Senate HELP Committee Hands Pharma Industry a Giant Golden Egg

This seems not to have been commented upon yet in these parts, but it’s an immense blow to health care cost-control efforts, regardless of what system our wise leaders inflict upon us.

Late Monday night, the Senate HELP Committee approved, as part of its health reform bill, an amendment granting 12-year marketing exclusivity on high-tech biologic drugs. This is a massive windfall to pharmaceutical companies, offering extended protection from generic competition for some of the most expensive classes of therapeutic agents.

Biologics are drugs that are grown rather than chemically synthesized — for example, custom-designed proteins harvested from genetically modified cell cultures. They are governed by different rules, and a different branch of the FDA, than traditional pharmaceuticals and include sophisticated and pricey agents in such areas as cancer, autoimmune diseases, and blood disorders. A year’s treatment with the oncology agent Herceptin, for example, can run to $48,000.

Marketing exclusivity is related to, but distinct from, patent protection. A drug or biologic may be protected by various patents that would typically have been taken out years before its approval. Separately, whenever the FDA approves a nonbiologic drug, the clock starts ticking on a period of marketing exclusivity — protection from generic competition regardless of patent status — that typically lasts 5 years.

Biologic agents have not enjoyed marketing exclusivity protection; their makers currently defend their turf exclusively in the realm of patent and intellectual property law. (Note: IANAL.) Recently, the Federal Trade Commission, studying this issue, concluded that no marketing exclusivity was necessary at all for biologics; patent law was sufficient.

Pharmaceutical companies, particularly those with major biologic portfolios and pipelines (eg, Amgen) have of course been lobbying for exclusivity, and our leaders have been listening. President Obama supports a 7-year exclusivity period; Henry Waxman, chair of the House Energy and Commerce Committee, had called for 5 years, comparable to traditional drugs.

Over at the Senate HELP Committee, however (supposedly the good guys in that body, in comparison with Max Baucus’s Finance Committee), Chairman Ted Kennedy was in favor of a 13-year exclusivity, as Tim Noah at Slate noted. Sherrod Brown tried to shrink that golden egg down to the Obama-concordant 7 years, but was voted down 5-17.

Enter our dear friend Kay Hagan (D-NC), who co-sponsored an amendment with Republicans Orrin Hatch and Mike Enzi calling for the 12-year exclusivity period. Monday night it passed 16-7. It’s now part of the Senate HELP Committee’s health reform bill.

Of course, we’ve still got all that horse-trading and sausage-making between House and Senate, and the still-balked Baucus bill, ahead of us. But years of protection from generic (for biologics known as "biosimilar") competition amounts to billions of extra dollars to pharma companies, when the FTC has weighed in saying that not even a single year of marketing exclusivity was necessary.

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