More on Obama and the Biotech Industry

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It was a surprise indeed. Most people had figured that the biologic drug industry had sealed the deal for 12 years of protection from generic competition when it succeeded in getting language to that effect in both the House and Senate health care bills. Although President Obama had supported shorter protection of seven years,* there had been no indication that he was willing to fight for it.

My sources tell me that the first inkling the industry and its allies got to the contrary came in a private meeting in recent days. In that session, California Congresswoman Anna Eshoo–the lead supporter of the 12-year provision in the House–asked the President to affirm that he supported it. “As a matter of fact,” Obama told her, “I don’t.”

This exchange represents at least a couple of important developments:

First, after spending most of last year relatively disengaged from the details of the congressional negotiations on the bill, Obama is now drawing some bright lines as to what he does and doesn’t want in the legislation. The second is that he is trying to make sure the bill that ultimately passes–if one does–can make a credible claim to bringing down health care costs. This is the area where many independent economists have said the current legislation comes up short.

As Michael Scherer and I noted in our earlier story on this subject, generic competition for biologic drugs presents an enormous potential for savings:

A 2008 analysis by former Clinton Administration official Robert Shapiro, who has consulted for both biologics companies and their would-be generic competitors, suggested that generic versions of the top 12 categories of biologics whose patents have expired or will expire soon could save Americans up to $108 billion in the first 10 years and as much as $378 billion over two decades. “It’s the low-hanging fruit,” says Mark Merritt, head of the Pharmaceutical Care Management Association, the trade organization for prescription-drug-benefit managers. “If you can’t get this right on cost control, what can you get right?”

*NOTE: This is in addition to their patent protection.

UPDATE: A spokesman at Congresswoman Eshoo’s office notes that my characterization of the patent question is not accurate. He points out: “The patent and data exclusivity run concurrently.”

A more precise way to describe this is a period of “data exclusivity” (that is, use of the data used to develop the drug) guaranteed separate and apart from the patent. The amount of time we are talking about differs from drug to drug, because of the varying amounts of time that it can take to test a drug and win regulatory approval. For instance: If a drug comes to market with, say, five years left on its patent, this bill would give it an additional seven years.

As the spokesman explains:

To further clarify, just like chemical drugs, biologics have a 20-year patent protection from the date the patent is filed. Data exclusivity begins the date the FDA approves a drug or biologic, running concurrently with whatever patent protection may be left at that time (generally this is about 12 years, according to the CBO).