Milestones 2004

2003 Biotech Drug Approvals >

HEALTH CARE

When people are asked what they think of when they hear the word biotechnology, they respond with phrases like "biomedical research," "breakthrough medicines," "cures" and "hope for the future." Health care is, after all, the number one market for biotechnology.

A majority of BIO members are engaged in biomedical research, and to date such companies have brought 187 new medicines to market, serving more than 325 million patients. In 2003 alone, the FDA approved 25 new biotech medicines and vaccines, including first-in-class products for HIV/AIDS, cancer and rare genetic disorders. In the clinical development pipeline are more than 370 additional medicines and vaccines, with many more experimental products expected in the future.

BIO's campaign to reverse cuts in Medicare reimbursement featured print ads urging patients to contact their congressional representatives.

BIO and its members seek to develop and bring these products to patients in a way that is expeditious, maximizes patient access and encourages continued innovation. Those goals sound simple, but achieving them requires a complex, delicately balanced legal and regulatory environment at every level — state, national and international. BIO is the leading industry voice at all those levels.

MEDICARE

The U.S. Medicare program provides health insurance for 40 million senior citizens and disabled individuals — the same populations many biotech products are designed to help. In 2003, the top health-care priority for BIO's federal government relations team was Medicare reform and expansion of the program to cover prescription drugs.

When Medicare modernization and drug coverage legislation was signed into law in December, BIO scored its most significant legislative victory to date. Its six core principles for expanding coverage were incorporated into the law, as well as partial reversals to recent reimbursement cuts to dozens of biotech medicines that were already covered by the program. Passage of this historic legislation marked the culmination of more than four years of federal government relations, grassroots and communications efforts.

BIO kept up the pressure on Congress to pass Medicare reform and drug coverage until the final vote. This ad ran in Washington, D.C., papers and in selected congressional districts in late November 2003.

Hospital Outpatient Prospective Payment System
BIO's Medicare advocacy in 2003 centered on reversing a new rule that dramatically changed reimbursement for medicines used in hospital outpatient settings. That rule, affecting the Hospital Outpatient Prospective Payment System (HOPPS), inflicted steep cuts (35 percent, on average), redefined radiopharmaceuticals as nondrugs, arbitrarily chose a handful of orphan drugs for more favorable reimbursement (while excluding others that met the same criteria), and introduced the concept of "functional equivalence," under which a new product could be reimbursed at the same rate as an older, similar product.

BIO responded with a multipronged strategy to achieve reversals of these policies in the broader Medicare bill. Tactics included aggressive advocacy by BIO staff and member companies, newspaper ads and op-eds in Washington and key congressional districts, and a grassroots education campaign that resulted in letters to Congress from thousands of senior citizens, providers and representatives of patient organizations. Some of them joined biotech company executives on Capitol Hill in the spring to brief a standing-room-only crowd of lawmakers, their staff and journalists.

Results
The results of BIO's HOPPS strategy, as well as the organization's long-term advocacy for its Medicare principles, were evident in the final legislation. The core prescription drug benefit, slated to take effect in 2006, meets several long-term BIO goals by providing

• A more reasonable, predictable reimbursement climate for biotech products, relying on private-sector competition rather than centralized price controls.
• Coverage for catastrophic costs, such as those faced by patients who require long-term treatment with biologics; Medicare will cover 95 percent of costs after a beneficiary's out-of-pocket spending reaches $3,600 in a year.
• Assistance to those most in need first; Medicare will provide free or reduced premiums with nominal co-pays to low-income seniors.
• Incentives to maintain current coverage; the final Medicare bill provides $70 billion to encourage employers to maintain existing drug coverage for retirees.

The reforms to the HOPPS include the following:

• New, higher payment floors in 2004 and 2005 for dozens of biotech products used in the hospital outpatient setting.
• Mandated U.S. General Accounting Office surveys in 2005 and 2006 to determine actual hospital costs of providing these products, with results to serve as the basis for new reimbursement rates in 2006.
• Improved reimbursement for an expanded group of specially designated orphan drugs used in hospital outpatient centers.
• A prohibition against declaring a new product "functionally equivalent" to an older one and reimbursing both at the same rate.

Although the Medicare legislation is good for both the biotechnology industry and the patients it serves, BIO's work on Medicare and related issues does not end with its passage. The Centers for Medicare and Medicaid Services is expected to issue a raft of new regulations before the bulk of the law takes effect in 2006.

BIO is already challenging a provision that arbitrarily singles out 17 high-volume medicines used in physicians' offices for reimbursement rates below those of other products used in the same setting. This provision was inserted into the Medicare legislation at the last minute for budgetary reasons only, with no underlying policy rationale.

In 2004, BIO will explain the new law to member companies and work with the administration and Congress to achieve successful implementation of the program.

ADDRESSING THE NEEDS OF THE UNINSURED

The 2003 Medicare legislation will expand prescription coverage, but some 43 million Americans — 14 percent of the population — lack health insurance, most of them in working families. Bringing this population into the ranks of the insured is likely to become a major public policy and political issue now that Medicare drug coverage has been enacted.

In 2004, BIO will work with other health-care organizations and government agencies to develop workable solutions to the problem.

THE VALUE OF BIOTECH MEDICINES

For two years, prescription drug cost and access issues have dominated the U.S. domestic agenda, driving passage of the landmark Medicare drug coverage legislation and sparking debates on issues such as "reimportation" and access to generic drugs. But even though some important issues were resolved last year, the debate over the value of medicines is unlikely to subside with overall U.S. health-care spending climbing at near double-digit annual rates.

Although prescription drugs account for only 10.5 percent of health-care spending, they are a lightning rod because the sector is growing — thanks primarily to biotech and greater use of pharmaceuticals.

Biotechnology products as yet are only a small part of the overall market for pharmaceuticals, but they are attracting increasing scrutiny from the media and legislators. In response, BIO is supporting a series of independent studies on the value of biotech drugs. Those studies will document the impact of biotech medicines on the health-care system and quality of life. The first study is expected in February 2004.

FOOD AND DRUG ADMINISTRATION

The value of biotechnology drugs matters only if an efficient regulatory system ensures that those products reach the market in the first place. The gatekeeper to that market, at least in the United States, is the Food and Drug Administration.

The appointment of Mark McClellan to the post of commissioner in late 2002 brought the agency fresh energy and a deep commitment to innovation. From the outset, Dr. McClellan's background in economics and medicine has been evident in his support for new technologies and willingness to apply science-based, efficient risk management in agency regulatory activities.

Over the past year, the biotechnology industry has developed an excellent working relationship with the commissioner, who delivered pro-innovation messages to large audiences at BIO's CEO & Investor Conference in February 2003 and at the BIO 2003 Annual Convention in June.

"Despite the tremendous progress of medical care in recent decades, the potential medical benefit of biotechnology is the main reason why most medical experts believe that the most important innovations are still ahead of us," Dr. McClellan told the convention audience.

In anticipation of some of those innovations, the FDA in early November published a draft guidance to encourage drug developers to share pharmacogenomic data with the agency. The plan incorporates BIO's recommendation for a mechanism allowing companies to comfortably share exploratory pharmacogenomic information without stalling ongoing drug development. BIO called the proposal "a significant step toward the era of personalized medicine, when genetic analysis will help guide prescribing decisions and many drugs will be tailored to treat genetically defined subsets of the population."

Such new FDA projects were in addition to a packed agenda that included implementation of the 2002 Prescription Drug User Fee Act, the move of some therapeutic biologics regulation into the FDA's Center for Drug Evaluation and Research, and continued work on good manufacturing practices reform — all measures of critical importance to BIO, whose Science and Regulatory Affairs Department filed numerous comments on FDA proposals and met frequently with the agency's leaders and staff in 2003.

BIO and member-company staff also are participating in initiatives at the Product Quality Research Institute, an organization that fosters collaboration among academia, industry and the FDA to identify best practices for the manufacturing of high-quality pharmaceutical products.

Follow-on Biologics
FDA leaders in 2003 indicated they were preparing a development and approval pathway for new versions of previously approved recombinant DNA medicines and vaccines, or follow-on biologics. Because these protein products are made in cells — not chemically synthesized — and are hundreds of times larger and far more complex than conventional small-molecule drugs, they are not amenable to a generic approval process. Clinical trials are essential to demonstrating safety and efficacy because, as has been seen with similar versions of biologics on the market, minute differences in structure can make large differences in clinical efficacy and safety.

In the spring of 2003, BIO filed a Citizen Petition to make the legal and scientific case for including clinical trials as part of the approval process for follow-on biologics. The debate over such products appeared to gain momentum in December 2003, with the European Parliament passing legislation that calls for appropriate testing of "biosimilars" — a move BIO supports.

As the U.S. debate unfolds in Congress, at the FDA and possibly in the courts, BIO will continue to advocate putting patient safety first by requiring clinical testing of biologics.

Public outreach will be a critical component of this effort. In preliminary polling, BIO found that of voters given a lengthy explanation as to why clinical trials for follow-on biologics are necessary, 77 percent expressed support.

Drug Importation
Even as the FDA cracks down on drug counterfeiting, pressure is mounting to liberalize federal importation laws. Several state and local governments, as well as some private insurers, have begun to explore importing drugs from Canada — where government controls keep prices lower — in order to cut costs.

At the federal level, the House of Representatives in 2003 attached to the Medicare drug coverage legislation an amendment that would have opened U.S. borders to Canadian imports. The final law, however, allows such imports only if the secretary of the Department of Health and Human Services certifies their safety. Imports of biologics are banned, period.

Opening the borders to drug imports, especially when counterfeiters and drug diverters are growing increasingly brazen, would put patients at risk. BIO will continue to oppose efforts to weaken patient protection against adulterated, counterfeit and non-FDA-approved drugs. BIO supports the FDA's recent actions to enforce the importation ban and dissuade state governments from implementing drug import programs.

HATCH_WAXMAN REFORM

BIO targeted members of Congress and their staffs with an anti-importation ad that ran in the Washington Times, The Hill, Roll Call and several regional newspapers.

The 2003 legislation enacting Medicare drug coverage includes substantial reform to the 1984 Hatch-Waxman Act governing approval of generic drugs.

The original Hatch-Waxman law established a delicate balance between innovator firms and generic competitors, so as to allow cheaper generics to proliferate while preserving the marketplace incentives that drive discovery and development of new drugs. The law has been a resounding success: The United States is a world leader in development and availability of both innovative medicines and generics.

But for several years, it has been argued that Hatch-Waxman contained a few flaws and needed reform. BIO has supported reform, but only if it retained a healthy balance between the interests of innovator companies and those of generic firms. The reform package that passed takes into account BIO's comments regarding litigation damages, the declaratory judgment mechanism, bioavailability and bioequivalence rules, and marketing exclusivity.

BIODEFENSE

Biotechnology scientists and executives are eager to use the technologies that have transformed mainstream health care to develop an arsenal of products for biodefense: diagnostics, therapeutics and vaccines that could be used to thwart or respond to attacks with biological, chemical or radioactive weapons.

Although desperately needed, such products present thorny policy and development challenges. For one thing, there is no natural market for biodefense products: They would be used only rarely, if at all, with a tidal wave of demand in an emergency. And because they cannot ethically be tested for efficacy in human clinical trials — to do so would necessitate exposure to anthrax, smallpox and the like — they present unique liability concerns.

In 2003, President Bush offered the BioShield bill to demolish some of the barriers to biodefense product development. The bill would establish a 10-year, $5.6 billion program to develop and procure therapies and vaccines for biodefense, and would allow expedited FDA approval of such products.

The bill sailed through the House of Representatives, passing 412-2, but stalled in the Senate, where it never came to a vote. Some provisions were later incorporated into defense authorization legislation, but apply only to the armed services.

BIO supports the broader BioShield bill, even though it has several weaknesses, including insufficient liability protections, unclear procurement commitments, emergency use provisions that may not be practical and a prohibition against funding products with nondefense uses.

REGENERATIVE MEDICINE

Bioethics debates unfold over years, sometimes decades, and so it should come as no surprise that some of the hottest issues in 2003 were the same ones that have been making news since the 1990s breakthroughs in cloning and stem cell science.

Spurred by a UFO cult's claims of a December 2002 human cloning success (apparently a hoax), Congress, state legislatures and the United Nations in 2003 stepped up efforts to ban cloning.

BIO supports the banning of reproductive human cloning — that is, use of somatic cell nuclear transfer technology to effect the birth of a baby who is a clone of another individual — but opposes efforts to extend a ban to therapeutic applications of the same technology. Those applications, using stem cells as the starting material, could someday produce genetically matched replacement cells and tissues as treatments for a wide range of ailments, including diabetes, spinal-cord injury, cancer and Parkinson's disease.

Broad bans on cloning failed in Congress and at the United Nations in 2003, but the debate is far from over. Anti-cloning bills have been introduced in every Congress since 1997, and the U.N. has delayed discussion only for a year. State legislatures have also debated these issues and will continue to do so (see Outreach: States).

U.S. backers of restrictions on stem cell and cloning research did succeed in attaching to unrelated legislation an amendment barring patents on "human organisms" as a means of preventing patents on human beings. BIO worked with the Coalition for the Advancement of Medical Research to persuade legislators to add language limiting the scope of the amendment so as not to impede legitimate research on human cells and tissues.

CLINICAL TRIAL REFORM

Most health-care advocates agree that the current system for clinical trials needs reform. The problems range from overworked institutional review boards to a confusing patchwork of state laws that makes multicenter trials a headache to plan and execute.

Because the integrity and efficiency of clinical trials is of the utmost importance to the hundreds of BIO members developing biomedical products, BIO has been a leading advocate for patient safety and privacy, alongside high ethical standards for investigators and a single set of federal laws to provide consistency across the United States.

In 2003, BIO's board of directors reconfirmed the organization's Principles for Federal Law to Protect Research and Research Participants, which are posted in the bioethics section of BIO's Web site, www.bio.org.

'ENHANCEMENT'

Although biotechnology's potential for altering humanity has been a topic of imaginative speculation since the dawn of science fiction, it's now emerging as a political issue as well. In 2003, the President's Council on Bioethics published Beyond Therapy: Biotechnology and the Pursuit of Happiness, a 325-page tome that turns a critical eye on the use of biotechnology to "enhance" human beings rather than to treat specific diseases, and notes that the lines between enhancement and treatment are sometimes fuzzy.

According to the report, enhancement technologies may include genetic and assisted reproduction technologies, as well as medicines designed to improve alertness, memory, mood or stamina. In other words, the technologies at issue are not science-fiction exotica but include products that are here now — improving the lives of patients with diseases such as narcolepsy, depression and anemia — or in the development pipeline.

Since its creation in late 2001, the council's discussions have been largely academic and ruminative in nature, but in March 2003 the group indicated an interest in examining the FDA's authority and competence to further regulate genetic and reproductive technologies, an interest of concern to BIO, which values individual choice and scientific freedom.

As BIO commented in response, "Members of the biotechnology industry respect the power of the technology they are developing and accept the need for appropriate regulation. In our view, appropriate regulation of biotechnology is solidly rooted in values such as autonomy, privacy, beneficence, social justice and intellectual freedom."