Magazine Article | November 26, 2014

New Congress: Bipartisan Opportunity To Spur Innovation

Source: Life Science Leader

By John McManus, president and founder, The McManus Group

While the concluding 113th Congress will be remembered more for ideological warfare than notable healthcare policy achievements, the upcoming 114th Congress holds promise for advancing several bipartisan bills that can have a material impact in promoting innovation to address unmet medical needs.

Energy & Commerce Committee Chairman Fred Upton (R-MI) along with Rep. Diana DeGette (D-CO) have spearheaded a bipartisan effort known as the 21st Century Cures Initiative. This workstream has included eight hearings and four roundtables on Capitol Hill and over a dozen more across the country and is meant to solicit ideas expediting the lengthy and costly process of bringing drugs and devices from discovery to treatment delivery as well as retrofitting important arenas like health information technology. The committee is expected to unveil a comprehensive package early next year, but the dialogue has already resulted in the production of concrete proposals and legislation from some unusual quarters.

For example, the National Health Council (NHC) — a coalition of over 100 patient advocacy groups, provider associations, nonprofit groups, and industry, focused on assisting patients with chronic health problems — has led the charge in advocating for legislation that they believe will spur research and development on medicines for unmet medical needs. The MODDERN (Modernizing Our Drug & Diagnostics Evaluation and Regulatory Network) Cures Act (H.R. 3616) would address two barriers to product development: 1) complete lack of patent protection for dormant products (those discovered but never brought to market) and 2) predictable post-approval patent protection.

In testimony to the Energy & Commerce Committee this summer, Marc Boutin of the NHC explained that, “A drug cannot be patented if it was previously disclosed to the public; no exception is made for when the disclosed drug has not yet been tested in clinical trials and thus has not been approved by the FDA.” Thus, a company has no incentive to undertake costly clinical trials of a dormant product because it would have no effective intellectual property protection upon FDA approval.

Secondly, Boutin explained, “The unfortunate reality is that manufacturers stop developing a drug when they believe that its patent protection will not extend long enough after it enters the market and allows the company to recoup the investment. Because the drug manufacturers must apply for patents early in the development process, there can be little or no patent life left when the drug finally enters the market, even with patent extensions granted under Hatch-Waxman … . This uncertainty discourages companies from pursuing medicines with long development time lines in favor of those with shorter development time lines.”

The MODDERN Cures Act is championed by Rep. Leonard Lance (R-NJ) and a whopping 78 cosponsors equally divided by both political parties. It would address the aforementioned challenges by permitting companies to apply for a fixed 15-year period of combined data package and patent protection from date of NDA (new drug application)/ BLA (biologic license application) approval for qualifying medicines that the FDA designates as being investigated for an unmet medical need. At the end of the 15-year period, generic and biosimilar drugs are assured immediate abbreviated approval where the sponsor would waive the ability to litigate patents that would delay market entry beyond the 15-year protection period.

"Can such legislative incentives spur innovation? History shows that the emphatic answer is 'Yes'!"

The creation of an aligned period of patent and data protection commencing upon FDA approval provides incentives to pursue R&D for products that require longer development time lines — often those that treat a disease with no existing treatments, a drug with a new mechanism of action, or drugs to treat chronic diseases. It also eliminates gaming between innovator and generic companies that mutually benefit from delayed market entry of a generic drug, but leaves patients picking up the higher costs during that period. The bipartisan breadth of support as well as the patient groups’ leadership in spearheading the legislation’s advocacy make this a viable product that could move toward enactment.

In the case of antibiotics, spurring innovation has had more to do with addressing market failures than securing sufficient intellectual property protection. But here, too, legislative progress has been made to address the immediate public health concern that sparked Dr. Janet Woodcock, director of the FDA's Center for Drug Evaluation and Research, to proclaim that, “We are facing a huge crisis worldwide not having an antibiotics pipeline.”

Novel antimicrobial products, especially those targeting multidrug-resistant Gram-positive and Gram-negative bacteria, face significant commercialization barriers that run counter to typical pharmaceutical market dynamics, including:

  • administration in acute care settings, where reimbursement is largely controlled by predetermined payment bundles with a relatively small pharmaceutical cost component
  • use as short (6-10 days) and/or episodic courses
  • reserved for third/fourth-line use to control resistance, used in conjunction with stewardship policies.

Without a steady development of new products that keep pace with pathogens increasingly resistant to existing therapies, patients will face a world without effective treatments for even commonplace infections. Leaders in infectious disease, including the Infectious Disease Society of America, Antimicrobial Innovation Alliance, and the President’s Council of Advisors on Science and Technology, encourage greater market-based reimbursement for these innovative products.

In response, representatives from Illinois on both sides of the aisle — Peter Roskam and Danny Davis — recently introduced the DISARM (Developing an Innovative Strategy for Antimicrobial Resistant Microorganisms) Act (HR 4187) with strong bipartisan support, to better incent the development and commercialization of antibiotics that address unmet medical needs. Medicare’s current bundled payment does not adequately reimburse antibiotic drugs and gives hospitals little incentive to utilize innovative antibiotics. The bill would provide more appropriate payments to hospitals when they treat dangerous pathogens with more expensive and novel antimicrobials.

Can such legislative incentives spur innovation? History shows that the emphatic answer is “Yes”!

In 1983, Congress passed the Orphan Drug Act, which was the first step toward creating economic incentives for orphan drug development by awarding grants, tax credits, and seven-year market exclusivity for orphan-designated products. During the decade before the Orphan Drug Act was signed into law, only 10 treatments were developed for rare diseases, but since passage, 450 orphan drugs have been approved by the FDA and over 3,000 orphan products are in development.

In addition to benefiting from the development of new medicines, the American public can gain from substantially lower drug costs when the intellectual property protection period expires. The Hatch-Waxman Act, a great example of bipartisan compromise which recently celebrated its 30th birthday, created the modern generic drug industry. The Government Accountability Office has found that between 1999 and 2010 generic drug substitution achieved more than $1.2 trillion in cost savings for American consumers.

In assessing the positive impact of 30 years of the Hatch-Waxman Act, Senator Orrin Hatch (R-UT) expressed a hope that this success might “inspire(s) ideas on how to improve the effects of the Act through additional legislation.”

The incoming 114th Congress can certainly relitigate Obamacare. But a more productive endeavor would be to move bipartisan legislation such as the MODDERN Cures Act and the DISARM Act, which can actually make a material difference for patients waiting for a cure.