The Biologics Price Competition and Innovation Act of 2007 (Senate bill S 623) was approved on Wednesday by the Senate Health, Education, Labor and Pensions ("HELP") Committee. 

According to a press release issued by Senator Orrin Hatch, the key provisions of the bill are as follows:

• Creates an abbreviated pathway the FDA will use to approve “safe, pure, and potent” biosimilar products, the legal standard for biological approvals.
• Gives incentives for innovators to continue developing new breakthroughs in biologics. The incentive is crucial because currently those incentives only lie in patent law. And because the low-cost versions will be only similar, but not identical, it was unclear if all of the innovator’s patents would be protected.
• Creates a mechanism to resolve legal challenges to the follow-on products. It allows innovators, generics, and the universities that partner with them in developing biologics, to adjudicate expeditiously whether or not follow-on products are violating an innovator’s intellectual property rights.
• Allows FDA to determine if a biosimilar product is interchangeable, meaning that it could be substituted at the pharmacy level under state law. Under the law, FDA can designate a product as interchangeable if it is biosimilar in composition and action in the body and if the patient is not harmed by switching from one product to another.
• Bases its guidance on scientific standards that FDA has always relied on, giving tremendous deference to FDA in developing and administering the new program. 

DrugResearcher.com reported:

[The draft bill] finally reaches a compromise between warring factions within the US senate over three main bones of contention regarding the new legislation, first proposed in February, which would be an amendment to the Public Health Service Act. .  . .

So firstly, under the proposed compromise bill, all follow-on biologics will be required to undergo appropriate animal studies along with one clinical trial in humans in order to demonstrate adequate comparability with the innovator drug, although the FDA will retain the discretionary power to deal with companies on an individual basis on the extent of testing actually required.

Secondly, on the thorny issue of whether or not to give the green light to interchangeability between a branded biologic and its follow-on counterpart, the bill will allow for this in certain cases where the FDA deems it appropriate.

Thirdly, in order to placate the industry who are fuming over the lack of incentive to innovation that allowing follow-on biologics may cause, the length of time a branded biologic would be protected under patent has been guaranteed at 12 years under the proposed compromise bill.

The Patent Baristas provided the following explanation on the bill:

The Act amends section 351 of the Public Health Service Act to provide for an approval pathway for safe biosimilar and interchangeable biological products (relying in part on the previous approval of a brand product) while preserving the incentives that have fueled the development of these life-saving medicines. . . .

The legislation allows, but does not require the FDA to issue guidance documents to inform with the public of the standards and criteria the agency will use in approving biosimilar and interchangeable products. Development of these guidance documents will require public input. Applications can be filed in the absence of guidance documents. . . .

The Act provides incentives for the development of both new life-saving biological products and interchangeable biosimilar products: 12 years of data exclusivity for the brand company during which a biosimilar product may not be approved, and 1 year of exclusivity for the first interchangeable biological product.

How is the biotech industry going to receive this proposed bill, in light of the concerns that the industry has had about biogenerics?

A press release issued by the Biotechnology Industry Organization ("BIO") gives an initial glimpse into the biotech response, stating as follows:

“Senators Kennedy, Enzi, Clinton and Hatch deserve credit for their hard work in crafting this complex legislation, and for the bipartisan support they have achieved for the bill.  Biotechnology innovators share the goal of ensuring all patients have access to life-enhancing and life-saving biologics.  We support the development of a pathway for the approval of follow-on biologics,” said BIO President and CEO Jim Greenwood.  “Toward that goal, we will continue to work with Congress to make certain the legislation is improved to ensure it supports the principles we have outlined for a pathway to follow-on products, namely providing better protections for patient safety and the patient-doctor relationship. 

“In addition, the patent litigation rules included in the bill must be revised to improve protections for the intellectual property rights of innovators, ensure timely resolution of all patent disputes and maintain incentives to develop future medical breakthroughs,” Greenwood stated.

It will be interesting to see how the introduction of this new legislation unfolds.  I suspect that it definitely will not be embraced by the industry, but I still don’t have a sense of how strong the opposition will be.  Is this legislation something that biotech companies can work with as the BIO press release suggests, or is this something that will be fiercely opposed?  Only time will tell.

We will be following this issue as this legislation is introduced outside of the committee, and we will keep you posted.

I recently sat down with LexBlog’s Rob La Gatta, who interviewed me in conjunction with LexBlog’s "Five Questions Series."  In the interview, Rob explored how I stay on top of developments in the blogosphere, how I’ve set myself apart to reporters who use me as a source, how I’ve set myself apart from other bloggers, what I see happening with regulation in the blogosphere, and whether I’ve accomplished what I aspired to yet with my blog. 

Since I try to stay on topic with this blog and don’t often talk about myself, this interview provides some insight into me, my firm, and my views on blogging generally that likely goes beyond what you will read in my blog yourself.  

LexBlog has, of course, written about me in the past–Kevin O’Keefe was kind enough to compliment me in a prior blog posting "Be an A-List Blogger in Your Niche to Succeed," where he pointed to me as an example of how you can become successful by blogging in a niche such as biotechnology. 

To follow up on this recent LexBlog interview, as well as Kevin’s earlier posting, I think that that in many ways the web is the great equalizer for legal practices–it enables the small firm practice to distinguish itself in ways that small firms previously could not.  By providing quality content on a relevant subject, lawyers can absolutely become known as experts in a field, even without doing it from the corner office of a swanky large-firm office building.  I have been building my firm for a little over three years now, which was a challenge I took on unexpectedly only after the sudden collapse of my former firm, Pennie & Edmonds LLP.  While, at the time of the collapse, when I decided to start the firm, I had a sixth sense that I should put my resources into developing my web presence and I had a definite vision about how to accomplish this, even I would not have expected to be getting the caliber of media calls and speaking engagements that I am now getting three years later.   

So, thank you to Rob La Gatta and LexBlog for interviewing me, and I hope you, as my blog readers, enjoy this brief glimpse into the story behind the blog. 

Well, it happened again–President Bush vetoed yet another stem cell bill.

MSNBC reported on the President’s action as follows:

This was the third veto of Bush’s presidency. His first occurred last year when he rejected legislation to allow funding of additional lines of embryonic stem cells — a measure that passed over the objections of Republicans then in control. The second legislation he vetoed would have set timetables for U.S. troop withdrawals from Iraq.

According to MSNBC, the Democrats do not currently have enough votes to override the veto; however, Senate Majority Leader Harry Reid is set to schedule an override vote. 

The President’s action today really should not have come as a surprise to anyone.  I certainly anticipated that this bill would be disposed of by veto when I discovered that a new bill was being considered by Congress.  But apparently Congress thought it was worth its time to send another bill through Congress.  Isn’t it nice to know our taxpayer dollars are being put to good use?

The California Healthcare Institute ("CHI") is warning that the California’s biotech industry is at risk as a result of recent court decisions, according to the San Jose Mercury News.

The San Jose Mercury News reported:

[The organization was] critical of several recent Supreme Court rulings, including its decision in January in MedImmune vs. Genentech, which eliminated a longstanding requirement for businesses licensing another company’s patented technology.

The decision allows companies licensing such technology to challenge the patent without first having to breach their license agreement and risk being sued.  As a result, many biotech executives fear the ruling could trigger a flood of patent challenges.

In other cases, the report said, the Supreme Court has made it tougher for biotech companies to obtain court injunctions against companies that infringe upon their patents and to prove their technologies are novel enough to warrant patents in the first place.

According to the San Jose Mercury News, CHI also expressed concern about the patent reform debate in Congress and the potential effects of patent reform on the industry.  At the heart of its concern is the fact that biotech products take many years and significant expense to develop.  If biotech companies are forced to overcome additional obstacles, what will this do to the industry?

I agree with CHI that California’s biotech industry will be impacted by some of the recent decisions by the courts as well as by patent reform; however, I can’t help but think that CHI is focusing on the wrong issues.  In my view, the issues that pose the greatest risk for the biotech industry are not these recent patent decisions, nor patent reform, but rather the push for biogenerics and for adopting universal healthcare, both of which could have serious and even devastating consequences for the industry.  How will the industry survive and flourish in a world, where biotech companies are unable to profit from the next big blockbuster?  As an entrepreneur myself, it’s difficult to believe that biotech entrepreneurs will be out there launching new biotech start-ups to the same degree they are today without the promise of a big payoff at the end.  How many well-intentioned people would really do that to themselves?  As much as I enjoy what I’m doing in building my firm and practice, I’m not sure I would do it if you took away the profit potential.  It’s just too much work.

Don’t get me wrong–I am as concerned as the next person with the rising costs of healthcare and the challenges with obtaining affordable health insurance and medications.  When my former law firm closed its doors unexpectedly and decided to terminate my COBRA six months later, I was surprised to find myself uninsurable.  Then, I had the pleasure of paying full price for brand-name medications for a year as I struggled to get my firm off the ground in a bad economy.  I even became very ill at one point and found myself in the situation of not being able to go to the doctor due to the expense and the fear of being hospitalized.  Coming from a family of healthcare professionals, it was a shock to the system to experience first-hand the other side of the story and to realize how easy it was to find myself–when I was young and basically in almost perfect health–in the position of not being able to obtain the insurance I needed.

And, of course, now that I do have insurance, I just received a letter from my insurer that the prescription drug benefits are being slashed this summer as a cost-saving measure–a move that will likely hit me and a lot of other Californians in the pocketbook.

However, the flip side of argument is that the biotech industry is a for-profit industry, which is just not going to thrive if you take away the "profit" element.  You don’t have to be an entrepreneur to understand that reality. 

With all of the innovation coming out of the biotech world today, a profitable industry could be the difference between any one of us dying from a horrible illness and our being able to avoid getting sick altogether.

So, does CHI have the right focus?  I guess it is up to us to decide.  

The Medimmune v. Genentech case has received extensive media coverage since the Supreme Court decision earlier this year, but if you still have questions about the case and its anticipated impact, you should check out the recap published on IP Frontline by attorney Dennis Fernandez and college student Brian Bensch.

In their article "The Impact of MedImmune v. Genentech," the authors describe the potential implications of MedImmune as follows:

The major implication of MedImmune is that potential and current licensees will find it incredibly easier to file a declaratory judgment action. . . . After MedImmune, licensees will be able to recklessly challenge contracts knowing that the worst possible consequence is that the contract is upheld. . . .

[T]he implications of MedImmune are already taking shape. Since the MedImmune ruling only four months ago, the Federal Circuit Court of Appeals has begun to clarify the impact of MedImmune by dropping the "reasonable apprehension" clause of its subject matter jurisdiction test in its decision in SanDisk Corporation v. STMicroelectronics, Inc. . . .

 [I]n its decision on March 26 of this year, the CAFC established a new test that "holds that "where a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where that party contends that it has the right to engage in the accused activity without license," the party may bring a declaratory judgment action."

In the end, the authors conclude that the impact of the ruling will be as follows:

[T]he Supreme Court’s MedImmune decision weakened the stability of both future and current licensing agreements. While the federal circuit’s precedent had been rather unambiguous, the Supreme Court accepted the circularly reasoning and exaggerated risk claimed by MedImmune and allowed it to file for declaratory judgment relief against its licensor without first ending their licensing agreement. The decision gives a blank check to licensees to challenge their licensor on patent invalidity charges if they feel they have any chance at success.

As a licensing attorney looking at this case and the subsequent San Disk ruling, I can’t help but wonder if the impact of these decisions is really going to be as severe as legal commentators are predicting.  While certainly this line of cases enables licensees to challenge licenses more easily, I question whether this will really happen with the kind of frequency you might expect from the commentary.  Is it possible that they are looking at these cases from litigator’s perspective rather than considering the business realities that would often caution against souring an otherwise cordial business relationship?

The vast majority of licensing negotiations are not done at the end of a big stick, and that there are generally sound business reasons to maintain a good relationship with the other side of the negotiating table.  While it is true that these cases make it easier for licensees to challenge a licensing relationship, I question whether it will make good business sense for licensees to do so as frequently as it has been suggested they will do.  Will licensors really want to do deals with licensees who have challenged other licensing agreements with third parties?  Will licensors really want to develop relationships with licensees who have challenged  other licensing arrangements with prior licensors? 

In the end, I suspect that the application of these cases will depend largely on the realities of the business world.  I find it hard to believe that regularly challenging license agreements will ultimately prove to be a good business strategy as the dust settles on these decisions.  I anticipate that in the end declaratory judgments will be used a little more judiciously to challenge relationships that have already soured, in much the same way that litigation and the threat of litigation have been used prior to the MedImmune ruling.  When a relationship can be managed outside of the courtroom, I continue to believe that, despite the hype to the contrary, the average licensee is going to stick with negotiation and stay away from the courts. 

In case you missed it, Google is not the only company making news for investing in biotech.  Pfizer has announced that it will be setting aside $10 million to invest in biotech companies. 

Terri Somers of Bend Weekly reported:

In a modern, tile-and-glass building on its campus on the San Diego coast, the pharmaceutical giant is planning to spend $10 million annually for at least the next five years, incubating promising innovations or ideas as they germinate into startup companies. The incubator’s board met for the first time in April and reviewed the initial applications from interested entrepreneurs. The incubator is set up to operate as a separate and distinct business unit from the drug company. But Pfizer expects to favor innovation that may one day help it strategically, either by providing new drug candidates or technologies that make finding drugs more efficient, said Catherine Mackey, a senior vice president of Pfizer Global Research & Development and head of the laboratories.

Tenants will have to agree to an upfront equity-share agreement with Pfizer. When research is done, Pfizer will have an option to acquire rights at a fair market price. Or the incubator could spin out the company as an independent businesss.

There has been significant commentary in recent years about the failure of big pharma to generate a pipeline of new products.  Evidently, this new move by Pfizer is an attempt to secure a pipeline.

Is Pfizer’s new strategy good for biotech? 

Obviously, it does provide some benefits to start-ups who want to get up and running, but based on the article, it appears that the strategy will tie the hands of those start-ups as they go forward, since Pfizer will have the first option to acquire the rights.  As a transactional attorney, I wince at the idea of giving up your bargaining ability before you even get off the ground.  I can only imagine representing such a client down the road and trying to negotiate the deal with Pfizer to transfer the rights.  No doubt it would be a frustrating experience at best.

Does Pfizer’s move signal the launching of a new trend in the biotech world, and if so, what will be the industry impact of such a trend?   Could it ultimately result in a stifling of innovation?  Only time will tell for certain.  Those of us in the industry will be watching to see.

I happened across an article this weekend on biotech licensing, which I would recommend to any readers who are contemplating licensing negotiations in the near future.

The article, "Biotech Patent Licensing: Key Considerations in Deal Negotiations," was written by Jeffrey P. Somers, an attorney at the Massachusetts firm of Morse Barnes-Pendleton, PC.  I thought Jeffrey did did an excellent job of capturing the essence of biotech licensing and the issues that must be considered in drafting and negotiating a biotech license. 

Jeffrey’s article addresses five topics of interest: (i) field of use restrictions; (ii) the multi-purpose compound; (iii) special issues related to non-exclusive licenses; (iv) the payment term; and (v) rights to the drug master file upon early termination of the license.  His article also provides practice tips related to each of the topics. 

While Jeffrey issues a disclaimer in his article that his background is in representing the pharmaceutical company and that he is therefore biased toward that perspective, this article should be informative to both sides of the negotiating table. 

To follow up an earlier posting from April 2, 2007 on  Outsourcing Trends in the Biotech Industry, a new report is out which provides more evidence that outsourcing is on the rise in across all of the life sciences industries.

Drugs-about.com News reported:

In EquaTerra’s newly-released Pulse Survey report covering the first quarter of 2007, the firm’s advisors cited pharmaceuticals as the leading vertical industry segment in terms of outsourcing demand. The report also found that outsourcing demand in the pharma industry has increased since the first quarter of 2006. . . .

The report also disclosed that there is far higher interest among pharmaceutical, life science, and biotech companies than among companies in general in expanding their current use of outsourcing. In this industry, 44 percent said they planned to expand outsourcing into new process areas – compared with 28 percent of companies overall. Also, 39 percent said they planned to expand outsourcing into new geographies or business units, compared with 30 percent of companies overall.

This report further bolsters the argument that outsourcing is going to become as widespread and important to the biotech and life sciences industries as it already is in the high tech world.   

Will outsourcing leave even more of a mark on the life sciences landscape than what we previously anticipated?  One can’t help but wonder if it will ultimately result in at the very least  the  modification of the current practices of certain companies, which current run early clinical trials in some of the same countries to which they are now outsourcing.  

The biotech world is buzzing about Google’s newfound interest in biotechnology. 

Of course, if you pay attention at all to Bay Area news, you are likely aware of the fact that Google co-founder Sergey Brin just got married this past month to biotech entrepreneur Anne Wojcicki.  However, the latest news is that Google has now decided to invest in his wife’s start-up.

The New York Times reported:

Google said Tuesday that it invested $3.9 million this month in 23andMe, the biotech company co-founded last year by Ms. Wojcicki, a former health care industry analyst.

Google’s investment was disclosed in a regulatory filing, which also officially confirmed that Mr. Brin, 33, and Ms. Wojcicki are married. . . .

The filing with the Securities and Exchange Commission also stated that Mr. Brin had provided $2.6 million in interim debt financing to 23andMe and that his loan was being repaid as part of the financing of 23andMe.

“Our audit committee requested that we disclose this in order to be completely transparent with our investors about the facts underlying this investment,” said Jon Murchinson, a Google spokesman.

Mr. Murchinson said the search giant, which has invested in other start-ups, made the investment in 23andMe because it furthered Google’s goal of organizing the world’s information. “They are developing new ways for people to make sense of their genetic information,” Mr. Murchinson said.

Needless to say, Google’s new investment in biotechnology has caught the attention of the media as well as the blog world, and there is speculation that this step by Google signals a change in focus by the company. 

Blogger Mark McQueen writes in the  Seeking Alpha blog:

For all of the biotech entrepreneurs out there having a hard time raising an early financing round, Google might be your next roadshow stop.

According to the New York Times, Google invested US$3.9 million in 23andme. 23andme is in the genetics information business, which may well indicate that Google’s cookies are about to get dramatically more invasive into your personal affairs and web habits.

I can see the next generation of the permission form now: “By using Google’s web search technology, you agree and consent to provide a sample of your DNA to us for our own use.”

It will be interesting to see what Google has up its sleeve with this latest move.  Does this action signal a new focus by the company in biotechnology?  Or is this just a case of a company co-founder wanting to help get his new wife’s business off to a good start?  Those of us who follow news over at Google are watching with interest for the answer to those questions.

Patent Baristas and Peter Zura’s 271 patent blog reported today on the industry group letter that went out today to Congress on patent reform.  Sent by the Innovation Alliance group,  comprised of a number of California biotech companies, venture capitalists, and universities, the Letter to Congress was addressed to House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, House Minority Leader , and Senate Minority Leader Mitch McConnell. 

An excerpt from the Letter to Congress states as follows:

[We] support The Innovation Agenda’s call to improve intellectual property protections, strengthen the patent system, and end the diversion of patent fees. . . . However, we strongly believe that certain provisions, such as those dealing with apportionment of monetary damages for patent infringement, expansive PTO rule making authority, an open-ended post grant opposition system, and a narrow grace period will not strengthen our patent system but instead will fundamentally undermine patent certainty, discourage investment in innovative technologies, and reduce publication and collaborative activities among academic scientists.

For companies (directly, and as university licensees) in industries such as ours, the consequences – greater bureaucracy, inability to rely on valid patents, weakened protections against infringement and a decreased access to capital — would be devastating. The harm to investment in tomorrow’s technologies would be felt immediately, and would hurt U.S. competitiveness for years to come. As the U.S. presses for strong patent protections abroad, Congress should preserve strong protections at home, so that we retain our competitive edge in the global economy.