President Barack Obama’s ambitious health care reform could be derailed by an abstruse lobbying battle between two key White House allies: the pharmaceutical industry and the senior citizens lobby.
AARP has sided with generic drug makers against the name-brand giants on the backstage issue of biologic drugs. Biologics are prescription drugs more complex (and more expensive) than standard drugs, and they are generally derived from living matter. Examples are insulin and the anemia drug Epogen.
The senior citizens lobby has privately threatened to withhold support for a broader health care reform bill if the legislation doesn’t pave a clear and quick path for generic versions of biologics.
To promote innovation, the Food and Drug Administration protects ordinary drugs such as Lipitor or Viagra from competition for five years. But the FDA also provides a clear pathway for approval of generic versions once the drug’s FDA exclusivity expires.
For biologic drugs, there is no generic pathway, effectively leaving name-brand biologic drug makers with perpetual monopolies. Patients, consumers, insurers, and the government could save billions if the FDA creates a pathway for generic biologics — also known as “biosimilars,” because making identical copies of them is difficult or impossible. Obviously, the powerful biotech companies could lose billions to competition with generics.
The Food and Drug Administration says it lacks authority to approve generic biologics, handing this hot potato to Congress. The result is a lobbying battle royale. The most contentious issue: How many years should the FDA protect biologics from competition?
Generic drug makers support the Promoting Innovation and Access to Life-Saving Medicines Act sponsored by Rep. Henry Waxman, D-Calif., which provides for quick approval of biosimilars. For lowering health care costs, Waxman’s bill is also backed by AARP and employers such as AT&T, General Motors, and Chrysler.
“On the other side,” one health care lobbyist supporting Waxman’s bill told me, “there’s BIO, PhRMA, and $100 million — and that’s why we’ve been running into a brick wall.”
The Pharmaceutical Research and Manufacturers Association was the top industry lobbying group in the first quarter of this year, spending $6.9 million — more than any entity other than the Chamber of Commerce and ExxonMobil. PhRMA’s biggest member, Pfizer, spent $6.1 million lobbying in the first quarter.
PhRMA’s well-armed ally is the Biotechnology Industry Organization, or BIO. PhRMA, BIO, and their member companies combined in 2008 to spend $101 million on lobbying.
Pharmaceutical companies provided $1 million to Obama’s campaign last year, three times what they gave John McCain.
The big drug makers oppose Waxman’s bill and instead support the “Pathway to Biosimilars Act,” sponsored by Rep. Anna Eshoo, D-Calif. Eshoo’s “pathway” is rockier for generics than Waxman’s and, most importantly, would grant the name-brand biologic drug makers at least 12 years of exclusivity — effectively preventing competition from generics.
PhRMA and BIO would normally walk over the generics, especially considering how closely Obama has been working with the brand-name companies on stem-cells research and health care reform. But the generics have a ringer here: AARP, which spent $4.1 million lobbying in this year’s first quarter and a massive $27.9 million last year.
The seniors’ lobby raised the stakes of the biologics debate late last month when one of its lobbyists wrote a pointed e-mail to Sen. Edward Kennedy’s staff on the Health, Education, Labor, and Pensions Committee, which is drafting a health care reform bill:
“Can you just confirm to me to that the [health care reform] bill you plan to report out will contain an exclusivity period that will be notably less than 12 years? If you cannot, I cannot recommend a letter of support or a major grassroots effort in support. Indeed, people will probably have to be critical, particularly about that provision. I hope you won’t force us to do that on such an important bill that I know you all have worked so hard on.”
Democrats are now in the position of alienating the name-brand drug makers who have carried so much water for them on the health care reform debate, or the seniors who are crucial electorally.
The White House, through the Office of Management and Budget, has suggested it sides with the generics and the seniors here. But unless this is handled expertly, Obama’s reform could become collateral damage in this backroom lobbying brawl.
