Reuters is reporting that two stem cell bills are set to be debated in the Senate when it returns tomorrow.

According to Reuters, the first bill is virtually identical to one that was vetoed by President Bush last year expanded and encouraged federal funding of human embryonic stem cell research.

The second is  a compromise measure worked out by Republicans Sen. Johnny Isakson of Georgia and Norm Coleman of Minnesota.

Reuters reports as follows:

[The bill] would encourage stem cell research on embryos that have naturally lost the ability to develop into fetuses, such as those that have died "naturally" during fertility treatments. 

The compromise bill also would support the creation of a bank of stem cells taken from amniotic fluid and placentas — two recently discovered potential sources.

This bill replaces last year’s alternative sponsored by Kansas Republican Sam Brownback, which would ban human embryonic stem cell research and encourage research using other types of stem cells.

Will the outcome of these bills be any different year than last , given the Democratic-controlled Senate?  I must say that I have my reservations.  My suspicion is that even if the bills are voted into law, President Bush will veto them.   Surely, the Senate recognizes that this will be the likely outcome.  Is this really a good use of their time and resources?

Having said this, the compromise bill is likely to receive more support  from the American public, given its focus on embryos that have naturally lost the ability to develop into fetuses.  Time will tell if this makes any difference.

In case you missed its radio broadcast, Marketplace Money recorded a podcast of its story last week on biologics: "Making Speciality Drugs Cheaper," which explored both sides of the ongoing biologics debate. 

The program first presented the human side of the issue through an interview with Darren Baker, a chemist at Biogen Idec. in Cambridge, Massachusetts, who was diagnosed with  B-cell Non-Hodgkins Lymphoma in 2003 and took one of the biologics his company developed, Rituxan.  Three years later, Mr. Baker is cancer free.

The program then addressed the cost side of the debate and explored the difficulties in developing generic biologics, interviewing Matthew Connell, director of pharmacy services at Blue Cross Blue Shield, the largest insurer in Massachusetts, and Biogen Idec spokesman Tim Hunt.

The program did a really good job of capturing the essence of this debate and conveying why there are no easy answers.   On one hand, we want biologics to be developed that will save lives, but on the other hand, society wants those same biologics to cost as little as possible.  It goes without saying that it will be difficult–if not impossible–to fully reconcile the two opposing societal goals, particularly in the case of biologics. 

Legislation has been proposed that would establish a new Office of Intellectual Property for California.

AB 1456, proposed on February 23, 2007 by Assembly Member Mullin, would accomplish the following:

This bill would establish the Office of Intellectual Property in the Business, Transportation and Housing Agency. The agency would be responsible for tracking intellectual property generated by state employees and by state-funded research, developing a database to track intellectual property, establishing and updating guidelines for use by state agencies in administering their intellectual property, developing an outreach campaign informing state agencies of their rights and abilities concerning intellectual property, and developing sample invention assignment agreements and sample language for licenses or terms-of-use agreements for use by state agencies. The bill would define terms that apply to the function of the agency, and
would make findings and declarations regarding intellectual property. This bill would require that intellectual property policies, established on and after January 1, 2009, meet certain requirements regarding rights and uses of the research or invention. It would also require that state agencies or departments submit an annual report regarding royalties earned pursuant to the agency’s or department’s contracts, grants, or agreements to the office.

The jury is still out as to what the reaction will be by the biotech industry to this proposed new legislation. Bay Bio held a town hall meeting to discuss the legislation last week, and the event description provided the following background on the bill:

[T]he use of technology transfer programs remains a potential vulnerability for the life sciences industry. There are members of the California State Legislature who advocate restricting the use of intellectual property developed at state institutions, (such as the University of California) as a way of lowering the price of prescription drugs or increasing revenue for the state. These individuals have favored provisions that would limit access to state IP only to companies that agree to sell resultant therapeutics at the federal Medicaid price when purchased using public funds. Additional proposals have included mandating payments equal to 25 percent of net licensing revenues or requiring 2-5 percent of revenues from a developed product be paid to the state over the lifetime of that product.

Furthermore, there are state agencies that have developed intellectual property but have no mechanism in place to license it to private industry. Assemblyman Gene Mullin (D-South San Francisco) has reintroduced legislation to create a statewide office of intellectual property. When this bill was considered by committee last year, it was amended by the committee to include some of the provisions previously mentioned. Although the bill did not get out of committee it did raise concerns about the IP and technology transfer policy in California.

The current bill (AB 1456) will be amended to remove the cost control provisions, but the debate continues on the use of IP from state institutions. . . .

Will a California Office of Intellectual Property benefit the state biotech industry?  Will it benefit the citizens of California?  Or will this just create another layer of bureaucracy and red tape?  I fear that establishing such an Office could hamper intellectual property in this state rather than promoting it.  However, I will reserve final judgment until I hear more. 

H.R. 1561:The Enhancing Drug Safety and Innovation Act of 2007 was introduced this week by Representative Henry Waxman (D-CA) and Representative Edward J. Markey (D-MA).   H.R. 1561 is the House counterpart to the Enzi-Kennedy drug safety bill (S. 484). Representative Waxman’s website states that H.R. 1561 will do the following:

• Give the FDA enhanced tools to ensure post-market drug safety through the “Risk Evaluation and Mitigation Strategy” (REMS) process, including: (1) increasing the possible moratorium on direct-to-consumer advertising from two years to three years; (2) adopting the IOM recommendation that the FDA place a symbol on the packaging of a product to let consumers know that the drug is new to the marketplace; and (3) requiring a review of drug products after they have been on the market for 7 years (the average time it takes to detect most side effects);
• Increase the transparency of the REMS review process;
• Enhance FDA’s enforcement authority by giving the FDA the ability to impose civil monetary penalties if drug companies fail to comply with any requirements relating to drugs in the Federal Food, Drug, and Cosmetic Act and increasing the amount of those civil penalties;
• Provide for a balance between funding from user fees and federal dollars in FDA’s drug safety budget by authorizing $25 million for each of fiscal years 2008 through 2012 in addition to other funds available for carrying out Title I activities;
• Require the FDA to report to Congress on its efforts to integrate the expertise of the Office of Surveillance and Epidemiology (formerly Office of Drug Safety) into the Agency’s approval, labeling, and post-approval safety decisions; and
• Strengthen the clinical trials registry and results databases to include more information on more trials (including medical devices), and give the Secretary the added ability to impose civil monetary penalties for non-compliance.

The Scientist reported on the Senate version of this bill in August, 2006, highlighting two opposing viewpoints on the proposed legislation.

The biotech industry has been somewhat silent as to the pros and cons of this bill to date, which may speak to the industry’s views on the issue–clearly there are times when silence speaks more loudly than words. 

Patent reform continues to be a hot topic around the country, particularly in the Bay Area, where the world revolves around the patent system.  The topic of debate is of course, whether the current system which regularly churns out multi-million dollar jury verdicts, is broken and requires a complete revamping. Or whether our system, with all its flaws, is the best it can be. 

On one side of the debate, of course, is the argument that this push to litigation is stifling innovation, which goes against the goals of the patent system, which was intended to encourage innovation.  On the other side of the debate is the argument that litigation is a necessary consequence of the system, and that companies need litigation to protect their investment in innovation. 

Newsweek columnist Steven Levy recently took on the issue in his column, arguing the case for patent reform, taking issue with the argument that our system is the best in the world and far from broken, stating:

I’ll wager, however, that China would be less than delighted to emulate us if the consequences included events like the one in a San Diego courtroom last month. Following the rules of our system, a jury laid a whopping $1.52 billion judgment on Microsoft for infringing on a patent involving the mechanics of playing MP3 music files. Here’s what is outrageous: Microsoft had already licensed MP3 technology from the consortium that developed the standard, for $16 million. Years later, after MP3 technology took off, Alcatel/Lucent (inheritor of patents filed by the fabled Bell Labs) emerged to file its suit, and won almost 100 times as much as what was determined a fair license fee originally (because Microsoft had unwittingly infringed that patent). Unless the judgment is overturned, more than 400 other firms using MP3 technology are prone to a similar ambush.

I’d also guess that China or Brazil does not envy the outcome of the case where Rim (BlackBerry) had to pay $612 million to settle a case—even though the patents in question had been re-evaluated as invalid after the suit had been filed. Those are only two of a number of cases where patent holders used the system to extract huge, apparently unearned, sums.

Are these two cases, both in the high tech industry, really examples of a flaw in the system as Levy suggests?  Or is he taking an extreme position regarding a system that may not be perfect but is the best available?

The answer perhaps lies somewhere in between.  The costs of litigating in this country have skyrocketed generally in recent years, and the high costs of litigating intellectual property infringement cases are only a reflection of that trend.  Moreover, verdicts around the country have gotten larger over time, and verdicts in infringement cases reflect that trend as well.  One could argue that if a flaw exists, it is not really with the patent system but with the trial court system generally that has created these trends toward increased litigation and higher verdicts. 

Oddly enough, that viewpoint does not seem to be getting much airtime in the patent reform debate, but perhaps we should be giving it more consideration as we ponder a large overhaul of the patent system.  Are we focused on the wrong issue?

Supporters for California’s Stem Cell Research Program won a victory this week when a state appeals court upheld a lower court’s decision that the program does not violate laws concerning state spending, the structure of ballot initiatives, or rules regarding conflicts of interest.

The New York Times reported that Robert N. Klein, chairman of the board overseeing the stem cell program, hailed the court’s decision as “one huge step for California,” and also stated that:

Mr. Klein said the decision was so strong that he thought the California Supreme Court would decline to hear the case if the ruling were to be appealed. If the Supreme Court turned away the case, he said, the state could begin issuing bonds as soon as 120 days from now.

According to The New York Times, a lawyer representing opponents of the program indicated that they would likely appeal, but that no definitive decision had been made on the issue.

On February 14, 2007, Representatives Henry Waxman, Jo Ann Emerson, and Frank Pallone, Jr.,  and Senators Charles E. Schumer and Hillary Rodham Clinton introduced HR 1038, the "Access to Life-Saving Medicine Act".  The purpose of the bill is to establish a process by which the FDA can approve lower cost copies of biotech drugs.  It goes without saying that this bill is going to be the subject of some serious debate. 

The Washington Post reported that a study conducted by Express Scripts, Inc. showed that patients and health insurance providers could save at least $71 billion over 10 years if there was a regulatory mechanism that allowed for the marketing of generic biotech medicines. 

Of course, on the other side of this debate will no doubt be the biotech industry and its supporters.  If this Act were to become law, it would have a huge financial impact on the industry. 

A letter posted on the BIO website written by Stephen E. Lawton, Vice President and General Counsel in July, 2001 gives a glimpse of what the official position by the industry organization may look like:

[W}e believe that such an approach would raise substantial constitutional and administrative law questions, including the unlawful taking of proprietary data and trade secrets held by the biotechnology industry. . . . A change in regulatory status (from biological product to new drug) to allow for the approval of generics would, in effect, retroactively undo the reasonable expectations of the biotechnology industry.

Indeed, there is no doubt that the passage of such a bill into law would deal a huge blow to the industry.  While a generic biologics law would inevitably create a new market for generic biologics, it would also dramatically reduce the profits that the industry would otherwise earn.  Why would insurance providers cover regular-priced biologics when a generic is available for a significantly lower cost? 

Given the economic reality of what it costs to bring a new drug to market, we should all be concerned at what passing a bill like this would do to an industry that today presents so much promise for the future.  Could this stifle the innovation that is creating all these new biologics in the first place?  Sadly, by legislating that these biologics shall be more affordable to health care providers and the public, we stand to lose many new biologics, which will never be brought to market at all. 

A new victory was scored today for Stem Cell Research, when California awarded $45 million in new research grants to labs and universities statewide.

The Los Angeles Times reported:

The grants were a bonanza for the UC system, with UC San Francisco receiving eight; UCLA seven; UC San Diego and UC Irvine six each; UC Riverside, UC Santa Cruz, UC Davis and UC Berkeley receiving two each. Even the new UC Merced got one. The biggest winner was Stanford University, which took home 12 grants. USC received four. The private nonprofit Burnham Institute for Medical Research in La Jolla received eight.

The state’s action comes despite the fact that the funding for the California Institute of Regenerative Medicine remains tied up in ongoing litigation.  

The message is clear: the state of California intends to support stem cell research, regardless of any roadblocks that may stand in its way. 

The Stem Cell Trial opened today in Alameda County, California–apparently without any fireworks.

California Stem Cell Report Blogger David Jensen, who is closely following the proceedings, wrote of the day’s events:

The case of the CIRM foes moved slowly on Monday with fumbling over exhibits and evidence, tedious readings of long and short documents and a lengthy opening statement that tested the patience of Alameda Superior Court Judge Bonnie Lewman Sabraw. . . . CIRM’s opponents did seem ill-prepared and poorly organized. But this was day one in the nonjury trial, which is certain to be appealed and ultimately not resolved for another 12 months or so. And a fumbling, country-boy routine may be part of the strategy.

Clearly, Jensen’s characterization of CIRM opponents on this first day of trial was not a favorable one. Based on his commentary, one would think that CIRM opponents did a good job today of reinforcing themselves as the archetypical stereotype of conservative, right-wing Christian, country bumpkins. As a transplanted Southerner from a part of the country that is often viewed by my fellow Californians as mere “Flyover Country,” I cringe a bit at the imagery. It goes without saying that Southerners are often seen through a similar light.

Having said that, there is little doubt that serious religious and political value questions are fundamentally entangled in this stem cell debate, and perhaps even at the heart of this legal dispute, as suggested by Jensen through his remarks. The question for the court of law and of public opinion is whether there is anything more to this legal dispute than mere politics and religious issues. It doesn’t sound as though Plaintiffs got off to a very good start today in proving their case.

Peter Zura’s Two-Seventy-One Patent Blog recently examined the Biotech Community’s response to the USPTO’s proposed changes to US patent practice, including the proposed change aimed at curtailing the number of continuations that could be filed from a disclosure.

According to Zura, the response from the patent community was “befuddled outrage.” Zura writes:

The USPTO has no overt authority to limit continuations, yet is requiring applicants to explain why amendments, arguments, or evidence could not have been previously submitted? Aside from the fact that such a requirement injects subjective elements to an apparently objective process, this heavy-handed approach unduly restricts a valuable procedure for practitioners.

Zura reports that biotech companies are complaining that the proposed continuation rules are the wrong approach, since

[i]n this industry, product development timelines can reach 10 to 15 years and can cost upwards of $500 million. Accordingly, continuing applications are needed to protect technologies that can take more than a decade to bring to market. The biotech patent process not only covers product itself but also the process to make the product. As the 12 to 15 year cycle continues, different matters about the product, process, and its ultimate application are learned. All of this would require applicants to revisit applications and provide updates on any new developments.

Thus, restricting continuing applications will result in overly broad biotech patents, according to Todd Gillenwater, vice president of public policy at the California Healthcare Institute, a life sciences trade group in La Jolla, California.

Of course, from very early in the debate, the biotech community has been vocal on its views regarding the proposed patent reform rules. The Biotechnology Industry Organization (“BIO”) testified before the U.S. House of Representatives on September 15, 2005 on the proposed patent reforms, and has posted a transcript. An earlier letter to the U.S. House of Representatives is also posted on the website.

Likewise, in his recent President’s Desk column, the BayBio President wrote about the many flaws in the USPTO’s proposed direction, which was intended to address and remedy the existing three to five year USPTO backlog, highlighting the following:

First and foremost, the 2005 hiring trend at USPTO suggests that the agency of the Department of Commerce is aware of its human resource problems. Among the primary elements of reform that will not be proposed in the present comment period is the addition of hundreds – or thousands – of new examiner positions. Retention of new hires may also be an issue, but not in these proposed reforms.

Second, this collaborative approach asserts a fundamentally flawed view of governance in the public interest. Can John Q. Public realistically expect that Corporation X will act in the public’s interest in previewing materials and attachments filed by Corporation X in a working relationship with the Patent Office?

Third, the approach misses the mark on the responsibility of the USPTO. The backlog in the system is not the shared responsibility of innovators and the Government. The responsibility of innovators is to innovate – and in our industry, to continue the work of discovering life-saving products that shape and change people’s lives every day. It is the responsibility of the Patent Office to receive and review patent filings.

Finally, presuming that this proposition: Innovator: Control Thyself became USPTO policy, this reform does not accurately imagine the lawsuits that may result in the system – lawsuits by both innovators who face the unintended consequences of the priority of brevity, as well as by challengers who will have less material by which one discovery may be differentiated from another.

The BayBio President writes that the comment period will soon begin on these reforms and encourages members to participate in that debate and voice their views on the proposed reforms.

Clearly, this is sound advice to all of us in the biotech community.