Follow-On Biologics: Defeat For Waxman, Win For Health Reform

Lopsided committee vote suggests that lengthy exclusivity is here to stay, which means that big pharma can get more comfortably behind the broader reform effort.

Rep. Henry Waxman, D-Calif., can perhaps take some comfort in the fact that his defeat on follow-on biologics means his broader health reform legislation may have a greater chance of passage.

At the July 31 markup of the health reform package, H.R. 3200, Waxman saw Rep. Anna Eshoo's rival amendment on a follow-on biologics pathway adopted overwhelmingly, 47-11. Among other differences, Eshoo's proposal would give innovator products 12 years of exclusivity, while Waxman's own FOB bill offers five.

The vote was good news for the brand industry - but also is good news for the health care reform legislation overall, since the pharmaceutical and biotech industry now have a much stronger interest in seeing the bill pass.

Things could always change in conference but the lopsided votes - the Senate Health Committee endorsed a similar measure by 16-7 (Also see "Follow-on Biologics Go Back To The Future: Senate Cmte. Endorses 12 Years of Brand Exclusivity" - Pink Sheet, 13 Jul, 2009.) - suggest that if a bill is signed, it will include a brand-friendly pathway.

The business case for pharma support of health care reform has been that it would expand their potential customer base by expanding coverage to the insured. But now the bill could offer something more - excellent intellectual property protection for biologics, the kinds of products that most expect to be the future of the industry.

That kind of stability could make industry more willing to make sacrifices on pricing and rebate issues if asked to by the administration - and there are strong indications that President Obama will ask for more than the $80 billion in savings the industry has already pledged (Also see "The 77% Solution: Obama Rx Drug Overpayment Claim Culled From McKinsey Report" - Pink Sheet, 30 Jul, 2009.).

Those concessions will in turn make it easier to score the bill and thus get it passed, getting industry closer to the strong exclusivity it craves.

Vote Has Drama, But Few Surprises

The outcome of the vote in the Energy and Commerce Committee appeared to be a forgone conclusion for weeks (Also see "The 77% Solution: Obama Rx Drug Overpayment Claim Culled From McKinsey Report" - Pink Sheet, 30 Jul, 2009.) but there was still a bit of drama regarding the recording of it. Waxman was ready to concede on a voice vote, but Eshoo wanted a roll call, even though he tried to talk her out of it.

In the end, even noted industry critic Rep. Bart Stupak, D-Mich., voted for the Eshoo amendment, which was modified from her original bill to be germane for the mark-up (Also see "The 77% Solution: Obama Rx Drug Overpayment Claim Culled From McKinsey Report" - Pink Sheet, 30 Jul, 2009.).

Waxman has scored many legislative victories in the Energy and Commerce Committee, including the deal with the Blue Dog centrist Democrats this week that allowed mark-up to resume. But with follow-on biologics, he came up well short.

The vote brought the usual shower of reaction statements from interest groups, including remarks from Pharmaceutical Research and Manufacturers of America President Billy Tauzin, who stated, "Today's strong bipartisan vote by the House Committee on Energy and Commerce is a step in the right direction because it strikes an appropriate balance between the desire for enhanced competition and preserving incentives for innovation."

Tauzin, a former congressman from Louisiana, had chaired the committee before becoming PhRMA president in 2005. And in grand Capitol Hill tradition, his portrait hangs in the committee's markup room. Waxman may hold the gavel now, but on the FOBs vote at least, it was still Tauzin's committee.

-M. Nielsen Hobbs ([email protected])