MEMORANDUM

From: The AffordableMedsNow Campaign of Universities Allied for Essential Medicines (UAEM) and the American Medical Student Association (AMSA) http://affordablemedsnow.com/ and Essential Action’s Access to Medicines Project www.essentialaction.org/access

Re: Responding the October 30, 2009 Huffington Post article by Rep. Anna Eshoo, “Setting the Record Straight on Our Health Care Legislation”

Date: November 1, 2009

Below are some of the key assertions made by Rep. Eshoo in her recent blog post, followed by our responses to them.

Eshoo: Biotechnology products cost billions of dollars to develop, test and bring to market, and in order to ensure that competitors aren’t immediately allowed to free-ride on the costly safety and efficacy data produced by innovators, some period of ‘data exclusivity’ is necessary to allow some period of time to recoup the investment in developing the drug.

The House and Senate health care bills include a data exclusivity period of 12 years, which is the same amount of time that all drugs enjoy on the market under patent protection, which prevents any competition. I believe the 12-year data exclusivity period preserves the existing incentives for investment in these life-saving products.”

And

Without such a ‘data exclusivity’ period, there would be no reason to invest in new biologics. We would see the flow of research funds going to traditional pharmaceuticals, medical devices, semiconductors, green technology or other more promising innovations.

Response: The brand-name pharmaceutical industry’s own numbers show that research and development costs for biologics and conventional drugs are comparable, and that about the same amount of time is required. Eshoo’s approach would grant 12-years of market exclusivity to brand-name biologics — an extra 7 years of monopoly protection — more than double the five years conventional drugs receive. Moreover, the evergreening loopholes in the Eshoo-Barton approach adopted in the House health committee (which is identical to the Senate health committee’s adopted approach championed by Sens. Hatch, Enzi and Hagan) could make monopoly protection for many products indefinite. This approach doesn’t make sense given the numbers.

Sources for the above:

In its own document, PhRMA (the brand-name pharmaceutical industry’s association) notes that the development costs for biologics ($1.2 billion) are actually less than for conventional drugs ($1.318 billion). See: http://www.phrma.org/files/PhRMA%202009%20Profile%20FINAL.pdf

Similarly, three studies authored or co-authored by Tufts University economist Henry Grabowski note little difference in development costs and approval times (97.7 months and $1.2 Billion for biologics vs. 90.3 months and $1.3 billion for traditional drugs). One of these studies can be found at: http://www.aei.org/docLib/20070607_GrabowskiWorkingPaper.pdf

Prof. Grabowski’s findings are notable because his work is also frequently funded by the brand-name industry. See the following recent article from Time Magazine, which mentions Prof. Grabowski’s industry ties. More importantly, this article discusses how the pharmaceutical industry lobbyists got their way on health care using the Eshoo-Hatch biogenerics proposal as an example: http://www.time.com/time/politics/article/0,8599,1931595-2,00.html

There are many experts who are concerned about the 12 years of data exclusivity offered to branded biologic drugs by the Eshoo approach.

For example, a June 2009 study by the independent Federal Trade Commission concluded that biologics would be well protected from generic competition even in the absence of data exclusivity. They recommended these products be given zero years of data exclusivity and indicated that giving biologics any period of exclusivity – but particularly the 12 years that the brand-name industry seeks and that Rep. Eshoo’s approach gives them – would in fact likely stifle innovation. This amount of exclusivity, in the FTC’s view, would merely encourage firms to tinker with what they have rather than drive them toward “new inventions to address unmet medical needs.” This is contrary to Rep. Eshoo’s comment that 12 years of market exclusivity is absolutely necessary to ensure future biologic development.

An October 2009 article in the New England Journal of Medicine argues that biogenerics approach adopted by the Senate and House committees this summer puts so many barriers to generic biologics that the pathway will seldom be used. http://content.nejm.org/cgi/content/full/NEJMp0908496v1

Also note that Patricia Danzon, a Wharton professor who regularly consults for pharmaceutical companies, argues that giving biologics more data exclusivity than conventional drugs could have the undesirable effect of promoting biologic research at the expense of investment into developing more traditional drugs. “Having five years of exclusivity for chefdamical drugs and 12 years for … biologics would be very different. We may be creating a situation where the return on investment is lower for developing chemical drugs compared to biologics and that would be a big mistake.” (http://www.kaiserhealthnews.org/Checking-In-With/Biologics.aspx).

For all of these reasons and more, we believe that data exclusivity for biologics should not exceed the five (5) years proposed by Rep Waxman (HR 1427) and Sens Schumer, Brown, Collins, Vitter et al (S. 726), which is the same amount of protection that conventional drugs receive.

Eshoo: It’s important to note that today there is absolutely no restriction on data exclusivity — it’s effectively infinite. Competitors are never permitted to use the data produced by a brand-name biologic manufacturer. The Kennedy-Eshoo legislation brings this exclusivity down from forever to 12 years, in essence laying the groundwork for the creation of the biosimilar industry, new competition for the biotechnology industry, and reduced prices for patients.

Response: It is true that there is currently no pathway to make generic biologics. However, we need a pathway that will work, not one that will introduce so many barriers that the pathway will seldom be used.

Eshoo: Let me individually address the patently false statements in Ms. Hamsher’s post.

“…thanks to Representatives Anna Eshoo and Joe Barton, there will be no generic versions of these drugs. At least not for 12 years…”

The 12-year data exclusivity period in the Kennedy-Eshoo legislation begins from the time of FDA approval. Since the vast majority of the most popular biologics treatments were approved at least 12 years ago, this means that they would have virtually no data exclusivity protection. The important cancer and anemia treatments that millions of patients rely on will be subject to biosimilar competition as quickly as the FDA can process the follow-on manufacturers’ applications. (For example, under my amendment Herceptin’s data exclusivity period will expire in September 2010.)

Response: It is true that for older biologics there is the potential for biosimilars to start coming on the market shortly after an FDA approval pathway is adopted. However, under Rep. Eshoo’s proposal it will be possible for brand companies to make relatively simple and inexpensive tweaks to the older biologics, and obtain a new 12-year protection period for the modified product. Then, based on the experience with conventional drugs, there is very strong reason to believe that brand-name companies will be able to exert their marketing acumen to transition patients (and doctors) to the modified product, and away from cheaper, generic versions of the old product. Indeed, it is quite likely that in many or most cases this prospect will deter generic manufacturers from entering the biogenerics market at all. This practice is called evergreening.

A classic example of how the evergreening process works involves the acid-reflux drugs Prilosec and Nexium. With its best-selling Prilosec facing generic competition, AstraZeneca introduced Nexium, a slight chemical variant of Prilosec. AstraZeneca studies showed the new drug to have the slightest improved performance from Prilosec, not for heartburn, but for “erosive esophagitis,” where burped-up stomach acid injures the esophagus. That slightly improved result enabled the company to launch a full-court press to get consumers to switch from the drug going off patent to the one just coming on. Nexium sells for about 5 times the price of Prilosec. Annual revenues for Nexium, on a global basis, top $5 billion.[1]

Troublingly, under Eshoo-Barton and Senate health committee approaches, evergreening will be easier and more effective for biologics than it is for conventional drugs.

First, in many or most cases, generic versions of biologics will not be identical with the brand-name product. In these cases, the generic product will be treated as “biosimilar” and not “interchangeable,” and will only be available to a patient upon specific prescription by a doctor. There will thus be a built-in bias in the system against switching to generic products — and make it easier for the brand-name company to direct patients to their modified, monopoly-protected products.

Secondly, conventional drug evergreening involves efforts to obtain new patent protection. Patent protection is much less robust than data exclusivity; this is especially true for patents on modifications to products. Generic firms are commonly able to challenge successfully or work around modification patents. By contrast, while the bar for attaining data exclusivity is lower than obtaining patent protection (which requires a new, useful and non-obvious invention), the data monopoly is absolute: it is granted automatically upon FDA marketing approval and is not subject to workarounds.

Moreover, with biologics expected to make up half of all the newly approved drugs in just a few years, we have to be concerned about accessibility to newer and better treatments that will continue to come on the market. Rep. Eshoo’s proposal will give these as yet undeveloped products an unjustified 12-year marketing monopoly, and, more troublingly, the evergreening loophole will also be available to them.

This means that the Eshoo-Barton and Senate health committee approaches will offer only the illusion of urgently needed price-lowering generic competition for biologics. These approaches will torpedo the objective of healthcare cost containment so crucial to current healthcare reform efforts, and severely limit patient access to these important and exceptionally high-priced medicines for conditions like cancer, arthritis and diabetes.

This means Medicare and other federal programs will find their budgets increasingly strained by growing biologic drug costs. Employers will continue to struggle to provide affordable health insurance to their employees. Americans with insurance will find it even more difficult to pay for their already sky-high prescription drug co-payments. And the uninsured may have to go without crucial lifesaving biologics.

Eshoo: “And because of an ‘evergreening’ clause that grants drug companies a continued monopoly if they make slight changes to the drug (like creating a once-a-day dose where the original product was three times per day), they will never become generics.”

“There is no ‘evergreening’ clause in my legislation. There is in fact an ‘anti-evergreening’ clause which explicitly provides no new exclusivity period would be granted for “a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength.” My amendment prohibits by its plain language exactly what Ms. Hamsher alleges it would encourage.”

Response: The short answer is that the language highlighted by Rep. Eshoo does exactly the opposite of what she says it does: it preserves an evergreening option so long as there is a structural modification made to the biologic, which in the bill is an easy standard to meet. By contrast, Rep. Waxman and Sen. Schumer’s bills show what you’d do if you were trying to avoid evergreening.

The longer rebuttal follows: The clause Representative Eshoo refers to does appear on its face to exclude changes that result in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength from being eligible for a new 12-year exclusivity period. Unfortunately, her understanding of how the language operates is incorrect. The existence of the language in the bracket “(not including a modification to the structure of the biological product)”—actually does create a huge evergreening loophole. If you look closely at the tricky language of the sentence you will see that changes to biologics that result in new indications, routes, dosing schedules, delivery systems, strengths, etc., are ineligible for another 12- year exclusivity period under the Eshoo approach only if they come about without a modification to the structure of the product.

In other words, if a company makes a modification to the structure of the already approved biologic that results in a new indication or any of the other items listed, they will be eligible for a brand new 12-year exclusivity period. Unfortunately, because the term “structural modifications” is not defined, interpretation is open to a very wide range of possible changes that will qualify for a brand new 12-year monopoly, many of which are relatively simple and inexpensive to do, and which do not change a drug in any material way.

Of course, these modifications may offer small or significant patient benefits. But because they are typically easy and inexpensive to design, brand-name firms do not need the lure of protracted monopolies to make these minor modifications.

A key example of the types of modifications that would qualify for a new 12-year monopoly under the Eshoo approach is a process called PEGylaton, which will result in increased safety or a new dosing schedule, route, form, or delivery system. PEGylating a protein is a relatively inexpensive and easily performed structural modification (compared to changing the underlying amino acid structure of the biologic).

Example: Oncaspar is a PEGylated from of L-asparaginase used for the treatment of acute lymphoblastic leukemia. It is used in patients who are hypersensitive to the un-PEGylated form of L-aparaginase. The PEGylated product Oncaspar is now is being encouraged by the company for first line use instead of the older, un-PEGylated versions.[2]

It should also be noted that the Eshoo language does not require a change to the amino acid structure of the biologic — the scientific definition of a truly new medicine — in order to allow a brand product to obtain a new 12-year monopoly.

For your convenience, I have reproduced below the language of the relevant provision from the Eshoo-Barton-Inslee Biologics Amendment adopted by the House Energy & Commerce Committee in their healthcare reform bill in July 2009 in its entirety. (Note that this amendment is identical to that which was adopted by the Senate Health Education Labor and Pensions committee as part of its healthcare reform bill in July 2009)

Section 7(C): Products not eligible for 12 years exclusivity and filing moratorium.

“7(A) and (B) shall not apply to a license for or approval of-

i. a supplement for the biological product that is the reference product; or

ii. a subsequent application filed by the same sponsor or manufacturer of the biological product that is the reference product) or a licensor, predecessor in interest, or other related entity) for

(I) a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength; or

(II) a modification to the structure of the biological product that does not result in a change in safety, purity or potency.”

Translation: Subsequent applications filed by the same sponsor or manufacturer are eligible for 12 years market exclusivity and filing moratorium for products that have a structural modification that results in either:

II) A new indication, route, dosing schedule, form, delivery system, delivery device, or strength; or

II) Improved safety, purity, or potency.

Only if the changes that result in the items listed in point I or II are not accompanied by a change to the structural modification are they ineligible for the 12-year exclusivity period. As explained above, it will be very easy for brand companies to make simple and inexpensive structural modifications to many biologics that result in new dosage forms, strength, etc. Thus Eshoo’s understanding of her own amendment’s language is incorrect.

Eshoo: I’m proud to have this legislation endorsed by: The AIDS Institute, ALS Association, Alliance for Aging Research, American Autoimmune Related Diseases Association, Association of American Universities, Candlelighters Childhood Cancer Foundation, former Vermont Governor Howard Dean, M.D., Immune Deficiency Foundation, the National Alliance on Mental Illness and many other patient advocacy groups.

Response: The vast majority of non-industry affiliated consumer, health and patient groups who have weighed in on this issue, plus a huge number of businesses, HMO’s and unions support the approach of Representatives Waxman and Deal and Senators Schumer, Brown, Collins et al, and oppose the approach of Representatives Eshoo, Barton and Inslee and Senators Hatch, Enzi and Hagan. A long list of consumer, health, patient and industry groups supporting the Waxman-Schumer approach and concerned about the Eshoo-Barton and Enzi-Hatch-Hagan approach (along with links to a few specific pieces of correspondence and key WebPages) can be found below. This list may be incomplete.

It also is worth noting that Eshoo-Hatch approach supporter Dr. Howard Dean has recently worked for BIO (the Biotechnology Industry Association), that the universities represented by the Association of American Universities stand to reap larger royalty payments from the patents they hold on biologic medicines for longer monopoly periods, and that the National Alliance on Mental Illness receives three-quarters of its operating budget from brand-name drug makers, according to a recent New York Times article, available at http://www.nytimes.com/2009/10/22/health/22nami.html?_r=2&scp=1&sq=advocacy%20group&st=cse

If you do some research, you will likely find that many if not all of the patient groups that back Rep. Eshoo’s approach have significant ties to the brand-name industry, as this is a common practice of Pharma to fund patient and health groups. Very few (probably only two, but possibly a couple more) of the consumer, health and patient groups that oppose Eshoo’s approach take money from the either the brand-name or the generic biopharmaceutical industry. You could search the database created by Essential Action at http://www.pharmafiles.net/ to see if any of the other patient and health groups Rep. Eshoo (or this memo) mentions as supporters have industry connections. FYI, the absence of a mention doesn’t mean that the groups don’t have industry ties: the database is a work in progress and there are literally thousands of pharma-funded patient and health groups.

For more information about Howard Dean, his views on biogenerics, and his relationship with the brand-name biologics industry, see the fabulous blog posts by James Love on Huffington post this past July:

Howard Dean: Now a Shill for BIO:

http://www.huffingtonpost.com/james-love/howard-dean—-now-a-shil_b_241465.html

Howard Dean claims he “is not a shill for BIO.” Then stop acting like one:

http://www.huffingtonpost.com/james-love/howard-dean-claims-actual_b_243038.html

Mr. Love also blogged about how Dr. Dean’s former campaign manager Joe Trippi wrote a piece on biogenerics on HuffPo while not disclosing he had been paid by industry to work on the issue: Joe Trippi Admits He Works for BIO, While He Plugs BIO Bill in HuffPo http://www.huffingtonpost.com/james-love/joe-trippi-admits-he-work_b_238289.htmlv

2009 Waxman-Schumer Biologics Approach Supporters (and Eshoo-Hatch Approach Opposition)

State Legislator group

National Legislative Association on Prescription Drug Prices (NLARx)

- Their Executive Director is Maine State Representative Sharon Anglin Treat

Consumer, Health and Patient Groups, Unions

AARP

American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME)

The American Medical Student Association (AMSA)

Breast Cancer Action

California Public Employees’ Retirement System (CalPERS)

Consumers Union

Center for Policy Analysis on Trade and Health (CPATH)

Department for Professional Employees, AFL-CIO

Essential Action

Health GAP (Global Access Project)

International Union, United Automobile, Aerospace & Agricultural Implement Workers of America (UAW)

Knowledge Ecology International (KEI)

Latinos for National Health Insurance

National Multiple Sclerosis Society

National Organization for Rare Disorders (NORD)

National Physicians Alliance

National Research Center for Women and Families

National Women’s Health Network

Northwest Federation of Community Organizations

OWL – The Voice of Midlife and Older Women

Public Citizen

Salud y Farmacos

Service Employees International Union (SEIU)

Universities Allied for Essential Medicines (UAEM)

U.S. PIRG (Public Interest Research Group)

Consumer and Business Health Care Coalition

National Coalition on Health Care http://www.nchc.org/

Business Groups, all of whom are members of a biogenerics advocacy coalition called The Coalition for Competitive Pharmaceutical Markets (CCPM): http://www.therightprescription.org/

Aetna Inc
America’s Health Insurance Plans
Apotex
Blue Cross Blue Shield Association
Caterpillar, Inc.
Centene
Chrysler Corporation
CVS Caremark
The Dow Chemical Company
Eastman Kodak Company
ERISA Industry Committee
Express Scripts Inc.
Ford Motor Company
General Motors Corporation
Generic Pharmaceutical Associations
Hospira, Inc.
Humana
Kaiser Permanente
Medco Health Solutions
Momenta Pharmaceuticals, Inc.
Mylan Labs
National Association of Chain Drug Stores
National Association of Health Underwriters
National Community Pharmacists Association
Pharmaceutical Care Management Association
Prime Therapeutics
Ranbaxy Pharmaceuticals
Rite Aid
Teva Pharmaceuticals USA
Walgreen Co.
Watson Pharmaceuticals
Wellpoint, Inc.
Xerox Corporation

Links to select letters, statements, articles and websites of those with concerns about the Eshoo-Hatch approach to biogenerics and/or who support the Waxman-Schumer approach:

October 26, 2009: CCPM, AARP, Public Citizen, SEIU, Other Organizations Tell Congress, “Fix or Drop Current Biologics Provision” http://www.biogenericsgetthefacts.org/images/group-letter.pdf

Sept. 9, 2009 Roll Call op-ed, “Don’t Kill Competition for High-Tech Drugs,” by James K. Glassman, Under Secretary of State for public diplomacy and public affairs in the George W. Bush administration and editor of Roll Call from 1988 -1993, and James Love, Director of consumer group Knowledge Ecology International (KEI): http://www.rollcall.com/news/38298-1.html

July 31, 2009: Consumer & Health Groups, State Legislators, Experts React to Vote to Add Generic Biotech Drug Proposal to Health Care Reform Bill: http://www.essentialaction.org/access/index.php?/archives/205-Consumer-Health-Groups,-State-Legislators,-Experts-React-to-Vote-to-Add-Generic-Biotech-Drug-Proposal-to-Health-Care-Reform-Bill.html

July 20, 2009: Consumer & Public Health Groups, State Legislators Ask Congress To Oppose Eshoo’s Biogenerics Proposal http://www.essentialaction.org/access/index.php?/archives/196-Consumer-Public-Health-Groups,-State-Legislators-Ask-Congress-To-Oppose-Biogenerics-Proposal.html

April 22, 2009 “Consumer, Public Health and Labor Groups plus State Legislators Support Bi-Partisan U.S. Biogeneric Bills” http://www.essentialaction.org/access/index.php?/archives/194-Consumer,-Public-Health-and-Labor-Groups-plus-State-Legislators-Support-Bi-Partisan-U.S.-Biogeneric-Bills.html

The Coalition for Competitive Pharmaceutical Market’s (CCPM) biogenerics campaign website, Biogenerics: Get the Facts: http://www.biogenericsgetthefacts.org/biogenerics-in-the-news.html

Teva Pharmaceutical Industries’ biogenerics websites, which have links to some gripping stories about patients struggling with the high costs of brand-name biologic drugs: http://www.fivevstwelve.com/index.html and http://www.yearofaffordablehealth.com/


[1] For more on the Prilosec and Nexium case, see, for example, Alex Berenson, “Where has all the Prilosec Gone?” The New York Times, March 2, 2005, at www.nytimes.com/2005/03/02/business/02prilosec.html and Maryann Napoli, “The Latest Heartburn Drug Dressed in Purple, But Just Another Knock-off,” BNET Healthfacts, September 2001, at http://findarticles.com/p/articles/mi_m0815/is_2001_Sept/ai_77823684/.

[2] Larson RA, Fretzin MH, Dodge RK, Schiffer CA. Hypersensitivity reactions to L-asparaginase do not impact on the remission duration of adults with acute lymphoblastic leukemia. Leukemia. 1998 May;12(5):660-5.