[Ip-health] Time: How Drug-Industry Lobbyists Won on Health-Care

[Sarah Rimmington]

http://www.time.com/time/politics/article/0,8599,1931595,00.html
Thursday, Oct. 22, 2009
How Drug-Industry Lobbyists Won on Health-Care
By Karen Tumulty and Michael Scherer

In Congress, committee chairmen are known as the old bulls for a reason:
it's unwise to provoke them. So it isn't often that you see one get
rolled by his own committee =97 especially when the chairman in question
is the formidable and canny Henry Waxman and the issue in question is
one that matters a lot to him. But that was what happened on July 31 as
the House Energy and Commerce Committee was putting the final touches on
health-reform legislation. Waxman's fellow California Democrat Anna
Eshoo offered a last-minute amendment that Waxman opposed. Knowing he
would lose, Waxman decided to save face with a quick voice vote. But
Eshoo insisted on a roll call, which would put every member on record.
Waxman snapped at her, "You promised you wouldn't do that!" The final
tally was 47-11 against the chairman. (Read "Understanding the
Health-Care Debate: Your Indispensable Guide.")

Waxman's loss that day was a big victory for drug companies, which have
spent more than any other segment of the medical industry to make sure
that they come out winners in the effort to overhaul the nation's
health-care system. It's understandable the drugmakers would want a
roll-call accounting of who their friends and enemies are, considering
the size of the investment they are making on Capitol Hill: in the first
six months of this year alone, drug and biotech companies and their
trade associations spent more than $110 million =97 that's about $609,000
a day =97 to influence lawmakers, according to figures compiled by the
nonpartisan watchdog group Center for Responsive Politics. The drug
industry's legion of registered lobbyists numbers 1,228, or 2.3 for
every member of Congress. And its campaign contributions to current
members of Waxman's committee have totaled $2.6 million over the past
three years. (See 10 players in health-care reform.)

The return on that investment has been considerable, both in the House
and in the Senate. "We've done very well," says lobbyist Jim Greenwood,
a former Republican Congressman from Pennsylvania who was a member of
the Energy and Commerce Committee and now heads the Biotechnology
Industry Organization (BIO). "We carried a majority of the Democrats and
a majority of the Republicans in each of the committees, and by very
clear margins."

Whether the broader public is benefiting from the industry's success is
less clear. How Greenwood's group has scored decisive early victories on
an obscure but crucial health-care provision is a case study in how
interest groups are shaping the contours of health-care reform =97 and why
that's not necessarily good news for consumers.

The Generic Nudge
The question before Waxman's committee last summer was this: How many
years of monopoly protection should be afforded to biotechnology drugs,
known as biologics, before cheaper alternatives are allowed on the
market? These miraculous drugs =97 which differ from traditional,
chemical-based pharmaceuticals because they are derived from living
matter =97 are widely regarded as the future of the pharmaceutical
industry and, indeed, of medicine itself. While only 20% of drugs on the
market today are biologics, it is expected that, with 633 biotechnology
medicines in development last year for more than 100 diseases, half the
new drugs approved in 2015 will be. Biologics average more than 20 times
the cost of traditional drugs: treating breast cancer with a year's
worth of the biologic Herceptin can cost $48,000; Remicade, for
rheumatoid arthritis, can cost $20,000 annually. For other, rarer
diseases, the price of biologic treatments can be as high as $200,000 a
year.

As policymakers look for ways to control health-care costs, the price of
biologics is drawing more and more scrutiny. The obvious model for
bringing in competition is a 1984 law that Waxman wrote with Republican
Senator Orrin Hatch. It lowered the regulatory obstacles that prevented
generic drugs from making their way to market. At the time, it was
expected that fast-tracking the approval of "bioequivalent" drugs would
bring down medical costs by $1 billion a year. But with generics now
accounting for more than 70% of prescriptions dispensed in the U.S.,
"the actual savings have exceeded our wildest expectations," Waxman said
in a Sept. 18 speech before the Generic Pharmaceutical Association. "In
the last decade alone, generic drugs have saved consumers, businesses
and state and federal governments $734 billion."(See TIME's health and
medicine covers.)

Can a similar approach work with biotechnology drugs, which were not
dealt with in the 1984 law because the industry was then in its infancy?
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?"

But there's a dilemma: policymakers want to foster cost-saving
competition without killing the financial incentives that have put the
U.S. biotechnology industry at the vanguard of medical science and
without stifling the development of even more drugs that could save
lives and eliminate suffering. Finding that equilibrium goes to the
question of how long biotech firms should be guaranteed exclusivity,
outside the protection of their patents, before copycats can begin using
the data they have developed.


Waxman had pushed to shield biologics for no more than five years =97 the
same amount of time that traditional pharmaceuticals get under the
Hatch-Waxman law. President Obama proposed seven years as a compromise.

Eshoo's successful amendment to the Energy and Commerce Committee bill
would extend that to 12 years of exclusivity, as would legislation
passed a few weeks earlier by the Senate Health, Education, Labor and
Pensions (HELP) Committee. Then-chairman Ted Kennedy, whose state of
Massachusetts is home to many biotech firms, had long supported a
12-year exclusivity period. The industry showed its gratitude last year
when Amgen, one of the biggest biotech firms, donated $5 million =97 twice
the size of the next largest donation =97 to a nonprofit educational
institute being built in Kennedy's honor. (Watch TIME's video "Uninsured
Again.")

The Federal Trade Commission (FTC), though, argued in June that giving
biologics makers any period of exclusivity at all could actually stifle
innovation. Biologics are so much more complex and expensive to produce
than traditional drugs that the barriers to would-be "biosimilar"
competitors are already high, the FTC said. Giving biologics further
protection =97 particularly the 12 years of exclusivity that the industry
wants =97 would merely encourage firms to tinker with what they have
rather than drive them toward "new inventions to address unmet medical
needs."

Most small biologics companies are still years away from seeing their
first profits in this high-risk, high-return business. Their trade
association, BIO, says that in the past 11 months, at least 40 of them
have cut back or eliminated drug-development programs. The venture
capitalists who invest in them "aren't looking to cure Parkinson's
disease as much as they are looking for a return on their investments,"
says Greenwood. "They're just as happy to put their money into the next
iPod." But increasingly, the big players in the pharmaceutical industry
are moving into the biologics business themselves, either by investing
in cutting-edge firms or by acquiring them. (See the most common
hospital mishaps.)

Shifting Politics
That makes the politics =97 and the lines of political influence =97 a lot
more difficult to sort out. Whereas the traditional pharmaceutical
industry is concentrated in just a couple of states, biotech firms have
sprung up just about anywhere you find a university with a research
hospital, which gives them a broad political base. "I know that vote
hurt me at home," says Ohio Senator Sherrod Brown, who led the
unsuccessful fight against the 12-year exclusivity in the Senate HELP
Committee.

Indeed, the biologics lobby has become one of K Street's most powerful
players. Working largely through BIO and the Pharmaceutical Research and
Manufacturers of America (PhRMA), it has funded an extensive network
that includes not only lobbyists but also think-tank experts and
advocacy groups. "You can't get on the phone with someone who isn't
getting paid," says an economist who has studied the biologics issue
with funding from a drug company. "They give money to everyone and anyone."

That means it can be hard to find a truly independent viewpoint, though
it often requires deep digging into the finances of advocacy groups to
discover their ties. In July, one calling itself the National Health
Council wrote letters to members of Congress "on behalf of 133 million
Americans" asking for a minimum of 10 years of data exclusivity. The
group boasts a membership that includes 50 of the nation's largest
patient-advocacy groups, including the American Cancer Society, Easter
Seals and the National Kidney Foundation. But its board of directors
reads like a Who's Who of top pharmaceutical executives from Amgen,
Pfizer, Novartis and Bristol Myers Squibb. Its 2007 tax filings show
that almost half its $2.3 million budget came from PhRMA and drug companies=
.

Similarly, on Oct. 19, PhRMA put out a statement calling for a "fair
period of data protection" of 12 years at a "bare minimum." To defend
its position, the group cited Duke University economist Henry Grabowski,
whose work it has funded, and two patient groups. One, called
RetireSafe, receives regular infusions of "general operating support"
from Pfizer and operates out of a small Washington law-firm office. It
has been blitzing Capitol Hill with letters arguing that guaranteeing
biologics makers fewer than 12 years of exclusivity in the use of their
data could cost lives. The other group, the Alliance of Aging Research,
is also run by the drug industry. Its chairman is the managing partner
of Foxkiser, a drug-company consultant, and its vice chairman is with
Novartis.

Among the biologics industry's most high-profile advocates has been
former Democratic National Committee chairman Howard Dean, who is
consulting for a law firm that has a deep roster of biologics clients.
In July he wrote an Op-Ed in the Hill newspaper arguing for a
"commonsense and fair approach" to give biologics companies at least 12
years of exclusivity. ("I wouldn't do this if I didn't believe it,"
Dean, a physician, said in an interview.) His former campaign manager
Joe Trippi echoed Dean's views on a Huffington Post blog without
disclosing that he had been paid by BIO to create two Web campaigns. (He
also says his views predated his paycheck.)

The other side has resources of its own. The biggest generic-drug
company, Teva Pharmaceuticals, has spent more than $2 million on
lobbying and also sponsored academic work on the issue, aiming to
disprove Duke's Grabowski. Generic-drug manufacturers are allied with
such powerful organizations as AARP, labor unions, insurance companies,
health-maintenance organizations and health-reform advocacy groups.
There will be fights on the House and Senate floors and ultimately a
House-Senate conference committee, on which Waxman will be a key voice.
"The war is not over," he has warned. "If you know me at all, you know
that I don't give up that easily."

How it is resolved =97 in favor of protecting the biotech industry or
opening up the market to generics =97 may say a lot about which interest
groups will ultimately reap the windfall of the big-stakes battle in
Washington. What it means for consumers is somewhat murkier: Will a
miracle cure be there when you need one? And if it is, will you be able
to afford it? Those are questions that hinge on whether the rest of us
can trust Congress to find proper balance between competition and
innovation.=08

--
Sarah Rimmington
Attorney
Essential Action, Access to Medicines Project
Washington, DC
Tel: +1 (202) 387-8030
Cell: +1 (202) 422-2687
www.essentialaction.org/access/

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