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The push to create a regulatory framework for generic versions of biotech drugs fizzled last year in Congress, as legislators seemed to lose interest after failing to attach the measure to a major FDA reform bill. But now it’s back, and has gained some unlikely friends in the Bush administration.

The FY2009 federal budget, compiled by the administration’s Office of Management and Budget, for the first time explicitly proposes giving the FDA authority to regulate biogenerics. To recap for those joining us already in progress, biotech drugs — formally known as “biologics” because they’re composed of organic material produced by living cells — currently face no threat of competition in the U.S. even if their underlying patents have expired. The FDA has until now declined to even accept applications for generic biologics, arguing that it lacks the legal authority to do so. (The framework that regulates ordinary generic drugs was required passage of the 1984 Hatch-Waxman Act.)

I’ve written about the subject on several previous occasions. For a general overview, see here. I critiqued the biotech industry’s double standard on biogenerics here, and took on another shoddy argument advanced by a prominent VC here.

In the FY2009 budget, however, the administration proposes a “new authority” for the FDA to approve “follow-on protein products” — yet another buzzword for biogenerics. It’s only a single line in the budget — those inclined to see for themselves can find it in the HHS section of the budget on page 425; the PDF link is here — yet it could be a major turning point in this particular battle.

Of course, the budget doesn’t provide any details, which will have to be worked out in Congress. And there are still plenty of potential pitfalls ahead, as the biotech industry has pushed hard for an explicit term of “market exclusivity” that would fence out biogeneric competition for as long as 14 years (see the Biotechnology Industry Organization’s stand here) even if underlying patents have expired. How all that falls out is largely up to Congress. Still, for anyone who thinks biotech-drug monopolies ought to end the same way they do for ordinary drugs, the administration’s decision is a heartening first step.

(Hat tip to this Chicago Tribune article, which happened to be the first one I saw on the subject, although the budget came out almost ten days ago.)

UPDATE: OK, this makes more sense now — apparently the biotech industry itself is pushing for a biogenerics bill this year, according to this AP story, which suggests that the Bush administration is simply taking industry’s cue. Again. Apparently political momentum for biogenerics has grown to the point that it can’t simply be stonewalled, and the biotech and pharma industries think they’ll get a better deal if they can establish fundamental rules under a Republican administration than they would if a Democrat moves into the White House next year. My prediction: The industry will push hard for a regime that throws up as many roadblocks as possible — not just the market exclusivity issue, although that’s a big one, but also in terms of requiring as much onerous testing of would-be biogenerics as they can get away with.

TODAY’S HEADLINES:

• Teva acquires protein-therapeutic maker CoGenesys for $400M (release)
• ViewRay takes in $25M for MRI radiation-therapy guidance (release)
• NovaMed, Chinese clinical-research outfit, receives $14M (release)
• Progentix Ortho raises first funding round (release)
• Medical imaging co. Point Biomedical recaps with $25M (VentureWire)
• Lumidigm takes in $7M for optical-fingerprint ID systems (VW)
• Medical-software co. Compressus aims to close $14M round (VW)
• Channel Medical Partners aims for $150M med-tech fund (VW)
• Spinal-implant maker Scient’x names Michael Huggins as CEO (release)
• Specialty pharma Cardiokine names Manuel Worcel as CEO (release)
• Respiratory-disease co. Pulmatrix appoints Robert Connelly CEO (release)

Teva acquires protein-therapeutic maker CoGenesys for $400M — CoGenesys, a Rockville, Md., protein-drug biotech spun out of Human Genome Sciences in 2006, has been acquired by Israel’s Teva Pharmaceutical Industries for $400 million in cash. The companies’ joint release is here.

CoGenesys, like its former parent HGS, is focused on the development of protein and peptide drugs for a variety of conditions. The company’s two lead drug candidates aim to treat neutropenia, a depletion of white blood cells that puts people at risk of serious infection, and heart failure.

Teva said the acquisition advances its recently revised strategic goal of pursuing biotech drugs (”biopharmaceuticals”) and generic biologics (”biogenerics”). It’s not entirely clear whether Teva is interested in pursuing CoGenesys’ actual drug pipeline or simply putting its manufacturing technology to use in Teva’s existing international biogenerics business. No biogenerics have been approved for use in the U.S.

ViewRay takes in $25M for MRI radiation-therapy guidance — Gainesville, Fla.-based ViewRay, a developer of MRI-based cancer-radiation systems, raised $25 million in a second funding round. Investors included OrbiMed Advisors, Fidelity Biosciences, Aisling Capital and Kearny Venture Partners.

ViewRay claims its system will be the first to offer real-time “volumetric” imaging of tumors concurrent with radiation treatment, which ostensibly allows radiation oncologists to compensate for organ movement. The funding will go for additional staff and the manufacture and validation of advanced prototypes of the system. Our previous coverage of the company is here.

NovaMed, Chinese clinical-research outfit, receives $14M — NovaMed, a Chinese startup that performs outsourced commercial and clinical-trial management for Chinese and international drug companies, raised $13.8 million in a second funding round. Investors included Fidelity Asia Ventures, its US affiliate, Fidelity Biosciences, and Atlas Venture.

Founded in 2005 by a former AstraZeneca executive and a Chinese Internet entrepreneur, NovaMed essentially acts as a middleman for companies with drugs they’d like to sell or test in China. Depending on the client, NovaMed says it will do everything from running clinical trials and shepherding drugs through the Chinese regulatory process to manufacturing, distributing and selling pharmaceuticals.

The company had previously raised roughly $6 million. NovaMed said it will use the new funding to expand its operations and also to in-license new drugs for deveopment or sale in China.

Lumidigm takes in $7M for optical-fingerprint ID systems — Lumidigm, an Albuquerque, N.M., developer of multispectral fingerprint scanners, raised $7 million in a third funding round, VentureWire reports, citing a regulatory filing. Investors included Epic Ventures led the round, joined by new investor Sun Mountain Capital and existing investors Fort Washington Capital Partners, Motorola Ventures, Draper Fisher Jurvetson New England and Intel Capital. Lumidigm’s technology aims to read fingerprint information both from the skin surface and from subsurface layers to improve accuracy and foil attempts to spoof the technology.

Medical-software co. Compressus aims to close $14M round — Compressus, a Washington, D.C., software maker whose products link hospitals and doctors to government agencies for public-health monitoring and emergency response, is looking for an additional $1.3 million to close out a $14.3 million third funding round, VentureWire reports. The company, which was founded by three lobbyists, has so far raised more than $27 million from angel investors.

Channel Medical Partners aims for $150M med-tech fund — Channel Medical Partners, a Skokie, Ill., VC firm focused on medical-device investments, aims to raise a $150 million second fund, VentureWire reports. The new fund would be more than triple the size of its $40 million initial fund, raised in 2001. Channel aims to fund 12 to 15 startups with the new cash, and will concentrate on device firms, although it is open to investing in diagnostics, drug delivery and “specialty supply” companies as well.

It’s always fascinating to see just how entitled biotechnology investors feel about the outsized rewards the industry bestows whenever one of their long-shot companies finally strikes it rich — not to mention how thoroughly that sense of entitlement seems to muddle their thinking.

Case in point for the moment is Steve Burrill, CEO of the life-science VC firm that bears his name, and in most respects a sage and intelligent man. Yet here he is quoted in Fortune on the disaster that awaits biotechnology should Congress allow the FDA to approve generic forms of biotech drugs, here referred to as “biosimilars,” once the original patents expire:

G. Steven Burrill, CEO of Burrill & Company, a biotech venture capital firm, believes the government faces a huge dilemma in its quest to cut healthcare costs while also maintaining incentives for innovation. “It’s the new technologies of biotech that are moving us toward better preemptive and predictive medicines - the very medicines that will reduce healthcare costs. So far, the government’s approach has been schizophrenic.”

Burrill notes that biosimilars change the entire risk/reward equation for biotech investors. “This will have a bad effect on the capital markets that fund biotechs,” he says. “Anything that reduces the potential reward for those capital markets could be devastating for the industry.”

Leave aside the notion that biotechnology offers the hope of reducing healthcare costs — most evidence to date suggests biotech drugs and technologies do exactly the opposite. Instead, consider Burrill’s implicit — and breathtaking — assumption that no biotech investor anywhere has ever considered the possibility that expiring patents might one day lower the sky-high prices of most biotech drugs. No wonder the growing enthusiasm for biogenerics comes as such a rude shock to these folks.

Of course, limits on patent protection are written into the U.S. Constitution, so they really shouldn’t take anyone by surprise. (The relevant clause lies in Article I, Section 8, amidst other specified powers of Congress: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Emphasis added, of course.) If investors really thought biotech patents would grant their holders a perpetual monopoly, particularly in an era of rampant healthcare inflation and biotech drugs that can cost $200,000 a year, either they’ve been drinking the BIO Kool-Aid or they probably shouldn’t be allowed to dress themselves.

Recall also that pharmaceutical investors have lived with patent expirations and generic competition for better than two decades, and at least until the industry hit its recent bad stretch (see our coverage here), they’ve coped with it just fine. Had that industry continued to innovate the way it’s always claimed it does, it wouldn’t be in the pickle it’s in now.

Besides, biotech investors thrive on risk, or they wouldn’t be biotech investors. Plunking money into biotechs that are far more likely to collapse than return an Amgen-sized jackpot isn’t exactly rational, as I’ve noted myself on more than one occasion. With that kind of mentality, the possibility that biotech profits might be curtailed by biogeneric competition — eventually, that is, as in ten to 14 years down the road — surely pales when compared to the vastly more likely chance that a hot new drug simply won’t work.

At the end of the day, I doubt Burrill or any other opponent of biogenerics really believes they will “devastate” the biotech industry. These folks do, however, undoubtedly want to make the most of biotech’s legal monopolies while they can, and they don’t seem to mind ginning up alarmist scenarios in order to preserve the status quo. As I’ve argued before, if the biotech industry is so delicate that it requires perpetual protection from the cold, cruel winds of competition, it can’t possibly be anywhere near as innovative and revolutionary as it has always claimed.

See also: Biotech’s double standard on biogenerics

(UPDATED: See below.)

Yesterday, the WSJ Health Blog cited a WSJ story as evidence that “biogenerics” — that is, generic versions of biotech drugs, which currently don’t exist — need to be treated with caution. Unfortunately, that post missed a much more important point about biogenerics: The double standard that the biotech industry holds when it comes to determining whether different batches of biotech drugs are equivalent or not. The subject is still widely misunderstood, thanks in part to chaff kicked up by the biotechnology industry itself. (See our previous coverage here and here.)

The original WSJ story, written by David Armstrong and Geeta Anand, concerned production problems at a new Genzyme plant making Myozyme, the company’s new drug for a rare genetic condition called Pompe disease. Myozyme produced at the new plant, it turns out, differs measurably from that pumped out by the same genetically engineered cells at the company’s older manufacturing facility. In particular, the “new” Myozyme appears to contain less of a carbohydrate that helps muscle cells take in the drug. Because of this difference, the FDA has so far refused to approve the new manufacturing plant, which raises the prospect of Myozyme shortages and a financial hit for Genzyme.

The WSJ story itself didn’t delve into the issue of biogenerics. On the health blog, however, Armstrong wrote:

Making biologics is complicated work, and that’s one reason the biotech industry has voiced caution about legislation to allow generic versions of the medicines.

In the case of Myozyme, billions of cells from hamster ovaries growing in large stainless steel tanks produce the enzyme Pompe patients lack. The fact that Genzyme, which has loads of biotech experience, is having such difficulty ramping up production of its own drug heightens worries about the ability of generic manufacturers to accurately copy brand-name biotech drugs.

The first issue here is that there’s nothing new about biotechs finding that new production batches of a complicated protein differ in certain ways from older batches. I listed several examples in an online column I wrote for the WSJ more than three years ago, and there have undoubtedly been others since. Sometimes these differences are serious; more often, they’re not. When there is a major discrepancy, as there was for Genentech’s drug Raptiva (then called Xanelim) in 2001, the FDA requires the biotech to carry out clinical trials to ensure that the new production line is pumping out a drug that’s equivalent to the old stuff. So far, the FDA isn’t requiring Genzyme to conduct new clinical trials of Myozyme produced at the new facility, company spokesman Dan Quinn told me.

The second issue — and those of you who’ve followed these debates can probably see where I’m going — is that the biotech industry wants to have it both ways when it comes to the “complicated work” of making biologics. Where biogenerics are concerned, the industry insists that copycat versions of biotech drugs must undergo those expensive and lengthy clinical trials in the interests of “patient safety.” When it comes to their own drugs, however, biotech companies are perfectly willing to rely on a battery of simpler tests to ensure that a new production batch is equivalent to an old one, and only run clinical trials as a last resort (and when forced to by the FDA).

All of which suggests that it would probably suffice to subject any would-be copycat drug to the same set of tests that biotech manufacturers themselves must meet for a new production facility. If it passes, it’s approved. If not, then it’s time to consider clinical trials. In fact, this is pretty much the “case-by-case” strategy adopted by the House and Senate biogenerics bills — ones that I’m pretty sure the Biotechnology Industry Organization opposed. In any event, it doesn’t seem too much to ask that journalists covering these debates realize that the case against biogenerics is a lot weaker than the industry would like us to think.

UPDATE: This NPR story (via the LAT) makes some of the same mistakes. It’s not the complexity, folks — it’s whether there are reliable tests for ensuring that batches of these complex molecules are equivalent to one another short of clinical trials, which there most certainly are.

UPDATE REDUX: The In Vivo blog weighs in with a related story about the slow start to sales of Omnitrope, a generic human-growth hormone (which they refer to as a “biosimilar,” a word preferred by the biotech industry).

UPDATE, TAKE THREE: I revised the headline and first paragraph to better reflect the post’s main point. I also wanted to belatedly credit David Williams of the Health Business Blog for sparking this train of thought in the first place with this post. (I’d written about his thoughts on the subject earlier, but now that I’m thinking about it, there was no good reason not to mention it again.)

House-Senate confrontation set over biogenerics – Late last month, a key group of senators reached agreement on legislative provisions that would authorize copycat versions of biotech drugs, which are typically complex proteins manufactured by genetically engineered cells (see details here and here). These provisions would finally put biotech drugs — which don’t face cut-rate competition once their key patents expire — on a par with traditional pharmaceuticals, and have been a long time in coming. They’re not perfect, but they’re about as good a compromise as we’re likely to see any time soon..

The catch is that biogenerics supporters want to attach this langauge to a reauthorization of the FDA’s user-fees act, the awkwardly named PDUFA, which has to pass by September to keep the FDA operating smoothly. The Senate’s version passed in May, whereas the House just approved its version yesterday — but didn’t include a biogenerics pathway. The senators want to add it to their version of the bill, which has to be reconciled with the House version in a conference committee. But key House members, including Energy and Commerce Chairman John Dingell, a Michigan Democrat, appear likely to object, since they haven’t had a chance to weigh in on the provision.

The upshot: Turf wars between the houses of Congress may cost us our best shot at biogenerics legislation in some time. Tying the measure to PDUFA would be one of the best ways to sidestep legislative roadblocks that opponents and their biotech/pharma backers are likely to throw up — but the window is closing rapidly. The WSJ has more here.

Digital medical records are good for your health — or are they? One of the strongest arguements for digitizing medical records is that they’ll help prevent medical errors and improve medical care. A recent review of other studies in the journal Health Services Research gave digitized records a strong vote of confidence when it found that hospitals that switched to electronic drug-ordering systems saw a 66 percent drop in medication errors. (Such mistakes apparently kill 500,000 U.S. hospital patients every year.) Similarly, a report from the Pharmaceutical Care Management Association predicts that electronic prescribing could save Medicare as much as $29 billion over the next two years while preventing two million medication errors.

As with any technology, however, electronic records are no panacea. Another study of walk-in doctor visits found no improvement in treatment quality among practices that used electronic medical records versus those that still relied on paper. The study’s conclusion: Implementing digitized records is just the first step — doctors and medical groups still need to do a lot of work to get the most out of them.

On a related note, a Senate committee recently passed legislation that would offer subsidies to convince doctors to install digital health-record systems.

RNAi is hot, hot, HOT — Once again, it’s boom times for a new drug technology, and this time the spotlight is on RNA interference — a fascinating but largely unproven method for turning off individual genes by using a short stretch of double-stranded RNA to activate ancient gene-silencing machinery inside cells.

The party really got started last year, when Merck paid $1.1 billion to acquire Sirna Therapeutics, a fledgling RNAi company that had barely managed to move a single drug into an early-stage trial. Now things have heated up even further. Last Friday, AstraZeneca struck a $400 million deal with Silence Therapeutics. Then on Tuesday, Roche stepped up to forge a $1 billion deal with Alnylam, an early pioneer in the area.

What’s worth remembering is that no matter how promising a technology like RNAi seems, putting it to practical use almost always takes far longer and costs more than people expect in the early stages. Just take a look at the roll call of other drug technologies that have undergone similar cycles of hype and disappointment — gene therapy, antisense, therapeutic vaccines. All remain promising — but none of them worked the first time out of the gate. Even monoclonal antibodies took close to two decades before anyone could make a reasonable drug with them. Maybe RNAi will be different — but I wouldn’t bet my wallet on it.

Have cancer vaccines gotten a raw deal? A paper in Clinical Cancer Research (described here) argues that regulators and companies may be too quick to dismiss clinical-trial results if they focus on tumor shrinkage rather than long-term outcomes like survival. That may well be true, as tumor shrinkage is a notoriously bad measure of whether drugs work or not, although it’s also worth noting that a reconsideration still wouldn’t have helped Dendreon’s Provenge vaccine, since its survival data was so statistically equivocal. (Separately, the SEC has now opened an informal inquiry into Dendreon’s public disclosures about Provenge this year.)

DNA transplant “transforms” microbial species – J. Craig Venter’s group at his eponymous institute takes the honors, described here in the WaPo. Next up: Transferring an entirely synthetic genome into a DNA-less microbe to create “artificial life,” something Venter says may happen within months. Similarly, here’s the NYT on the new science of “synthetic biology.” Brace yourselves.

Does “pay for performance” improve medical care? A few weeks ago, the WSJ said no, citing a Medicare experiment. Today, the NYT says yes, citing… a Medicare experiment! I’ll have more to say once my head stops hurting.

Pre-implantation genetic diagnosis may harm fertility – Or so say the authors of a Dutch study described by the WSJ here. Several researchers seem to think the results need to be verified elsewhere before abandoning the procedure, in which a single cell is extracted from an IVF embryo for genetic analysis.

Stem cells tailor their own environments — At least according to Canadian researchers, who explored the specifics of how embryonic stem cells communicate with the cells around them. The Globe and Mail has the story.

Simple enzyme short-circuits bacterial drug resistance – Basically, it prevents bacteria from swapping the genes that confer resistance to antibiotics.

High-throughput output –

• Vermont sets up a Web site comparing pharmacy drug prices (Kaiser)
• Researchers discover molecule that may promote food allergies (BBC)
• Breast-cancer risk genes may not influence survival (WSJ)
• Congressional Democrats want to know who muzzled the former surgeon general (Bloomberg)
• Scientists identify gene linked to autism (BBC)
• Robotics help stroke patients regain function (NYT)

(NOTE: This item originally incorrectly stated that J. Craig Venter’s company, Synthetic Genomics, was involved in the research that transplanted one microbe’s genome into another. In fact, it was Venter’s own research institute, the J. Craig Venter Institute.)

(Note: This item has been copied over to the Life Sciences page from its original location on the VentureBeat main page. To view it in its original context, with comments, click here.)

A second legislative fight for the biotech industry is shaping up in Washington over whether to give the Food and Drug Administration authority to approve “generic” versions of biotechnology drugs whose patents have expired.

Measures that would grant FDA that authority, introduced separately in the House and Senate, are billed as a natural cost-saving measure by supporters. They note the high cost of many biotech drugs and the fact that several best-sellers are expected to go off-patent over the next few years. To biotech’s biggest companies and their lobbyists, however, the effort could jeopardize public safety and the incentives that lead companies to spend vast sums in search of new drugs in the first place — at least unless the copycat products are required to go through the same arduous and expensive clinical trials as their brand-name counterparts.

Here, the industry relies on an argument that is one part science and one part misdirection. Biotech drugs generally consist of large, complex proteins that are much more difficult to understand than the relatively straightforward active chemical ingredients in traditional pills. The industry argues that it’s impossible to analyze copycat biotech drugs thoroughly enough to know whether or not they’re identical — or at least close enough — to a name-brand version. Which, of course, leads to the demand that copycat biologics run the same human-trial gauntlet as name-brand drugs, a requirement that might run up development costs so high that a “generic” biotech drug wouldn’t necessarily be any cheaper than its rival.

The problem here is that some biotech-drug proteins aren’t so complex as to defy analysis. The FDA, for instance, already approved a copycat version of human growth hormone called Omnitrope a year ago, after a variety of laboratory and limited human tests allowed FDA scientists to determine that it was “highly similar” to its name-brand cousin. That sort of testing isn’t possible for all biologic proteins, but as analytical laboratory technology gets better, so will the FDA’s ability to correctly assess the similarity of even complex protein drugs. Last month, in fact, FDA Deputy Commissioner Janet Woodcock testified before Congress that the agency already has the skills to make those assessments in some cases. Since the bills in question simply give the FDA the authority to authorize copycat versions of biotech drugs when the evidence warrants it, it’s hard to see what all the shouting is about.

Except, of course, that this fight — like most such Beltway brawls — is at heart about money. Unlike Big Pharma, which has to brace itself for generic competition every time a billion-dollar drug approaches the end of its patent lifetime, biotech companies face little threat of pricing pressure even when patent protection lapses on their cash cows (such as Amgen’s Epogen, a version of the erythropoietin molecule pictured above). Given that annual costs for many best-selling biotech drugs run into the tens of thousands of dollars — even hundreds of thousands in some cases — the green at stake is truly astonishing.

As for the innovation argument, it helps to remember that patents are limited, artificial monopolies created for public-policy reasons that are written into the Constitution itself. If innovation in the biotech industry really depends upon perpetual monopolies over incredibly expensive drugs — well, let’s just say that this is not an argument you’re likely to hear explicitly from a biotech representative any time soon.