Senior Staff Writer

As the presidential election approaches this November, biotech industry leaders pour through documents and meet with campaign officials, all looking for clarity in understanding the platforms of Sens. John McCain (R-Ariz.) and Barack Obama (D-Ill.).

Through all their efforts, one thing is clear. "It's maybe surprising, but my take is, on the issues that are going to be directly relevant to the biotech industry, the two candidates seem surprisingly close together," said Greg Conko, senior fellow with the Washington "think tank" Competitive Enterprise Institute.

"There's not a lot of difference when you think about the things that can impact biotech," agreed Robert W. Baird & Co. analyst Christopher Raymond.

And Jim Greenwood, president and CEO of the Biotechnology Industry Organization said in a media briefing in September, "They both support embryonic stem cell research and both look as if they want to move away from an ideological-based policy making to a science-based policy making where that's appropriate."

Furthermore, both Sens. McCain and Obama want more government funding for research, as well as stronger global warming initiatives - an effort that bodes well for biotech companies working toward the production of cellulosic ethanol. They both intend to make permanent the R&D tax credit, to protect intellectual property, to see biosimilars legislation passed and to have more oversight of the financial markets.

But the candidates also appear aligned on issues that might negatively affect the biotech industry, such as their support of the reimportation of drugs and of Medicare Part D price negotiation. "It doesn't look good for the pharma industry broadly or the biotech industry specifically regardless of who the next president is," Conko said, "because these overriding concerns of cost-cutting will have a big impact on how the industry is regulated."

Drug Reimportation

In a Your Candidates - Your Health 2008 survey, McCain suggests addressing health care costs by "allowing for more affordable drugs through safe reimportation and faster introduction of generic drugs."

Likewise, Obama supports drug reimportation, commenting that drug companies should profit from their research, but that some "are exploiting Americans by dramatically overcharging U.S. consumers."

"These companies are selling many of the exact same drugs in Europe and Canada for less than half the price that they charge Americans," Obama wrote in his survey.

Both he and McCain would allow Americans to buy cheaper drugs, determined to be safe, from other developed countries. Drugmakers have long opposed ideas of reimportation because it puts patients at risk of receiving products that do not meet FDA standards, has the potential of eroding intellectual property rights and puts foreign constraints on the revenues that fuel innovation.

Medicare Price Negotiation

Another supported policy by McCain and Obama could, some industry leaders say, stifle innovation at an even greater degree.

"For both candidates, the big gorilla in the room, if you will, is Medicare reform," Raymond said. "I think that's too big of an issue to be tackled in the near term."

Still, McCain and Obama are both behind legislation that would allow for Medicare Part D price negotiation, an effort that concerns BIO.

Biotech products such as erythropoietin are a large portion of Medicare's drug expenses. They are costly to produce and treat mostly elderly patients who have cancer or on kidney dialysis.

"There are going to have to be efforts, regardless of who the next president is, to figure out how to save money across the board in Medicare and Medicaid," Conko said, "and because some of these biotech products that are going to be used in geriatric populations are so hugely expensive - they can run $10,000, $15,000, $20,000 a year per patient - there is a clear and growing interest on both sides to reign in those costs."

But Joshua Boger, BIO chairman and the head of Vertex Pharmaceuticals Inc., said in September that some of these cost-saving measures are already in place.

"The dialogue in the election and the dialogue in the country on the street is very much around many of the issues and problems that BIO companies have been configured to confront," he said. "Certainly, being in the middle of a robust and problem solving, as opposed to finger pointing, discussion of health care costs is a great place for biotech companies to point out that, on the medical side, the most straightforward way to reduce medical costs is to reduce suffering and to cure diseases."

Biotech "is right in the thick of the problem solving" because of its ability to increase crop yields in order to address worldwide food shortages, and its new methods of generating energy, he said.

Biosimilars Legislation

Both candidates support biosimilars legislation, hoping the competition will keep a tighter control on drug costs. Obama said he would "prohibit large drug companies from keeping generics out of the marketplace" by paying off generic drug makers in order to "preserve their monopolies and charge Americans exorbitant prices for brand name products."

McCain said that he supports greater competition in the biotechnology market by allowing follow-on biologics into the marketplace, but also wants to ensure that "future research and development is not hindered."

While legislation to authorize a biosimilar pathway is expected to pass in the next Congress, "the wrangling right now centers around the length of exclusivity," Raymond said, and the question over whether they will have "a high bar to determine comparability."

Obama and McCain campaign representatives who attended the Generic Pharmaceuticals Association annual conference in Washington in September appeared to support a shorter exclusivity timeframe of about five years, Conko said, as opposed to the 14 or 16 years asked for by industry.

Comparative Effectiveness Research

McCain and Obama support comparative effectiveness research in which treatments are compared to determine which work best, but they say it should be used only as an informational tool for patients and doctors and not as a guide for Medicare and private insurers to deny coverage for drugs that do not perform as well.

"We need to ensure that this does not stifle the spirit of innovation in our medical sciences that has made America a world leader and maintains patient choice," McCain wrote.

Novartis' CEO Daniel Vasella chose to take Pfizer Inc.'s Lipitor for his high cholesterol due to side effects he experienced with his own company's product Lescol - a clear illustration that no drug is a one-size-fits-all. The general concern about comparative effectiveness research is that it will lead to insurance carriers covering only the drugs that are effective in the largest number of patients.

"The underlying question then becomes what happens to those people who don't tolerate well the so-called best-in-class medicine that is the only one that the health plan will reimburse," Conko said.

Regulatory Issues

With either candidate as president, it appears that more regulation of the financial markets is likely, although a lot will depend on who the next president nominates to head the various regulatory agencies.

McCain is "clearly a moderate when it comes to regulation" and Obama's position on regulatory issues "does not appear to be a radically liberal one," Conko said, "so my guess is they would not be as much different in practice as the candidates would like us to think."

The bigger issue is how the current financial crisis might affect the availability of venture capital to the biotech sector.

As for drug regulations, Conko pointed out that the FDA's willingness to approve marginal products is largely influenced by Capitol Hill, with therapeutics and medical devices reaching the market faster during the Clinton years. Since Vioxx and other drug safety issues, however, there has been "a move toward being more cautious in a way that I think is unwarranted," Conko said. That caution is expected to continue with either of the two candidates as president.

Intellectual Property and the Patent System

Both Obama and McCain say they will protect intellectual property at home and abroad, and both support more resources for the United States Patent and Trademark Office, also giving it authority to resolve patent disputes in order to eliminate the need for costly litigation.

BIO has said that it agrees with McCain's view that too much protection can hold back ideas and legitimate commerce, but notes that current protection standards have not been a problem. The organization seems more concerned about Obama's support of humanitarian licensing policies, under which certain medications would be available off-patent in developing countries. BIO says the policies would weaken the Bayh-Dole Act and increase a company's risk by undermining investments.

The current patent system may serve the biotech industry well despite the dire financial markets, according to John Berlau, director of the Center for Entrepreneurship at the Competitive Enterprise Institute. "If a company holds a variety of patents, that actually might be seen by investors, in this time, as a safe haven," he said.

Raymond agreed, saying that "with the macroeconomic headwinds, there's already a lot of evidence that people are running toward the resistant sectors like health care and biotech."

Embryonic Stem Cell Research

Both candidates are in favor of embryonic stem cell research with Obama recognizing that federal funding restrictions has forced researchers to move to other countries and with McCain noting that recent breakthroughs "raise the hope that one day this debate will be rendered academic."

The candidates also support certain ethical standards in conducting the research, meaning only embryos that would otherwise be discarded can be used and that the embryos cannot be created for research purposes - a practice known as "fetal farming."

McCain and Obama also support funding of other approaches such as adult stem cells and cord blood.

Healthcare Reform

In terms of health care reform, Obama intends to create a public health insurance program that mandates coverage for children, while McCain wants to offer a $5,000 tax credit to families to help them purchase insurance. Both want to eliminate employee dependence on employer-provided plans.

Greenwood said they each "have good ideas on how to expand access" and BIO expects "to be a key player as we are a key stakeholder" in any reform package.

Published  October 6, 2008