Cheaper Medicines for the Public Good

By Peter Maybarduk
The Chronicle of Higher Education
Letters to the Editor

To the Editor:

Sheldon Elliot Steinbach’s “Academe Should Oppose Speedier Approval of Generic Drugs” (The Chronicle, April 25) places universities’ highly uncertain financial interests in technology licensing ahead of their public missions to promote the public good through, for example, ensuring that the fruits of university research are publicly available and affordable. If, as Steinbach recommends, universities support legislation to require long periods of marketing exclusivity for biologic medicines, the result could be a financial windfall for brand-name biologics companies at significant — and, in some cases, deadly — public cost.
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Biologic medicines include key drugs for cancer, diabetes, and heart disease. But biologics routinely cost tens of thousands of dollars per patient per year, sometimes more than $100,000. Those high prices limit access and absorb resources that could be invested in meeting other health-care needs.

The availability of follow-on biologics, or biogenerics, would save consumers and health programs billions of dollars per year. Until now, the Food and Drug Administration has had no efficient mechanism for biogenerics review, and so very few have come to market. But lawmakers are debating several proposals for biogenerics review.

The worst of the proposals, supported by the Biotechnology Industry Organization — and in principle, it seems, by Steinbach — advocates shielding biologics from biogeneric competition for a minimum of 14 years. Every year of exclusivity would cost consumers billions.

Meanwhile, universities’ financial gains from royalties on biologics are not clear. Many university technology-transfer offices operate at a net loss.

Further, the vast bulk of the $45-billion that U.S. academic centers received for research and development in 2006 came not from licensing, but from federal funds. The public deserves, at an embarrassing minimum, that universities not lobby to keep prices high while taking the people’s money.

Peter Maybarduk
Attorney
Access to Medicines Project
Essential Action
Washington

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Here is the full text of the submitted letter:

Chronicle LTE: Biogenerics

May 3, 2008

To the Editor:

Sheldon Elliot Steinbach’s Commentary “Academe Should Oppose Speedier Approval of Generic Drugs” (Issue 33, April 25, 2008) places universities’ highly uncertain financial interests in technology licensing ahead of their public missions to promote the public good through, for example, ensuring fruits of university research are publicly available and affordable. If, as Steinbach suggests, universities support legislation to require long periods of marketing exclusivity for biological medicines, the result could be a financial windfall for brand-name biologics companies at dramatic, and in some cases deadly, public cost.

Biologic medicines include key drugs for cancer, diabetes and heart disease. But biologics routinely cost tens of thousands of dollars per patient per year, and sometimes top one hundred thousand. These high prices limit access, and absorb resources that could be invested in other health care needs.

Availability of follow-on biologics, or biogenerics, would save consumers and health programs many billions of dollars per year. Until now, the FDA has had no efficient mechanism for biogenerics review, and so very few have come to market. But lawmakers broadly agree on the need to introduce an efficient pathway to biogenerics approval, and are debating several proposals.

The worst of these proposals, supported by the Biotechnology Industry Organization (BIO) and in principle, it seems, by Steinbach and the Association of American Universities, advocates 14 years of data exclusivity, during which biogenerics would be effectively excluded from the market, and brand-name companies would enjoy a monopoly. Such a bill would be a tremendous windfall for BIO: conventional drugs receive “only” a maximum eight years exclusivity, and the average patent, if we accept BIO’s figures, lasts an average 11.5 years after first sale. Under BIO’s proposal, new biologics would be shielded from competition a minimum 14 years. Some, through patents and patent extensions, would have even longer monopolies. Every year of exclusivity would cost consumers billions.

Meanwhile, university financial gains from biologics royalty payments are not clear. Many university technology transfer offices – some studies suggest half – operate at a net loss. The top 7% of universities take 60% of total technology licensing revenue, generally from a few blockbuster products, which may or may not offer significant health or other benefits to the public.

Further, the vast bulk of the $45 billion universities received for research and development in 2006 came not from licensing — as some readers of Steinbach’s commentary might be led to believe — but from federal funds. The public deserves, at an embarrassing minimum, that universities not lobby to keep prices high while taking the peoples’ money.

The relentless, and often unfruitful, quest to increase licensing revenues threatens to separate universities from their historic missions to serve the public interest. If the American Association of Universities has its way – and BIO wins in Congress – we will all pay more than necessary, for longer periods of time, for biological medicines. For those lifesaving products with prices in the tens of thousands, this is a dangerous game indeed.

Peter Maybarduk

Attorney
Essential Action
Access to Medicines Project

P.O. Box 19405
Washington, D.C. 20036
[email protected]
http://www.essentialaction.org/access/