In Biotech Industry, Cash Flow Fears And Patent Questions

Patent reform, universal health care, and intellectual property rights protection of new health and environmental technologies are critical not only for the biotechnology industry but for improvements in public health, the president of the Biotechnology Industry Organization (BIO) said Thursday.

Creating legislation that maintains incentives for innovation is particularly key in this economic climate, when – the organisation says – thirty percent of biotech companies have less than six months of cash remaining.

The ability of the industry to cope with the economic downturn and respond to public health needs is “contingent on IP policy,” said CEO of BIO James Greenwood at a press conference on 26 February.

But Greenwood cited a joint survey between BIO and Thompson/Reuters that said a majority of investors on Wall Street believe the biotech industry will rebound in 2009, and asserted that there is “nothing wrong with our business model, [which] has worked since the beginning of our industry and will work again” as soon as the credit crunch is over.

He also agreed with US President Obama on the need to extend healthcare. “We want to get to universal healthcare,” said Greenwood, but “you can’t get there by squeezing out costs,” but rather by reducing disease, especially chronic disease. This means, he said, making sure the biotech industry has the capital it needs to take research into developed drugs. To do this, they need action in both patent reform and on new forms of medication. Ecologically-friendly technology is also a key area of growth for BIO.

Meanwhile, a representative from the lobby group the Manufacturing Alliance on Patent Policy has said on patent reform that “any language to reduce infringement damages through apportionment pits some industries against others and hurts far more companies than it helps.” The proposal to limit damages for patent infringement to a single invention, rather than the whole product containing that invention, may be part of the US patent reform bill that may be reintroduced as soon as next week (IPW, Biotech, 17 February 2009).

New Technology, New IP Needs?

Of particular interest in IP protection for BIO is a continuing debate over “follow-on biologics.” Biologics are a complex new class of medicines for which the science involved in their manufacture is so intricate that they defy normal generic processes, which normally require the generic drug have an identical chemical makeup to the brand name.

The parallel process for generics in biologic medicine involves “biosimilars” or “follow-on biologics” (IPW, Biotech, 24 February 2009). These are only similar, and not identical, to the brand name drug.

The US bill that created a pathway for generic versions of chemical drugs, called the Hatch-Waxman bill after the members of Congress who sponsored it, is a round hole into which “the square peg of biologics” does not fit, said Greenwood, adding “I don’t think anyone who understands the molecules would argue that Hatch-Waxman” applies to biologics.

The reason is that “we need something other than patents to create incentives to invest” in biologics, he explained, as the fact that follow-on biologics are required only to be similar rather than identical to their originals means that a patent may not necessarily prevent their creation.

So BIO supports a 14-year period of data exclusivity for biologics in the US – up from the 5 years offered to chemical medicines under Hatch-Waxman.

Patents, Biofuels, Reforms

Evergreening of patents was also brought up. The term is generally seen to mean when minor innovations on drugs are used to extend the life of a patent. But Greenwood called the term “a misnomer” saying “if a product is on the market and an innovator makes it better and is willing to make the expense to prove that… well then [s/he] has a new product and should be incentivised.” This “doesn’t prevent a generic company from making a copy of an original product,” allowing doctors and patients to make a choice as to whether the improved version is worth the brand-name price.

Greenwood also stressed the importance of technological development in environmental fuels. Cellulosic ethanol, and in particular microbes capable of digesting cellulose and turning it into sugars which can then be made into ethanol, are a exciting new area in biotechnology, Greenwood said. They offer an “opportunity to avoid gasoline” and are causing a “rapidly forming coalition between agriculture and environmental communities.” The technology is, he said, a “win, win, win” – more income for farmers, more jobs, and better for the environment.

Ethanol has been questioned by environmentalists as being potentially just as ecologically damaging as fossil fuels, and by humanitarians who worry that it will compete with the food supply.