Washington Editor

WASHINGTON - When Brigitte Boisselier held a press conference in the waning days of 2002 to announce that her controversial company, Clonaid, had come through on its promise to clone a human, you could almost hear the rumbling in Washington.

Following the announcement, well-respected scientists did the rounds on television to question the validity of Boisselier's claims, while industry leaders and politicians issued statements denouncing reproductive cloning.

One of the first on the bandwagon, incoming Senate majority leader Bill Frist (R-Tenn.), issued a statement calling the announcement "disturbing," saying it "reinforces the need for Congress to continue its efforts to enact a ban on human cloning."

When the 107th session of Congress ended in December, all legislation that did not make it to President Bush's desk died. That means Rep. Dave Weldon's (R-Fla.) bill that would criminalize all forms of cloning, which passed the House in a 265-162 vote, is no longer valid. (See BioWorld Today, Aug. 6, 2001, and Nov. 1, 2001.)

And competing legislation introduced in the Senate by Sam Brownback (R-Kan.), calling for a ban on all cloning, and by Dianne Feinstein (D-Calif.), to ban human cloning but allow therapeutic cloning, must also be reintroduced.

Republicans take over the Senate next week, but that doesn't necessarily mean therapeutic or research cloning will become a dream of the past. As pointed out by a number of industry insiders, science has powerful allies, including Orrin Hatch (R-Utah) and Arlen Specter (R-Pa.)

Whether to clone is the not the only holdover from 2002.

Prescription Drugs In Hands Of Republicans

Another issue sure to draw headlines surrounds prescription drugs.

Sharon Cohen, vice president of government relations for the Washington-based Biotechnology Industry Organization (BIO), said lawmakers are committed to moving forward on a prescription drug coverage plan.

"Part of this is politically driven," she said. "With [Republicans] controlling both bodies of Congress and the White House, they have to produce. We know it and so does the public," Cohen said. "And if they don't, two years from now when we are looking at another presidential race and another congressional race, it would be perceived as a promise not fulfilled."

Even though the Senate never reached a compromise, last summer the Republican-dominated House passed legislation considered favorable to the drug industry. (See BioWorld Today, June 21, 2002; June 24, 2002; and Oct. 10, 2002.)

But the divided Senate did take some action on prescription drugs with passage of the Greater Access to Affordable Pharmaceuticals Act (S.812), sponsored by Sens. John Edwards (D-N.C.) and Susan Collins (R-Maine). That legislation would reform the Hatch-Waxman Act of 1984 by closing loopholes that have enabled the pharmaceutical industry to delay generic competition by stacking automatic 30-month patent extensions when a generic company files for FDA approval. (See BioWorld Today, Aug. 1, 2002.)

Cohen said BIO will closely watch the rebirth of S.812. "I don't see it all coming back, but parts of it probably will," she said.

That legislation was particularly threatening to the industry because it would have diminished patent rights, Cohen said. (Biologics are not included under Hatch-Waxman.)

Days before the mid-term elections, President Bush recommended his own generic drug plan that would limit a brand-name company to one 30-month patent extension per generic application. The plan was introduced in the form of an FDA rule that requires a 60-day comment period, commencing Oct. 24. Washington insiders say such rules usually take a year before becoming effective. (See BioWorld Today, Oct. 10, 2002, and Oct. 22, 2002.)

One way or another, the government is going to impact the price and availability of prescription drugs.

Reimbursement Another Hot Topic

Beginning Jan. 1, Medicare recipients who receive treatments in the outpatient hospital setting could be impacted by new reimbursement rules implemented by the Centers for Medicare & Medicaid Services (CMS), formerly HCFA. (See BioWorld Today, Nov. 11, 2002.)

Amgen Inc., whose anemia drug Aranesp would be affected due to the adjusted reimbursements to the Outpatient Prospective Payment System (OPPS) - since CMS determined that Aranesp is "functionally equivalent" to Procrit, a similar product made by Johnson & Johnson - filed a lawsuit, but a District of Columbia judge on Christmas Eve dismissed the case, citing the company's lack of standing. (See BioWorld Today, Dec. 27, 2002.)

Carl Feldbaum, BIO's president, released a prepared statement saying, "By slashing reimbursement rates well below costs for many new drugs, the agency's new rule in some instances will provide an incentive for hospitals to offer older medicines instead of innovative products that may be safer or more effective."

Cohen added, "We'll see tangible outcomes once a patient's care is disrupted. We can see it coming, but it hasn't hit yet. Once it hits, we'll have clear evidence to go back to Capitol Hill and say these changes are impacting patients' care."

She said Congress has the authority to alter the rule, "and whether or not they do is largely going to be through a lot of pressure and education on our part."

Meanwhile, after the New Year rings in, BIO intends to prepare a tax incentives package aimed at correcting unintended mismatches in the law, Cohen said.

For example, she said, many smaller biotechnology companies cannot deduct their net operating losses (NOLs) from their taxable income because they are unprofitable and therefore have no taxable income.

"We think this is a mismatch in the tax code because there really isn't any other business entity that accumulates the size of losses that we do for such a long period of time, where it cannot be taken against profit for tax purposes," she said.

In another area, Cohen said BIO is looking into the code that requires a company to relinquish the value of accumulated NOLs if there is a change in company ownership.

"This is not specific to biotechnology, but the impact is unique because biotech companies have the need to generate large sums of capital," she said. "If you bring in large sums of money, i.e., through a partnership arrangement where there may be a shift in equity in the underlying corporate structure, that triggers a change in the ownership."