It was thumbs up for biogeneric legislation and PDUFA’s renewal, thumbs down for government negotiated Medicare drug prices, and plenty of unanswered questions about how the new congress will resolve some of the stickiest problems facing the U.S. health care system:  A panel convened at the recent BIO CEO meeting in New York seemed to be in overall agreement about these topics, even though its members represented a variety of points of view.

Alex Azar, former deputy secretary of the Department of Health and Human Services said that while there is heated discussion about negotiating drug prices for Medicare recipients, “Competition is already working, and if you pull Medicare out of the pool, and negotiate it separately, you actually lower the bargaining power.”  As a result, this is unlikely to be a priority for the new Congress. 

Meanwhile, the Prescription Drug User Fee Act (PDUFA) is certain to receive new funding, mainly because the FDA can’t operate without the additional money raised from industry through this Act.  The question is what new features the Act will have as well.  The Food and Drug Administration (FDA) recently released some recommended improvements. 

“Everyone understands you must pass PDUFA,” said Nick Littlefield, partner and co-chair of the government strategies group at Foley Hoag LLP,  “And some form of drug safety plan will be a part of it.”

If a proposal sponsored by senators Edward Kennedy, Democrat of Massachusetts, and Michael Enzi, Republican of Wyoming, is approved, every drug will need to go to market with an accompanying risk management plan including a great deal of post-marketing surveillance. 

“I would really like to see the FDA’s resources going into the science, so drugs go to the people who they will work for and are kept away from those they will hurt,” said Littlefield.

The Kennedy/Enzi bill has some strong support, but it’s by no means a done deal yet.  “At the end of the day, FDA will get more authority,” said Steve Usdin, Washington Editor at BioCentury Publications.  But nothing else is certain. 

Usdin said that at the moment, “We are in a political environment where there is almost paranoia about drug safety, but little or no focus on drug benefits.” That pendulum, he pointed out, tends to sway back and forth.  Now, there is a trend towards “Total lifecycle management,” of drugs.

The panel probably had the greatest disagreement over biogenerics.  Biotechnology companies have long argued that the question of “equivalence” is much more difficult to answer with biotechnology products as compared to traditional small molecule-based pharmaceutical products.  Proponents of biogenerics, however, have argued they represent as much as a $71 billion savings for the overburdened U.S. health care system, according to Littlefield.

“The only issue that will matter for the biotechnology industry in any major way is follow on biologics,” said Littlefield.  He pointed out that large employers, insurance companies, and generics firms are all pushing for legislation that would make it easier to get biogenerics approved.  Currently, there is no clear approval pathway for such products. 

“The irony is that [biogenerics] raise huge safety issues,” said James Greenwood, president and CEO of the Biotechnology Industry Organization (BIO).  “Will the senate be consistent and look at the safety issues here too?” he asked. 

“Not necessarily,” answered Littlefield.

The rising cost of health care means that more, and possibly much more serious, changes are being proposed, such as universal health care. The current administration, meanwhile, has been taking incremental steps to try and adjust the system by allowing market forces to play a bigger role. 

“One reason costs are so high is because health care is subsidized,” said Azar.  Health insurance provided through employers is not taxed as income, meaning that employees with this type of benefit are paying a reduced price for their insurance.  President Bush has put forward legislation that aims to “level the playing field” Azar said.  One proposal would make employers pay taxes on the health insurance benefits they provide, while individuals who purchase private health care insurance would get a tax break.

“The single biggest source of funding for universal coverage would come from this [reversal of the tax subsidy]; it redistributes the benefit from the wealthy to the poor,” said Thomas Scully, senior counsel and general partner at Alston & Bird LLP, Welsh, Carson, Anderson & Stowe.  Scully is a former administrator of the Centers for Medicare and Medicaid Services.

Some republicans object to the President’s plan because it raises taxes for some people — mainly the wealthiest Americans, while unions initially hated it because it meant a decrease in benefits, Scully explained. Some key supporters, however, are now emerging.  “This is the biggest potential breakthrough policy wise,” he said.  “It is the Holy Grail of universal health coverage.”