[Ip-health] Expert Says Eshoo-Barton Bill Stifles Drug Innovation

[Sarah Rimmington]

http://www.marketwatch.com/news/story/expert-says-eshoo-barton-bill-stifles/story.aspx?guid=%7B55331C9C-A682-48B9-AB79-74AFA1E8F1C1%7D&dist=hppr
Expert Says Eshoo-Barton Bill Stifles Drug Innovation
Boston University Economist Finds Excessive Market Protection Threatens
Development of New Biologics

Sept. 17, 2008

WASHINGTON, Sep 17, 2008 (BUSINESS WIRE) -- Pending legislative
proposals in Congress to create a follow-on biologics (FOBs) pathway
risk overextending monopoly protection and undermining innovation,
according to a comprehensive analysis released today by Boston
University Economics Professor Laurence J. Kotlikoff and commissioned by
Teva Pharmaceuticals USA.

Dr. Kolikoff found that biogeneric legislation drafted by
Representatives Anna Eshoo (D-CA) and Joe Barton (R-TX), as well as
proposals by Senator Edward Kennedy (D-MA) and Representative Jay Inslee
(D-WA) all contain provisions that would "delay the pace at which
innovative drugs are brought to market and lower the speed at which
today's innovations are incorporated in tomorrow's discoveries."

The scientific and legal framework for the approval of small-molecule
generic drugs is well developed. But so far Congress has not been able
to come to consensus on establishing a regulatory pathway for the
approval of FOBs, which are also commonly referred to as biosimilars or
biogenerics.

At the center of the debate is the number of years of monopoly
protection afforded brand manufacturers after the marketing of a new
biologic drug. Dr. Kotlikoff's work closely examines each of the
exclusivity provisions in the pending biogenerics legislative proposals,
as well as the current standard applied to chemical drugs.

He concludes that excessive monopoly protection for biologics, such as
the structure outlined in the Eshoo-Barton proposal, will cause
inventors to focus on protecting intellectual property and marketing
shares rather than developing a dramatically different and better
version of the product. According to Dr. Kotlikoff, Congress should
instead consider the landmark 1984 Hatch-Waxman Act as a model for
establishing a regulatory pathway for biogenerics.

"The average development time for new biological entities is only 7.4
months longer than that for new chemical entities. In comparison,
compared with Hatch-Waxman, the Eshoo-Barton and Inslee bills call for
between 12 months and 120 months of extra monopoly protection depending
on when the biologic is brought to market," Dr. Kotlikoff wrote. "There
are no compelling differences between the chemical-based and
protein-based medication industries to justify deviating from a policy
that has succeeded for over a quarter of a century in both dramatically
reducing drug prices and stimulating innovation."

"Dr. Kotlikoff's work presents a compelling case that we need to achieve
the delicate balance between two equally important objectives--reward
for innovation and incentives for future discovery" said William Marth,
President and CEO of Teva North America. "We hope Congress will
carefully consider this balance when it crafts a clean, science-based
regulatory pathway for the approval of safe and effective biogenerics."
Highlights from the paper include:

-- Kennedy, Eshoo-Barton, and Inslee bills overextend marketing
exclusivity for biologics by leading to less, not more, innovation over
time. In fact, all three of these proposals would reward companies that
delay bringing biologics to market with longer monopoly protection.

-- Hatch-Waxman's success did not come at the price of innovation. On
the contrary, the legislation appears to have accelerated innovation,
with significant rise in new pharmaceutical products since 1984.

-- Compared with pharmaceuticals, biologics are more costly to produce,
but their reward is also considerably higher. Indeed, compared to
chemical medications, biologic medications appear to have a lower ratio
of invention cost to invention reward.

-- When it comes to non-diversifiable risk, the biotech industry is
riskier than most, but not by much. Consequently, the cost of equity
capital in biotech is only 18 percent higher than the average across all
other industries. The pharmaceuticals industry, interestingly enough, is
much riskier than biotech. Its cost of capital is 35 percent above average.

Dr. Kotlikoff's full report is available on Teva's government affairs
Web site at www.tevadc.com.

Journalists may contact him by calling 202-879-5828 or emailing
yshi@gibraltar-llc.com.


About Laurence J. Kotlikoff

Laurence J. Kotlikoff is Professor of Economics at Boston University,
Research Associate of the National Bureau of Economic Research, Fellow
of the American Academy of Arts and Sciences, Fellow of the Econometric
Society, and President of Economic Security Planning, Inc., a company
specializing in financial planning software. Professor Kotlikoff
received his B.A. in Economics from the University of Pennsylvania in
1973 and his Ph.D. in Economics from Harvard University in 1977. From
1977 through 1983 he served on the faculties of economics of the
University of California, Los Angeles and Yale University. In 1981-82
Professor Kotlikoff was a Senior Economist with the President's Council
of Economic Advisers. Professor Kotlikoff has served as a consultant to
the International Monetary Fund, the World Bank, the Harvard Institute
for International Development, the Organization for Economic Cooperation
and Development, as well as many other foreign government entities.
Professor Kotlikoff has consulted for the Office of Management and
Budget, the U.S. Department of Education, the U.S. Department of Labor,
the Joint Committee on Taxation, The Commonwealth of Massachusetts, The
American Council of Life Insurance, Merrill Lynch, Fidelity Investments,
AT&T, AON Corp., and other major U.S. corporations. He has provided
expert testimony on numerous occasions to committees of Congress
including the Senate Finance Committee, the House Ways and Means
Committee, and the Joint Economic Committee. Professor Kotlikoff is
author or co-author of 13 books and hundreds of professional journal
articles. Professor Kotlikoff publishes extensively in newspapers, and
magazines on issues of deficits, generational accounting, the tax
structure, social security, Medicare, health reform, pensions, saving,
insurance, and personal finance.

About Teva Pharmaceuticals USA

Teva Pharmaceuticals USA isthe leading generic pharmaceutical company,
marketing products from a wide range of therapeutic areas with
operations in nine states. Teva USA products are marketed to chains,
wholesalers, distributors, hospitals, managed care entities, and
government agencies. Teva USA has an aggressive Research and Development
effort and one of the best overall ANDA approval records in the
industry. The company's mission is to play a leading role in the
transformation of the U.S. healthcare system through its pre-eminence in
the development, manufacture and marketing of generic and innovative
pharmaceuticals. Teva USA is a wholly-owned subsidiary of Teva
Pharmaceutical Industries Ltd., one of the largest generic
pharmaceutical companies in the world and among the top 20
pharmaceutical companies, with more than 27,000 employees in 50 countries.

SOURCE: Teva Pharmaceuticals USA

Teva North America:
Denise Bradley, 215-591-8974
denise.bradley@tevausa.com


Copyright Business Wire 2008 End of Story

--
Sarah Rimmington
Attorney
Essential Action, Access to Medicines Project
Washington, DC
Tel: (202) 387-8030
Cell: (202) 422-2687
www.essentialaction.org/access/