Biotech Association Presses Agenda As National Elections Near

The next president--whoever it may be after elections this fall--must make the future of the biotechnology business a priority, according to a leading industry group. In a detailed agenda released late last month and forwarded to each major party's platform committees, the Industrial Biotechnology Association (IBA) identified the issues most important to its 130 members. "The highest-visibility issues for biotechnology this election surround health care reform and patent issues," says IBA director of communications Eric Christensen. Financ- ing issues are also critical to the industry, according to Christensen and others. On health care reform, the IBA agenda calls for a "quality-driven, pluralistic system," one serving the broadest population possible while preserving the widest range of patient choice and avoiding a one-payor system that might be overregulated and might stifle innovation. The group wants all "medically necessary therapies and pharmaceuticals" available to patients in such a system, including all Food and Drug Administration-approved drugs, group C cancer drugs, and treatments published in the peer-reviewed medical literature. Opposes Regulation The agenda opposes proposed laws aimed at regulating specific segments of the biotechnology industry under the banner of health care reform. (here, IBA has suggested that an overall health care reform strategy would be preferable to highly targeted cost-control measures.) For example, in its document IBA objects to amendments to the Orphan Drug Act sponsored by Sens. Howard Metzenbaum (D-Ohio) and Nancy Kassebaum (R-Kan.) that would eliminate a company's market exclusivity when total sales of a drug top $200 million, on the grounds that such legislation would dampen initiative in drug development for rare diseases. On patent-related issues, IBA's agenda supports expanded protections of intellectual property. The Biotechnology Patent Protection Act, proposed by Sen. Dennis De-Concini (D-Ariz.) and Rep. Rick Boucher (D-Va.) is praised, for example. The bill would loosen the definition of a patentable process, making it easier to protect a recombinant DNA process, even when similar to an existing process. It would also bring United States law more into line with laws in Europe and Japan, according to IBA. The agenda favors moves by the National Institutes of Health to patent thousands of partial gene sequences, "as an interim measure." According to IBA, "The patent filing was the only way in which the new technology could be protected from foreign patent infringement and inappropriate technology transfer." The group sees efforts to shorten the U.S. patent approval process as likely to benefit the biotechnology industry. Also, the success of U.S. discussions with European, Japanese, and Canadian officials to standardize laws concerning intellec- tual property will be important in protecting biotechnology products internationally. Regulatory issues are an ongoing concern to the biotechnology industry, says IBA's agenda. The group supports the Bush administration's so-called scope document, released in February, which puts forth a "risk-based" oversight policy on the release of biotechnology products into the environment. That document says, in part, that "although the new biotechnology processes can be used to produce risky organisms, so can traditional techniques; it is the characteristics of the organism, the environment, and the application that determine risk (or lack thereof) of the introduction, not the technique used to produce the organism.... Triggering the exercise of oversight based on the use of a specific innovative technology, such as recombinant DNA, will tend to discourage the use of that technology by industry and re- searchers." The agenda notes that the 90-day moratorium on the issuance of new regulations announced by President Bush in his State of the Union speech allowed involved agencies time to recast regulations according to the new "risk-based" criteria of the scope document. "There's been a receptivity to biotechnology in Washington concerning reform of the patent and regulatory processes," says Stephen A. Duzan, CEO of Immunex Corp. of Seattle and chairman of IBA's board of directors. "It's important not to have excessive hoops for the industry to jump through. There's plenty that still needs to be done--getting more resources for the relevant agencies, for instance--but the FDA and USDA [U.S. Department of Agriculture] have improved their processes, and the patent office has hired new examiners. "But one of the most important issues to the biotechnology industry is the taxation of capital. Biotechnology is a very capital-intensive, high-risk industry." Several recently proposed changes to the capital gains tax structure have had IBA's approval in the past and are included in the agenda. The group endorsed a provision, part of an economic package sponsored by the Democrats, that would have lowered the maximum tax rate on qualified capital gains to 14 percent from the current 28 percent. The package was approved by Congress, but President Bush vetoed it on March 20. The veto came--despite the fact that the rate was lower than the president's proposed rate of 15.4 percent--because Bush objected to other aspects of the package. Currently, IBA is working with lawmakers to achieve changes in the laws governing capital gains that would encourage investors by allowing them to realize more gain after taxes. IBA opposes a bill proposed by Sen. Carl Levin (D-Mich.) and Rep. John Bryant (D-Texas) that the association says would require all companies to calculate the value of unexercised employee stock options and to show that value as a liability on their books. This is "unreasonable," according to IBA's Christensen, because there is no way to assign value to an unexercised option that is not necessarily artificial. IBA claims the law would depress earnings--or increase losses--making it more difficult for smaller biotechnology companies to compete with larger ones for scientific talent. Three-quarters of independent biotechnology companies would be negatively affected by this law, says IBA. "Options are worthless until exercised," Christensen says. "The law is aimed at cutting CEO compensation, but it unfairly affects the biotechnology industry." "Stock options have been an extremely important tool for us," says Duzan. "Every employee at Immunex gets stock options--it provides incentive to work hard." Duzan adds: "Larger, older companies are the target of this law, not the biotechnology companies. We don't want to throw the baby out with the bath water." The Republican National Committee has scheduled hearings for June 15 in Washington, D.C., where testimony on technology issues will be considered for in- clusion in the party platform. The Democratic National Committee held hearings in Cleveland May 18. IBA has submitted its agenda for consideration by both committees. Spokespersons for both parties say that platform language will not be finalized until after the conventions this summer. "Biotechnology may not be one of the burning issues of this election," says Duzan. "But, as an emerging industry, it is important to the future economic health of the United States. For now, we're preeminent in this industry, but there's plenty that needs to be done to ensure that continues in the future. We would like both parties to adopt these ideas."

Biotech Association Presses Agenda As National Elections Near

Interested in reading more?

Become a Member of