By Kim Coghill
WASHINGTON ¿ Sen. Ron Wyden is giving the National Institutes of Health until January to prove that drug development would be stifled if companies were forced to pay higher fees on blockbuster products that are developed in part by government research.
Around the middle of the summer, Wyden, a Democrat from Oregon, released a statement saying the taxpayers¿ pockets need to be protected when federal money results in drugs that generate $500 million or more in U.S. sales. The senator had intended to introduce an amendment known as the ¿return on investment¿ tax to the fiscal year 2002 Health and Human Services Appropriations bill.
That plan was pushed back after the NIH told Wyden that it is difficult to track the outcome of government-supported drug research because there¿s no system in place to gather and store information. The NIH annually invests about $16 billion in research-related activities.
¿There wasn¿t even a sufficient database at the NIH to keep track of the research,¿ Carol Guthrie, Wyden¿s spokeswoman, told BioWorld Today. ¿They can¿t tell you what their research has resulted in because they can¿t keep track of it.¿
Wyden has given NIH officials until Jan. 1 to resolve the problem by setting up a web-based database that will identify grants and contracts, including any FDA-approved drugs that arise from the funding. And the agency will standardize its language to simplify its reporting requirements.
Guthrie contends that the senator¿s actions are directed at protecting the taxpayer, but others in the biotechnology community see any effort to further tax the industry as potentially detrimental.
And this time they¿ve got the NIH on their side.
In a conference committee report for the fiscal year 2001 Health and Human Services appropriation, the NIH wrote that ¿contravening the provisions of the Bayh-Dole Act would have a deleterious effect on biotechnology development and that if direct financial recoupment of the federal investment in biotech was required, it could impede the development of promising new technologies.¿ The Bayh-Dole act of 1980 promotes technological competitiveness through the transfer of basic research to the private sector.
Michael Losow, outreach director at the Washington-based Biotechnology Industry Organization, told BioWorld Today that the ¿return on investment¿ for the taxpayer is the availability of better, more effective drugs. Furthermore, if companies are forced to pay a return on investment fee, they will probably be less likely to seek out the NIH research.
¿The basic research would just sit on the shelves,¿ Losow said. ¿A company that is desperate might be willing to pay 20 percent back, but a larger company isn¿t going to want to pay 10 percent or 20 percent back 15 years later when they develop a drug.¿
In addition, it¿s not easy to measure the impact that a specific technology transfer has on any given product ¿ that is, if the product ever makes it to market, Losow said.
Under current law, biotechnology and pharmaceutical companies already pay the NIH execution fees at the time the license is signed, minimum annual royalties, patent costs and earned royalties as a percentage of sales.
Four blockbuster drugs at the center of Wyden¿s pending debate are Taxol, a chemotherapeutic made by Bristol-Myers Squibb Co., of Princeton, N.J.; Procrit and Epogen, EPO drugs sold for different indications by New Brunswick, N.J.-based Johnson & Johnson and Amgen Inc., of Thousand Oaks, Calif., respectively; and Amgen¿s drug Neupogen, a white blood cell booster.
According to a study conducted by the U.S. Congressional Joint Economic Committee in May 2000, the benefit due to increased life expectancy in the U.S. as a result of advances in health care creates annual net gains of about $2.4 trillion (using 1992 dollars). The report concluded, ¿If only 10 percent of those increases in value ($240 billion) are the result of NIH-funded medical research, it indicates a payoff of about 15 times the taxpayers¿ annual NIH investment of $16 billion.¿
This isn¿t the first time this issue has surfaced. Back in 1995, Harold Varmus, the former NIH director, was successful in eliminating the fair pricing clause from Cooperative Research and Development Agreements (CRADA). Inserted in 1989, the clause stated that there must be a ¿reasonable relationship between the pricing of a licensed product¿ and ¿the public investment in that product.¿ The NIH never enforced the clause, a move that irritated some on Capitol Hill, including Wyden.
Both Taxol and the AIDS drug AZT (GlaxoSmithKline plc, of London) were developed under CRADAs. Six years ago Wyden was arguing that the clause should be enforced until a reasonable alternative to safeguard taxpayer investment in drugs could be found.
On the other side, NIH scientists said the clause hampered scientific collaborations with the private sector. (See BioWorld Today, Aug. 18, 1994.)
It appeared that the scientists were right. In 1995 there were 32 CRADAs with industry, and by 1997 ¿ two years after the clause was dropped ¿ the number increased to 153.
The issue came up again in 1998 when Rep. Bernard Sanders (I-Vt.) introduced failing legislation that would have required a reasonable pricing agreement when companies obtain licenses and patent rights from the government. (See BioWorld Today, May 1, 1998.)