WASHINGTON -- Biotech companies lined up on opposing sidesof an amendment to limit orphan drug exclusivity in testimonybefore a Senate subcommittee on Tuesday.

Sen. Howard Metzenbaum, D-Ohio, chairman of the SenateJudiciary subcommittee, held oversight hearings on a bill he isco-sponsoring with Sen. Nancy Kassebaum, R-Kan., that wouldextend the Orphan Drug Act for three years, but narrow thedefinition of orphan products so that "blockbuster" drugs areexcluded.

S. 2060 would end exclusive marketing rights when sales reach$200 million. A companion bill, H.R. 3930, has been introducedin the House.

Serono Laboratories Inc. and Bio-Technology General Corp.,which have been excluded from the U.S. market for humangrowth hormone (hGH) by the law, testified in favor of theamendment.

Five companies, including Serono and BTGC, weresimultaneously developing recombinant hGH products when EliLilly and Co. and Genentech Inc. won exclusive marketingrights for their products, said John Castello, chairman of Ares-Serono Inc.

Lilly and Genentech now share an annual market that is worthmore than $250 million and growing, said Castello, so their totalsales will exceed $1 billion during the period of exclusivitygranted by the law. "The orphan drug law was not designed tobe a welfare program for the biotech industry or a substitutefor patents," he said.

hGH is the product that is most vulnerable to changes in thelaw because Genentech and Lilly do not have patent protection,PaineWebber analyst Linda Miller told BioWorld.

BTGC (NASDAQ:BTGC) has developed a patented hGH that wouldenter the U.S. market earlier than the 1994 expiration of Lilly'smarket exclusivity, said Dr. Sim Fass, BTGC president and chiefexecutive officer. Competition would reduce the price by asmuch as 20 percent to 40 percent, he said.

Genentech (NYSE:GNE) and Genzyme Corp. (NASDAQ:GENZ)testified against the legislation. Genzyme, which marketsCeredase to 2,000 to 3,000 people who have Gaucher's disease,has made a profit from the drug, "but nowhere close to normalbiotechnology products," said Henri Termeer, chief executiveofficer. He noted that 1991 was the company's first profitableyear since it was founded 10 years ago.

However, Metzenbaum attacked Genzyme and other companiesfor charging "unbelievable" prices, noting that Genzyme spent$54 million on R&D for Ceredase and sold $120 million of thedrug since it was approved last April.

Although invited, Amgen Inc. and Lilly did not testify. Amgensent a letter in which it voiced support for the law withoutamendments, and said the company had already stated itspositions clearly.

Metzenbaum called Amgen "cocky" and said Lilly "deserves thecondemnation of the American people" for failing to explain itsdecision not to appear or respond to requests for cost andrevenue data.

S. 2060 has been referred to the Senate Labor and HumanResources Committee, which will hold hearings in the nextseveral weeks, said Andrew Patzman, a legislative assistant toKassebaum.

-- Kris Herbst BioWorld Washington Bureau

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