GENETICS INSTITUTE, CETUS PART WAYS WITH IBA CITING ASSOCIATION’s POSITION ON ORPHAN DRUG ACT AMENDMENTS, BOUCHER BILL; UPJOHN ALLOWS MEMBERSHIP TO LAPSE
Genetics Institute and Cetus have withdrawn their membership from the Industrial Biotechnology Association, citing disagreement with the association's positions on amendments to the Orphan Drug Act and Rep. Boucher's (D-Va.) bill on biotechnology patents. Cetus President and CEO Robert Fildes and Genetics Institute President and CEO Gabriel Schmergel sent resignation letters to IBA President Richard Godown on March 26. The two companies were among IBA's founding members and their top execs sat on the association's board. In a March 27 release, Cetus and Genetics Institute said that the IBA's opposition to changes in the Orphan Drug Act and its support of "certain proposed protectionist patent legislation now before a House subcommittee" would "unfairly perpetuate or create market monopolies for highly profitable products, such as recombinant human growth hormone and erythropoietin." The firms maintained that such positions "hamper long-term growth of the biotech industry and show blatant favoritism toward specific IBA member companies." In a statement issued in response to the companies' announcement, IBA's Godown said the association "regrets the loss of Genetics Institute and Cetus Corporation from our membership. The controversy is over what is best for biotechnology." He added that "IBA has always made special efforts to represent the interests of all its member companies, [it] did so in this instance, and will continue to do so." With regard to the Boucher bill, Godown said the legislation "is designed to stimulate the development of biotechnology drugs and to protect intellectual property rights against unfair competition. It is an affirmative act which will help the U.S. to maintain its competitive position and protect the scientific advances being produced at a steady rate by American companies." * Introduced Feb. 6, Boucher's bill would affect Genetics Institute by no longer allowing the importation of biotechnology products manufactured outside the U.S. by foreign firms using a U.S.-patented component or process ("The Pink Sheet" Feb. 12, T&G-2). The bill is supported by several biotechnology firms in addition to IBA. The bill could be used to prevent the sale of Chugai-Upjohn's recombinant erythropoietin, Marogen, which is manufactured by Chugai in Japan under license from Genetics Institute. The product has not yet been approved by FDA; but could reach the market soon after the Genetics Institute and Amgen strike an agreement following a ruling in the two companies patent case in Boston earlier this month. Reportedly, the last remaining hurdle for Genetics Institute's product at FDA is Amgen's orphan exclusivity for Epogen. Genentech's orphan exclusivity for Protropin (human growth hormone) has prevented other biotech companies from coming on the market. Boucher's legislation would benefit Amgen, by preventing Chugai from importing erythropoietin, and could benefit Genentech's Activase by making it difficult for Burroughs Wellcome to enter the U.S. market with its recombinant TPA product. Amgen and Genentech are IBA members. Upjohn decided not to renew its membership in the IBA when it expired nearly two weeks ago, the firm said. The company had been a member of the association since the mid-1980s. Upjohn would not comment on its reasons for leaving IBA. IBA has long held the position that Orphan Drug Act market exclusivity provisions should not be amended. With congressional authorization of the Orphan Drug Act up for renewal this year, Rep. Waxman (D-Calif.) is looking at proposing amendments to the act in conjunction with reauthorization legislation. The IBA board, at a late February meeting, agreed to maintain its position against Orphan Drug Act amendments and voted to support the Boucher bill. Cetus and Genetics Institute said that they "favor legislative remedies to reform the Orphan Drug Act that now prevents multiple independent, early sponsors of profitable drugs from sharing access to the U.S. market." The two firms also oppose the Boucher bill, which they say would "distort U.S. patent law and override specific court rulings permitting the importation of biopharmaceutical products." * Cetus does not have a product in the late stages of development that would appear to be affected by changes to the Orphan Drug law or the Boucher bill. The company objects to the positions taken on the two issues as representative of a trend that the firm feels is not in its best interest. For example, Cetus says it is concerned that the opposition to orphan drug law changes could draw a backlash of criticism from Congress and the public. Reportedly, Fildes was also unhappy with the recent restructuring of the IBA board's executive committee. Cetus and Genetics Institute will continue their memberships with the Association of Biotechnology Companies. The ABC, which represents many of the smaller biotech companies, supports amending the exclusivity provisions of the Orphan Drug Act for products the association feels are highly profitable, such as erythropoietin and human growth hormone. The Senate version of the Boucher bill, S 2326, was introduced by Sen. DeConcini (D-Ariz.) on March 22. As expected, ("The Pink Sheet" Feb. 26, T&G-3), the effective date of DeConcini's bill is the one difference between the two bills. S 2326 does not require importers of a potentially infringing substance to sell through all stock in a specified period of time after the bill is enacted. Boucher's legislation requires importers to sell all stock within 90 days of enactment. IBA also supports the DeConcini version, although the association board has not addressed which effective-date provision it prefers. The DeConcini bill states that for "any article which is imported before the date of enactment of this Act, and which, but for the [the new law] could be sold or used within the United States, no person shall be liable for infringement...for such sale or use." Like its House counterpart, S 2326 would grant jurisdiction to the International Trade Commission to exclude foreign products that are made using a component -- a host cell, for example -- that has been patented in the U.S. In an introductory statement on his bill, DeConcini said: "Contrary to the intention of the 1988 amendments to Section 337 [of the Tariff Act] and the Patent Code, the International Trade Commission has recently ruled that foreign manufacturers are still permitted to take patented biotechnological materials offshore to produce a product to ship back into the United States with legal recourse to the patentee. This practice has had a deleterious effect on the American biotechnology industry." Both bills would change current U.S. Patent Office practice by directing that patents be granted for production processes in situations where the starting material is novel. The provision, DeConcini explained, "addresses the problem that biotechnology inventors have had with the [court] decision In re Durden." In that case, "the federal circuit held...that although the starting material and the resulting product were nonobvious and novel, the process to make the product could not be patented," DeConcini said. * The Senate bill has been referred to the Senate Judiciary/Patents Subcommittee, which DeConcini chairs. DeConcini is expected to hold a hearing on the measure this spring. In the House, Boucher said he hoped the Judiciary/Courts, Intellectual Property Subcommittee, chaired by Rep. Kastenmeier (D-Wis.), would hold a hearing on his bill this month; no hearing has yet been scheduled.
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