Capital EyeJuly 09, 2003By Sheryl Fred
A decade ago, biotechnology seemed a strange, futuristic endeavor—the stuff of mad scientists holed up in basement laboratories. But over the years biotech has evolved into a booming industry, complete with blockbuster drugs and substantial political clout.
That clout was on full display in June at the 11th annual conference of the Biotechnology Industry Organization (BIO), biotech's main trade group. Featured speakers included President Bush, Homeland Security Secretary Tom Ridge and Food and Drug Administration Commissioner Mark McClellan.
Biotech pharmaceutical companies and BIO have given more than $13 million in individual, PAC and soft money contributions since 1989. The industry gave more than $4 million in the 2002 election cycle alone.
Between 1998 and 2002, the industry spent an additional $89 million lobbying Congress, the FDA and the White House. Biotech has had a hand in issues including patent protection and homeland security. Most recently, the industry played a role in the Medicare debate, where it joined forces with big pharmaceutical companies to ensure that the new prescription drug benefit would be offered through private insurers.
A Meteoric Rise
The very first biotech companies emerged more than two decades ago, but it wasn't until the early '90s that the industry began to show signs of political savvy. In 1990, Johnson & Johnson formed Ortho Biotech Products, the first biotech subsidiary of a major health care manufacturer—and, in this case, a major political player. Today, the company spends upwards of $3 million on lobbying every year.
By 1992, Genentech and Amgen, two of the oldest and largest biotech companies, had formed political action committees. In 1993, the industry created BIO to represent its interests in Washington. The trade group has spent more than $14 million on lobbying since 1998.
But the game didn't begin in earnest for biotech until the late '90s, when it began scoring its first major political victories—and encountering its first obstacles.
In 1997, biotech teamed up with patient-advocacy groups and the larger pharmaceutical industry to pressure Congress to pass the FDA Modernization Act. The law allowed the FDA to fast-track the approval process for drugs meant to treat life-threatening conditions. But an unintended consequence of the legislation was a series of dangerous drugs that entered the market before they could be adequately tested.
"The fast-track drug approvals resulted in some premature acceptances," said Sheldon Krimsky, a professor at Tufts University who specializes in scientific ethics.
According to Krimsky, the most egregious case did not involve a biotech drug at all. Rezulin, a diabetes treatment, killed at least 60 people before the FDA recommended it be pulled from the market. But biotech drugs did have their problems. The FDA recalled RotaShield, a childhood diarrhea vaccine, less than a year after it was approved.
Biotech endured another major setback in 1999 with the death of 18-year-old Jesse Gelsinger, who was participating in a gene therapy clinical trial at the University of Pennsylvania. The FDA promptly shut down Penn's gene therapy program. In addition, the National Institutes of Health held hearings, and then-Health and Human Services Secretary Donna Shalala called for stricter guidelines for human clinical trials.
In response, the biotech industry stepped up its political activity. BIO launched its first television ad campaign in January of 2000 under the slogan "Biotechnology, a big word that means hope." The industry increased its campaign contributions for the 2000 election cycle. Washington quickly forgot biotech's problems.
It didn't hurt that Celera Genomics and Human Genome Sciences announced their completion of a working draft of the human genome sequence that same year. This revolutionary gene "map" would give biotech firms the tools to research and develop a host of new treatments for genetic diseases.
"The Human Genome Project was a big step for the industry," said Kay Holcombe, executive vice president of Policy Directions and a lobbyist for the Biotech Coalition, a group of mid-sized biotech companies. "It signaled that medicine would be more genetically driven in the future."
President Clinton was just as enthusiastic. In an internationally televised news conference, he gushed, "Without a doubt, this is the most important, most wondrous map ever produced by humankind."
Clamoring for Change
But Clinton's speech was not enough to overcome biotech's mounting frustration with the White House. Despite the FDA's standing orders to speed up its approval process, the agency actually slowed down under Commissioner Jane Henney, a Clinton appointee. Median approval times for biotech drugs rose from 11.5 months in 1998 to 17.5 months in 2000.
The industry was eager to find a replacement for Henney, and the upcoming elections represented an ideal opportunity to accomplish that goal. Biotech companies and BIO contributed more than $3 million in the 2000 election cycle—nearly double what they'd spent in any previous election. Almost 70 percent of that money went to Republicans.
It took President Bush almost two years to fill Henney's post, but the biotech industry was more than satisfied with the result. Since taking office last November, Mark McClellan has received rave reviews from the industry for working with companies to get drugs approved more quickly.
"Over the last eight months there have been a number of significant FDA approvals," said BIO President Carl Feldbaum. Among them are Genentech's Xolair, the first biotechnology drug for asthma, and Biogen's Amevive, a psoriasis treatment. Both drugs are expected to generate millions of dollars for their developers.
Drug approvals should get an extra boost from President Bush's Project BioShield, which gives the FDA the authority to fast-track vaccines and other treatments that could be used in the event of biological or chemical weapons attacks. Even before this initiative, the biotech industry had made strides in Congress on the homeland security front. Last year, BIO and its member companies successfully lobbied for liability protections in the Homeland Security Act that allow companies to develop vaccines without the threat of lawsuits. The legislation also authorized more than $3 billion for biodefense research and development.
Partnering With Drug Companies
But the industry is not always playing offense. Along with the drug lobby, biotech companies have been fighting an ongoing battle to hold on to their patents. In 2002, they successfully blocked legislation that would have eased the way for generic drugs to enter the market. The industry is dealing with the issue again this year, trying to keep a generic drug provision out of the final Medicare bill.
This year's Medicare debate raises another controversial issue for the industry: price controls. If Medicare were to cover the new prescription drug benefit alone, the government would likely impose price controls, which biotech and pharmaceutical companies oppose. Biotech drugs are among the most expensive to develop, and the industry says it wants a competitive reimbursement rate from insurance companies for these new treatments.
"So many of our companies are developing drugs for the aging population," Feldbaum said. "BIO companies need a reliable and predictable reimbursement process."
Armed with an ad campaign urging Congress to "Keep the care in Medicare," BIO is pushing for a plan that would allow seniors to choose among several private insurers—a surefire way to keep the government from having the bargaining clout to drive down prices.
Critics of the private insurance plan say a prescription drug benefit insured by Medicare alone would be more useful to consumers.
"Private plans have proved themselves to be wasteful and unreliable in delivering health care," said Ben Peck, a Medicare lobbyist for Public Citizen's Congress Watch, a consumer advocacy group in Washington.
The Medicare debate seems poised to go in the biotech companies' favor—especially with the larger and more powerful pharmaceutical industry on their side. Only a handful of big drug firms actually research and develop biotech drugs. But according to BIO, the industry strikes more than 900 deals with biotech companies each year to manufacture and market their products.
Eli Lilly was one of the first pharmaceutical companies to enter into such an arrangement when it licensed human insulin technology from Genentech in the early '80s. Today, nearly 10 percent of Lilly's revenue comes from Humulin, the resulting blockbuster diabetes drug.
A 2002 PricewaterhouseCoopers report says these lucrative partnerships will become even more common in the future: "With pipelines running dry and patents on older drugs running out, today's big pharma is on the hunt for promising products and looking to biotech to replenish its pipeline."
