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(12-06) 04:00 PST Washington - --
Buried in the giant health care bills in Congress is a multibillion-dollar bonanza for Silicon Valley's biotechnology and venture capital industries, sponsored by Rep. Anna Eshoo, a Palo Alto Democrat.
The provision would grant "biologic" drugs, a new class of drugs based on gene splicing and grown in living cells, 12 years of protection from competition by the generic drug industry, in addition to their patents.
A scathing report by the Federal Trade Commission in June said no added protection, much less 12 years, was warranted, and warned that the Eshoo legislation would ensure sky-high drug prices and stifle innovation on the most promising frontier of medical research.
Eshoo, who has engaged in an angry public debate with patients in the blogosphere, argued that she is opening the door to cheaper "biosimilar" alternatives, not closing it, because no path to market such drugs currently exists.
She crafted the legislation, she said, "with the highest purposes of bringing life-saving biologics to include biosimilars, to save lives and to bring down the costs to every human being in our country who needs them."
An article last month in the New England Journal of Medicine took issue with that claim, saying the Eshoo legislation creates the illusion of a path for cheaper substitutes that "would scarcely be used."
Risks of gains, losses high
The stakes could hardly be higher for taxpayers, patients and the industry. With a $112 billion market now, biologics are expected to match within just a few years chemical pharmaceuticals for their share of new drug approvals by the Food and Drug Administration.
The promise such medicines hold is breathtaking: Chemical drugs treat the symptoms of diseases while biologics, vastly more complex, focus on their genetic source.
Many scientists believe that the most debilitating and dreaded diseases of modern life - cancer, AIDS, Parkinson's, multiple sclerosis, rheumatoid arthritis, Crohn's disease and many others - may one day see miracle breakthrough therapies, even cures, thanks to biologic drugs.
Those drugs also tend to be very expensive. Herceptin, for treating breast cancer, can cost a patient more than $37,000 a year. Epogen, to treat anemia caused by renal failure, more than $84,000; Avastin, a lung cancer drug, $100,000; and Cerezyme, to treat Gaucher's disease, more than $200,000.
Greg Bonaparte, 62, a construction manager who lives in Pescadero, has used biologic drugs to treat rheumatoid arthritis since the mid-1990s, paying as much as $1,100 every two months in co-pays for Remicade.
He recently switched to another drug, Humira, because the drugmaker offers a program that covers almost all the drug's costs.
"I can understand where the drug companies are coming from because they've put a lot of time and money into developing these things and they're fabulous drugs," he said, "but I'd love to see them go generic. I've been very fortunate because I've had jobs and money to pay for them but a lot of people can't."
The drugs can cost hundreds of millions of dollars to develop and are often financed by venture capital firms that expect a big payoff for the high risk. A blockbuster can yield billions of dollars in sales, but many never pan out.
California is home to more than 2,000 biomedical companies, according to the California Healthcare Institute, an industry group. Public biomedical companies doing business in California spent more than $28 billion in research and development in 2007.
Taxpayers heavily invested
Taxpayers have a big stake, too. Much of the basic research underlying biologics is financed by the National Institutes of Health. The government also pays for biologics through Medicare and Medicaid, spending an estimated $2 billion a year on Epogen alone, roughly equal to the budget of the Food and Drug Administration.
The biotech industry spent $110 million- or $609,000 a day - lobbying Capitol Hill during the first six months of this year, according to figures compiled by Time Magazine, which counted 2.3 registered drug industry lobbyists for each member of Congress. The New York Times found dozens of Republicans and Democrats were inserting verbatim biotech industry talking points into the Congressional Record.
With bipartisan support, Eshoo overpowered the chairman of the House Energy and Commerce Committee, Rep. Henry Waxman of Los Angeles, to get her legislation into the health care bill.
Waxman wrote the first generic drug bill in 1984 with Utah Republican Sen. Orrin Hatch that opened chemical pharmaceuticals to competition from generics. Biologics were in their infancy then so they were left out of the law.
Waxman shocked
The savings shocked even Waxman: $734 billion to the health care system in the last decade alone, while spurring, not depressing, competition. Waxman fought for the same five-year shield for the biotech industry but lost to Eshoo 47-11 in his own committee.
The Obama administration opposed the legislation but facing certain defeat, offered a "generous compromise" of seven years of protection. The industry rejected that. The Eshoo bill has powerful sponsors in the Senate, including Hatch.
The Senate version was originally sponsored by the late Sen. Edward Kennedy, whose home state of Massachusetts has a big biotech industry that contributed heavily to Kennedy's pet causes.
The pharmaceutical industry is Eshoo's second-leading campaign contributor after the computer industry, donating nearly $170,000 in the 2008 election cycle, according to OpenSecrets.org, the Web site of the nonpartisan Center for Responsive Politics.
David Gollaher, president and chief executive of the California Healthcare Institute, expressed confidence the Eshoo provision would survive. A shorter period of protection from competition, he said, would "hugely damage the amount of investment that venture capital and biotech companies are devoting to biologics .... This, at the end of the day, is all about lowering prices on biologics."
Surprise boost from Dems
The Federal Trade Commission found that the 12-year protection would encourage companies to modify existing drugs rather than invent new ones. The monstrous difficulties in copying biologic drugs, and a host of other barriers, make current patent protections adequate, the agency concluded.
So great are the difficulties that competition from unbranded substitutes may cut prices no more than 10 to 30 percent, the agency said, far less than the 80 percent drop that generics brought to the chemical drug market. Eshoo's staff said the FTC took an overly simplistic approach to the industry.
Kathleen Jaeger, president of the Generic Pharmaceutical Association and a fierce opponent of the Eshoo bill, said generic drugmakers her group represents have begun to switch their research efforts to branded drugs.
"For ten years, Big Pharma had a lock on the Republicans," Jaeger said. "And now it's just so surprising that they are going to be doing just as well or better under this new administration. They've just made some really good new friends in the Democratic Party."
What U.S. consumers pay
Annual costs of some common biologic drugs:
$29,247 - Etanercept (trade name Enbrel), treats rheumatoid arthritis.
$37,180 - Trastuzumab (Herceptin), treats breast cancer.
$39,505 - Interferon beta-1a (Rebif), treats multiple sclerosis.
$50,933* - Adalimumab (Humira), treats rheumatoid arthritis and Crohn's disease.
$56,424* - Imatinib (Gleevec), treats leukemia and gastrointestinal stromal tumor.
$84,467 - Epoetin alfa (Epogen), treats anemia of chronic renal disease.
$200,000 - Imiglucerase (Cerezyme), treats Gaucher's disease.
*Costs are for treatment of Crohn's disease and gastrointestinal stromal tumor.
Source: New England Journal of Medicine
Chronicle staff writers Victoria Colliver and Joe Garofoli contributed to this report. E-mail Carolyn Lochhead at clochhead@sfchronicle.com.
http://sfgate.com/cgi-bin/article.cg...MNFQ1AV2C3.DTL
Buried in the giant health care bills in Congress is a multibillion-dollar bonanza for Silicon Valley's biotechnology and venture capital industries, sponsored by Rep. Anna Eshoo, a Palo Alto Democrat.
The provision would grant "biologic" drugs, a new class of drugs based on gene splicing and grown in living cells, 12 years of protection from competition by the generic drug industry, in addition to their patents.
A scathing report by the Federal Trade Commission in June said no added protection, much less 12 years, was warranted, and warned that the Eshoo legislation would ensure sky-high drug prices and stifle innovation on the most promising frontier of medical research.
Eshoo, who has engaged in an angry public debate with patients in the blogosphere, argued that she is opening the door to cheaper "biosimilar" alternatives, not closing it, because no path to market such drugs currently exists.
She crafted the legislation, she said, "with the highest purposes of bringing life-saving biologics to include biosimilars, to save lives and to bring down the costs to every human being in our country who needs them."
An article last month in the New England Journal of Medicine took issue with that claim, saying the Eshoo legislation creates the illusion of a path for cheaper substitutes that "would scarcely be used."
Risks of gains, losses high
The stakes could hardly be higher for taxpayers, patients and the industry. With a $112 billion market now, biologics are expected to match within just a few years chemical pharmaceuticals for their share of new drug approvals by the Food and Drug Administration.
The promise such medicines hold is breathtaking: Chemical drugs treat the symptoms of diseases while biologics, vastly more complex, focus on their genetic source.
Many scientists believe that the most debilitating and dreaded diseases of modern life - cancer, AIDS, Parkinson's, multiple sclerosis, rheumatoid arthritis, Crohn's disease and many others - may one day see miracle breakthrough therapies, even cures, thanks to biologic drugs.
Those drugs also tend to be very expensive. Herceptin, for treating breast cancer, can cost a patient more than $37,000 a year. Epogen, to treat anemia caused by renal failure, more than $84,000; Avastin, a lung cancer drug, $100,000; and Cerezyme, to treat Gaucher's disease, more than $200,000.
Greg Bonaparte, 62, a construction manager who lives in Pescadero, has used biologic drugs to treat rheumatoid arthritis since the mid-1990s, paying as much as $1,100 every two months in co-pays for Remicade.
He recently switched to another drug, Humira, because the drugmaker offers a program that covers almost all the drug's costs.
"I can understand where the drug companies are coming from because they've put a lot of time and money into developing these things and they're fabulous drugs," he said, "but I'd love to see them go generic. I've been very fortunate because I've had jobs and money to pay for them but a lot of people can't."
The drugs can cost hundreds of millions of dollars to develop and are often financed by venture capital firms that expect a big payoff for the high risk. A blockbuster can yield billions of dollars in sales, but many never pan out.
California is home to more than 2,000 biomedical companies, according to the California Healthcare Institute, an industry group. Public biomedical companies doing business in California spent more than $28 billion in research and development in 2007.
Taxpayers heavily invested
Taxpayers have a big stake, too. Much of the basic research underlying biologics is financed by the National Institutes of Health. The government also pays for biologics through Medicare and Medicaid, spending an estimated $2 billion a year on Epogen alone, roughly equal to the budget of the Food and Drug Administration.
The biotech industry spent $110 million- or $609,000 a day - lobbying Capitol Hill during the first six months of this year, according to figures compiled by Time Magazine, which counted 2.3 registered drug industry lobbyists for each member of Congress. The New York Times found dozens of Republicans and Democrats were inserting verbatim biotech industry talking points into the Congressional Record.
With bipartisan support, Eshoo overpowered the chairman of the House Energy and Commerce Committee, Rep. Henry Waxman of Los Angeles, to get her legislation into the health care bill.
Waxman wrote the first generic drug bill in 1984 with Utah Republican Sen. Orrin Hatch that opened chemical pharmaceuticals to competition from generics. Biologics were in their infancy then so they were left out of the law.
Waxman shocked
The savings shocked even Waxman: $734 billion to the health care system in the last decade alone, while spurring, not depressing, competition. Waxman fought for the same five-year shield for the biotech industry but lost to Eshoo 47-11 in his own committee.
The Obama administration opposed the legislation but facing certain defeat, offered a "generous compromise" of seven years of protection. The industry rejected that. The Eshoo bill has powerful sponsors in the Senate, including Hatch.
The Senate version was originally sponsored by the late Sen. Edward Kennedy, whose home state of Massachusetts has a big biotech industry that contributed heavily to Kennedy's pet causes.
The pharmaceutical industry is Eshoo's second-leading campaign contributor after the computer industry, donating nearly $170,000 in the 2008 election cycle, according to OpenSecrets.org, the Web site of the nonpartisan Center for Responsive Politics.
David Gollaher, president and chief executive of the California Healthcare Institute, expressed confidence the Eshoo provision would survive. A shorter period of protection from competition, he said, would "hugely damage the amount of investment that venture capital and biotech companies are devoting to biologics .... This, at the end of the day, is all about lowering prices on biologics."
Surprise boost from Dems
The Federal Trade Commission found that the 12-year protection would encourage companies to modify existing drugs rather than invent new ones. The monstrous difficulties in copying biologic drugs, and a host of other barriers, make current patent protections adequate, the agency concluded.
So great are the difficulties that competition from unbranded substitutes may cut prices no more than 10 to 30 percent, the agency said, far less than the 80 percent drop that generics brought to the chemical drug market. Eshoo's staff said the FTC took an overly simplistic approach to the industry.
Kathleen Jaeger, president of the Generic Pharmaceutical Association and a fierce opponent of the Eshoo bill, said generic drugmakers her group represents have begun to switch their research efforts to branded drugs.
"For ten years, Big Pharma had a lock on the Republicans," Jaeger said. "And now it's just so surprising that they are going to be doing just as well or better under this new administration. They've just made some really good new friends in the Democratic Party."
What U.S. consumers pay
Annual costs of some common biologic drugs:
$29,247 - Etanercept (trade name Enbrel), treats rheumatoid arthritis.
$37,180 - Trastuzumab (Herceptin), treats breast cancer.
$39,505 - Interferon beta-1a (Rebif), treats multiple sclerosis.
$50,933* - Adalimumab (Humira), treats rheumatoid arthritis and Crohn's disease.
$56,424* - Imatinib (Gleevec), treats leukemia and gastrointestinal stromal tumor.
$84,467 - Epoetin alfa (Epogen), treats anemia of chronic renal disease.
$200,000 - Imiglucerase (Cerezyme), treats Gaucher's disease.
*Costs are for treatment of Crohn's disease and gastrointestinal stromal tumor.
Source: New England Journal of Medicine
Chronicle staff writers Victoria Colliver and Joe Garofoli contributed to this report. E-mail Carolyn Lochhead at clochhead@sfchronicle.com.
http://sfgate.com/cgi-bin/article.cg...MNFQ1AV2C3.DTL