Members of the biotech industry can now breathe a sigh of relief: the patent reform bill has been stalled in the Senate. 

According to Biotech Transfer Week, the Senate reached the current impasse over a section of the bill dealing with the assessment of damages in patent infringement cases.  The concerns were raised by Senator Arlen Specter (R-Pa.).  Biotech Transfer Week reported Senator Specter’s remarks as follows:

“The Chairman and I differ on a number of aspects of the proposed patent reform legislation. .. . The principal sticking point is the issue of how to assess damages in patent infringement lawsuits. We thought we had reached an agreement on this matter, but the language continued to shift, so we do not yet have a deal on the package. . . .  I am hopeful that we can reach an agreement, but more work has to be done to get it right."

“Our view is that [we disagree with] those who are saying this is dead, or there is no time to do it now and that they missed that window,” Tom DiLenge, vice president and general counsel for BIO, told BTW this week. “There has always been time to do a consensus patent reform bill – but does the other side want to stick to its guns and get 100 percent of everything they wanted? In that case, I think it could be dead. . . .Or, are they willing to compromise and get a bill that has about 98 percent of what they wanted, and is acceptable to the rest of the patent-holding community. . . .”

"The idea that Senator Specter, or BIO, or anyone would accept really harmful damages language just because some other part of the bill is the way that they want it, is just not accurate,” DiLenge said. “The other side in this debate needs to recognize that they’re not going to be able to get the kind of harmful damages language that they were seeking. Once they recognize that and admit it, we can come to the table and get this bill done fairly quickly.”

The Biotech Industry Organization ("BIO") spent $6.6 Million on lobbying efforts in 2007, reported the Associated Press.

BIO’s lobbying efforts last year addressed a range of issues from patent reform to generics to FDA-related issues.  The Associated Press reported as follows:

[BIO’s] lobbying efforts went toward cloning issues ahead of the Food and Drug Administration’s ruling that cloned meat and milk is safe for consumers. Several members of Congress tried to compel the agency to do more studies before issuing a ruling, but FDA cleared the products for consumption in January. 

The biotech industry also lobbied on legislation to allow the Food and Drug Administration to approve generic copies of biotech drugs. Generic drug companies already market cheaper versions of regular, chemical drugs, but the FDA does not have the authority to approve copies of biotech drugs, which are more complicated.  Biotech makers opposed a bill that would have made generic biotechs medically interchangeable with the originals. The industry also argued generic biotechs should be classified as similar, but not interchangeable.

They also want biotech medicines to be guaranteed at least 12 years on the market before having to compete with generic copies. Generic drug makers say any protection beyond five years is unreasonable. Senate lawmakers attempted to pass a compromise bill last year, but negotiations broke down over the length of exclusivity.

This report raises some interesting questions about how much various industries spend today on their Washington lobbying efforts.  One of the issues that has repeatedly come up in the patent reform debate is how minimal the biotech industry’s lobbying efforts are in contrast with the high tech industry.  The argument has been that the proposed patent reform legislation favors the high tech industry, which has traditionally had more of a voice and presence in Washington.  However, as this report makes clear, the biotech industry’s expenditures on lobbying–at least BIO’s expenditures on behalf of the industry–are not inconsequential.  So, this report begs the question: if biotech’s lobbying efforts pale in comparison to high tech’s lobbying efforts on Washington, just how much is the high technology industry spending on Washington lobbying?  What kind of lobbying money is considered adequate to have a voice in Washington?

The California Biotech Law Blog wrote a blog posting on March 21st about legislation under consideration which would require doctors to disclose the acceptance of gifts from drug companies and we addressed the issue of whether doctors should have an ethical duty to disclose potential conflicts to patients; however, a column today by Peter Huber in Forbes.com looks at a new angle to this debate: whether the public should really be concerned about doctor bias against drug companies?

The crux of Huber’s argument  is that some doctors out there are biased against the drug companies because if drug companies churn out drugs that are too good, doctors will lose business.  Huber writes as follows:

Brilliant doctors often work closely with big drug companies, and they seem to like their corporate partners just fine. Too fine, say their vocal critics–no doctor can have objective views about Lipitor when he takes Pfizer‘s money to develop or test it. But when the critics are doctors themselves, as they quite often are, keep in mind that there’s a deeper conflict in play here that the critics never acknowledge or discuss. By working at the cutting edge of pharmacology in close collaboration with Big Pharma, top-tier doctors are taking over the whole medical show. It’s because of their work that so many of their less able colleagues are destined to provide doc-in-a-box services at Wal-Mart, at cut-rate prices prescribed by Big Insurance or Big Government. . . .

In the old way of looking at things, drugs are just extensions of the physician’s wise hands, like stethoscopes and sutures. But when Big Pharma’s products get good enough, they displace a whole lot of hands-on doctoring. A pregnancy test used to be an office visit and a lab analysis; now it’s a remarkably smart dipstick sold over the counter. Diagnosis used to be almost all doctor; now it’s almost all lab–and the lab technicians rely on higher-caliber dipsticks, assays and reagents developed and mass-produced by the same teams of top-tier doctors, research hospitals and big drug companies.

When drugs get good enough, they displace hours of ineffectual (but remunerative) human monitoring and palliative care. Drugs displace doctors, nurses and hospital beds because they really work and because they often work long before bad chemistry morphs into clots, plaques, lumps and other symptoms that require scalpels and beds. In the first half of the 20th century almost all medically supplied gains in health and life expectancy came from germ-killing vaccines and antibiotics. All the important gains since have come from arrays of drugs that target clogged arteries, strokes, cancer and other diseases rooted in our own human chemistry. Human eyes can’t see and human hands can’t handle most of the things that make us sick–bacteria, viruses, white blood cells, antibodies, proteins, enzymes, fats and genes.

At first glance the argument seems a bit ludicrous.  Isn’t there a doctor shortage in many places?  Aren’t we having to import doctors from overseas? Isn’t there talk about the fact that the baby boomers growing older means we need more doctors than medical schools are already churning out?  Why would doctors be concerned about losing work? Or at least work that is the most profitable?

But on further consideration, you have to admit that there may just  be a glimmer of truth in the argument.  Coming from a medical family myself, I know that the real money for a physician is in specialization–becoming board certified in a particular field.  This is not so different than in the legal field.  You specialize to become an expert on a particular field, since experts can stand out in the profession and potentially make more money. 

In the medical profession, patients go to specialists when they have an illness that seems to need the attention of an expert in that field.  However, if a miracle drug exists that eradicates the illness, would that patient ever need to go to the specialist?  The patient might never get past the primary care physician.  Or, if the the patient did go to the specialist, at the very least the physician wouldn’t see the patient very often. The patient would take the drug and not really need a specialist unless the drug stopped working, which in the case of the miracle drug perhaps wouldn’t happen.  Perhaps the specialty wouldn’t really be that profitable any more.

Sounds crazy?  Maybe.  But it does happen in the legal profession.  Specialties become unprofitable all the time.  Lawyers get asked to leave law firms, or they just gradually realize that they need to switch specialties if they intend to have a profitable practice.  Isn’t it just possible that the same could happen to specialist physicians?

I think the answer is yes: it can and probably will happen to some physician specialties.  Perhaps not as quickly as a legal specialty becomes unprofitable, but just like certain jobs are getting phased out due to technological advances, the same probably will happen to certain physician specialties over time as biotechnological advances make certain specialties unprofitable.  Look what is happening in the medical profession: the same consolidation that has happened in the legal industry is increasingly happening among medical practices.  With consolidation comes the reality that practices and specialties will be viewed through the eyes of the business on their overall profitability to that business.

So, back to the argument–is it just possible that there is a bias by some doctors against pharma due to a fear that  pharma may be doing its job too well?  Perhaps. I’ve certainly seen things written by lawyers worrying that technology will cause us to be able to do our job too efficiently.  Why wouldn’t doctors have similar worries?  Can’t those worries cause a conflict?  Of course, they could.  I would be concerned if the practice I had built was looking like it might not have a future–or at least a very profitable future. That’s only natural. 

How concerned should we the public really be about this?

Well, I think we should keep it all in perspective.

In the end, technological advances benefit society and our professions at large.  Doctors, like lawyers and other professionals, will inevitably develop new expertise as the need for various specialities changes with those advances–we all have to adapt in this world to survive.  So, any damage to a practice that might be caused by those advances will likely be temporary.  Savvy doctors will develop new expertise just like savvy lawyers and other professionals have to do to change with the times.  In my opinion, the majority of doctors will recognize this reality and not let fear get the better of them. 

Nevertheless, Huber makes some interesting points, which are definitely worth considering in parallel as Congress considers legislating that doctors disclose potential conflicts with drug companies.  Should we perhaps be taking another logical step and asking if Congress should really be legislating on doctor conflicts?  Or should we perhaps consider other possible doctor conflicts in tandem to what Congress has been proposing?   Is focusing in on doctor conflicts arising from receiving gifts from drug companies too narrow a focus for the legislation?  I think that these are all valid questions to consider as Congress moves forward and addresses this issue.

Following up on our February 4th report on the debate regarding the future of the SBIR Program,  the House Committee on Small Business held a hearing on March 13th to consider changes to modernize the program, according to a press release issued by the House Committee on Small Business.  SBA Administrator Steven Preston was subpoenaed to appear before the Committee.

The chief items up for consideration by the Committee were as follows: (i) increasing size limits on SBIR grants during the first two phases of the program, potentially doubling the size of the awards, and (ii) changing the definition of small business to include businesses majority-owned by venture capital firms, reported Kent Hoover for the Dallas Business Journal. 

Hoover reported on the second topic of consideration:

The committee also wants to change the SBA’s rules defining what types of companies qualify as a small business in order to allow small companies that are majority-owned by venture capital firms to receive SBIR awards.

These types of companies routinely received SBIR awards until 2003, when the SBA ruled that venture capital firms don’t qualify as individuals under the agency’s eligibility rules for the SBIR program. . .  . Many biotech companies contend the ruling ignores the realities of their industry, where small businesses must get outside capital in order to research and develop new drugs and other treatments. The Biotechnology Industry Organization and the National Venture Capital Association have been lobbying Congress to overturn the SBA’s ruling. . . . .

The House overwhelming passed legislation last September to allow small companies majority-owned by VC firms to be eligible for SBIR awards as long as no single VC owned more than 50 percent. The Senate didn’t act on the bill, so the House is taking another stab at it this year.

BioOptics World ran an article this month on the SBA reauthorization battle.  I was actually interviewed for the article, but my interview did not make it into the published article.  Anyway, Author Susan Reiss reported as follows on the status of SBA reauthorization:

One Hill observer says that the venture-capital issue will boil down to whether Congress wants to emphasize the “S” or the “B” in SBIR. At this point the House and Senate don’t agree on whether they should change the program to address the venture-capital issue. A bill introduced last fall by John Kerry (D-Mass.), chairman of the Senate Committee on Small Business and Entrepreneurship, and ranking member Olympia Snowe (R-Maine) that tried to bridge a middle ground passed in the Senate but failed in the House. An alternative bill was approved in the House, but failed in the Senate.

This year the Senate has yet to hold hearings on SBIR reauthorization, although an aide to Kerry on the Small Business Committee says Kerry is committed to reauthorizing the program. . . .

Reiss further noted:

To lessen impact of the venture-capital issue, some observers have suggested creating a separate program for innovation development at NIH. “NIH is concerned about the path to commercialization. Instead of trying to fit a square peg in a round hole, let’s look at a commercialization program,” suggests James Morrison, a senior advisor for the Small Business Technology Council.

But the chance that someone will devise an entirely new program that addresses the needs of NIH is unlikely. At this point it’s unclear where on the spectrum the House and Senate will meet to reauthorize SBIR, but as Brown notes, “it would be devastating to have a gap in the program.”

Video of the hearing and and copies of written testimony by witnesses are available for review at the Small Business Committee website.

I am interested to hear any comments on the current proposal to the House Committee.  It is a well-established fact that BIO strongly supports the idea of changing the SBIR rules to allow venture-backed companies to recieve SBIR grants.   But the Dallas Business Journal article suggests that some biotech companies may actually oppose BIO’s position.  Is there any truth to this?  If you oppose the changing the rules to allow venture-backed companies to participate, I would like to hear your argument.  Please write us and let us know your position. 

Also, what about the idea of developing a new program at NIH?  Is this a workable or even advisable solution?  Why or why not?  Any comments we receive on this issue will be shared with blog readers, so we welcome the feedback.

The Pharma Marketing Blog ran an interesting column today on the new proposed legislation, which would require doctors to disclose gifts received from drug companies. 

Introduced by Rep. Peter DeFazio (D-OR) and Ways and Means Health Subcommittee Chairman Pete Stark (D- CA), the new legislation is called The Physician Payment Sunshine Act  and is a companion bill to S. 2029, which was introduced by Senators Chuck Grassly (R-IA) and Herb Kohl (D-WI).  According the the press release issued by U.S. Congressman Peter DeFazio, the purpose of the bill is as follows:

The legislation builds on existing laws in Minnesota, Vermont, Maine and West Virginia to require prescription and medical device manufacturers to publicly report any gifts with a value of $25 dollars or more provided to doctors in connection with their marketing activities.  Under the new legislation, this information would be made widely available to the public. . . ."Americans are being gouged by pharmaceutical companies that spend more on marketing than they do research and development." DeFazio said.  "They enjoy generous subsidies from the government, but have no accountability when it comes to the billions of dollars they spend promoting high priced drugs.  I am proud to introduce this legislation which would shine a light on the marketing practices of drug companies and give patients the information they need to make an informed decision about their healthcare."

The question, of course, being debated is whether it is a good idea to enact The Physician Payment Sunshine Act.  The Pharma Marketing Blog argues that this legislation goes too far in attempting to curb the potential for conflicts of interest, stating:

This "sunshine" bill also has a few dark clouds associated with it. I have to agree with Bob Ehrlich of DTC Perspectives that "this bill seems overly onerous" and "is meant to discourage payments to doctors by outing them and the drug company on a public site". . . .
Do I agree with this? I hate to sound like a Clinton, but it all depends on what "large" means. Is "large" more than $100? This is the cutoff amount specified in PhRMA’s voluntary guidelines on gifts to physicians. Usually, these types of bills attempt to codify such voluntary guidelines and I’m not sure where the $25 limit came from other than the idea of setting the bar so low that it would put the pharma "tchochke" industry out of business.

What is our view at the California Biotech Law Blog on the proposed legislation?  In my opinion, there is a definitely a need for legislation to regulate potential conflicts of interest in the medical profession.  Lawyers certainly receive close scrutiny on potential conflicts of interest, and I see no reason why physicians should not receive the same treatment.  I certainly would think twice about taking any drug recommended by my physician if I knew that the physician making the recommendation had received compensation of any nature from the drug company, and as a lawyer, I would expect any doctor to disclose such an association.  I’m frankly surprised that rules are not already in effect to require this type of dislosure.

As far as the issue of whether the $25 limit is reasonable, this does sseem a bit ridiculous and arbitrary.  Is receiving $25 really a conflict of interest, when it is only a fraction of the doctor’s total earnings? The standard on legal malpractice applications for weeding out potential conflicts of interest is typically ownership of more than 5% of the company at issue.   Perhaps a more reasonable conflict of interest standard would be 5% of the doctor’s total earnings in the year.  Or even 3% of the doctor’s total earnings. But $25? 

What are your thoughts on the new legislation?  Please let us know your thoughts on the issue and we will share them with our readers.

Baybionotes provided a short update this month regarding the implementation of recent legislation expanding the obligations of clinical trial sponsors to submit information regarding their trials to the federal data bank. 

Author Robert Church of Hogan & Hartson LLP discussed the legislation as follows:

Title VIII of the Food and Drug Administration Amendments Act of 2007 expands the federal registry in several important ways. First, it is no longer limited to trials of drugs intended to treat serious or life-threatening diseases, but rather requires registration of all clinical trials other than Phase I and requires significantly more content. As of December 26, new data points for initial registration became required, even reaching back to include some clinical investigations that began before the law was passed.

The NIH has also been directed to expand ClinicalTrials.gov to include trial results. By this fall, sponsors will have to submit results information about approved products. Soon thereafter, adverse event data will be required on the site as well. Still more, the law requires the promulgation of regulations by September 2010, further expanding the results database “to provide more complete results information and to enhance patient access to and understanding of the results of clinical trials.”

What are the penalties for failure to comply with the new legislation?  According to Church, the penalities are as follows:

Not only will failure to submit the required information in a timely fashion be posted on ClinicalTrials.gov, but sponsors may also face civil fines up to $10,000 for all violations adjudicated in a single proceeding. If noncompliance continues thirty days after notice, the fine may be increased $10,000 each day until the matter is resolved.

A new bill introduced this week would reduce the compliance burdens faced by biotech companies under Sarbanes-Oxley.

IndustryWeek reported on the bill as follows:

A provision in the HOME Act directs the Securities and Exchange Commission to provide a threshold definition for smaller public companies thereby providing an objective standard as to who is eligible for a scaled audit under the newly adopted Auditing Standard No. 5 (AS-5) and Section 404 of the Sarbanes-Oxley Act of 2003. . . .

The bill enables companies without federal tax liability to increase their capital investments by claiming some portion of their unused R&D and Alternative Minimum Tax (AMT) credits. Under this provision, companies would elect to accelerate R&D and AMT credits in lieu of bonus depreciation. Allowing companies to accelerate the recovery of some portion of unused R&D and AMT credits through new capital investments will help maintain economic growth by encouraging business investments and job creation. The bill also provides for a two-year R&D tax credit extension which expired at the end of 2007

The Biotechnology Industry Organization ("BIO") issued a press release praising the bill, in which BIO President and CEO Jim Greenwood stated as follows:

"Biotechnology researchers are creating innovative technologies that provide hope to patients worldwide.  But most biotech companies are small start-ups, years away from having products on the market.  So with little to no product revenue, and an undefined definition of a smaller public company, these companies have been absorbing outsized audit and compliance costs – revenue that could otherwise go to developing life-saving therapies."

To check out the full text of the BIO press release, click here.

Following up on our posting yesterday regarding the Boston Globe’s critique of stem cell research in California, Governor Schwarzenegger made some remarks yesterday on California’s experiences with stem cell research in the context of a short speech on the state of the California biotech industry generally, and he presented a very different perspective on the issue.     Unlike the Boston Globe which viewed California’s experiences as providing a "lesson for Massachusetts," Governor Schwarzenegger applauded California for providing a shining example for the rest of the country to follow and for investing in the state’s future.  Clearly, the Governor has a very different view of the state’s stem cell research program, and perceives it already as being a success.  While there is no doubt that as the Governor, he may at times view the program through rose-colored glasses, as a member of the biotech community, I think many of us in the industry and in the state generally share that same vision and perspective on our state’s stem cell accomplishments. 

To view the video of the Governor’s remarks, click here.

Bioworld Today is reporting that the FDA and Congress will be joining forces to develop follow-on biologics legislation.

According to Bioworld Today, the Bush Administration indicated in the 2009 federal budget package released last week that “it would seek regulatory authority for the FDA to approve follow-on biologics, also called biosimilars or biogenerics, which would be financed through user fees. Currently, no such approval pathway exists for follow-on biologics.” Both the House and Senate had introduced follow-on biologics legislation last year, and planned to move the legislation forward in 2008.

What is the FDA’s current vision for the legislation?

Bioworld Today reported:

In a document titled “Other Legislative Items” that is part of the White House fiscal year 2009 budget, the administration said the follow-on biologic legislative proposal would include a “predictable and public guidance process for licensing follow-on protein products” under the Public Health Service Act.

“The proposal will prescribe the type of data required for FDA to review applications for follow-on protein products and will require labeling for the safety concerns related to the interchangeability of these products,” the Bush administration said.

The proposal also will include “adequate intellectual property protections to preserve continued robust research into new and innovative life-saving medications,” the document stated.

The news was viewed as a promising development  by both Sen. Charles Shumer (D-N.Y.) and Department of Health and Human Services Secretary Michael O. Leavitt, both of which were interviewed by Bioworld Today.  Similarly, Jim Greenwood, CEO of the BIO industry organization indicated his support for the FDA approach, as well as Kathleen Jaeger, CEO of the Generic Pharmaceutical Association (GPhA), who also expressed her approval for the development.  Having said this, the Bio Job Blog took issue with the FDA’s decision, stating:

I don’t think that Congress’s involvement is a good idea given the political wrangling, deal-making and concessions that must be made in order to get legislation passed.

Is the Bio Job Blog right to express concern about how this new joint effort will pan out?

Well, there is no doubt that the legislative process is time-consuming and is inevitably intertwined with politics and political compromises.  However, it is also true that a collaborative effort can greatly speed up the process, and having the administration on board means that any agreed-upon legislation is unlikely to end up with the words “vetoed” stamped on its front.  I would have to say that on the whole the development is a positive one, and suggests that we are one step closer to voting into law follow-on biologics legislation, which even Bio Job Blog concedes is likely, stating:

It looks as though follow-on biologics may become a reality in the US. . .  . I don’t think Americans will see follow-on biologics on the market before 2010 or 2011. That said, it gives us Americans something to look forward to!

The California Stem Cell Report reported on a story run in today’s Boston Globe, in which the paper characterized the “$3 billion stem cell research effort in the Golden State” as a “lesson” and a “reality check” for Massachusetts.

According to the Boston Globe:

The slow rate of progress serves as a reality check for Massachusetts and other states that have followed California’s lead by placing big bets on medical research. Texas voters approved a $3 billion commitment to cancer research in November. New York has set aside $600 million for stem cell work. And later this month, Massachusetts lawmakers are expected to vote on Governor Deval Patrick’s $1 billion life sciences initiative, which is primarily targeted for research.

The Boston Globe next compares and contrasts the proposed Massachusetts bill with the California initiative:

Patrick’s proposal differs in some key ways from California’s. For instance, it sets aside $250 million in tax incentives to encourage companies to expand, something that could yield immediate results. It also allocates money for workforce training. And unlike California, the Massachusetts research funding is not restricted to stem cell research. . . .

[A]s in other states, the bulk of the bill is related to life sciences research, which typically takes time to generate results. Specifically, $250 million is reserved for grants for research, fellowships, or workforce training. Another $500 million would support public research and education facilities, including a stem cell bank to be housed at the University of Massachusetts Medical School in Worcester and a research center focused on RNA interference, an area pioneered by UMass researcher Craig Mello.

Unlike the Massachusetts proposal, California’s stem cell plan didn’t come from politicians. It was the brainchild of Robert Klein, a well-connected California lawyer and low-income housing developer. Klein said he got involved as a patient advocate: His son has diabetes, and his mother has Alzheimer’s disease. When federal officials decided to limit funding for embryonic research, Klein thought California could help fill the gap. Embryonic stem cell research holds immense promise because stem cells can potentially morph into any other kind of cell, making it possible for them to replace other cells that have been damaged.  Instead of going through the Legislature, Klein organized a ballot initiative, taking the proposal directly to voters. . . .  In the end, 59 percent of voters approved the measure.

The Boston Globe article goes on to describe the controversies surrounding the California initiative and to explain that the the initiative to date has had little–if any–real impact.

The California Stem Cell Report responded to the Boston Globe article, stating:

The Boston piece downplayed the impact of CIRM’s efforts, perhaps a reflection of a parochial East Coast perspective. Pumping money into stem cell research at the rate of $20,000-plus an hour, however, is no small achievement, even though it does not measure up to the perceptions created by the campaign rhetoric surrounding Prop. 71 more than three years ago.

There is little doubt that the Boston Globe’s perspective is a cautionary one on the value of investing public funds into stem cell research.  At the very least the Boston Globe has emphasized the fact that the value of the investment will be realized in the long-term rather than the short-term, which is certainly a fair point to make.  At worst, the Boston Globe may in fact be as the California Stem Cell Report stated exhibiting a certain degree of  “East Coast parochialism.”

In truth, I think that this article is a reflection of all of the above.  As a relocated Southerner from the real South–not Southern California–I have to say that it was no great surprise that California would be the pioneer in this area.  Not only is the state very progressive in a variety of ways and historically very supportive of life sciences, but it is also more inclined than many states to allocate taxpayer dollars to fund politically-correct projects.  Is this at heart a reflection of the fundamental difference between East Coast and West Coast perspectives?  Of course it is.  But which view is correct?  It depends.  Utlimately, isn’t the measure of success going to be what the CIRM does for California and what kind of results in the field the CIRM achieves? Thus, I would argue that everyone is correct here.

Having said this, did anyone honestly think that the CIRM would have achieved any tangible results by now? Does anyone really need cautionary words of wisdom on how rapidly stem cell  research results are likely to be achieved?  I suspect that even most elementary school students would have expected it to take a while for the CIRM to achieve any measurable results.  Is it possible that the Boston Globe is truly concerned that its readers will get ahead of themselves, expecting the results to be literally evident overnight?  I somehow doubt it.