Policy Documents

Research & Commentary: Innovation in Biopharmaceuticals Must Be Protected

Peter Fotos –
December 8, 2009

Amendments to the health reform legislation making its way through the U.S. Senate would impose a 75 percent discount on biologic drugs for patients in the Medicare Part D "doughnut hole," and would prohibit certain clinical trials for biosimilars. An amendment that would deny biologic drugs a full 12-year period without competition from biosimilars may be offered.

The hugely productive partnership between the biopharmaceutical industry and venture capital investment is at a crossroads. The future of biologic medicines depends upon preserving incentives for innovation.

Venture capital and biopharmaceutical firms have collaborated with great success in the development of groundbreaking medications that have helped millions of patients treat and defend against life-threatening diseases. That partnership cannot continue to thrive, however, if innovator companies and their capital investors are not given sufficient intellectual property protections.

If the paths of venture capital and the biopharmaceutical industry it has fostered diverge, the patients who depend on lifesaving biologics will suffer. As Ruth Hoffman, executive director of Candlelighters Childhood Cancer Foundation, observed during her May 2, 2007 testimony before the House Energy and Commerce Subcommittee on Health, "A policy that produces more copies and less innovation will not help the children and their families living with cancer. For me, and for parents I represent, life-saving trumps cost-saving any day."

A model for approving biosimilars must include adequate protections for the innovators so as to provide incentives for continued innovation, or future cures may never materialize. A model with sufficient incentives for innovation would address the timely resolution of patent disputes and provide adequate protection for the data developed to secure FDA approval of the innovator's product. Data developed over many years and at great expense to the innovator must be protected from use by others for a reasonable period of time in order to give the innovator an opportunity to recover its investment. A period of 12 to 14 years of data exclusivity is appropriate and has precedent in the 1984 Hatch-Waxman Act.

The FDA has acknowledged the importance of preserving innovation incentives. Speaking at the Biogenerics 2008 conference at Northeastern University, the FDA's deputy commissioner for policy, Randall Lutter, said,

"We need a system that balances the need for access to drugs with incentives for innovation. That means including an appropriate number of years of data exclusivity, as well as some additional protection to provide innovators with an incentive to seek approval for additional indications."

The United States is the world leader in biotech and pharmaceutical research. The biopharmaceutical industry is primarily made up of small startups that rely on external investment to conduct research. Biopharmaceutical research is inherently high-risk, aiming at complex solutions and often missing the mark. If we expect the private sector to replant the seeds for tomorrow's cures, we need to preserve a fertile investment environment that includes incentives for high-cost, high-risk research.

Congress must understand the inescapable truth: Without renewed investment in research into new cures and novel medications, there will soon be no novel biologics on which to base biosimilars.

The documents linked below offer additional information about the importance of biologics and incentives for innovation.

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Safety First: A Legislator's Brief on Biosimilars
http://www.heartland.org/publications/policy%20studies/article/25496/
Endocrinologist Richard Dolinar, M.D., a senior fellow for The Heartland Institute, explores the challenges facing Congress in drafting legislation that strikes a prudent balance among the goals of (1) ensuring the safety and efficacy of biosimilars, (2) preserving incentives for innovative research and development of future biologics, and (3) increasing price competition and patients' access to biologics.

Follow-On Biologics Create Challenge For Congress
http://www.heartland.org/publications/health%20care/article/25306/
Dolinar breaks-down the issue in this article from Health Care News.

Biosimilar Drugs Too Different to Bypass Testing
http://www.heartland.org/publications/health%20care/article/25759/
Physicians and patients need to be confident that any biosimilar approved by the FDA has been subjected to the same rigorous clinical testing as the innovator drug.

Sustaining Biologics Research & Development
http://www.heartland.org/policybot/results/26021/
This analysis of a March 2009 report by Deloitte examines the incentives needed to sustain the discovery of new biologics.

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For further information on the subject, visit the Health Care Issue Suite on The Heartland Institute's Web site at http://www.heartland.org, or Heartland's new Web site devoted to health policy issues, www.healthpolicy-news.org.

Nothing in this message is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, you may contact Peter Fotos, director of government relations, at 312/377-4000 or pfotos@heartland.org.