Dolly, FDA Reform Keep Biotech In Congressional Spotlight

By Lisa Seachrist
Washington Editor

From the Washington perspective, thebiotechnology industry had a full plate when 1997 began. David Kessler’s departurefrom his post as FDA commissioner meant industry lobbyists could look forward to the dramaof Senate confirmation hearings and a new attempt at FDA reform. In addition, thePrescription Drug User Fee Act – the program that assessed companies fees in returnfor guaranteed review times – was set to expire on Sept. 30.

“The year was busy enough,“ saidCarl Feldbaum, president of the Biotechnology Industry Organization (BIO). “And, thencame Dolly.“

In late February news media organizationsreported that Scottish scientists had successfully challenged and permanently changeddevelopmental dogma by using the DNA from a differentiated adult mammary cell to create asheep clone they named “Dolly.“

Almost as soon as scientists began tounderstand the biological implications of Dolly’s existence, the public debate doveinto the ethical implications of cloning human beings that has continued unabated.

“From the moment that the news of Dollybroke, it leapt immediately from the cloning of one sheep to the cloning of human beingsand the implications of such attempts,“ said Feldbaum. “It wasn’t as if wereally had the time to go through the intermediate steps of trying to explain the scienceto the public. We just had to go right to the endpoint. Which was does Saddam Hussein wantto clone armies and are we going to clone headless humans for body parts? It went right tothe extreme.“

Since the early 1950s scientists haveattempted to clone animals as varied as frogs and mice. As those experiments repeatedlyfailed, the premise that DNA from differentiated or adult sources lost the ability tosupport cell division that would produce a new animal approached dogma.

What Ian Wilmut and his colleagues at theRoslin Institute in Edinburgh, Scotland, had shown was that the previous failures werefailures in technique rather than some inherent characteristic of the DNA.

By removing the nucleus of a sheep egg andtransferring the nucleus of an adult mammary cell into the egg – a procedure calledsomatic cell nuclear transfer – Wilmut stimulated the egg to divide and develop witha jolt of electricity. After implanting the newly created embryo into a surrogate sheep,the researcher produced a single, apparently healthy sheep that was the genetic duplicateof the adult donor animal. But it took 277 attempts.

The discovery meant that, theoretically, theDNA from any cell could serve as the blueprint to direct a human egg to divide anddifferentiate into every cell of the body.

Government Called For Human Cloning Ban

Within a week of the announcement,President Clinton banned federal funding of any research into cloning humans and calledfor private industry to observe a voluntary moratorium.

In addition, Clinton charged hisnewly-convened National Bioethics Advisory Commission (NBAC) to explore the moral andethical implications of the technology and report back to him in 90 days.

Not to be outdone, Congress began a series ofhearings on the cloning technology. While most called for federal action to ban cloning,Sen. Tom Harkin (D-Iowa) livened up one hearing by announcing his eager anticipation ofthe day when cloning humans would be commonplace.

“I, for one, expect to see cloning takeplace in my lifetime and I look forward to that day,“ Harkin said. “Youcan’t stop scientific progress and it is foolish to try.“

Rep. Vernon Ehlers (R-Mich.) was the firstlegislator to introduce legislation in March banning human cloning and the federal fundingof human cloning efforts. Sen. Christopher Bond (R-Mo.) introduced similar legislation inthe Senate shortly thereafter.

“The problem with this legislation isthat its too imprecise,“ said Jeff Trewhitt, media spokesperson with thePharmaceutical Research and Manufacturers of America (PhRMA). “It places legitimateresearch at risk.“

Trewhitt noted PhRMA preferred a voluntary banrather than the legislative alternative; however, hopes for such a voluntary moratoriumfaded in June when the NBAC presented its report to the president at a Rose Gardenceremony. Calling attempts to create a human clone scientifically unsafe, the reportrecommended legislation, albeit carefully worded, that would ban attempts to create humansusing cloning techniques.

The committee recommended a sunset clause forthe legislation, allowing the country to revisit the issue as people became more familiarwith the risks and benefits of the technique.

In addition, the committee focused veryspecifically on the creation of a human. It did not address the implications of using thesomatic cell nuclear transfer technique for other research.

Embryo Research Unresolved

Harold Shapiro, president of Princeton(N.J.) University and chair of NBAC, told a House committee the NBAC understood from thebeginning that any effort in humans to transfer a somatic cell nucleus into an enucleatedegg involves the creation of an embryo. However, he also noted that the ethical dilemmassurrounding human embryo research have been extensively debated and that the cloning ofDolly brought nothing new to the debate.

“Some people say that we ducked the toughissues in this report,“ said David Cox, commission member and professor of Geneticsat Stanford University School of Medicine in Palo Alto, Calif. “I don’t believewe ducked anything. There is no consensus on embryo research in this country which issomething that we absolutely need to resolve. But there is consensus about cloning a humanbeing.“

Following the committee’s recommendation,Clinton responded quickly sending his own legislation banning the production of humansusing the new technology to Congress and assessing civil penalties on anyone who defiesthe ban. Clinton’s proposal also called for a sunset provision to allow the NBAC toreassess, in more depth, the moral and ethical questions of cloning.

Unlike early attempts to ban cloning, theClinton proposal specifically noted that legitimate research was protected. But GillianWoollett, assistant vice president of biologics and biotechnology for the PhRMA, said thethe language has three different definitions of somatic cell, causing confusion. Thepresident’s bill also didn’t preempt state laws, which began to proliferate withthe introduction of Dolly.

“We estimate that in the absence of anational cloning ban preempting state laws, we are likely to see as many as 250 bills inthe states during the 1998 legislative session,“ Trewhitt said. “And, if ourexperience this year is any indication, those bills will be so broadly worded that verybasic non-cloning research will be at risk.“

The Clinton proposal failed to find acongressional sponsor, and Congress refrained from acting on any legislation before itadjourned in November 1997.

However, right before Congress reconvened inJanuary 1998, the country was rocked by news that a Chicago physicist, Richard Seed,intended to assemble a team to clone humans before Congress had the opportunity to ban theprocedure.

Industry and academic organizations roundlydecried Seed’s proposal as dangerous to both the clone and the woman who would serveas surrogate for the cloned embryo. The FDA announced its intention to assert regulatoryauthority to prevent rogue researchers from endangering human subjects.

“I actually expected this sooner,“Feldbaum said. “Dr. Seed’s statements have been consciously provocative and willlikely generate further legislative activity. Where not drafted properly, it couldendanger legitimate genetic research.“

Cloning Bill Made Top Priority

Indeed, when the 105th Congress startedits second legislative session in 1998 Senate Majority Leader Trent Lott (R-Miss.) andHouse Majority Leader Dick Armey (R-Texas) announced that cloning legislation was at thetop of their agenda.

Sens. Dianne Feinstein (D-Calif.) and EdwardKennedy (D-Mass.) introduced a bill with specific definitions of cloning, a sunset clausefor the ban, preemption of state legislation and a detailed list of research activitiesprotected from the ban.

“[Feinstein and Kennedy] have certainlymade a commendable effort,“ Feldbaum said. “Their bill is very precisely wordedwith the powerful intent to avoid any collateral damage to legitimate research. This billcould move cloning into a bipartisan issue gathering moderates from both sides.“

However, Lott took a revamped version oflegislation sponsored by Sen. Christopher Bond (R-Mo.) directly to the Senate floor duringthe first week of February 1998. The bill phrases the issue in the terms of embryoresearch and the abortion debate. Because the legislation bypassed the committee process,which would have held hearings, Feinstein began a filibuster of the motion to consider thebill on the Senate floor. “It is my intention to slow down this bill so that coolerheads may prevail,“ she said.

In a session immediately preceding a mid-termelection, cloning is likely to serve as the source of very contentious and public debateas legislators look for issues for their upcoming campaigns.

“Now, we are into the pitfalls andvagaries of the election year that magnify these strong political battles,“ Feldbaumsaid. “We would have a better chance if [this debate] took place in an offyear.“

Out Of Rancor, Consensus Found On FDA Reform

The rancorous, ideological debatesurrounding attempts at FDA reform in the 104th Congress yielded to a down-to-business,bipartisan effort that reauthorized the successful Prescription Drug User Fee Act (PDUFA)and resulted in substantial reforms at the agency that passed by voice vote in the 105thCongress. The stark contrast between the two efforts wasn’t lost on the president ashe signed the FDA Modernization Act of 1997 into law Nov. 23.

“I just think it is worth pointing outthat at the beginning of the process the sides stood worlds apart,“ Clinton said.“If somebody told me two years ago, two years from now you’ll be standing at theOld Executive Building and you’ll sign a bill passed by the Congress by a voice voteand it will be a sweeping reform of FDA, I would have taken odds against that.“

The debate over FDA reform began in 1995 whenthe Republicans swept into office and took over both chambers of Congress. With a zeal toreduce the role and size of government, proposals to privatize FDA and render it acertificatory agency were offered by a number of lawmakers. However, the attempts of the104th Congress fell short as a result of partisan politics and concern over“hammers“ that would force the FDA to send drug reviews to third parties if itdelayed action beyond a statutorily determined amount of time.

The 105th Congress, however, had a strongerimpetus to compromise and produce a bill in 1997: PDUFA, the program that assesses fees tocompanies in return for guaranteed review times, was set to expire on September 30.

The FDA, industry and patient organizationsdeemed PDUFA an unqualified success, and the agency was eager to see it reauthorizedbecause it had hired over 600 reviewers with the funds obtained from the program.

Senator Jim Jeffords (R-Vt.), who used hisposition as chairman of the Labor and Human Resources committee to spearhead the FDAreform effort, announced early on that he intended to link wide-ranging FDA reform toPDUFA reauthorization.

Kennedy, as ranking minority member of thecommittee, urged Jeffords to reconsider his plan and offer up a “clean“ PDUFAreauthorization bill to ensure that there would be no gaps in the program.

Lead Deputy FDA Commissioner Michael Friedmanechoed Kennedy’s request.

Jeffords, however, would hear none of it, andremarked in March that PDUFA “is the biggest incentive I have to get [FDA] tochange.“

Jeffords proposal, as it came out of committeein June, included a mission statement for FDA, codification of the biologics rewrite andreauthorization for PDUFA under terms the agency and industry agreed to the previous fall.

Senate Bill Considered Biotech Friendly

The bill also specifically permittedFDA to approve a drug based upon one pivotal trial when the agency saw fit, clearly statedthe agency is permitted to contact third parties during the review process and establisheda fast-track drug approval process that identifies breakthrough drugs early in thedevelopment process and encourages the agency to provide advice and guidance at thatstage.

At the time, Feldbaum declared the bill“just about perfect in terms of the needs of the biotech industry.“ However,lawmakers and industry representatives remained concerned the president’s budgetwould jeopardize the reauthorization of PDUFA.

The budget permitted FDA to allocate the userfees for other purposes than simply drug review and relied on unauthorized fees on otherindustries to make up for an 8 percent decrease in funding to the agency.

The PDUFA agreement was predicated on flatfunding of the agency so that the user fees were additional monies, not a supplement forbudget cuts. In addition to simply reauthorizing the budget, the lawmakers had to be suremoney to fund PDUFA was provided in the agency’s budget.

Budget worries aside, the deadline for PDUFAbegan to loom large. During the entire month of July, the FDA reform bill failed to makeit to the Senate floor for a vote. Kennedy had issues with provisions in the bill thatdealt with cosmetics and the scope of review for medical devices. As a result, he andJeffords could not agree to limit debate on the bill and Lott refused to risk a filibusterand bring the bill to the floor. The House, for its part, had not even introduced reformlegislation when Congress adjourned for the August 1997 recess.

The chances for getting a bill throughCongress and signed by the President before PDUFA expired Sept. 30 seemed slim. However,Health and Human Services Secretary Donna Shalala acknowledged the PDUFA program couldcontinue for three to six months after it expired on money it already had collected.

When Congress returned, the Senate took up FDAreform. After two filibusters and several weeks of debating cosmetics and a single medicaldevice issue, the Senate voted 98-2 to pass the measure. Only Sens. Kennedy and Jack Reed(D-R.I.) voted against the bill Sept 24.

“This vote was beyond bipartisan,“Feldbaum said. “It represented a political breakthrough of sorts.“

Bipartisan Effort Built On Need For Reform

The House, however, took a differenttack and produced three bills: one for drugs and biologics that reauthorized PDUFA, onefor medical devices and one for food issues. The Senate bill had no provisions for foodreform.

On Sept. 25 the House quickly marked up thebills and remanded most controversial issues to be worked out between staff. On Oct. 7,the House passed the three bills on voice vote sending the measures into conference withthe Senate’s bill.

While most device and drug provisions wereidentical between the House and Senate, one key difference lay with the scope of reviewfor medical devices. Kennedy had held up passage of the Senate bill over a provision tolimit the agency’s scope of review on medical devices. The House version of the bill,however, worked out a compromise that Kennedy ultimately accepted.

On Nov. 9, the Senate and the House passed theconference report by voice vote within three hours of each other. At the end of November,the president signed the bill into law.

“Reform took three years because it isdifficult to build consensus from a situation of such wide disagreement and lack ofconfidence in each other – this year the Congress changed,“ Jeffords said at thesigning ceremony. “We knew we had to get this done to serve our country and ourselvesas well. That is why this became a true bipartisan effort.“

Priority Shifts To Implementing FDAReforms

Feldbaum credited the success of FDAreform and PDUFA reauthorization to the work done in the 104th Congress and to a concertedeffort to avoid political pitfalls which was embraced by Gordon Binder, BIO’schairman and CEO of Amgen Inc., of Thousand Oaks, Calif.

“We refused to be drawn into this extremediscussion of whether we should have an FDA or whether it should be fullyprivatized,“ Feldbaum said. “It was just not something that was going to happenor should happen. That was a useless side show to be involved in.“

Feldbaum also noted Binder wanted everyproposal strictly analyzed to be certain it would not harm public health. The fact therewas no commissioner at FDA probably also smoothed the path for reform, Feldbaum noted.

“In some ways, quite honestly, webenefited from the fact that a commissioner had not been confirmed,“ Feldbaum said.“It was our good fortune to have people with whom we negotiated PDUFA and hadestablished good relationships with at the helm of the agency as we worked on FDA reform.It really worked in our favor.“

Feldbaum and Trewhitt said a top priority forboth of their organizations in 1998 was to make sure the reforms written into law werefully implemented at FDA. Who will be responsible for that implementation at the agencyremains a mystery.

However, Feldbaum pledged BIO will be activein helping the Senate conduct confirmation hearings of any nominee the Clintonadministration puts forward to take the helm of FDA.

“Confirmation hearings are different in1998 than they were a decade ago. In some ways they are more superficial,“ Feldbaumsaid. “This is a place where BIO could play a very constructive and civil role inhaving tough but fair questions.“

Patents, Taxes, Privacy Also Important Issues

As important as FDA reform was to theindustry, patent reform, tax incentives and genetic privacy issues also popped up on thelegislative agenda with varying degrees of success for the biotech industry.

Sen. Orrin Hatch (R-Utah) introduced a bill tocreate a permanent orphan drug tax credit ending the year-to-year renewals of the taxcredit which defrays the costs associated with developing a drug to treat rare disorders.

The orphan drug tax credit was enacted in 1983to encourage drug companies to develop drugs to treat diseases that afflict a relativelysmall number of people – 200,000 or less – in the U.S. The credit allowscompanies to receive a 50 percent tax break for the clinical research costs associatedwith developing an orphan drug.

“Few provisions of the tax code can claimto have clearly reduced human suffering and to have expanded our store of medicalknowledge,“ Hatch said. “This credit has done both.“

In addition, Hatch’s proposal allowed fora carry back and carry forward of the tax credit so that a company could use the creditwhen they actually were making profits. The tax credit is available three years prior tothe expenditure and 15 years after – a provision Hatch inserted into last year’sextension of the tax credit.

Lisa Raines, vice president for governmentrelations at Genzyme Corp., of Cambridge, Mass., said the orphan drug tax credit wasparticularly important for biotech companies.

“Biotech companies develop adisproportionate number of the orphan drugs,“ Raines said. “Until last year, thecredit wasn’t useful to the vast majority of companies who had yet to market theirfirst product. And making the credit permanent means that companies can count on it.“

The credit was included in the budgetreconciliation bill that Clinton signed into law Aug. 5, 1997.

Even though the industry experienced victorywith the orphan drug tax credit, BIO still intends to bring up the research anddevelopment tax credit and the venture capital incentive in 1998.

The R&D tax credit allows companies towrite off expenses associated with research and development. The credit was extended thisyear, but will expire June 30, 1998.

“Between 1995 and 1996, the R&D taxcredit lapsed,“ said Chuck Ludlam, BIO’s vice president of government relations.“Making this tax credit permanent will allow our companies to plan their research anddevelopment expenditures. This is one of our highest priorities.“

In addition, BIO is suggesting a venturecapital incentive which would encourage investment in entrepreneurial firms. The 1997 taxbill allows for a rollover of gains, with a deferral of capital gains taxes for directinvestment in the stock of companies with $50 million or less in capitalization. BIO, inconjunction with a coalition of entrepreneurs, has suggested raising the ceiling to $400million. In addition, it supports exempting 75 percent of the gains from taxation forindividual investors and 50 percent for corporate investors. BIO also favors decreasingthe holding period for stocks from five to three years.

“We came so close this last Congress togetting this venture capital incentive that we’re trying again,“ Ludlam said.

Patent Reform Proved Too Tough

Patent reform proved to be one of thehardest battles fought and lost this year for the biotech industry. Both the House andSenate produced bills designed to address the inequities in the patent law that arose whenthe General Agreements on Tariffs and Trade (GATT) became law. Whereas previous patent lawprovided 17 years of patent protection from the day the Patent and Trade Office (PTO)issued the patent, the GATT treaty grants 20 years of patent term from the date the patentwas filed with the office. Most patent applications gained a little patent term as theaverage patent takes 18 months to wend its way through PTO.

Biotechnology patents, on the other hand, arecomplicated and often contested, meaning they can languish for up to a decade at PTObefore being granted. The House and Senate measures returned patent term for every day ofdelay at the patent office. In addition, both bills called for publication of the patent18 months after it was filed.

The House bill sponsored by House Subcommitteeon Courts and Intellectual Property Chairman Howard Coble (R-NC), passed on a voice votein April 1997 after Rep. Marcy Kaptur (D-Ohio) offered an amendment addressing theconcerns of small inventors about patent publication.

The Senate bill sponsored by Sen. Orrin Hatch(R-Utah), however, sailed through the Judiciary Committee markup in May, only to fail tofind its way to the Senate floor before Congress adjourned. Hatch even assembled the lastfive commissioners of the PTO to voice their support for the bill in early October in anattempt to get it scheduled for floor debate.

“There has been a lot of misunderstandingof the provisions of the bill from conservatives who don’t understand patent law aswell as they could,“ Hatch said. “I think [this bill] would pass overwhelminglyif we brought it up to the entire Senate.“

However, Hatch and supporters of patentreform, including BIO and PhRMA, will face trying to pass a bill in the heat of electionyear politics.

“We are fighting for everyday of patentterm for our members,“ Ludlam noted.

Privacy Debate Contentious

Before there was Dolly, the hotbioethics issue affecting biotechnology was genetic privacy and medical privacylegislation. After the hub-bub over Dolly died down briefly in the summer, privacy issuesreturned to the forefront.

In July, Clinton publicly endorsed legislativeefforts by Rep. Louise Slaughter (D-N.Y.) to end discrimination based on geneticinformation and promised to send legislation to the Senate aimed at protecting geneticprivacy.

“It is wrong to force people to make achoice between taking a test that could save their lives and having healthinsurance,“ Clinton said. “We can no longer let our progress become lost forfear of discrimination.“

The legislation endorsed by Clinton wouldprevent health insurers across the country from denying, canceling, refusing to renew orchanging the terms, premiums or coverage based on genetic information. The bill would alsorequire an insurance company to get written consent before releasing genetic informationto a third party.

In addition, the legislation would preemptstate laws which Slaughter said is vitally important in creating blanket protection forAmericans.

Both BIO and PhRMA have been lobbying Congressto create a blanket protection for all Americans. The organizations have spent countlesshours poring over state laws that are written so imprecisely they could stymie researchinto genetic diseases. However, both organizations vehemently oppose legislation thatprotects genetic information separately from medical information in general.

“Genetic information is part of acontinuum of medical information,“ Feldbaum said. “Simple cholesterol tests andfamily history provide important genetic information. Separating genetic information froma medical record is nearly impossible to do.“

Shalala presented a report to Congress inSeptember urging the lawmakers to act to curb access to medical records in an effort tosafeguard health care privacy.

“Let me be frank,“ Shalala said.“The way we protect the privacy of our medical records right now is erratic at best– dangerous at worst.“

The report Shalala presented was required as aprovision of the Health Insurance Portability and Accountability Act (HIPAA). Thesecretary concluded there should be limits on access to medical records and civil andcriminal penalties for abuses. The recommendations also acknowledge health researchers andlaw enforcement officials must maintain their access to medical records.

None of the genetic privacy, geneticdiscrimination or medical privacy legislation introduced came to a vote in either body ofCongress. However, it is likely such legislation will hit the agenda in 1998 because ofpublic concerns.

“Dolly had resonance beyond cloning,“ Feldbaumsaid. “That event really convinced a lot of people that bioethics issues in general– genetic discrimination, xenotransplantation and other issues – were reallygoing to be on BIO’s agenda and the public’s agenda for decades to come.“

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