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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.)