It can be easy sometimes to get caught up in the horse race aspects of elections and lose sight of the fact that who wins and who loses has immense real-world consequences for the people of this country. One concrete example is the baffling course being charted by the Obama administration during negotiations over the Trans-Pacific Partnership regional free trade agreement. One of the major issues being negotiated is the amount of protection for the intellectual property (IP) of pharmaceutical and biotech companies that have invested billions of dollars and numerous years in the research and development of biologic medicines. The industry consensus is that the complex pre-clinical research and clinical trial data created during this process should be protected for a minimum of 12 years to provide enough time for an adequate return on investment. This would prevent generic competitors for this time period from using the researching companies’ clinical data when applying for approval of their bioequivalent drugs.
Failure to protect the IP rights of the pharmaceutical and biotech industries by ensuring the appropriate period of data exclusivity is encoded in the TPP could have severe consequences for health care in the U.S. Insufficient IP protection could stifle innovation in the pharmaceutical and biotech industries, erect significant barriers to ongoing research and development, and prevent companies that have successfully navigated the complex pathway to drug approval from fully recouping their research and development costs. Billions of dollars and hundreds of thousands of jobs are potentially at stake, and the Obama administration is putting them all at risk. Beyond the lost dollars and jobs is the price of lost patient lives as research companies decrease their risk tolerance due to less revenue from existing brands.
Not surprisingly, the job creators in the pharma and biotech industries understand the stakes that are involved in this. James Greenwood, president and chief executive officer of the Biotechnology Industry Organization and John Castellani, president and chief executive officer of the Pharmaceutical Research and Manufacturers of America, wrote recently that “it is important to do all we can to sustain America's global leadership in biopharmaceutical research and development which provides quicker access to innovative medicines, jobs and economic growth to build stronger communities, and new technologies, spin-off industries and a stream of exports to keep America competitive for decades to come.” As Castellani and Greenwood note, “We need public policies and incentives that support and grow the biopharmaceutical sector domestically and promote access to global markets,” not a presidential administration that is eager to “trade away the economic and systemic advantages” that have enabled the U.S. pharmaceutical and biotech industries to become world leaders.
The pharma and biotech industries are not the only evaluators that see the merit in protecting one of our most innovative and productive industries. Earlier this year, a bipartisan coalition of eight U.S. governors (five Democrats and three Republicans) sent a letter to the president expressing support for the 12-year period of protection for biologics test data. In the letter, the governors noted that “America's biopharmaceutical research companies have 901 biotechnology medicines and vaccines in development targeting more than 100 debilitating and life-threatening diseases,” and that the industry supports nearly four million American jobs. Because these companies “depend heavily on secure, enforceable, IP rights for a fair playing field with competitors,” it is absolutely vital that the federal government act aggressively and proactively to protect these rights. Doing so “helps maintain the levels of research and development investment required for developing new medicines including biologics.”
With the weakened economy and historically slow recovery since the recession front and center during the presidential election campaign, you would think that the Obama administration would protect American business interests by actively supporting strong IP protections. After all, even the President’s signature health care reform legislation, the Affordable Care Act, calls for 12 years of data protection for biologics. Yet U.S. trade negotiators have been reluctant to push their counterparts from countries participating in the TransPacific Partnership to agree to this timeframe of statutory exclusivity for biologics. The reasons for this may be that the Obama administration has changed course and is now in favor of fewer years of data exclusivity for biologic innovators. Under its proposed 2012 budget, “innovator brand biologic manufacturers would have7 years of exclusivity,” apparently because the administration has determined that “12-year exclusivity is unnecessary to promote innovation by brand biologic drug manufacturers.”
If this is the case, it’s just one more indication of the administration’s hostility to American corporations and willingness to sacrifice American jobs and competitiveness in its counterproductive pursuit of increasing access to generic drugs. The generic drug industry plays an important role in our health care system by providing access to cheaper medications. But make no mistake: no major therapeutic advances have ever come from a generic company and none ever will. The industry as a whole exists solely because of the vast amounts of original research and financial capital expended by the pharmaceutical and biotechnology industry. The generics industry can only accomplish what it does because it truly stands on the shoulders of giants. If the Obama administration continues on this reckless course with regards to the intellectual property of the pharma and biotech industries, those shoulders may not be able to support as many jobs and companies in the future. Sadly, the biggest losers from the administration’s unenlightened posture will not be the research companies and the unemployed … they will be the patients who could have been saved by undiscovered or unresearched life-saving therapeutics.
Mike Hennessy is Chairman and CEO of MJH & Associates, the publisher of many influential journals, including The American Journal of Managed Care, Pharmacy Times, MDNG, Politics, Oncology & Biotechnology News, and Physician's Money Digest. As a businessman, entrepreneur, and a publisher of magazines and websites that focus on the financial and professional needs of physicians, Hennessy is intimately familiar with the challenges physicians face in today's competitive practice environment.
Hennessy's Highlights dissects the healthcare policy issues that impact physicians, particularly those who are running their own practices.