Milestones in 2006-2007

BIO Advocacy Report

What happens in Washington influences biotechnology progress every bit as much as what happens on Wall Street or in the lab. In 2007, issues are in play that could affect the industry for years to come. Below are some of the highlights of BIO’s agenda:

Patent reform. At many biotech companies, patents are the number one asset, and BIO fights to keep intellectual property protection solid. In 2007, Congress and the U.S. Patent & Trademark Office are considering major changes, some of which would weaken patent rights. BIO supports some reforms, but is opposed to changes that could subject companies to multiple administrative patent challenges and limit the ability of companies to file patent applications.

Prescription Drug User Fee Act reauthorization. PDUFA and the new resources it brought the FDA are widely credited with reducing drug review times since the law’s initial passage in 1992. BIO supports the FDA’s recommendations to Congress for reauthorization in 2007, which include measures to expedite drug development using new technological tools, as well as a doubling of user-fee funding for
postmarketing surveillance.

Follow-on biologics. This complex issue is one of BIO’s top priorities this year, as Congress considers legislation that would establish a regulatory pathway for followon versions of protein products. Biologics are manufactured in living cells, making the process and product very difficult for new manufacturers to duplicate exactly. BIO maintains that any such pathway must protect patient safety and preserve the intellectual property rights and incentives that drive biomedical innovation.

Medicare Part D drug coverage. With some 80 percent of beneficiaries expressing satisfaction with Part D Medicare drug coverage, there would seem to be no momentum for revisiting the program, which just took effect in January 2006. Yet some in Congress want to do just that, by eliminating a system of marketbased
competition that works well and is delivering the benefit at a lower cost than expected. BIO is fighting these proposals.

Adventitious presence. The term refers to the unintentional and incidental commingling of trace amounts of one type of seed, grain or food product with another. BIO has long advocated for a U.S. regulatory policy governing adventitious presence for biotechnology crops and proteins. In the last year, we achieved major steps forward with USDA, EPA and FDA issuing policies. BIO also successfully advocated for the Codex Alimentarius Commission, the international food safety standards organization, to develop an international standard on adventitious presence.

Biofuels and other biobased product incentives. In late 2005, four years of BIO advocacy culminated in the inclusion of $4 billion in incentives to support cellulosic ethanol or bioethanol in the Energy Policy Act. Just over a year later, the Department of Energy awarded its first cost-share grants under the act to support construction of new biorefineries. BIO also successfully advocated for a biobased product purchasing mandate for federal agencies and is pursuing additional incentives for industrial and environmental biotechnology in a new farm bill now making its way through Congress.

Sarbanes-Oxley reform. As many biotech executives know too well, Section 404 of the Sarbanes-Oxley Act has had some unintended and costly consequences for small and mid-cap public biotech firms. BIO has urged the Securities and Exchange Commission (SEC), the Public Company Accounting Oversight Board (PCAOB) and members of Congress to reduce the law’s internal-control burdens for these companies. In December 2006, the SEC moved forward with proposals to improve the implementation of Section 404. These proposals are a first step, but more need be done. BIO has provided comments to SEC and PCAOB, met with SEC commissioners and will continue to work toward a more flexible Section 404.

Bioethics. BIO has endorsed legislation to provide federal funding for embryonic stem cell research conducted under stringent ethical guidelines. The measure passed the House and Senate in the 2005-2006 session, but did not win enough votes to override a presidential veto. In 2007, the fight has continued, with House passage in January and Senate passage in April. BIO’s bioethics agenda also includes clinical trial issues, the handling of genetic data and other ethical issues emerging from biotechnology research and products.

SBIR grants. A 2003 interpretation of the rules that implement federal Small Business Innovation Research (SBIR) grants has left small biotech companies majority-owned by venture capital firms out in the cold. BIO has been fighting to restore access to the grants and in 2006 won inclusion of reform in Small Business Administration reauthorization legislation. That legislation stalled before the congressional session ended, but BIO expects similar legislation in the new Congress. This reform is a part of new Speaker Nancy Pelosi’s Innovation Agenda, a positive sign for the 110th Congress.

Animal cloning. Livestock cloning is an assisted reproductive technology that allows farmers and ranchers to rapidly distribute the best genetics to produce healthy livestock and safe, high-quality meat and milk. In late December 2006, the FDA released a draft risk assessment and risk management proposal on livestock cloning,
concluding that foods derived from cloned animals and their offspring are as safe as foods from animals produced using conventional breeding techniques. BIO has advocated for FDA’s guidance to allow this industry to move forward and is pressing FDA to finalize its decisions this year.

Biodefense and pandemic preparedness. The world needs vaccines, diagnostics and therapies to prevent or respond to bioterrorism or pandemic outbreaks. We hope these events don’t occur, but as a nation we need to be prepared, and the development of these products is a costly and risky endeavor. How can companies be persuaded to use precious R&D funding to develop products with an uncertain market? BIO has worked with its members, as well as key congressional committees and federal agencies, to develop solutions. BIO advocacy generated funding and other incentives in the Bioshield program, pandemic legislation, and the establishment of the Biodefense Advanced Research and Development Authority.