BIO Comments on US EU Dialogue

February3, 2012

L. Daniel Mullaney

Assistant U.S. TradeRepresentative for Europeand the MiddleEast

Officeof theU.S. TradeRepresentative

600 17th Street NW Washington, DC 20508

Re: U.S.-EU HighLevel Working GrouponJobs andGrowth

Subject:Request forComments

http://www.regulations.gov

Dear Mr. Mullaney:

TheBiotechnology IndustryOrganization (BIO) appreciates theopportunityto respond to the Request forComments issued bythe U.S. TradeRepresentativeseekinginputon identifyingpoliciesandmeasures to increaseU.S. EU tradeand investment to support mutuallybeneficial job creation, economicgrowth and international competitiveness.  On behalf ofBIOIwould liketo urgethe working group to include in its  high level

dialogue, issuesrelated to biotechnology.

BIO is atradeassociation representingmorethan1,100 companies, academiccentersand research institutions involved in the researchanddevelopment of innovative biotechnologyproducts and services.  Our members areprimarilysmall-and medium- sized enterprises working to develop and commercializecutting-edgeproducts in the areas of healthcare, agriculture, energy,and the environment.  Sinceits inception roughly

30years ago, thebiotechnologyindustryhas spurred the creation of hundreds of thousands of direct jobs in the United States andEuropeand millions of indirect jobs. Theindustryhas developed hundreds of innovativeproducts that arehelpingto heal, feed, andfuel theworld.  In the healthcaresectoralone, theindustryhas developed and commercialized morethan 300 biotechnologytherapies, cures, vaccines, and diagnostics that arehelpingmorethan 325 million peopleworldwide who aresuffering from cancer,

1201 MarylandAvenueSW ·Suite900 · Washington,DC20024 ·202.962.9200 · www.bio.org

HIV/AIDS, and numerous other serious diseases and conditions. Another 400 biotechnologymedicinesarein thepipeline.  In the agricultural field, biotechnology innovations aregrowing the economyworldwidebysimultaneouslyincreasingfood supplies, conservingnatural resources of land water and nutrients, and increasing farm income.  Within thefield ofindustrial biotechnology,biotechcompanies areleadingthe wayin creating conventional biofuels, and next generationadvanced biofuels,which can beproducedfrom forest residues, algae, municipal solid waste, or otherrenewable sources of biomass, without compromisingthe environment. Renewablechemicals and biobased product platforms arealso providingreal opportunities to creategreen jobs, reducedependenceonforeign oil, increaseenergysecurity, and reducegreenhousegas emissions.In the U.S., states recognizethe tremendous rolethat biotechnologycan play in their economies.  As such virtuallyallstates haveput into placebioscience

initiatives.

To fullyappreciate thebiotechnologyperspective,itis necessaryto clearlyunderstand the natureof thebiotechnologyenterprise and theelements necessaryto enable biotechnologyinnovation. Biotechnologyresearch and development is capital intensive. It isgenerallyacknowledged that it takes morethan adecadeandcostson average$1.2 billion2to bringabiotechnologytherapyto market. Thehistoryof theindustryis replete with anecdotes ofmeticulous, lengthyand expensiveexperiments that havefailed.  It is estimated that onlyonein 10,000  experimental compounds ever makeitto market as successful medicines. Yet because of its tremendous potential, theU.S. and most of themajorEuropean economies haveinvestedsignificantcapital resources in this industry.  As such, these nations boast a tremendous number ofscientificdiscoveries, manyof which have potential toyield the next curefor cancer, Alzheimer's, diabetes or other diseases.  A http://www.bio.org/articles/battellebio-state-bioscience-initiatives-2010 Grabowski,Henry.“Follow-onBiologics:DataExclusivityandtheBalanceBetweenInnovation and Competition”Nature7 June2008Pg482  http://www.nature.com/nrd/journal/v7/n6/full/nrd2532.htmlErnst&Youngreport,BeyondBorders 2009 concerted effort initiated bythis high level working groupto unleash thepotential of biotechnologyin theU.S. and EUwillgoalong wayto bringinginnovativeproducts to consumers, creatingjobs, and improvingtheeconomyofboth regions.  It isgenerally wellaccepted bypolicymakers that engendering arobust bioeconomyrequires active support from government, policymakers, academia, the financial community,and other stakeholders.  Creating an environment conduciveto biotechnologyrequires investment from thepublic(throughgovernment fundingandgrants) and private sector(throughVC investment, taxincentives, etc.); an efficient system leveraginguniversityresearch through transfer from thepublicto theprivate sector; strongand predictable protections and enforcement for intellectual property,and ascience-based, streamlinedregulatory system.  What follows is BIO's suggestionfor areas around which that theU.S. and EU cangeneratearobust dialogue.

Opportunities for Enhancing theCompatibilityof Regulations and Standards

The U.S. and Europearethe largest markets forbiopharmaceutical products thecost of producingof whichexceeds a billion dollars.  Whilethereis investment in the earlyR&D phaseof product development, asignificant portion ofthe cost of developingabiotech product goes towards takingthe product through regulatoryreview process. In this regard,elimination ofduplicativeadministrativerequirements in the U.S. and EUwillbe helpful in bringingbiopharmaceuticals to market.  In 2007, theU.S. and EU began a dialogueonadministrativesimplification under theTransatlanticEconomicCouncil which had as its keyobjectiveidentification for simplification ofthe regulatoryprocess at the level of administrativepractices andguidelines4.  BIO urges the USTR to consider reinvigoratingthis effort.  Avoidingduplicativerequirements would cut redtape, and save money for theindustry, consumers, andregulators.  Tradeand investment on both sides ofthe Atlanticcanbeenhanced if theU.S. and EUeliminatedduplicativetesting and  streamlined procedures which would ultimatelyalso decreasetheamountof time needed to bringnew products to market.http://www.fda.gov/InternationalPrograms/FDABeyondOurBordersForeignOffices/EuropeanUnion/EuropeanUnion/EuropeanCommission/ucm114338.htm

Simplification and compatibilityofrequirements will also benefit theagricultural biotechnologysector.  Inthis regard,Idirectyou to ourcomments filed in response to ITA-2011-0006filedonAugust 8, 2011.5In theareaof agriculture, the EUis a large export market forU.S. soybeans and soybean meal, in theU.S. importing$1.1 billion and $413 million respectively.  However, unnecessarybarriers that restrict traderemain. There are at least two areas whereahigh level U.S. EUdialoguethat focuses on therole that agricultural biotechnologyplays in theeconomyand job creation maybehelpful. First, a World TradeOrganization dispute panel found that theEU's moratoriumon agricultural biotechnologyproduct approvals andseveral member states bans on cultivation wereinconsistent with their commitments under theWTO Agreement on the Application ofSanitaryand PhytosanitaryMeasures (SPS).  Second, with regard to authorizations fornew biotechnologyproducts, theEU process is substantiallyslower than theU.S. and other important U.S. export markets.  Accordingtoan analysis conducted byEuropaBio,the EC takes an averageof45 months to complete areviewof an import product application.  This burgeoningbacklogrepresents a major barrier to trade.

Consistent requirements forpatent protections on both sides of theAtlantic would go a longwaytoreducingthecost of biotech innovation and commercialization.  Intellectual propertyis thelinchpin of biotechnologyinnovation.  Theabilityto obtainIPprotection both upstream and downstream of the biotechnologyR&D enterpriseis critical to investment.  As afirst step, adoption in Europeofaunitarypatent would help mitigate the high patent filingcosts of applyingin multipleEU countries (mostlydueto translation requirements).  Loweringthesepatent filingcostswould resultin morecapital flowingto theresearchand development process and resultin job creation.  Inaddition, a UnitaryPatent Court hasthe promiseof loweringlitigation costsand enforcement across Europeancountries.  Biotechnologycompanies will no longer haveto relitigate their claims in everyEUcountrybut rathertheycanredirect thoseresources back to the http://www.bio.org/category/41 innovative process.  Finally, anyfurther harmonization (both procedural and substantive) between theUnited States andEuropean Patent Offices would further reducepatent filing costs.

Enhanced Cooperationfor theDevelopment of Rules and Principles onGlobalIssuesofCommonConcernand also for theAchievement of SharedEconomicGoals Relating to Third Countries

Bringinginnovative medicines andtechnologies to the public at largeis arguablyoneof the greatestglobalchallengesof ourtime.  Yet, thesedifficult economictimes havemade movingproducts alongtheresearchand development continuumeven morechallenging. In particular, today's economicdownturn has created agap in theinvestment required to takepromisingdiscoveryto a stagewhereinvestors, collaborators and larger biotech

firms arewillingto invest their resources. Whileconventional upstream initiatives in research and development continue to beimportant forbiotechnologyinnovation, it has become alltoo clear thatwithout  robust translational programs, promising biotechnology products maynot be developed. This is becausemanysuch earlystagediscoveries are

justthat--discoveries which entail significant investment to develop them into products. Traditional biotech models include investors andVCs as significant funders of early technologies.Oncethesetechnologies aresuitablydeveloped, theyaretransferred to, or acquired by,alarger company.  Today's economicdown turn has madeVCand company backingof theserisky,earlystagetechnologies less desirable.  As such manypotential products and technologies neverget developed tothe point of being attractiveto larger firms.Advancingsciencethrough what has been called the "valleyof death"hasnever been moreimportant than itis right now, as numerous small biotechnologycompanies

arebeing forced to shelvepromisingtherapies asaresultof thecurrenteconomiccrisis and restrictivecapital market. Theimpact of thecurrent economiccrises onsmall biotechnologycompanies has been andcontinuesto be severe.In fact, since2008, at least

47 U.S. public biotech companies haveeither placed drugdevelopment programs on hold orcut programsalltogether. Theseprograms includetherapiesforHIV/AIDS, cervical cancer, multiplesclerosis, and diabetes. According to thelatest available data, 24 percent ofsmall, publicly-tradedbiotechnologycompanies arenow operatingwithless than six months of cash on hand,and 38 percent of thesecompanies haveless thanoneyear of cash remaining. Thetotal capital raised bytheindustrysaw a25 percent declinebetween

2007 and with venturecapital fundingdropping30 percent.Coordinated efforts across the Atlanticon translational research initiatives to fill thesegaps could benefit biotechnologyinnovation and bringmoreproducts into thehands of consumers.

A second areaofglobal concern relates to incentivizingthe development ofclimate friendlytechnologies in  particular biofuels.  Combustion offossil fuels permanentlyand irreversiblyleads to increased concentrations of CO2 in the atmosphere. Combustion of biofuels and other biogenic energysourcesrecycles CO2 emissions through renewable biomass feedstocks.Ifsustainablysourced, suchcombustion does not resultin lasting increases in CO2 concentrations in the atmosphere. Other uses of biogeniccarbon,such as biochemicals and bioplastics, mayeven sequesterCO2, reducingatmosphericGHG concentrations. Theseinherent benefits of utilizingrenewablebiomass feedstocks versus traditional fossil fuel consumption should berecognized on aglobal scale.

Thereis perhaps no better timethan nowforthe U.S. and EUto discuss thetimingfor buildingabiobasedeconomyto providefuels, chemicals, materials and energy sustainablyfor thelongterm future.Ahigh leveldialoguethat includes discussions of how to furtherthesetechnologies on aglobal scalewould not onlybenefitthe biotechnologysector, butwould also help bringinnovativealternativesources of energy into the market place.

Conclusion

Weapplaud theAdministration for exploringtradefocusedways to stimulate innovation and job creation in theU.S. and EU.  BIObelievesthat the suggestions outlined in this paper can haveboth a short-and medium term impact on economicgrowth, job creation and competitiveness butunleashingthe potential of biotechnology.  Thesuggested topics arenot onlyfeasiblein theshort term, butalso havesignificant implications forand consistencywith bilateraland multilateral tradeobligations.  Weurgethe Administration to continue its consultativeprocessas the high level working groupcontinues its efforts.