California Biotech Law Blog

The Baltimore Business Journal is reporting that life sciences companies spent a record amount on lobbying efforts in 2007--some 32 percent more in 2007 than in 2006.

The Baltimore Business Journal reported:

The industry unleashed a $168 million lobbying effort last year, the largest among all sectors and 90 percent of which was dominated by three biotech and pharmaceutical trade groups and 40 global companies. . . . Among top company spenders were British-based AstraZeneca PLC, which owns Gaithersburg-based MedImmune and tallied $4.1 million in lobbying efforts, and Israel-based Teva Pharmaceuticals, which owns Rockville-based CoGenesys and tallied $2.3 million. Amgen Inc., based in Thousand Oaks, Calif., topped the company list with a $16.3 million total contribution last year.

As the California Biotech Law Blog previously reported, BIO spent $6.6 million in lobbying efforts in 2007.

According to The Baltimore Business Journal, the industry's investment seems to "have paid off." 

Was the investment really dollars well spent?  Well, clearly the industry has had some success with respect to delaying the passage of patent reform legislation, which was largely viewed as being more favorable to high tech companies than biotech companies.  Likewise, the lobbying efforts seem to have had some success in the SBIR area, as we previously reported in a recent blog posting.  So, the industry has definitely seen some success in Washington this past year, although that success has not been felt uniformly across the board.

There is no doubt that having a voice in Washington is taking on increasing importance for the life sciences industry, particularly in light of the lobbying efforts of the technology world.  It seems likely that the industry's investment in lobbying will continue to grow in the near future, as the topic of health care reform continues to be a key political issue and the interests of technology and life sciences companies continue to diverge.  As I've suggested before, however, it is rather stunning to consider how much money that has to be invested these days in order to maintain a presence in Washington politics: $168 million is certainly not pocket change.

Pharmaceutical companies are currently ramping up their preparations to comply with new regulatatory requirements enacted to fight drug counterfeiting, according to a recent article by Mass High Tech. 

Mass High Tech reported on the new regulatory requirements as follows:

[T]he federal government and nearly half of the states have enacted or proposed legislation to protect patient safety. The most far-reaching mandate is California's electronic pedigree (e-pedigree) law. It requires electronic serialized product pedigrees for all prescription drugs at the item level (i.e., each salable item has a unique identity or serial number) and a secure chain of custody for all transactions involving that drug, starting with the pharmaceutical manufacturer.

Serialized product e-pedigrees enable the tracking and tracing of prescription drugs as they move through the supply chain to prevent counterfeit and diverted drugs from entering and remaining in the legitimate supply chain.

California recently provided the industry with additional time for full compliance, extending the implementation deadline to Jan. 1, 2011.

According to Mass High Tech, compliance with these regulations is a time-consuming and very complex process, which will require that companies comply with the new legislation more than a year prior to the implementation deadline, in order to meet the deadline at all.

The complexities of the implementation process were in fact what prompted the extension of the California deadline, according to a statement issued by Pharmaceutical Research and Manufacturers of America ("PhRMA") Senior Vice President Ken Johnson.  Johnson wrote as follows:

Clearly, more time was needed for effective implementation of the e-pedigree law. And now there's an extension of two years, which allows a longer period for a number of things to happen. For example, the makers of blood products -- such as those that treat hemophilia -- have two additional years to test the effects of radio-frequency identification (RFID) on the treatments. And they have more time to encourage the Food and Drug Administration to provide guidance on how companies should test to determine whether heat generated by the RFID system affects either the safety or effectiveness of blood products.

What's more, researchers will have more time to address the technology compatibility problem that confronts those trying to implement the law. The fact is, the technology exists to track medicines, but we do not have one standard electronic serialization system everyone can use to monitor medications throughout the pharmaceutical supply chain. In addition, there's now more time for state and local government agencies in California to resolve the budget crises they face. Organizations like the California Department of Corrections, state mental hospitals, California State University campus clinics and University of California hospitals must purchase many different expensive technologies to be in compliance with the law. And accomplishing that goal by January 1 would have been a daunting task.

In case you missed the passing of the California legislation, a summary of the text and background to the California legislation has been posted for review. 

Congress is examining backlog issues at the United States Patent and Trademark Office ("USPTO"), according to a report by Peter Zura's 271 patent blog.   The report indicated that Howard Berman, Chairman, Subcommittee on Courts, the Internet, and Intellectual Property recently sent a letter to USPTO Director Jon Dudas asking a number of questions relating to these issues.

Peter Zura's 271 patent blog reported on the highlights of the Berman letter as follows:

• According to the recent GAO report titled "Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog, " the GAO found that the USPTO cannot hire enough patent examiners to reduce patent pendency in the next five years. It seems, however, that this projection is based on estimates provided by the USPTO. . . . Please provide all data related to these "USPTO estimates, " including mathematical models, and underlying statistics and assumptions such as examiner retention and productivity. Under these same assumptions, hypothetically, how many patent examiners would have to be hired in the next five years in order to reduce the patent backlog?
• After release of the above mentioned GAO report, the USPTO issued"a press release on October 4, 2007 that stated the USPTO would"review assumptions the agency uses to establish production goals for patent examiners." Then, before the Subcommittee, Director Dudas confirmed that the USPTO has begun to study patent examiner production goals. Please provide details on the methodology of the study and personnel conducting it. What is the current progress of the study and when can Congress expect the study to be completed? To what extent is the Patent Office Professional Organization and the Patent Public Advisory Committee involved in this study. . . . .
• Examination on Request (or, as the USPTO called it, Deferred Examination) is used in many countries such as Canada and Japan. Under such a system, applications are not examined automatically, as in the U.S., but only upon a specific Request for Examination within a set time period, say 3 years. If no request is filed within that period, the application is deemed abandoned and is never examined. From experience of other patent offices, 10% to 40% of applications are never examined under Examination on Request systems, resulting in substantial workload reduction. This is due to applicants' voluntary abandonment of obsolete applications prior to the Request for Examination deadline. Under current USPTO practice, applications that become obsolete, but receive examination by the USPTO, are the worst investment the USPTO can make because their obsolescence means that the patents are unlikely to fetch any renewal fees.
• Why did the USPTO reject such a method that has the potential to reduce its workload and increase efficiency?

There is no word yet on the USPTO's response to this inquiry.  We will keep you posted of any developments that arise.  To review the full text of the letter, please see attached.

The Senate has unanimously passed the Genetic Information Non-Discrimination Act, which would prohibit genetic discrimination in employment and health insurance coverage decisions, reported the Associated Press.

The Associated Press reported:

The bill, described by Sen. Edward Kennedy as "the first major new civil rights bill of the new century," would bar health insurance companies from using genetic information to set premiums or determine enrollment eligibility. Similarly, employers could not use genetic information in hiring, firing or promotion decisions.

This is not the first time that the Senate has passed genetic non-discrimination legislation: bills were passed unanimously by the Senate in 2003 and 2005, but the House did not act to pass the bills at that time.  The House, however, passed a version of the bill last year. 

The Associated Press reported:

Senate action on [the] legislation has been slowed by Sen. Tom Coburn, R-Okla., who joined some business groups in warning that the bill could encourage a flood of lawsuits.

A compromise worked out earlier this week tightens language to ensure there is a "firewall" between the part dealing with health plans and the section regarding employment, so as to discourage inappropriate claims.

It also makes clear that, while individuals are protected from discrimination based on genetic predisposition, insurance companies still have the right to base coverage and pricing on the actual presence of a disease.

The California Biotech Law Blog will continue to follow this legislation as it is considered by the House.   

The SBIR/STTR Reauthorization Act, H.R. 5819, has passed in the House and is now headed to the Senate; the biotech industry will be pleased to hear that the House has given them exactly what they asked for in this bill, according to Rick Shindell of the SBIR Gateway.

The SBIR Gateway reported on the House's action as follows:

The voting on the amendments was a virtual "lovefest" with the results known ahead of time. There was absolutely no opposition on any amendments that were allowed to be offered. BIO's VCs got everything they wanted and more with Sam Graves' amendment to strike Title II (Venture Capital Investment Standards). Two important amendments were withdrawn (because they stood no chance of passage) and a few simply weren't allowed to be accepted by the rules committee. . . .

Many SBIR advocates believe this is a bad bill that will be severely leveraged by the BIO/VC community. However, some other credible sources who deal in the DoD world think I may be presenting too severe of a worst case scenario.

SBIR Gateway reports that the highlights of the new bill include as follows:

• The set aside remains at 2.5% SBIR and .3% STTR
• 3% of the 2.5% will come off the top for agency administrative funds
• Phase I Awards $300k Phase II Awards $2.2m
• Agencies have the flexibility to award more $$ and consecutive phase IIs as they see fit
• Ability to apply for a phase II award without having received a phase I award
• Shortening of the time to receive the award
• More frequent solicitations and topics (at agency discretion)
• Notification of the right of a debrief
• Establishment of an SBIR advisory board
• Ability to crossover between SBIR and STTR
• Increase in commercialization assistance funding
• New FAST program funded at $10m

In addition, SBIR Gateway reports that the bill will include the following preferences and priorities:

• Areas that have lost major source of employment
• Preference to organizations making significant contributions towards energy efficiency
• Priority to veteran companies
• Special consideration to pressing transportation and infrastructure research activities
• Special consideration for energy related research topics
• Special consideration for rare-disease-related research topics
• Priority to rural areas
• Preference in FAST awards for SBDC applicants that are accredited for technology services  

Thus, it appears that the first round in this reauthorization battle goes to the biotech community.   We will keep you posted as to how the reauthorization battle unfolds in the Senate.

Members of the biotech industry can now breathe a sigh of relief: the patent reform bill has been stalled in the Senate. 

According to Biotech Transfer Week, the Senate reached the current impasse over a section of the bill dealing with the assessment of damages in patent infringement cases.  The concerns were raised by Senator Arlen Specter (R-Pa.).  Biotech Transfer Week reported Senator Specter's remarks as follows:

“The Chairman and I differ on a number of aspects of the proposed patent reform legislation. .. . The principal sticking point is the issue of how to assess damages in patent infringement lawsuits. We thought we had reached an agreement on this matter, but the language continued to shift, so we do not yet have a deal on the package. . . .  I am hopeful that we can reach an agreement, but more work has to be done to get it right."

“Our view is that [we disagree with] those who are saying this is dead, or there is no time to do it now and that they missed that window,” Tom DiLenge, vice president and general counsel for BIO, told BTW this week. “There has always been time to do a consensus patent reform bill – but does the other side want to stick to its guns and get 100 percent of everything they wanted? In that case, I think it could be dead. . . .Or, are they willing to compromise and get a bill that has about 98 percent of what they wanted, and is acceptable to the rest of the patent-holding community. . . .”

"The idea that Senator Specter, or BIO, or anyone would accept really harmful damages language just because some other part of the bill is the way that they want it, is just not accurate,” DiLenge said. “The other side in this debate needs to recognize that they’re not going to be able to get the kind of harmful damages language that they were seeking. Once they recognize that and admit it, we can come to the table and get this bill done fairly quickly.”

The Biotech Industry Organization ("BIO") spent $6.6 Million on lobbying efforts in 2007, reported the Associated Press.

BIO's lobbying efforts last year addressed a range of issues from patent reform to generics to FDA-related issues.  The Associated Press reported as follows:

[BIO's] lobbying efforts went toward cloning issues ahead of the Food and Drug Administration's ruling that cloned meat and milk is safe for consumers. Several members of Congress tried to compel the agency to do more studies before issuing a ruling, but FDA cleared the products for consumption in January. 

The biotech industry also lobbied on legislation to allow the Food and Drug Administration to approve generic copies of biotech drugs. Generic drug companies already market cheaper versions of regular, chemical drugs, but the FDA does not have the authority to approve copies of biotech drugs, which are more complicated.  Biotech makers opposed a bill that would have made generic biotechs medically interchangeable with the originals. The industry also argued generic biotechs should be classified as similar, but not interchangeable.

They also want biotech medicines to be guaranteed at least 12 years on the market before having to compete with generic copies. Generic drug makers say any protection beyond five years is unreasonable. Senate lawmakers attempted to pass a compromise bill last year, but negotiations broke down over the length of exclusivity.

This report raises some interesting questions about how much various industries spend today on their Washington lobbying efforts.  One of the issues that has repeatedly come up in the patent reform debate is how minimal the biotech industry's lobbying efforts are in contrast with the high tech industry.  The argument has been that the proposed patent reform legislation favors the high tech industry, which has traditionally had more of a voice and presence in Washington.  However, as this report makes clear, the biotech industry's expenditures on lobbying--at least BIO's expenditures on behalf of the industry--are not inconsequential.  So, this report begs the question: if biotech's lobbying efforts pale in comparison to high tech's lobbying efforts on Washington, just how much is the high technology industry spending on Washington lobbying?  What kind of lobbying money is considered adequate to have a voice in Washington?

The California Biotech Law Blog wrote a blog posting on March 21st about legislation under consideration which would require doctors to disclose the acceptance of gifts from drug companies and we addressed the issue of whether doctors should have an ethical duty to disclose potential conflicts to patients; however, a column today by Peter Huber in Forbes.com looks at a new angle to this debate: whether the public should really be concerned about doctor bias against drug companies?

The crux of Huber's argument  is that some doctors out there are biased against the drug companies because if drug companies churn out drugs that are too good, doctors will lose business.  Huber writes as follows:

Brilliant doctors often work closely with big drug companies, and they seem to like their corporate partners just fine. Too fine, say their vocal critics--no doctor can have objective views about Lipitor when he takes Pfizer's money to develop or test it. But when the critics are doctors themselves, as they quite often are, keep in mind that there's a deeper conflict in play here that the critics never acknowledge or discuss. By working at the cutting edge of pharmacology in close collaboration with Big Pharma, top-tier doctors are taking over the whole medical show. It's because of their work that so many of their less able colleagues are destined to provide doc-in-a-box services at Wal-Mart, at cut-rate prices prescribed by Big Insurance or Big Government. . . .

In the old way of looking at things, drugs are just extensions of the physician's wise hands, like stethoscopes and sutures. But when Big Pharma's products get good enough, they displace a whole lot of hands-on doctoring. A pregnancy test used to be an office visit and a lab analysis; now it's a remarkably smart dipstick sold over the counter. Diagnosis used to be almost all doctor; now it's almost all lab--and the lab technicians rely on higher-caliber dipsticks, assays and reagents developed and mass-produced by the same teams of top-tier doctors, research hospitals and big drug companies.

When drugs get good enough, they displace hours of ineffectual (but remunerative) human monitoring and palliative care. Drugs displace doctors, nurses and hospital beds because they really work and because they often work long before bad chemistry morphs into clots, plaques, lumps and other symptoms that require scalpels and beds. In the first half of the 20th century almost all medically supplied gains in health and life expectancy came from germ-killing vaccines and antibiotics. All the important gains since have come from arrays of drugs that target clogged arteries, strokes, cancer and other diseases rooted in our own human chemistry. Human eyes can't see and human hands can't handle most of the things that make us sick--bacteria, viruses, white blood cells, antibodies, proteins, enzymes, fats and genes.

At first glance the argument seems a bit ludicrous.  Isn't there a doctor shortage in many places?  Aren't we having to import doctors from overseas? Isn't there talk about the fact that the baby boomers growing older means we need more doctors than medical schools are already churning out?  Why would doctors be concerned about losing work? Or at least work that is the most profitable?

But on further consideration, you have to admit that there may just  be a glimmer of truth in the argument.  Coming from a medical family myself, I know that the real money for a physician is in specialization--becoming board certified in a particular field.  This is not so different than in the legal field.  You specialize to become an expert on a particular field, since experts can stand out in the profession and potentially make more money. 

In the medical profession, patients go to specialists when they have an illness that seems to need the attention of an expert in that field.  However, if a miracle drug exists that eradicates the illness, would that patient ever need to go to the specialist?  The patient might never get past the primary care physician.  Or, if the the patient did go to the specialist, at the very least the physician wouldn't see the patient very often. The patient would take the drug and not really need a specialist unless the drug stopped working, which in the case of the miracle drug perhaps wouldn't happen.  Perhaps the specialty wouldn't really be that profitable any more.

Sounds crazy?  Maybe.  But it does happen in the legal profession.  Specialties become unprofitable all the time.  Lawyers get asked to leave law firms, or they just gradually realize that they need to switch specialties if they intend to have a profitable practice.  Isn't it just possible that the same could happen to specialist physicians?

I think the answer is yes: it can and probably will happen to some physician specialties.  Perhaps not as quickly as a legal specialty becomes unprofitable, but just like certain jobs are getting phased out due to technological advances, the same probably will happen to certain physician specialties over time as biotechnological advances make certain specialties unprofitable.  Look what is happening in the medical profession: the same consolidation that has happened in the legal industry is increasingly happening among medical practices.  With consolidation comes the reality that practices and specialties will be viewed through the eyes of the business on their overall profitability to that business.

So, back to the argument--is it just possible that there is a bias by some doctors against pharma due to a fear that  pharma may be doing its job too well?  Perhaps. I've certainly seen things written by lawyers worrying that technology will cause us to be able to do our job too efficiently.  Why wouldn't doctors have similar worries?  Can't those worries cause a conflict?  Of course, they could.  I would be concerned if the practice I had built was looking like it might not have a future--or at least a very profitable future. That's only natural. 

How concerned should we the public really be about this?

Well, I think we should keep it all in perspective.

In the end, technological advances benefit society and our professions at large.  Doctors, like lawyers and other professionals, will inevitably develop new expertise as the need for various specialities changes with those advances--we all have to adapt in this world to survive.  So, any damage to a practice that might be caused by those advances will likely be temporary.  Savvy doctors will develop new expertise just like savvy lawyers and other professionals have to do to change with the times.  In my opinion, the majority of doctors will recognize this reality and not let fear get the better of them. 

Nevertheless, Huber makes some interesting points, which are definitely worth considering in parallel as Congress considers legislating that doctors disclose potential conflicts with drug companies.  Should we perhaps be taking another logical step and asking if Congress should really be legislating on doctor conflicts?  Or should we perhaps consider other possible doctor conflicts in tandem to what Congress has been proposing?   Is focusing in on doctor conflicts arising from receiving gifts from drug companies too narrow a focus for the legislation?  I think that these are all valid questions to consider as Congress moves forward and addresses this issue.

Following up on our February 4th report on the debate regarding the future of the SBIR Program,  the House Committee on Small Business held a hearing on March 13th to consider changes to modernize the program, according to a press release issued by the House Committee on Small Business.  SBA Administrator Steven Preston was subpoenaed to appear before the Committee.

The chief items up for consideration by the Committee were as follows: (i) increasing size limits on SBIR grants during the first two phases of the program, potentially doubling the size of the awards, and (ii) changing the definition of small business to include businesses majority-owned by venture capital firms, reported Kent Hoover for the Dallas Business Journal. 

Hoover reported on the second topic of consideration:

The committee also wants to change the SBA's rules defining what types of companies qualify as a small business in order to allow small companies that are majority-owned by venture capital firms to receive SBIR awards.

These types of companies routinely received SBIR awards until 2003, when the SBA ruled that venture capital firms don't qualify as individuals under the agency's eligibility rules for the SBIR program. . .  . Many biotech companies contend the ruling ignores the realities of their industry, where small businesses must get outside capital in order to research and develop new drugs and other treatments. The Biotechnology Industry Organization and the National Venture Capital Association have been lobbying Congress to overturn the SBA's ruling. . . . .

The House overwhelming passed legislation last September to allow small companies majority-owned by VC firms to be eligible for SBIR awards as long as no single VC owned more than 50 percent. The Senate didn't act on the bill, so the House is taking another stab at it this year.

BioOptics World ran an article this month on the SBA reauthorization battle.  I was actually interviewed for the article, but my interview did not make it into the published article.  Anyway, Author Susan Reiss reported as follows on the status of SBA reauthorization:

One Hill observer says that the venture-capital issue will boil down to whether Congress wants to emphasize the “S” or the “B” in SBIR. At this point the House and Senate don’t agree on whether they should change the program to address the venture-capital issue. A bill introduced last fall by John Kerry (D-Mass.), chairman of the Senate Committee on Small Business and Entrepreneurship, and ranking member Olympia Snowe (R-Maine) that tried to bridge a middle ground passed in the Senate but failed in the House. An alternative bill was approved in the House, but failed in the Senate.

This year the Senate has yet to hold hearings on SBIR reauthorization, although an aide to Kerry on the Small Business Committee says Kerry is committed to reauthorizing the program. . . .

Reiss further noted:

To lessen impact of the venture-capital issue, some observers have suggested creating a separate program for innovation development at NIH. “NIH is concerned about the path to commercialization. Instead of trying to fit a square peg in a round hole, let’s look at a commercialization program,” suggests James Morrison, a senior advisor for the Small Business Technology Council.

But the chance that someone will devise an entirely new program that addresses the needs of NIH is unlikely. At this point it’s unclear where on the spectrum the House and Senate will meet to reauthorize SBIR, but as Brown notes, “it would be devastating to have a gap in the program.”

Video of the hearing and and copies of written testimony by witnesses are available for review at the Small Business Committee website.

I am interested to hear any comments on the current proposal to the House Committee.  It is a well-established fact that BIO strongly supports the idea of changing the SBIR rules to allow venture-backed companies to recieve SBIR grants.   But the Dallas Business Journal article suggests that some biotech companies may actually oppose BIO's position.  Is there any truth to this?  If you oppose the changing the rules to allow venture-backed companies to participate, I would like to hear your argument.  Please write us and let us know your position. 

Also, what about the idea of developing a new program at NIH?  Is this a workable or even advisable solution?  Why or why not?  Any comments we receive on this issue will be shared with blog readers, so we welcome the feedback.

The Pharma Marketing Blog ran an interesting column today on the new proposed legislation, which would require doctors to disclose gifts received from drug companies. 

Introduced by Rep. Peter DeFazio (D-OR) and Ways and Means Health Subcommittee Chairman Pete Stark (D- CA), the new legislation is called The Physician Payment Sunshine Act  and is a companion bill to S. 2029, which was introduced by Senators Chuck Grassly (R-IA) and Herb Kohl (D-WI).  According the the press release issued by U.S. Congressman Peter DeFazio, the purpose of the bill is as follows:

The legislation builds on existing laws in Minnesota, Vermont, Maine and West Virginia to require prescription and medical device manufacturers to publicly report any gifts with a value of $25 dollars or more provided to doctors in connection with their marketing activities.  Under the new legislation, this information would be made widely available to the public. . . ."Americans are being gouged by pharmaceutical companies that spend more on marketing than they do research and development." DeFazio said.  "They enjoy generous subsidies from the government, but have no accountability when it comes to the billions of dollars they spend promoting high priced drugs.  I am proud to introduce this legislation which would shine a light on the marketing practices of drug companies and give patients the information they need to make an informed decision about their healthcare."

The question, of course, being debated is whether it is a good idea to enact The Physician Payment Sunshine Act.  The Pharma Marketing Blog argues that this legislation goes too far in attempting to curb the potential for conflicts of interest, stating:

This "sunshine" bill also has a few dark clouds associated with it. I have to agree with Bob Ehrlich of DTC Perspectives that "this bill seems overly onerous" and "is meant to discourage payments to doctors by outing them and the drug company on a public site". . . .
Do I agree with this? I hate to sound like a Clinton, but it all depends on what "large" means. Is "large" more than $100? This is the cutoff amount specified in PhRMA's voluntary guidelines on gifts to physicians. Usually, these types of bills attempt to codify such voluntary guidelines and I'm not sure where the $25 limit came from other than the idea of setting the bar so low that it would put the pharma "tchochke" industry out of business.

What is our view at the California Biotech Law Blog on the proposed legislation?  In my opinion, there is a definitely a need for legislation to regulate potential conflicts of interest in the medical profession.  Lawyers certainly receive close scrutiny on potential conflicts of interest, and I see no reason why physicians should not receive the same treatment.  I certainly would think twice about taking any drug recommended by my physician if I knew that the physician making the recommendation had received compensation of any nature from the drug company, and as a lawyer, I would expect any doctor to disclose such an association.  I'm frankly surprised that rules are not already in effect to require this type of dislosure.

As far as the issue of whether the $25 limit is reasonable, this does sseem a bit ridiculous and arbitrary.  Is receiving $25 really a conflict of interest, when it is only a fraction of the doctor's total earnings? The standard on legal malpractice applications for weeding out potential conflicts of interest is typically ownership of more than 5% of the company at issue.   Perhaps a more reasonable conflict of interest standard would be 5% of the doctor's total earnings in the year.  Or even 3% of the doctor's total earnings. But $25? 

What are your thoughts on the new legislation?  Please let us know your thoughts on the issue and we will share them with our readers.

Baybionotes provided a short update this month regarding the implementation of recent legislation expanding the obligations of clinical trial sponsors to submit information regarding their trials to the federal data bank. 

Author Robert Church of Hogan & Hartson LLP discussed the legislation as follows:

Title VIII of the Food and Drug Administration Amendments Act of 2007 expands the federal registry in several important ways. First, it is no longer limited to trials of drugs intended to treat serious or life-threatening diseases, but rather requires registration of all clinical trials other than Phase I and requires significantly more content. As of December 26, new data points for initial registration became required, even reaching back to include some clinical investigations that began before the law was passed.

The NIH has also been directed to expand ClinicalTrials.gov to include trial results. By this fall, sponsors will have to submit results information about approved products. Soon thereafter, adverse event data will be required on the site as well. Still more, the law requires the promulgation of regulations by September 2010, further expanding the results database “to provide more complete results information and to enhance patient access to and understanding of the results of clinical trials.”

What are the penalties for failure to comply with the new legislation?  According to Church, the penalities are as follows:

Not only will failure to submit the required information in a timely fashion be posted on ClinicalTrials.gov, but sponsors may also face civil fines up to $10,000 for all violations adjudicated in a single proceeding. If noncompliance continues thirty days after notice, the fine may be increased $10,000 each day until the matter is resolved.

A new bill introduced this week would reduce the compliance burdens faced by biotech companies under Sarbanes-Oxley.

IndustryWeek reported on the bill as follows:

A provision in the HOME Act directs the Securities and Exchange Commission to provide a threshold definition for smaller public companies thereby providing an objective standard as to who is eligible for a scaled audit under the newly adopted Auditing Standard No. 5 (AS-5) and Section 404 of the Sarbanes-Oxley Act of 2003. . . .

The bill enables companies without federal tax liability to increase their capital investments by claiming some portion of their unused R&D and Alternative Minimum Tax (AMT) credits. Under this provision, companies would elect to accelerate R&D and AMT credits in lieu of bonus depreciation. Allowing companies to accelerate the recovery of some portion of unused R&D and AMT credits through new capital investments will help maintain economic growth by encouraging business investments and job creation. The bill also provides for a two-year R&D tax credit extension which expired at the end of 2007

The Biotechnology Industry Organization ("BIO") issued a press release praising the bill, in which BIO President and CEO Jim Greenwood stated as follows:

"Biotechnology researchers are creating innovative technologies that provide hope to patients worldwide.  But most biotech companies are small start-ups, years away from having products on the market.  So with little to no product revenue, and an undefined definition of a smaller public company, these companies have been absorbing outsized audit and compliance costs – revenue that could otherwise go to developing life-saving therapies."

To check out the full text of the BIO press release, click here.

Following up on our posting yesterday regarding the Boston Globe's critique of stem cell research in California, Governor Schwarzenegger made some remarks yesterday on California's experiences with stem cell research in the context of a short speech on the state of the California biotech industry generally, and he presented a very different perspective on the issue.     Unlike the Boston Globe which viewed California's experiences as providing a "lesson for Massachusetts," Governor Schwarzenegger applauded California for providing a shining example for the rest of the country to follow and for investing in the state's future.  Clearly, the Governor has a very different view of the state's stem cell research program, and perceives it already as being a success.  While there is no doubt that as the Governor, he may at times view the program through rose-colored glasses, as a member of the biotech community, I think many of us in the industry and in the state generally share that same vision and perspective on our state's stem cell accomplishments. 

To view the video of the Governor's remarks, click here.

Bioworld Today is reporting that the FDA and Congress will be joining forces to develop follow-on biologics legislation. 

According to Bioworld Today, the Bush Administration indicated in the 2009 federal budget package released last week that "it would seek regulatory authority for the FDA to approve follow-on biologics, also called biosimilars or biogenerics, which would be financed through user fees. Currently, no such approval pathway exists for follow-on biologics." Both the House and Senate had introduced follow-on biologics legislation last year, and planned to move the legislation forward in 2008. 

What is the FDA's current vision for the legislation?

Bioworld Today reported:

In a document titled "Other Legislative Items" that is part of the White House fiscal year 2009 budget, the administration said the follow-on biologic legislative proposal would include a "predictable and public guidance process for licensing follow-on protein products" under the Public Health Service Act.

"The proposal will prescribe the type of data required for FDA to review applications for follow-on protein products and will require labeling for the safety concerns related to the interchangeability of these products," the Bush administration said.

The proposal also will include "adequate intellectual property protections to preserve continued robust research into new and innovative life-saving medications," the document stated.

The news was viewed as a promising development  by both Sen. Charles Shumer (D-N.Y.) and Department of Health and Human Services Secretary Michael O. Leavitt, both of which were interviewed by Bioworld Today.  Similarly, Jim Greenwood, CEO of the BIO industry organization indicated his support for the FDA approach, as well as Kathleen Jaeger, CEO of the Generic Pharmaceutical Association (GPhA), who also expressed her approval for the development.  Having said this, the Bio Job Blog took issue with the FDA's decision, stating:

I don’t think that Congress’s involvement is a good idea given the political wrangling, deal-making and concessions that must be made in order to get legislation passed. 

Is the Bio Job Blog right to express concern about how this new joint effort will pan out?

Well, there is no doubt that the legislative process is time-consuming and is inevitably intertwined with politics and political compromises.  However, it is also true that a collaborative effort can greatly speed up the process, and having the administration on board means that any agreed-upon legislation is unlikely to end up with the words "vetoed" stamped on its front.  I would have to say that on the whole the development is a positive one, and suggests that we are one step closer to voting into law follow-on biologics legislation, which even Bio Job Blog concedes is likely, stating:

It looks as though follow-on biologics may become a reality in the US. . .  . I don’t think Americans will see follow-on biologics on the market before 2010 or 2011. That said, it gives us Americans something to look forward to!

The California Stem Cell Report reported on a story run in today's Boston Globe, in which the paper characterized the "$3 billion stem cell research effort in the Golden State" as a "lesson" and a "reality check" for Massachusetts.

According to the Boston Globe:

The slow rate of progress serves as a reality check for Massachusetts and other states that have followed California's lead by placing big bets on medical research. Texas voters approved a $3 billion commitment to cancer research in November. New York has set aside $600 million for stem cell work. And later this month, Massachusetts lawmakers are expected to vote on Governor Deval Patrick's $1 billion life sciences initiative, which is primarily targeted for research.

The Boston Globe next compares and contrasts the proposed Massachusetts bill with the California initiative:

Patrick's proposal differs in some key ways from California's. For instance, it sets aside $250 million in tax incentives to encourage companies to expand, something that could yield immediate results. It also allocates money for workforce training. And unlike California, the Massachusetts research funding is not restricted to stem cell research. . . .

[A]s in other states, the bulk of the bill is related to life sciences research, which typically takes time to generate results. Specifically, $250 million is reserved for grants for research, fellowships, or workforce training. Another $500 million would support public research and education facilities, including a stem cell bank to be housed at the University of Massachusetts Medical School in Worcester and a research center focused on RNA interference, an area pioneered by UMass researcher Craig Mello.

Unlike the Massachusetts proposal, California's stem cell plan didn't come from politicians. It was the brainchild of Robert Klein, a well-connected California lawyer and low-income housing developer. Klein said he got involved as a patient advocate: His son has diabetes, and his mother has Alzheimer's disease. When federal officials decided to limit funding for embryonic research, Klein thought California could help fill the gap. Embryonic stem cell research holds immense promise because stem cells can potentially morph into any other kind of cell, making it possible for them to replace other cells that have been damaged.  Instead of going through the Legislature, Klein organized a ballot initiative, taking the proposal directly to voters. . . .  In the end, 59 percent of voters approved the measure.

The Boston Globe article goes on to describe the controversies surrounding the California initiative and to explain that the the initiative to date has had little--if any--real impact. 

The California Stem Cell Report responded to the Boston Globe article, stating:

The Boston piece downplayed the impact of CIRM's efforts, perhaps a reflection of a parochial East Coast perspective. Pumping money into stem cell research at the rate of $20,000-plus an hour, however, is no small achievement, even though it does not measure up to the perceptions created by the campaign rhetoric surrounding Prop. 71 more than three years ago.

There is little doubt that the Boston Globe's perspective is a cautionary one on the value of investing public funds into stem cell research.  At the very least the Boston Globe has emphasized the fact that the value of the investment will be realized in the long-term rather than the short-term, which is certainly a fair point to make.  At worst, the Boston Globe may in fact be as the California Stem Cell Report stated exhibiting a certain degree of  "East Coast parochialism."

In truth, I think that this article is a reflection of all of the above.  As a relocated Southerner from the real South--not Southern California--I have to say that it was no great surprise that California would be the pioneer in this area.  Not only is the state very progressive in a variety of ways and historically very supportive of life sciences, but it is also more inclined than many states to allocate taxpayer dollars to fund politically-correct projects.  Is this at heart a reflection of the fundamental difference between East Coast and West Coast perspectives?  Of course it is.  But which view is correct?  It depends.  Utlimately, isn't the measure of success going to be what the CIRM does for California and what kind of results in the field the CIRM achieves? Thus, I would argue that everyone is correct here.

Having said this, did anyone honestly think that the CIRM would have achieved any tangible results by now? Does anyone really need cautionary words of wisdom on how rapidly stem cell  research results are likely to be achieved?  I suspect that even most elementary school students would have expected it to take a while for the CIRM to achieve any measurable results.  Is it possible that the Boston Globe is truly concerned that its readers will get ahead of themselves, expecting the results to be literally evident overnight?  I somehow doubt it. 

Given the impending expiration of the SBIR Program this October, 2008, the future of the SBIR Program is once again being re-visited.

As The California Biotech Law Blog reported last October, the biotech industry has been actively lobbying for the Small Business Administration ("SBA") to reverse its decision of January, 2001 to make venture-backed companies ineligible for SBIR grants.  This issue, by far, has received the most press in recent years, and of course, is the issue receiving the most attention as the expiration date nears.  The rule excludes many if not most biotech companies from being able to take advantage of SBIR funding, which of course is a serious concern to the industry as a whole. 

Interestingly enough, even the more established pharmaceutical industry has been very vocal on this issue.  While at first glance, this concern seems a bit misplaced, on further consideration, it makes perfect sense that pharma would support biotech's efforts to change the SBA's policy.  It is a well-known fact that pharma is looking to biotech companies to supply new products to fill its drug pipeline, which is increasingly becoming depleted.  The more money these companies can access at the early stages, the more likely it will be that enough biotech companies will survive to fill that pharma need.

So, while the issue of excluding venture-backed companies from SBIR grants is taking center stage to the renewal debate, I would argue that Congress should look beyond that stage at some more fundamental problems with the program as it debates SBIR's future.

What are those problems?

First and foremost, there has never been a good clarification of the SBIR Program's priorities. 

The SBIR Program falls under the umbrella of the SBA, which according to its website, has a mission based on the following principles:

Health Advocacy and Medical Specialty Groups Submitted a letter to Congress today arguing for Congress to rethink its position on SBIR eligibility in its upcoming consideration of the reauthorization of the Small Business Innovation Research ("SBIR") program.

As we previously reported in Congress to Consider SBIR Funding Increase , the SBIR program is set to expire in 2008, and Congress is currently considering legislation that would increase the amount that federal agencies with large research and development budgets would have to set aside for SBIR funding. 

The letter sent to Congress today articulated the position of biotech companies that the SBIR eligibility rules should be amended to reinstate funding for majority venture capital-backed companies:

After twenty years of participating in the program, the Small Business Administration (SBA) ruled in 2003 that small companies that are majority venture capital-backed could no longer apply for grants regardless of how few employees the companies have.  Because of the unique capital needs of biotechnology companies, most are now ineligible to be compete for grants.  As a result of the reinterpretation, the SBIR applicant pool is shrinking at the National Institutes of Health ("NIH)," and work on live-saving and life-enhancing technology is being postponed. . . .

Small biotechnology companies take basic scientific discoveries,  many of which originate from universities, and conduct further research and development to turn discoveries into commerically available treatments and cures. This collaborative relationship is one of the ways universities and academic researchers serve the public by contributing to the development of new treatments and cures and supporting the local economy.  Small biotechnology companies require significant venture capital investment, and unfortunately the SBA reinterpretation of the eligibility rules has hampered the continued research and development into biotechnology products, thereby delaying the delivery of future treatments to patients.

Fifty-two organizations signed the letter to Congress, including the Christopher & Dana Reeve Foundation, the Michael J. Fox Foundation for Parkison's Research, and the Leukemia & Lymphoma Society.

Biogenerics legislation will likely be tabled until 2008, reported the Kaiser Daily Health Policy Report. 

According to the Kaiser Daily Health Policy Report:

Rep. Henry Waxman (D-Calif.) in a speech before the Generic Pharmaceutical Association on Thursday said legislation (HR 1038) that would allow FDA to approve generic versions of biotechnology drugs is unlikely to reach the House floor this year. . . .

Waxman said that although "enormous strides" have been made since he introduced the measure in February, scheduling issues would prevent the bill from being included in House legislation (HR 2900) that would overhaul FDA and reauthorize prescription drug user fees. Waxman tried to attach the generic biotech measure to the FDA overhaul bill in July but was unsuccessful.

The biotech industry can breathe a sigh of relief.  With the battle over patent reform legislation looming ahead this fall, biogenerics legislation is one fight that the industry will not have to take on this year.

The House passed its Patent Reform Bill on Friday with a 220-175 vote, reported the San Jose Mercury News.

According to the Mercury News, the passage of the Bill was in part due to a push by Democratic leaders, including Speaker Nancy Pelosi.  Sixty Republicans also supported the Bill, including Republicans in districts with large concentrations of high tech companies such as California, Virginia, and Texas.  The Senate plans to take up a similar bill this fall.

The passage of this Bill in the House is viewed as a victory for the high technology industry, but that victory comes at the expense of the biotech industry, which has not supported patent reform.

Ephraim Schwartz of InfoWorld reported on the differing views of the two industries last week:

One of the significant changes in the [Patent Reform] Act addresses the apportionment of damages clause. . . .

Because the high tech industry is built on thousands of small patents while the pharmaceutical industry typically would have one or two patents that covers years of research, pharmaceutical companies would like to see awards kept high to discourage patent infringement while high tech companies hope that by limiting damages it will also limit the huge number of so-called nuisance suits these large companies receive year in and year out.

Jim Greenwood, the President and CEO of the Biotechnology Industry Organzation ("BIO"), issued a press release on behalf of the organization expressing disappointment with the House vote.  The text of that press release stated as follows:

BIO appreciates the continued efforts by the House to improve the Patent Reform Act, but unfortunately cannot support the legislation passed today as it threatens continued biotechnological innovation.  We welcome improvements to the U.S. patent system, particularly those that increase patent quality, increase public participation, and provide additional resources to the Patent and Trademark Office (PTO).  However, the legislation that passed the House today and the legislation currently pending in the Senate do far more harm than good to our nation’s patent system.

While we are disappointed that the legislation passed the House, we were heartened that it did so narrowly and that there was strong bipartisan opposition to the bill.  This opposition demonstrates the serious concern of varied stakeholders -- across many industries, research institutions and other interests -- with the bill and the need for a more consensus-oriented approach to patent law reform.We look forward to working with the Senate to improve upon this legislation, particularly with respect to provisions relating to damages, inequitable conduct reform, post-grant review proceedings and PTO rulemaking authority.”

There is no word yet as to the official reactions to the House vote by our California biotech industry organizations, BIOCOM and Bay Bio, but their reactions are likely to be very similar to those of their national counterpart.

What will happen with patent reform when the Senate takes up its bill this fall?  We are likely heading for some heated debate.   The California Biotech Law Blog will keep you posted on the developments.

Congress is set to consider an increase to SBIR funding, according to a recent report by Mass High Tech: The Journal of New England Technology.

Sen. Evan Bayh, D-Ind., introduced the legislation, which would increase from 2.5 to 5% by 2013 the amount that federal agencies with large research and development budgets would have to set aside for SBIR funding.

Mass High Tech: The Journal of New England Technology reported on the significance of the SBIR program as follows:

The SBIR program -- which doled out $1.9 billion nationwide in 2005 -- is a major source of federal funding for early-stage technology development in the United States. The grants are used to explore the feasibility of technologies sought by government agencies, including the U.S. Department of Energy and the U.S. Department of Defense.

Supporters of the SBIR budget increase include biotechnology executives who argue that the funding fills the gap left by declining venture capital investment in the early-stage firms.

Of course, the report points out that the debate on the legislation will likely focus on the role of venture capital firms, since companies majority-owned by large venture-capital backed firms do not qualify for SBIR awards.

The SBIR program is currently set to expire in 2008.

The Food and Drug Administration ("FDA") is exercising new caution in approving drugs in the wake of the Merck Vioxx scandal, according to an Associated Press Report published on MSNBC.com.

The Associated Press Report stated as follows: 

The agency has approved 61 percent of drug applications through mid-August, down from 73 percent in the same period last year, according to BioMedTracker, a biotech and pharmaceutical research service. . . .

James Kumpel at Friedman, Billings, Ramsey & Co. just published a report showing FDA approvals of "new molecular entities" — drugs made from new chemical compounds rather then just twists on existing drugs — so far this year are at their lowest level in at least a decade. Only seven were approved through the end of July, versus an average of 12 over the first seven months of each year since 1998.

What are some of the specific examples cited by the article of the FDA's caution?

• Rejection of Merck's Arcoxia, a successor to Vioxx;
• Asking for more time to review its approved migraine drug Frova for a new use, preventing menstrual migraines;
• Rejecting or delaying for approval Novartis' diabetes drug Galvus, Sanofi-Aventis' weight-loss drug Zimulti, and a higher dose of GlaxoSmithKline's Advair Diskus for bronchitis and emphysema symptoms; and
• Rejecting Wyeth's experimental schizophrenia drug bifeprunox and Wyeth's Pristiq, which would have been the first nonhormonal drug for menopause symptoms.

It was almost inevitable that the FDA would tighten up its practices and exercise more caution in approving drugs following all the bad publicity over the Vioxx scandal.  In some ways, this was perhaps warranted.  However, the question now is: are they taking caution too far?  Are they delaying good medicines from going to market that could be saving lives, just to be overly cautious? Only time will tell.  I am sure many in the biotech industry will be closely watching.

The San Francisco Chronicle ran an interesting article last week on the steps that the biotech industry is taking to protect itself against the threat of generic copies, as patents run out and the threat of biogenerics legislation looms ahead.

The Chronicle reported on the issue as follows:

Whether many biotech companies will be able to beat the generic threat through innovation is an open question. But many will try. . . .

Traditional pharmaceutical companies, whose pills and tablets have been vulnerable to generic competition since 1984, have struggled to roll out significantly improved medicines before patents expired. Revenues for drugs such as the antidepressant Zoloft and the sleeping pill Ambien are plunging as generic sales rise.

"It remains to be seen if the same thing will happen in biotech," Citigroup analyst Yaron Werber said. Some of the signs for biotech are favorable. "The industry continues to be a leader in innovation," he said. That capacity for innovation is a significant added business risk for generic manufacturers who venture into the biotech realm, Werber said.

 So what is the industry doing to prepare?

According to the Chronicle, Genentech is putting brand-names of its drugs on the market to compete with the drugs that are about to lose protection, and is also putting next-generation versions of its own drugs on the market.

In contrast, the Chronicle reported that other companies are racing to develop improved generic versions of the brand name drug.  The Chronicle stated as follows:

Two Bay Area companies, Affymax Inc. of Palo Alto and FibroGen Inc. of South San Francisco, are among the manufacturers working on next-generation drugs they hope will capture market share from Epogen and similar branded drugs. Affymax's experimental compound Hematide requires less-frequent dosing. Theoretically, it could help patients avoid a very rare side effect associated with Epogen-like drugs.

All in all, the Chronicle put a positive spin on the issue, emphasizing that the industry was not concerned, arguing that the threat of biogenerics and the impending loss of patent protection just encouraged the industry to move forward with the development of more innovations.  

Is this media spin or an accurate reflection of the mood of the industry?  My guess is that it is a little of both.  Smart industry players have to think ahead on how they will survive if biogenerics legislation becomes a reality, but one cannot help but question whether they are really as unconcerned as the Chronicle suggests. 

Rebecca Zacks in XConomy provided an excellent overview of a blogosphere controversy that erupted last week over biogenerics legislation, in response to an article run by the Wall Street Journal on Genzyme's recent difficulties in manufacturing the drug Myozyme at a second plant.

Zacks provided some background to the issue:

Myozyme, approved by the FDA last year for the treatment of an inherited muscle disorder called Pompe disease, could be a big source of revenue for Genzyme—the drug can cost more than $300,000 per year for an adult patient, according to the Journal article. But Genzyme has been unable to scale up production of the drug because the FDA has so far declined to approve a Boston plant meant to be its main source. While the company waits for that approval, it is providing some U.S. patients with free doses from a different plant in Framingham, MA—the one that produced the drug for the clinical trials—on an experimental basis. (The Framingham product is already approved for sale in other countries, but not the U.S.)

What’s stalling approval of the new factory, according the article, is a chemical difference between the Myozyme produced in Framingham and that produced in Boston.

Zack cited Wall Street Journal's David Armstrong, who followed up on the Journal's article with the following explanation:

Genzyme is having trouble persuading the FDA to sign off on Myozyme made in big batches. The agency wants to be sure the drug produced in large tanks is the same as the stuff Genzyme made successfully on a smaller scale.

Making biologics is complicated work, and that’s one reason the biotech industry has voiced caution about legislation to allow generic versions of the medicines.

In the case of Myozyme, billions of cells from hamster ovaries growing in large stainless steel tanks produce the enzyme Pompe patients lack. The fact that Genzyme, which has loads of biotech experience, is having such difficulty ramping up production of its own drug heightens worries about the ability of generic manufacturers to accurately copy brand-name biotech drugs.

Even small differences in these drugs could affect patients. Myozyme made in the big tanks contains less of a key carbohydrate that is believed to help certain muscle cells absorb the drug. Less absorption could reduce the drug’s effectiveness.

However, Zacks acknowledged that not all the bloggers give any real credence to the biotech's industry's position or to the argument that Myozeme should be a case study for why biogenerics legislation is a bad idea, citing Venture Beat's David Hamilton, who had his own take on the controversy, arguing that the Wall Street Journal "missed a much more important point about biogenerics: [t]he double standard that the biotech industry holds" on determining the equivalence of different batches of drugs.  Hamilton wrote as follows:

The first issue here is that there’s nothing new about biotechs finding that new production batches of a complicated protein differ in certain ways from older batches. . . . Sometimes these differences are serious; more often, they’re not. . . .

The second issue — and those of you who’ve followed these debates can probably see where I’m going — is that the biotech industry wants to have it both ways when it comes to the “complicated work” of making biologics. Where biogenerics are concerned, the industry insists that copycat versions of biotech drugs must undergo those expensive and lengthy clinical trials in the interests of “patient safety.” When it comes to their own drugs, however, biotech companies are perfectly willing to rely on a battery of simpler tests to ensure that a new production batch is equivalent to an old one, and only run clinical trials as a last resort (and when forced to by the FDA).

All of which suggests that it would probably suffice to subject any would-be copycat drug to the same set of tests that biotech manufacturers themselves must meet for a new production facility. If it passes, it’s approved. If not, then it’s time to consider clinical trials. In fact, this is pretty much the “case-by-case” strategy adopted by the House and Senate biogenerics bills — ones that I’m pretty sure the Biotechnology Industry Organization opposed. In any event, it doesn’t seem too much to ask that journalists covering these debates realize that the case against biogenerics is a lot weaker than the industry would like us to think.

All in all, Zacks effectively captured a very interesting blogosphere debate on yet another aspect of the biogenerics controversy.  As you know if you follow this blog, I have indicated repeatedly in prior blogposts my view that biogenerics legislation is going to have a negative impact on the biotech industry.  I think I would agree with Venture Beat that this is the principal problem with biogenerics legislation, and that the argument that biogenerics legislation will somehow lead to dangerous copies of drugs being on the market is a fairly weak attempt at scaring the public and/or legislators into voting against such legislation.  There is already a mechanism in place to regulate drugs on the market--the FDA regulatory powers.  The much larger issue is what biogenerics legislation will do to discourage biotech innovations that should be a concern to all of us out there.  We all want to be able to afford to buy the drugs we need, but at the same time, we also want access to medications that will make us well when we come down with a horrible illness.  We should not lose sight that without a profit incentive to developing those medications, they won't be available when we need them.

In his blog Secondhand Smoke, J. Wesley Smith makes an interesting argument that California's stem cell priorities have been misplaced.  Wesley points to an article in today's San Francisco Chronicle as evidence for his argument.  The Chronicle article is a human  interest story on State Senator Carole Migden's push for a state system to collect and store umbilical cord blood.

J. Wesley Smith writes as follows:

This story illustrates how politics has twisted the proper pursuit of regenerative medicine in California. During the last six years or so, the legislature went GA-GA over ESCR and human cloning. It passed a state law explicitly permitting human cloning research. And then, under a $35 million propaganda barrage, state voters agreed to an initiative (Proposition 71) that created a constitutional amendment to permit human cloning research and to fund SCNT and ESCR to the tune of $3 billion over ten years using borrowed money--meaning the actual cost will be about $7 billion. And all to pursue utterly unproven and ethically contentious approaches to regenerative medicine--and to supposedly "defy Bush," even though Bush has done nothing to prevent state jurisdictions from funding whatever they want.

And yet, the legislature is only now getting around to creating an umbilical cord blood banking policy

Smith certainly makes a strong argument that California's priorities have been misplaced.  The question for those of us in California: is he right? 

Certainly, there is evidence that State taxpayers' decision to fund stem cell research was a purely political one.  It is no secret that President Bush will not go down in the record books as the most adored President in this state.  One can absolutely make the argument that the decision to fund stem cell research was in part a reaction to the President's repeated opposition for stem cell legislation, particularly since stem cell research is such a popular issue in this state.

Of course, a counter-argument could also be made that this State's economy will be supported by the investment into stem cell research, since the investment will go largely toward hiring people to conduct the studies.  Many jobs will likely be created by the investment, which will trickle down to the economy at large. 

However, one cannot help but wonder if the money couldn't have been better spent elsewhere, even if you are a supporter of the biotech industry and of the concept of the research generally.  Our schools, health care, keeping drugs off the street, illegal immigration, crime, overcrowded prisons, and terrorism are just some of the many issues facing this state that could have also been better funded with the same money.  Did we as taxpayers make a good decision when we voted to use the funds instead on stem cell research? 

It's a thought-provoking question that all Californians should  consider. 

The International Herald Tribune ran an interesting article last week on the clash between biotech and high tech over patent reform.

The International Herald Tribune reported:

Both industries depend on patented inventions, but high-technology firms have been pushing for changes to lower the risk of expensive patent-infringement lawsuits. And much of what they want is reflected in a bill making its way through Congress.

Biotechnology companies, however, argue that such changes would make it harder to protect new discoveries. . . .

The biotechnology industry. . . . foresees damaging consequences. Biotechnology firms, major drug companies, and universities all stand to earn millions, sometimes billions of dollars on inventions that can be as small as a single molecule.

They attract financing based largely on the potential value of their inventions, whose profits may be many years in the future. If those inventions were more vulnerable to patent challenge, with decreased penalties for infringement, they would become far shakier foundations on which to build a company. 

The article raises an interesting question: is patent reform a bad idea for the biotech industry?

While clearly a case can be made that patent reform is not favored by the industry, I think it is a bit leap to say that patent reform is actually going to harm biotech companies.  Sure, proponents for patent reform are largely members of the high tech industry, which has increasingly had to worry about the phenomenon of "patent trolls" and high litigation damage awards, but that does not mean that patent reform is going to actually have a detrimental effect on biotechnology.  Isn't it possible that, despite the gap between the industries on this issue, that in the end any patent reform measure passed will ultimately affect both industries to a similar degree? It is not as though the patent reform measures will be industry specific, although I am not so sure that the industries wouldn't prefer otherwise.

Pfizer may serve as a good case study for the potential impact of new generics legislation, in light of its reports today of plunging profits due to generic competition.

Dow Jones Marketwatch reported:

Pfizer Inc. said Wednesday its second-quarter profit fell 48%, largely due to generic competition for its top-selling drugs Zoloft, Norvasc and Lipitor. . . .

Pfizer's top line has been under pressure in recent quarters because of the loss of patent protection for several of its once-popular products, such as Zoloft, Zithromax and, most recently, Norvasc.

Once a patent expires, other drugmakers are legally permitted to make generic versions of the drug, which are often sold at considerable discount.

Pfizer has said that it expects revenue to be largely flat until 2009, when it sees sales of newer products compensating for those lost to patent expirations.

The House has passed legislation that will overhaul the Food and Drug Administration, but has declined to address the provisions of the legislation dealing with generics, which previously passed in the Senate.

The Wall Street Journal reported:

The House FDA bill, approved 403-16, mostly parallels a bill that passed the Senate in May. Both versions would devote more money to monitoring the safety of marketed drugs and increase the agency's authority over medications that raise safety concerns. The agency would have the clear ability to order follow-up studies, restrict distribution and enforce changes to the medications' labels. The bills don't grant the FDA the power to force a moratorium on direct-to-consumer advertising, a tough restriction that was discussed earlier, though the agency would be able to levy fines for false and misleading promotions.

The conflict between the House and Senate legislation means that we can expect more debate over generics in the coming months. 

According to The Wall Street Journal's Health Blog, house leaders appear to be "cooler on biogenerics than their counterparts in the Senate."

Does the House's action signal the death knell for generics legislation this year?  It may be too soon to say for certain, but it is clear that the legislation still has a rocky road ahead. 

Of course, even if the House ends up passing the legislation ultimately, it's unclear whether it will be supported by President Bush. 

The Los Angeles Times reported:

It's unclear how the White House will react to the finished product. Before the Senate voted in May, the administration said it agreed with the goals of the legislation but had serious concerns about aspects of the risk plans.

So, if the generics provisions of this legislation were not passed by the House, what did make it through?