Guest Editorial


President Obama Undermines His 'Innovation Agenda'

merrill matthewsOn many occasions, President Barack Obama has said, "The first step in winning the future is encouraging American innovation."

I agree. But in the president 2012 budget and elsewhere, he is undermining the very innovation he claims he wants to encourage.

The Patient Protection and Affordable Care Act, the president's health care legislation, included a "data exclusivity" provision. The law permits brand name drug manufacturers of new biologic drugs to protect the data they create for 12 years before a competitor can use that information to create a generic version of the drug.

With standard prescription drugs, which usually come in pill form, patents give innovator drug makers the exclusive right to make and sell a new drug for several years, providing the economic incentive to invest hundreds of millions of dollars creating it. Once the patent runs out, a generic drug company can market a copy of the drug, and consumers get much lower prices.

But copying pills is much easier than copying complex, "large molecule" biologics, which are made from living material such as proteins. And so generic manufacturers need the innovator company's data in order to copy the biologic accurately. Prior to ObamaCare, there was no law to determine how long drug companies could protect that data from their competitors. Now the law gives brand name manufacturers 12 years of data exclusivity-two more than Europe, a fact that could lure more drug innovation to the U.S.

So far so good. The brand name companies were content, and Obama's "We win through innovation" agenda would seem to be taking a step in the right direction. Indeed, it was one of the few bright spots in the health care bill.

But then the president released his 2012 budget, where he proposes cutting the data-exclusivity provision down to seven years. So much for the innovation agenda.

And there will likely be many more such examples as the government, pressed for ways to find budget savings, pushes cheaper care over quality care. Take the current battle over Avastin vs. Lucentis, both made by San Francisco-based Genetech.

Avastin is a biologic that has been approved by the Food and Drug Administration (FDA) for use on several different cancers. Lucentis was especially developed and is FDA-approved for the treatment of eyesight loss due to age-related macular degeneration (AMD).

Lucentis is expensive, about $2,000 a treatment. Avastin is also expensive, about $90,000 a year-when used for cancer. Because the two drugs are similar, many doctors have been using very small amounts of Avastin for the treatment of AMD. That reduced quantity means that an Avastin treatment for AMD costs about $50. But the treatment is off-label, because Avastin is not FDA-approved for age-related macular degeneration.

In an effort to determine if there is a therapeutic difference, the National Institutes of Health (NIH) has been conducting a three-year study comparing Avastin to Lucentis. Results may be released in March of this year.

The NIH has done these kinds of drug-to-drug comparisons for years, with the goal being therapeutic: to determine which therapy is more efficacious or has the fewest side effects. Cost has not been a consideration. And it probably isn't in the current study either.

But that doesn't mean the Obama administration won't take cost into consideration when it makes its own decisions about what drugs will and will not be covered by Medicare and Medicaid, or even health insurance. Indeed, you can count on it.

And that is how a president can say one thing about winning the future with innovation, while completely undermining that effort with his policies-and hoping the public won't notice.
It's the battle we, as consumers, lost when ObamaCare passed. For several years the health care system had been slowly transitioning from a top-down system where the government, for those in Medicare and Medicaid, or an insurer limited patients' choices. The goal was to move to a consumer driven system where the patient would be in charge.

When patients make their own health care decisions, in consultation with their doctors, they make trade-offs. They may be willing to pay more if they think a drug or other therapy is a good value for them. Not so with the government, budgets drive decisions-especially these days. And when budgets are king, the patient is just a pawn.

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas.