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SAFE AND AFFORDABLE BIOTECH DRUGS: THE

NEED FOR A GENERIC PATHWAY

HEARING

BEFORE THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 26, 2007

Serial No. 110–43

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSISGHT AND GOVERNMENT REFORM

HENRY A. WAXMAN, California, Chairman

TOM LANTOS, California

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

JOHN A. YARMUTH, Kentucky

BRUCE L. BRALEY, Iowa

ELEANOR HOLMES NORTON, District of

Columbia

BETTY MCCOLLUM, Minnesota

JIM COOPER, Tennessee

CHRIS VAN HOLLEN, Maryland

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

JOHN P. SARBANES, Maryland

PETER WELCH, Vermont

TOM DAVIS, Virginia

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

VIRGINIA FOXX, North Carolina

BRIAN P. BILBRAY, California

BILL SALI, Idaho

——— ———

PHIL SCHILIRO, Chief of Staff

PHIL BARNETT, Staff Director

EARLEY GREEN, Chief Clerk

DAVID MARIN, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on March 26, 2007 ............................................................................ 1

Statement of:

Allen, Geoffrey, Ph.D, president, chief executive officer, chairman of the

board, Insmed Inc.; Theresa Lee Gerrard, Ph.D, president, TLG Consulting, Inc. (Biopharmaceutical Consultants formerly with Amgen and

FDA’S Center for Biologics); Bill Schwieterman, M.D., president,

Tekgenics Corp. (Biopharmaceutical Consultants formerly with FDA’S

Center for Biologics); Inger Mollerup, vice president for regulatory affairs, Nova Nordisk A/S; and Ganesh Venkataraman, Ph.D, senior vice

president, research, Momenta Pharmaceuticals, Inc. ................................ 57

Allen, Geoffrey ........................................................................................... 57

Gerrard, Theresa Lee ................................................................................ 63

Mollerup, Inger .......................................................................................... 84

Schwieterman, Bill .................................................................................... 72

Venkataraman, Ganesh ............................................................................ 102

Brown, Yvonne, for the National Multiple Sclerosis Society; Mary Nathan, for the National Organization for Rare Disorders [NORD]; Nelda

Barnett, board member, AARP; Priya Mathur, vice chair, health benefits-Board of Administration, California Public Employees’ Retirement

System [CALPERS]; Scott D. McKibbin, special advocate for prescription drugs, State of Illinois; Henry Grabowski, Ph.D, professor of economics, director, Program in Pharmaceuticals and Health Economics,

Duke University; and Jonah Houts, senior analyst, Express Scripts,

Inc. ................................................................................................................. 127

Barnett, Nelda ........................................................................................... 137

Brown, Yvonne .......................................................................................... 127

Grabowski, Henry ..................................................................................... 161

Houts, Jonah .............................................................................................. 257

Mathur, Priya ............................................................................................ 146

McKibbin, Scott D. .................................................................................... 154

Nathan, Mary ............................................................................................ 129

Woodcock, Janet, M.D., Deputy Commissioner for Operations and Chief

Medical Officer, Food and Drug Administration ........................................ 19

Letters, statements, etc., submitted for the record by:

Allen, Geoffrey, Ph.D, president, chief executive officer, chairman of the

board, Insmed Inc., prepared statement of ................................................. 60

Barnett, Nelda, board member, AARP, prepared statement of .................... 139

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 268

Davis, Hon. Danny K., a Representative in Congress from the State

of Illinois, information concerning biotech drugs ....................................... 265

Davis, Hon. Tom, a Representative in Congress from the State of Virginia, prepared statement of ........................................................................ 11

Gerrard, Theresa Lee, Ph.D, president, TLG Consulting, Inc. (Biopharmaceutical Consultants formerly with Amgen and FDA’S Center for Biologics), prepared statement of ...................................................................... 65

Grabowski, Henry, Ph.D, professor of economics, director, Program in

Pharmaceuticals and Health Economics, Duke University, prepared

statement of ................................................................................................... 163

Houts, Jonah, senior analyst, Express Scripts, Inc., prepared statement

of ..................................................................................................................... 259

Issa, Hon. Darrell E., a Representative in Congress from the State of

California, prepared statement of ................................................................ 16

Page

IV

Letters, statements, etc., submitted for the record by—Continued

Mathur, Priya, vice chair, health benefits-Board of Administration, California Public Employees’ Retirement System [CALPERS], prepared

statement of ................................................................................................... 148

McKibbin, Scott D., special advocate for prescription drugs, State of Illinois, prepared statement of .......................................................................... 157

Mollerup, Inger, vice president for regulatory affairs, Nova Nordisk A/

S, prepared statement of .............................................................................. 86

Nathan, Mary, for the National Organization for Rare Disorders [NORD],

prepared statement of ................................................................................... 132

Schwieterman, Bill, M.D., president, Tekgenics Corp. (Biopharmaceutical

Consultants formerly with FDA’S Center for Biologics), prepared statement of ........................................................................................................... 74

Venkataraman, Ganesh, Ph.D, senior vice president, research, Momenta

Pharmaceuticals, Inc., prepared statement of ............................................ 104

Waxman, Chairman Henry A., a Representative in Congress from the

State of California, prepared statement of ................................................. 4

Woodcock, Janet, M.D., Deputy Commissioner for Operations and Chief

Medical Officer, Food and Drug Administration, prepared statement

of ..................................................................................................................... 22

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SAFE AND AFFORDABLE BIOTECH DRUGS:

THE NEED FOR A GENERIC PATHWAY

MONDAY, MARCH 26, 2007

HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The committee met, pursuant to notice, at 10 a.m., in room 2154,

Rayburn House Office Building, Hon. Henry A. Waxman (chairman

of the committee) presiding.

Present: Representatives Waxman, Kucinich, Davis of Illinois,

Yarmuth, Norton, Van Hollen, Hodes, Welch, Davis of Virginia,

Burton, Issa, Bilbray, and Sali.

Staff present: Phil Barnett, staff director and chief counsel; Kristin Amerling, general counsel; Karen Nelson, health policy director;

Karen Lightfoot, communications director and senior policy advisor;

Andy Schneider, chief health counsel; Sarah Despres, senior health

counsel; Ann Witt, health counsel; Robin Appleberry and Rachel

Sher, counsels; Earley Green, chief clerk; Teresa Coufal, deputy

clerk; Caren Auchman, press assistant; Zhongrui ‘‘JR’’ Deng, chief

information officer; Leneal Scott, information systems manager;

Robin Pam, staff assistant; David Marin, minority staff director;

Larry Halloran, minority deputy staff director; Jennifer Safavian,

minority chief counsel for oversight and investigations; Susie

Schulte, minority senior professional staff member; Kristina Husar,

minority professional staff member; Patrick Lyden, minority parliamentarian and member services coordinator; Brian McNicoll, minority communications director; and Benjamin Chance, minority

clerk.

Chairman WAXMAN. The meeting of the committee will please

come to order.

More than 20 years ago the Congress enacted the Hatch-Waxman Act. That law has taught us three things: genetic drugs are

good for patients, both medically and financially; with a little help,

the market works, generic competition lowers drug prices; and generic competition does not bankrupt the brand name drug industry

or slow innovation.

Maybe some big drug makers still dispute these lessons, but no

one else does. But there is still no generic competition for one of

the fastest-growing and most expensive categories of drugs,

biologicals, those drugs produced from living cell cultures rather

than from chemical synthesis.

Some of these drugs are near miracles for people with cancer,

metabolic diseases, and immune disorders. They can stop disability

and, in some cases, save lives. People need them. But some of these

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drugs cost each patient tens of thousands of dollars a year. Some

can cost hundreds of thousands per year. Many people cannot get

access to these near miracles, and even when people can get them

the prices drive up the cost of Medicare, Medicaid, and health insurance overall.

Why isn’t the market helping? It is not because of the patent system that biologicals are protected from the competition that might

lower prices. Biologicals, like other drugs, do enjoy patent protection. This allows manufacturers to enjoy a monopoly period during

which they can get a significant return on their investments. But

patents, or many of them, have already expired, and other patents

are just about to expire.

And it is not the science of these drugs that protects them from

competition. The technology is already here to make a safe and effective copy of some biotech drugs. Moreover, the technology is getting better every year, and we can make progress even faster if we

allow companies to use it to make generics.

Instead, the monopoly on each of these drugs is perpetuated by

the lack of a clear pathway for FDA to approve competing versions.

The Hatch-Waxman Act does not reach most of them. This costs

all of us—taxpayers, insurance premium payers, and patients—billions of dollars. It also means that some very sick people simply

cannot get the drugs they need.

I know that the science of these drugs is not simple. I take the

questions of research, safety, and efficacy very seriously. The only

way we can succeed in establishing robust competition for biotech

drugs is with drugs the doctors and patients know they can count

on, so we need to be sure that the FDA has the discretion to require the studies that are needed to establish that a copy of a

biotech drug is equivalent to the brand name drug in safety and

effectiveness. That is one of the things we hope to learn more about

today.

But the big brand name companies have gone beyond legitimate

concern and have thrown up a defensive smoke screen around

biologicals. They say there will be problems of safety, decreased innovation, and limited savings. When discussing creating generic

competition, they say things like, ‘‘Such action may also save consumers a few dollars here and there, although that is by no means

assured, but whatever short-term savings may be achieved will

come at an enormous long-term cost to the public. Focusing solely

upon short-term, lower prices, a cheap drugs policy will inevitably

reduce research and hinder our public health efforts.’’

Well, these arguments have a familiar ring to them. That is because the words I just read were the formal testimony that the

Pharmaceutical Manufacturers Association gave to the House in

1983 when they were opposing Hatch-Waxman, and now manufacturers are using these same arguments again. But they were wrong

then. Hatch-Waxman has saved patients billions of dollars and dramatically improved their access to drugs, and Hatch-Waxman did

not reduce research or hinder public health.

And they are wrong now. A new path for FDA to approve generic

biologicals will save patients billions in the future and will improve

access to treatments and cures, and a new path will improve comVerDate 11-MAY-2000 13:48 Apr 07, 2008 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\40874.TXT HGOVREF1 PsN: HGOVREF1
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petition, while preserving the market’s strong incentive for research.

For the sake of patients, their families, public and private health

insurance, and taxpayers, we must find a way to introduce competition to this market. When a patent expires, we owe it to consumers to find a way through competition to lower prices and still

deliver a safe and effective product. When a patient expires, they

no longer need the product, so the price will make no difference.

I look forward to the testimony of the witnesses today and learning more about the scope of the problem, the science, and the potential solutions.

[The prepared statement of Chairman Henry A. Waxman follows:]

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Chairman WAXMAN. Mr. Davis.

Mr. DAVIS OF VIRGINIA. Thank you, Mr. Chairman, for holding

today’s hearing to consider the implications of creating a regulatory

pathway for approval of follow-on biologics. It is a very important

subject, and certainly your leadership is appreciated and worthy of

this committee’s consideration.

Mr. Chairman, you have long been a leader in improving access

to pharmaceutical drugs. Indeed, there is near universal agreement

that the Hatch-Waxman Act has been extremely effective in allowing generic drugs to come to market and compete with brand name

drugs. This competition has benefited countless citizens, as well as

the Federal Government, by using natural market economics to

bring down the price of prescription medicine. You are to be commended for your leadership in improving access to these life-saving

medications.

It is my understanding you have recently introduced legislation

that would, in fact, create a regulatory pathway for the FDA to approve follow-on biologics. We have been reviewing the legislation

with interest, and we expect it will inform today’s discussion.

I look forward to exploring your proposal further. For now, let me

just offer a few preliminary thoughts on this very complex subject.

The first principle guiding this effort should be to foster innovation and the discovery of new cures. After all, there is no new

therapeutic, by definition there can be no follow-on. Accordingly,

we need to protect the intellectual property of innovative firms.

Given the high cost of research, development, manufacturing, and

regulatory approvals, IP protections are clearly a critical factor for

biotech startups when they are securing venture capital and pursuing partnerships with larger firms.

Today we will hear from economist Henry Grabowski, who will

explain that increased patent uncertainty and IP litigation would

have a significant negative effect on capital market decisions for

emerging private and public biotech firms. He will explain that if

the Federal Government either weakens patent protections or increases the chance of litigation there will likely be a corresponding

decrease in investment, and therefore less research and development of biologics. It would be tragic if legislation intended to increase access to medicine would have the unintended result of stifling innovation, preventing the discovery of cures of presently terminal diseases.

I hope you would agree with me, Mr. Chairman, about the importance of fostering a vibrant and innovative culture where we encourage our brightest minds and daring entrepreneurs to do the research, provide the investment so that we may some day discover

the cure for cancer or Lou Gehrig’s disease.

Reflecting on the Hatch-Waxman Act, you got it right when you

recognized the importance of balancing the twin goals of bringing

generic drugs to market while at the same time leaving intact the

financial incentive for research and development.

One of the keys to this successful balance in that legislation was

the guarantee of 5 years of market exclusivity for innovative companies. Incidentally, European Union regulators currently provide

10 years of market exclusivity for European drugs for innovative

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drugs. Some amount of market exclusivity for the innovator is necessary under any regulatory pathway for follow-on biologics.

The second imperative is to provide a mechanism so the FDA is

able to guarantee the safety and efficacy of follow-on biologics. To

do so we have to recognize the fundamental differences between

biologics and chemical-based pharmaceuticals. What has proven to

be successful in the case of traditional drugs is not necessary

transferrable to the science of biologics. For instance, it is currently

possible to know the complete character of a small molecule drug.

This knowledge enables the FDA to approve generic drugs with the

same characteristics as the innovator drug without requiring generic companies to test and prove the drug’s efficacy and safety

again. However, current science has not advanced sufficiently to

give us the same confidence that a follow-on biologic is identical to

a previously approved biologic based on molecular structure, alone.

Unlike traditional drugs, which are chemically based, biologics

are made from living organisms. Even minor variations in manufacturing processes can have a significant impact on the final character and consistency of the biologic and its effect on the human

body.

This diagram on the board comparing a biologic used to treat

anemia and a traditional drug that treats peptic ulcers disease

demonstrates the difference between traditional chemical drugs

and biological therapies. As you can see, the biologic is significantly

more complex than a traditional drug, having a molecular weight

of 30,000 versus 351. This is a critical distinction between traditional generic drugs and follow-on biologics. Any regulatory pathway must take full account of this distinction, which for now seems

to point to the inescapable conclusion that clinical trials on some

level will be essential to ensure the safety and efficacy of followon biological products.

Again I want to thank you, Mr. Chairman, for spurring a discussion on this important subject. I look forward to hearing from our

distinguished panel of witnesses.

[The prepared statement of Hon. Tom Davis follows:]

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Chairman WAXMAN. Thank you very much, Mr. Davis.

Without objection, all Members will be permitted to enter an

opening statement in the record. Do any Members wish, however,

to make any comments before we hear from our 15 witnesses? Mr.

Issa.

Mr. ISSA. Thank you, Mr. Chairman. I will be brief. I will put my

formal statement in the record, particularly because it sounds an

awful lot like Mr. Davis’. The view is somewhat the same, and that

is that it is very clear that we know a great deal about chemical

compounds and we can say a chemical is a chemical, but, for example, Mr. Chairman, would you want to have these two oranges substituted as though there were no difference? Would you accept that

a Florida orange is the same as a California orange if you have to

peel it, Mr. Chairman? And, for Mr. Sali who is not here today, do

you really think that any Russett potato is an Idaho potato and

should be interchanged and have no value, no second testing of

whether or not it makes a good french fry?

Now, clearly we know how to make grain alcohol, and if I am

buying grain alcohol, Mr. Chairman, it is very clear that I know

that it is alcohol plus about 3 percent water that just gets in if you

get the air to it. But, Mr. Chairman, do you really think that a $90

bottle of California wine that says Merlot is equal to this fine boxed

Merlot? And would you want to go to the dinner table or the hospital and have them interchanged without your prior approval, or

perhaps a little taste?

This is biologics. These are made by process. Mr. Chairman, they

may both be a Merlot, but as a Californian, I am sure that you

would not want them interchanged without your prior approval.

With that, I yield back.

[The prepared statement of Hon. Darrell E. Issa follows:]

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Chairman WAXMAN. Mr. Davis.

Mr. DAVIS OF ILLINOIS. Yes, Mr. Chairman, I would like to make

a brief statement.

Chairman WAXMAN. Before I recognize you for that purpose, I

would like to inquire if you have any props. [Laughter.]

The gentleman is recognized.

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Chairman. I

shall, indeed, be brief. But first of all let me thank you for calling

this hearing.

In 1984 the landmark Hatch-Waxman Act provided a cost-effective alternative to branded drugs with the creation of a traditional

generic pharmaceutical industry. Today’s hearing marks yet another landmark as we are being called upon to address escalating

biopharmaceutical costs.

This issue is near and dear to me, one, as a former health administrator, but also because my congressional district has more hospitals and more hospital beds than any other congressional district

in the country. Illinois has about 200 hospitals, most of them nonprofit. State hospitals are losing money, and another third are

barely breaking even, notwithstanding cuts in Medicare and Medicaid.

According to Crane’s Chicago Business, on February 13, 2006,

while the State of Illinois has implemented prescription drug assistance programs like the Senior Care Pharmaceutical Program,

State Pharmaceutical Assistance Plan, All Kids Program that provides health insurance coverage and prescription drugs to children

across all socio-economic groups, they help to buffer costs.

However, the sad reality is that cuts in Federal spending tend

to shift costs to insured patients and their employers. By definition,

health care is eating up a piece of our income, which is especially

bad news for the 26 percent of Chicagoans, including 164,203 with

full-time jobs and 43,876 with at least a college education who lack

health insurance. These data are particularly disturbing when you

take into consideration the median household income for Chicago

is $38,625 a year.

With this in mind, I welcome today’s distinguished panelists and

look forward to their insight and recommendations on how we can

buildupon the foundation of generic competition for our consumers

laid some 23 years ago under the Hatch-Waxman Act toward the

attainment of a pathway to safe and affordable biotech drugs.

I guess if I was to have any kind of prop, I’d just take this water,

which is pretty pure, and be delighted to have it.

Again, thank you, Mr. Chairman, for having this hearing.

Chairman WAXMAN. Thank you very much, Mr. Davis.

Does any other Member wish to be recognized for an opening

statement? Mr. Yarmuth.

Mr. YARMUTH. Mr. Chairman, two things real briefly. First of all,

I hope that Mr. Issa would accept an amendment to his list in saying that no self-respecting Kentuckian would accept Tennessee sour

mash whiskey for a Kentucky bourbon.

Mr. ISSA. Now that is bipartisan if I ever saw it.

Mr. YARMUTH. Thank you.

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Also, I would like to say that I think the chairman and Mr. Davis

have very accurately expressed and illuminated the conflicting

issues that we have to deal with on this topic.

I would also mention the fact that we have to recognize that

much of the research that leads to the development of these drugs

and these medications, both pharmaceutical and also these biologics, are funded by taxpayer dollars initially, so that we have an

overriding mandate to do what is best for the taxpayer, who is paying for most of this research at the very foundational levels.

Thank you, Mr. Chairman.

Chairman WAXMAN. Thank you very much.

We will now hear from our witnesses today. Our first witness I

am pleased to welcome is Dr. Janet Woodcock. She is the Deputy

Commissioner for Operations and Chief Medical Officer of the Food

and Drug Administration.

Since you are standing, I will have you continue to stand because

it is the practice of this committee to put all witnesses under oath.

[Witness sworn.]

Chairman WAXMAN. The record will indicate that you answered

in the affirmative.

We are delighted to have you here. We will put your full statement in the record. If it is possible, we would like to ask you to

keep to around 5 minutes.

STATEMENT OF JANET WOODCOCK, M.D., DEPUTY COMMISSIONER FOR OPERATIONS AND CHIEF MEDICAL OFFICER,

FOOD AND DRUG ADMINISTRATION

Dr. WOODCOCK. Thank you. Mr. Chairman and members of the

committee, I am Janet Woodcock, Deputy Commissioner and Chief

Medical Officer of the Food and Drug Administration. I thank you

for the opportunity to testify about the scientific and regulatory

framework surrounding follow-on biologics.

In considering the complex scientific issues at hand, I have relied

not only on my experience leading the Center for Drug Evaluation

and Research for over a decade, but also on my 8 years of experience working in the Center for Biologics Evaluation and Research

[CBER]. While in CBER I served as Acting Deputy Center Director

and as Director of the Office of Therapeutics, in which capacity I

oversaw the approval of biotechnology products to treat serious illnesses such as cancer, multiple sclerosis, and cystic fibrosis.

The success of FDA’s generic drugs program has spurred interest

in considering abbreviated application pathways for more-complex

molecules. Currently there are over 9,000 approved therapeutically

equivalent generic drugs on the market. They constitute about 60

percent of prescriptions written in the United States. FDA’s Office

of Generic Drugs currently approves generics at the rate of more

than one per calendar day.

The success of the program has stimulated competition. For the

last decade, the rate of submission to the Office of Generic Drugs

has rapidly increased. Submissions doubled between 2002 and

2006, to a current rate of about 793 applications per year.

The office has implemented numerous process improvements,

have improved increased efficiency of the review process, and recently, as part of FDA’s initiative on pharmaceutical quality for the

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21st century, OGD instituted the question-based review. Eventually it is hoped this change will decrease submission of manufacturing supplements by about 80 percent, and thus free up more time

of the reviewers to deal with this increased submission rate.

While the generics program has been very successful for small

molecules, scientific challenges remain. We do not have good bioequivalents methods for inhaled or many topical medications, and

must require clinical trials to demonstrate equivalence. This has

inhibited consumer access to generic versions of these types of

products.

In addition, a number of drugs are made from complex molecules. In these cases, it can be difficult to tell whether a proposed

generic version is structurally identical to the innovator product.

Recently, as part of its critical path initiative, FDA has been

evaluating the science needed to address these issues for generic

drugs and is planning to lay out the scientific research that is

needed to improve the process, as we did a number of years ago

for innovator medical products.

The topic for discussion today is variously referred to as followon proteins, follow-on biologics, generic biologics, as well as other

labels. Many of these terms are very imprecise and confusing, and

I hope we can discuss terminology.

Largely, these terms are intended to refer to biotechnology produced protein products. In the United States, such products are

regulated either as drugs under the Food, Drug, and Cosmetic Act,

or as biologic products under the Public Health Service Act. Whether regulated as drugs or biologic products, proteins fit into the category of complex molecules that can be difficult to fully characterize.

Copies of protection products that are regulated as drugs may be

considered for the abbreviated applications pathways that exist

under section 505. The very simplest peptide products may be able

to demonstrate that they contain the same active ingredient as the

innovator product, and thus may be considered under 505(j), what

is commonly regarded as the generic drug pathway.

In contrast, copies of approved protein products that are drugs

would currently be considered for abbreviated applications under

505(b)(2), and the reason for this is that scientific techniques are

not available to demonstrate sameness of these types of molecules.

The degree to which any abbreviated pathway could be used for

any given protein depends on many factors, including its physical

complexity, the availability of functional assays to characterize it,

and its clinical use.

An abbreviated pathway does not exist for copies of protein products approved under the PHS Act. FDA has approved several follow-on proteins under 505(b)(2), including a recombinant hyaluronidase and recombinant version of human growth hormone.

We are currently preparing a guidance document on the general

scientific framework for preparation of abbreviated applications for

follow-on proteins under 505(b)(2). We expect to follow this with

guidance on technical issues such as immunogenicity, dealing with

immunogenicity of proteins and physical characterization methods.

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I will be pleased to answer your questions regarding these complex issues.

[The prepared statement of Dr. Woodcock follows:]

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Chairman WAXMAN. Thank you very much, Dr. Woodcock.

As you mention in your testimony, for over 10 years FDA has allowed brand name manufacturers of biotech drugs to make certain

changes in the process by which they manufacture their products,

but without repeating all the original clinical trials, under something called comparability protocols. I am interested in understanding the scientific rationale for allowing brand name manufacturers

to make process changes without new clinical trials. I am also interested in its applicability to follow-on and biogeneric products.

What was the scientific basis for FDA’s conclusion that clinical

outcome trials are not necessary to assess the effects of certain biological product changes?

Dr. WOODCOCK. Manufacturing changes and process changes are

undertaken for all pharmaceutical products, whether drugs or biologics. In each case we have to determine whether or not the

change could result in any clinically significant change in the product, whether it is a small molecule or whether it is a large, complex

molecule of some kind. FDA has a long history of quality regulation, putting into place procedures, both physical characterization

of the new product and comparing it to the old product, functional

characterization of a new product compared to the original product,

and sometimes clinical characterization of a new product. It depends on, as I said in my oral testimony, how much science we

have available to assess these changes.

If we can be sure, based on a structural characterization, which

we often can for a drug, then that would be sufficient for a small

molecule drug. If that structural characterization isn’t enough to

assure that the new version is similar to the old version, then other

types of tests might be necessary. And in some cases we might

even require clinical tests.

For example, with small molecule drugs, when the formulation is

changed we may require new bioequivalent studies.

Chairman WAXMAN. So that is completely within your discretion

based on whether you think it is appropriate to have further evaluations, further studies?

Dr. WOODCOCK. Yes. There are multiple scientific issues that

come into play in any given manufacturing change.

Chairman WAXMAN. I know most of these comparability decisions

involving biotech drugs or any other drugs are confidential, but

with the biotech drug Avonex the information is public. I assume

you are familiar with that case?

Dr. WOODCOCK. Yes.

Chairman WAXMAN. What kinds of process changes did FDA permit in that case without repeating the original safety and effectiveness trials?

Dr. WOODCOCK. In that case the original cell line that had been

used to manufacture the product that was used in the clinical trials

was no longer available, so the manufacturer had to go back and

redo all of that and duplicate the manufacturing process that had

been used for the original product. That is well described publicly.

They made some original attempts. Those weren’t successful.

They made some subsequent attempts and then an extensive

number of comparisons were made between the original product

and the second version of the product, both the kinds I just deVerDate 11-MAY-2000 13:48 Apr 07, 2008 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 C:\DOCS\40874.TXT HGOVREF1 PsN: HGOVREF1
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scribed, both physical/chemical comparisons, functional comparisons, and so forth, so that at the end of the day it was decided that

the products were similar enough that FDA could extrapolate from

the clinical data that was derived for the first product to the new

product.

Chairman WAXMAN. Were the changes between the two products

significant?

Dr. WOODCOCK. The products were very similar, ended up being

very similar.

Chairman WAXMAN. I meant the process changes. Were they significant?

Dr. WOODCOCK. The manufacturer attempted to duplicate the

similar process that was originally done with the first product, but

it was in a different site, in a different scale, and so forth, so there

were differences. It was not the identical cell line. It wasn’t the

identical product that had been made, and so forth.

Chairman WAXMAN. Are these changes similar to the kinds of

changes that might be required to manufacture a follow-on product?

Dr. WOODCOCK. The difference between that example and the instance where a new manufacturer would attempt to manufacture

a follow-on product would be that in the Avonex case. The manufacturer had access to all the information about the process of manufacturing the first product. That is very important information,

because it has information on all the intermediate steps and what

happens during the manufacturing and purification process, and so

on.

Chairman WAXMAN. Thank you.

Mr. Davis.

Mr. DAVIS OF VIRGINIA. We will start with Mr. Issa.

Chairman WAXMAN. Mr. Issa.

Mr. ISSA. Thank you. Thank you, Mr. Chairman, and thank you,

Ranking Member Davis.

Avonex appears to be an example sort of—I will use a different

wine than the one here, but you are talking if the Rothschilds trying to duplicate after they have had to clear their grapes away and

put a new crop in. You have the same maker with the same wine

masters—in this case scientists—trying to duplicate what they had

already made. Is that roughly correct? You may not be a California

wine drinker, so I know it can be challenging.

Dr. WOODCOCK. I love California wine.

Mr. ISSA. You won’t love the one here in this box. Trust me.

Dr. WOODCOCK. Yes. As an analogy, that is quite reasonable.

Mr. ISSA. OK. So the next step that the chairman’s legislation or

the legislation we are hearing here today would attempt to do is

to say that, even though you had to sort of teach or go through a

process, a re-learning process, even with the original designer, you

are going to try and transfer this to a different winery, and they

are going to try to set up, but they are not going to have the right

to every trade secret, if you will. Not every nuance of the process

is, in fact, in the public domain. Is that correct?

Dr. WOODCOCK. That is correct. We face that now with our generic drug program.

42

Mr. ISSA. OK. And you mentioned earlier that you have had

chemical equivalents that didn’t work out so well when they went

generic, so to speak, even among name manufacturers. When an insurance company does a formulary and says this is equal to this,

that is not always right, is it? There are side effects that are unanticipated often?

Dr. WOODCOCK. The generic drugs that we approve are fully

interchangeable with the innovator drugs. They are therapeutically

equivalent.

Mr. ISSA. You have never had a side effect?

Dr. WOODCOCK. We have numerous reports of side effects; however, we investigate those and we have extraordinarily rarely found

any instance where there would be therapeutic inequivalence between a generic drug and an innovator drug.

Mr. ISSA. Now, when we get to biological and follow-on immune

problems that occur, that is a different problem that you are not

presently seeing as much in small cells but you do see it in biologics, don’t you?

Dr. WOODCOCK. Yes. Proteins are what is called immunogenic.

They produce often an immune response in people when they are

administered.

Mr. ISSA. So if there are two otherwise the same biologies, the

original and the follow-on, one could very much have a different

immune response that would lead somebody who had successfully

fought a disease to somehow develop a resistance; is that correct?

Dr. WOODCOCK. The immune response to a protein can cause

many things. It can cause what you just said, which is neutralizing

the effect, the beneficial effect of the protein.

Mr. ISSA. And then you could find yourself unable to deal with

either drug. In other words, you could make that change and find

yourself opted out of the cure or the treatment?

Dr. WOODCOCK. That is true, and there are difficulties, for example, with insulin sometimes.

Mr. ISSA. So, given that you have this history, wouldn’t, in the

case of follow-on biologics, at least until this problem can be quantified, wouldn’t you have a bias, an almost exclusive bias toward

clinical trials, even if we gave you the jurisdiction and the right to

shortcut those, limit those, eliminate them? From a standpoint of

unsettled science, wouldn’t it be proper to have clinical trials to ensure that is not happening when, in fact, it can take someone who

is surviving and put them in a position where they can no longer

survive?

Dr. WOODCOCK. Currently—and, of course, I can only address the

proteins that we are looking at under the 505, under the FD&C

Act.

Mr. ISSA. Right, and you admit those are, by definition, less likely to be unknowns than the ones we are going toward; is that

right?

Dr. WOODCOCK. No. That is where the terminology I think is

very confusing. We have approved proteins under the Food, Drug

and Cosmetic Act provisions under 505(b)(2), and in those cases, for

those recombinant proteins we have looked at the immunogenicity

in people.

Mr. ISSA. OK, but you have looked at them?

43

Dr. WOODCOCK. Yes.

Mr. ISSA. So, again, my one final exit question here in this short

time: clinical trials are the only way to know whether substantially

similar, substantially identical follow-on biologics are, in fact, going

to have differences in the immune response, or whatever term is

appropriate; is that right?

Dr. WOODCOCK. Yes. We have a very limited understanding of

the basis of an immune response, and we are not able to fully predict immunogenicity in humans right now from non-clinical data.

Mr. ISSA. And this could be dangerous?

Dr. WOODCOCK. The immunogenicity must be evaluated.

Mr. ISSA. Thank you, Mr. Chairman.

Chairman WAXMAN. Thank you, Mr. Issa.

Mr. Yarmuth.

Mr. YARMUTH. Thank you, Mr. Chairman.

Dr. Woodcock, some in the brand name industry argue that any

process for approving copies of biologics should follow the European

Union model. The EU’s governing directive, which is comparable to

a statute, is extremely flexible and gives regulators great discretion

to set procedures and standards and so forth.

The drug regulatory body there, the EMEA, has also established

very particular procedures and approval standards to implement

those directives. You are nodding, so you are obviously familiar

with that process or that model?

Dr. WOODCOCK. Yes.

Mr. YARMUTH. And the biotech industry seems to like that public

process that is used there for establishing and setting guidelines

that contain the data requirements for biosimilars because the data

gathering process allows those companies to help dictate what data

their competitors must produce, and, of course, that would take a

lengthy period of time.

Is the FDA required to undertake a public process for establishing data requirements?

Dr. WOODCOCK. No. We are not required to.

Mr. YARMUTH. Do you think it is scientifically necessary for FDA

to engage in a public guideline process to establish the data requirements for a follow-on protein product?

Dr. WOODCOCK. What FDA does currently is engage with the

manufacturer in discussions—of course, those are not public—to

provide advice on any manufacturer interested in pursuing a follow-on under the 505(b)(2) process. But we often write scientific

guidance for manufacturers because it provides better predictability and it provides, as you said, transparency.

We are in the process of writing overall guidance on the process

of scientific approach to follow-on proteins under 505(b)(2).

Mr. YARMUTH. Do you think that the process the European

Union uses, if we adopted that system here, would have the effect

of freezing science at all? Is that a risk in doing that?

Dr. WOODCOCK. I am really not able to comment on that.

Mr. YARMUTH. Thank you, Mr. Chairman. I yield back.

Chairman WAXMAN. The gentleman has a couple minutes, would

you yield your time to me?

Mr. YARMUTH. I would be happy to yield my time to the distinguished chairman.

44

Chairman WAXMAN. Thank you.

I just wanted to point out that the questioning by my colleague,

Mr. Issa, about how you might need to have clinical trials to understand possible concerns, that is legitimate. FDA does now at the

present time allow some changes in the process without requiring

clinical trials, but I do want to point out that the legislation that

I have introduced would allow FDA to decide, when they think clinical trials are appropriate, to require clinical trials.

I do want to ask you this. In the use of comparability protocols

limited to simple proteins, can the manufactures of more complex

proteins make changes in their products without repeating the

original clinical trials?

Dr. WOODCOCK. Yes, they can, if the science is there. It is very

desirable for manufacturers of pharmaceuticals of any kind to

make continuous improvements in their manufacturing process to

maintain the quality of the pharmaceuticals as soon as possible

and the efficiency of the process as good as scientifically possible.

So FDA has adopted procedures, as I said, that allow manufacturers to make changes to their manufacturing process or perhaps

open up new plants, say, if there is a demand for the product, and

the amount of data that has to be generated really depends on the

complexity of the product, how well we can physically characterize

the product, and how confident we are that physical characterization will extrapolate to the same performance. But we may require

many additional steps, up to and including clinical studies now,

particularly of immunogenicity.

Chairman WAXMAN. Well, do you and other FDA scientists feel

confident that comparability assessments provide adequate protection to patients from unsafe or ineffective biotech drugs?

Dr. WOODCOCK. The comparability assessment puts the burden

on the manufacturer. The manufacturer must show to FDA’s satisfaction that the change has not introduced anything that would be

detrimental to the clinical performance of the drug. So how much

evidence is needed after a manufacturing change depends on how

well the manufacturer can demonstrate that product is going to

perform the exact same way as the original product did in the clinical testing.

Chairman WAXMAN. And as science evolves, you will know better

whether the comparability requires clinical tests or not; is that correct?

Dr. WOODCOCK. The ability to physically characterize protein

molecules and other complex substances has evolved and is continuing to evolve, and so over time we are going to be able to do

a better and better job of controlling the quality of these products

and allowing for continuous improvement.

Chairman WAXMAN. Thank you very much.

Mr. Davis.

Mr. DAVIS OF VIRGINIA. I finally have my comparison up there.

We talked before about how complex these are. This diagram up

there, as you see, compares a biologic used to treat anemia and a

traditional drug that treats peptic ulcers. It demonstrates the difference between the traditional chemical drugs and biological

therapies.

Dr. WOODCOCK. Yes.

45

Mr. DAVIS OF VIRGINIA. As you can note on this, the biologic is

significantly more complex than a traditional drug.

Dr. Woodcock, you highlight in your testimony the importance of

ensuring that facilitating the development of follow-on products

through abbreviated pathways doesn’t discourage innovation and

the development of new biological products, and you refer to HatchWaxman as a balanced approach. Do you think an extended period

of data exclusivity as well as certain patent protections like HatchWaxman would help encourage innovation and development with

biological products?

Dr. WOODCOCK. Sir, I am a doctor and a scientist, and that is

really outside of my area of expertise.

Mr. DAVIS OF VIRGINIA. OK, so you don’t want to make the economic or policy determinations on that?

Dr. WOODCOCK. No.

Mr. DAVIS OF VIRGINIA. OK. You also state in your testimony

that demonstrating the similarity of a follow-on protein product to

a reference product is more complex and would require new data.

Does this mean FDA would require clinical safety data for followon biologics?

Dr. WOODCOCK. There is a very large range of complexity. All

right? The erythropoietin molecule that you have here is a pretty

complex example. There are very, very small biologic drugs of different kinds. So the amount of assurance and the amount of data

that would be needed is really based on how complex something is

and how well it can be characterized in different ways.

Mr. DAVIS OF VIRGINIA. But a slight alteration could have, you

know, significant clinical manifestations, wouldn’t it?

Dr. WOODCOCK. FDA would not approve a follow-on product or

a generic drug that we were not confident would have the same

performance as the innovator drug.

Mr. DAVIS OF VIRGINIA. What level of clinical safety data would

be necessary for approval, ball park?

Dr. WOODCOCK. Well, to talk about this we have to get into terminology a little bit. Please bear with me.

The abbreviated application process for 505(b)(2), for example,

may rely on some fact of the approval of a prior product. All right?

Mr. DAVIS OF VIRGINIA. Yes.

Dr. WOODCOCK. But we may approve a product using an abbreviated application where some of the data, maybe some of the clinical trials or animal studies do not have to be repeated. However,

that resulting of proof product is not considered substitutable for

the other product. In other words, each of them stand alone and

they can’t be switched at the pharmacy, or it is not recommended

they would be. That is one level.

Another level would be for a manufacturer to seek interchangeability, full interchangeability. So far the proteins that we have approved all stand on their own. They have had abbreviated applications but they are not considered interchangeable with any of the

other proteins in that class. For example, human growth hormone

or hyaluronidase.

Mr. DAVIS OF VIRGINIA. You testified that the science and technology isn’t sufficiently advanced to allow for comparison of comVerDate 11-MAY-2000 13:48 Apr 07, 2008 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 C:\DOCS\40874.TXT HGOVREF1 PsN: HGOVREF1
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plex protein products. How close are we to discovering those technology methods; 5 years; 10 years?

Dr. WOODCOCK. It is going to be a continuum, and right now we

are very short peptides, which are as small as the ranidine molecule you are showing there, for example, or in the same ball park.

We can do it now, but those are very, very small compared to the

erythropoietin molecule, so it is going to be a step-wise progression

over a decade or so.

Mr. DAVIS OF VIRGINIA. Are there any non-clinical tests or technology that could fully substitute for studying the safety of biotech

products in humans?

Dr. WOODCOCK. As I said, right now we do not have the science

around the immune system to adequately predict the human immune response fully to any given product.

Mr. DAVIS OF VIRGINIA. You listed two examples, omnitrope

and—I can’t pronounce the other one. Hyaluronidase?

Dr. WOODCOCK. That is pretty good.

Mr. DAVIS OF VIRGINIA. Neither was rated by FDA as therapeutically equivalent or substitutes for other biologics on the market.

Many believe interchangeability or substitution is where the most

cost savings would occur. Of course, the balance here is safety versus efficiency and speed to market.

When do you think the FDA will be able to rate a biologic product as interchangeable? And do you think the FDA needs this authority if the science isn’t developed yet?

Dr. WOODCOCK. For the 505(b)(2) drugs, which is what I can

comment on, manufacturers would need to do additional clinical

studies that would demonstrate interchangeability, and that is a

further step. That is a higher bar than simply getting on the market, an abbreviated application. Does that make sense to you?

Chairman WAXMAN. Thank you, Mr. Davis.

Mr. Welch.

Mr. WELCH. Thank you, Mr. Chairman.

Some of the drug companies have said that when a biotech product is derived from a specific cell line, any copy of the product will

have to begin with a different cell line. They are arguing, as I understand it, that this change is so significant that all the clinical

trials, all the clinical trials must be repeated to ensure that the

change has not altered safety and effectiveness. Obviously, we are

concerned about safety, but we also want to get the benefit and not

have this argument about safety be used to deny us the benefit.

My question to you is: is it true that a change in a cell line will

always necessitate repeating the original clinical trials?

Dr. WOODCOCK. No. We do not believe that. Again, any manufacturing change, whether the cell line, the DNA construct, the manufacturing process, the way the drug is purified, any of these could

affect safety and effectiveness, and therefore data has to be submitted and a very careful look has to be taken to make sure that it

hasn’t. The amount of data that we would need or that anyone

would need to make that evaluation depends, again, on the complexity of the product.

Mr. WELCH. All right. So the bottom line here is that you believe

that you do not need, for safety, to repeat the entire clinical trial?

47

Dr. WOODCOCK. In some instances the manufacturer may not be

able to show enough similarity and they may have to repeat much

of the clinical program. In other instances they may be able to

show an extreme amount of similarity, a very great similarity to

prior product, and therefore would have very much smaller clinical

trials needed, perhaps of immunogenicity.

Mr. WELCH. And that is an evaluation that you would feel confident, based on the information that you had at hand, that you

could make?

Dr. WOODCOCK. Yes. FDA has a long history, as I said, of controlling the access to market after manufacturing changes for a very

wide number of products for all pharmaceuticals on the market,

and this is another example of that.

Mr. WELCH. I was going to ask another question, but you are

starting to answer it. What scientific developments have allowed

FDA to feel that confidence you are describing, that manufacturers

of existing biologics can change cell lines, manufacturing facilities,

and/or the fermentation processes without having it conduct those

clinical trials?

Dr. WOODCOCK. Yes. And, as I said, sometimes they do and

sometimes they don’t. It really depends. The burden is on them, the

manufacturer, to show through scientific data that the performance

of the product after the change process is going to be the same as

the performance of the product before the change.

Mr. WELCH. And are clinical trials always the most sensitive

studies for detecting changes in safety or effectiveness due to process changes?

Dr. WOODCOCK. No. No, I think that is a common misconception.

Clinical trials may be insensitive to certain types of changes, adverse effects, for example, that are rare or uncommon.

Mr. WELCH. Yes.

Dr. WOODCOCK. And we really need to use the scientific tool to

assess the change in the product that is appropriate. It might be

physical characterization or it might be a functional test. It might

be evaluation of the purity of the product.

Mr. WELCH. Thank you. I yield the balance of my time.

Chairman WAXMAN. Thank you for yielding. You have another

minute left on your time, so if the gentleman would permit I will

take that minute if he will yield to me.

Dr. Woodcock, if FDA were given broad authority to require any

studies necessary for approval of follow-on versions of PHS Act approved protein products, are you comfortable that the agency could

use its discretion to ensure that only safe and effective products

were made available to patients? I think you have answered that

question several times, but let me just put it very clearly.

Dr. WOODCOCK. I think that FDA must do that. All right? We do

not currently approve generic products unless they have absolutely

met our standards and were follow-on products under 505(b)(2). We

must maintain the confidence in our program and also our own scientific integrity.

Chairman WAXMAN. Based on your experience with the comparability guidance, can you give the committee a perspective on

how often companies must do clinical outcome trials, not just PK

or PD studies, to support a product or process change after apVerDate 11-MAY-2000 13:48 Apr 07, 2008 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 C:\DOCS\40874.TXT HGOVREF1 PsN: HGOVREF1
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proval of its BLA? Are large clinical outcome studies scientifically

essential to support the approval 1 out of 10 post-approval product

changes, 1 out of 20 post-approval changes, or 1 out of 50 changes?

Dr. WOODCOCK. I would say that the factor that is most important here is the magnitude of the change; however, it is probably

more in the 1 in 50 range than the 1 in 10, or whatever. But don’t

forget there are many different types of changes that occur all the

time to manufacturing processes. If you included all of those, then

requiring clinical studies of outcomes would probably be quite rare.

Chairman WAXMAN. Thank you.

Mr. Bilbray.

Mr. BILBRAY. Mr. Chairman, I would like to yield my time to the

gentleman from the Northwest Territory, but I would first like to

clarify that, as a native Californian as opposed to Mr. Issa who is

an immigrant, I was outraged at the concept of bringing a bottle

of Merlot to this table and having it chilled. [Laughter.]

The only thing worse than that is to take it from the table and

take it back to his office after he presented it.

But at this time I would like to yield to Mr. Burton.

Mr. BURTON. I thank the gentleman for yielding. I am from the

Midwest, not the northwest.

Mr. BILBRAY. Well, the Northwest Territory.

Mr. BURTON. Ohio, the Northwest Territory. You are going back

a long way.

First of all, let me preface my remarks by saying the pharmaceutical industry and FDA working together has created probably

the highest quality of life in the history of mankind, and I appreciate that and I think everybody in America does. There are some

questions, though, that I have to ask about the process.

You said it is a judgment call on whether or not this product

comes to market. Who makes the judgment? Who makes the call?

Dr. WOODCOCK. The FDA.

Mr. BURTON. Don’t they have advisory committees that review

the process, review the product, review the results, and then they

make a recommendation to the FDA?

Dr. WOODCOCK. Yes. Advisory committees are frequently utilized,

particularly on clinical decisions. Here we are talking about scientific characterization of the product in a wide variety of ways.

Most often, that is something that the FDA scientists do.

Mr. BURTON. But the FDA does have advisory committees for almost all of the products?

Dr. WOODCOCK. Yes.

Mr. BURTON. When I was chairman I asked—I don’t believe it

was you, but I asked one of your coworkers who was a leader at

the FDA how many times has an advisory committee recommendation been turned down by the FDA.

Dr. WOODCOCK. You are asking me?

Mr. BURTON. Yes.

Dr. WOODCOCK. I don’t know the answer to that.

Mr. BURTON. I will tell you what it was before. It was never. The

advisory committee, I was told by the people who were doing the

investigation for my committee when I was chairman, was that the

advisory committee recommendations were always accepted.

49

Now, the other thing I would like to know is: the people on the

advisory committee, do they file financial disclosure reports?

Dr. WOODCOCK. Yes, they do.

Mr. BURTON. We looked at some of the financial disclosure reports when I was holding hearings on this when I was chairman

and we found that many of the people in the advisory committees

did not file financial disclosure reports. And we found that some on

the advisory committees had a conflict of interest. The RotoShield

virus was one of those. The head of the advisory committee had an

interest in a company that was going to make a RotoShield virus

vaccine, which was put on the market at his advisory committee’s

recommendation, and FDA approved it based upon the recommendation. One or two children died and several people were injured and they pulled it off the market within 12 months.

I bring this up because this is a very important issue we are

talking about today, and I would just like to ask that these advisory committees, when they make recommendation, that there is a

thorough judgment made after the advisory committee makes its

determination, and that the FDA does not always accept their results or their recommendations, and that there are complete financial disclosure reports.

The reason for that is pretty obvious. If a person is on an advisory committee and their recommendation is accepted and they

have a financial interest in a pharmaceutical company that is going

to manufacture a product like that or a like product, they are liable

to have their judgment tainted just a little bit. It has happened in

the past and I hope it doesn’t happen in the future.

The cost of biotech drugs increased 17 percent from 2005 to 2006,

and that was compared to 5.4 percent increase for traditional pharmaceuticals, which are much more expensive here than in some

other countries, in most cases. Why was that increase so much? Do

you know?

Dr. WOODCOCK. My understanding is that some of the new

biotech products on the market that are very highly effective, you

know, are very expensive to purchase, as some of the members already alluded to. But I don’t have any complete analysis of this.

Mr. BURTON. I have a couple more questions, but I will wait.

Chairman WAXMAN. We will have another round.

Mr. BURTON. I will catch it next time.

Dr. WOODCOCK. May I?

Chairman WAXMAN. Yes.

Dr. WOODCOCK. The FDA has recently published new guidance

on advisory committee conflicts of interest, and it lays out very explicit and transparent guidance on how people will be evaluated for

their conflicts of interest.

Mr. BURTON. That is very good news. I appreciate hearing that.

That is a great step in the right direction. Thank you.

Chairman WAXMAN. Thank you, Mr. Burton.

Mr. Davis.

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Chairman.

Dr. Woodcock, I have always tried to understand—and if you

could enlighten me it would be very helpful to me—the real difference between generic drugs and the brand name drugs. If they

do essentially the same thing or if the level of effectiveness is esVerDate 11-MAY-2000 13:48 Apr 07, 2008 Jkt 000000 PO 00000 Frm 00053 Fmt 6633 Sfmt 6633 C:\DOCS\40874.TXT HGOVREF1 PsN: HGOVREF1
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sentially the same, why do we pay so much more for one as opposed to the other? I have never been able to, in my own mind, feel

that I had a real understanding of that.

Dr. WOODCOCK. Well, if I may, if you look at the diagram—it is

gone now, but there was a diagram of the molecule up there, a

small molecule. We know exactly everything how that molecule is

structured. We know everything about it. And so what we do in the

generic drug program is we require an exact copy of that molecule

to be the generic drug and then we make sure that molecule gets

into the body the exact same way that the innovator molecule gets

into the body. So then we say if it does that it is going to have the

same effect on the body because it is circulating around in the body

the same way as the innovator drug. So that is what a generic drug

is.

The problem with the proteins is it is very difficult to say we

have the exact same molecule because it is such a complicated molecule.

Mr. DAVIS OF ILLINOIS. The effectiveness or the impact, are we

saying that we would expect a different level of impact or effectiveness using one as opposed to the other?

Dr. WOODCOCK. For the generic drugs that FDA approves we expect the exact same performance. Now, that means the exact same

good effects and the exact same side effects as the drug it is a copy

of.

Mr. DAVIS OF ILLINOIS. Do you know then how the price or cost

differential emerges or is determined?

Dr. WOODCOCK. Well, while the innovator drug is patent protected or protected by exclusivity, there are no other copies available to be prescribed. During that time the price is quite high.

Once generic versions get in the market, the price of the various

generic copies becomes only a fraction of what was charged by the

innovator.

Mr. DAVIS OF ILLINOIS. Are you aware or familiar with any consumer studies that would indicate whether or not consumers have

a greater level of confidence, for example, in the more popular

pharmaceuticals than the generics?

Dr. WOODCOCK. Certainly the generics are not advertised and

certainly there is some brand name loyalty that I have heard of.

I have certainly talked to many, many consumers over my lifetime

about this issue. There is some residual concern still about the

generics and whether are they as good because they are not the

brand name product; however, I think in the last 10 or 12 years

of our generic drug program, confidence, both by the health professionals—the pharmacists, the doctors—as well as the consumers

has really risen, and most people in this country are used to taking

generic versions.

Mr. DAVIS OF ILLINOIS. And so then one could probably reasonably assume that marketing plays a great role in shaping our attitudes and thoughts about the drugs that we would most likely prefer using?

Dr. WOODCOCK. I can’t comment on that directly, but that is one

of the purposes of advertising.

Mr. DAVIS OF ILLINOIS. And so I would assume that it probably

works fairly well and that it does, in fact, skew one’s thinking. And

51

if we are talking about having the most cost-effective health care,

then it just seems to me that the more enlightened consumers become, that will probably have as much impact on cost effectiveness

in health care as anything that we are going to regulate or anything that we are going to do.

I thank you very much for your answers.

Dr. WOODCOCK. At the request of Congress, we had an education

program, outreach program, on the generic drug program. It has

been very effective.

Mr. DAVIS OF ILLINOIS. Thank you. Thank you very much.

And thank you, Mr. Chairman. I yield back.

Chairman WAXMAN. Thank you, Mr. Davis.

Mr. Burton was using Mr. Bilbray’s time, and he said he had a

few more questions, so before we go to a second round I yield to

you your first-round 5 minutes.

Mr. BURTON. Thank you. I just have a few more questions.

Dr. Woodcock, I think you have been very helpful, some of your

answers today. I really appreciate that.

The pharmaceutical industry deserves to get some of their money

back or all of their money back when they spend a lot of money

on research and development, and that is why the patents are

there, and then when it expires, of course, it can be a generic drug

and they should have recovered their investment.

Are other countries working to develop these biotech drugs?

Dr. WOODCOCK. Yes. As was alluded to earlier, the European

Union has published a directive and is implementing a program on

what they call biosimilars. By that generally they mean biotech

drugs.

Mr. BURTON. If they produce a biotech drug and there is a similar biotech drug that has been produced here in the United States,

because of the differences, the scientific differences that you were

talking about when we saw the slide a while ago, the FDA probably

would not allow that drug to be imported into the United States

until it was approved by the FDA, even though it did the same

thing or pretty much the same thing?

Dr. WOODCOCK. Yes. The law doesn’t allow drugs to be imported

in the United States unless they are approved.

Mr. BURTON. Let me ask you one more question. If we had reimportation or importation of the pharmaceuticals that are approved by the FDA, would the prices of those pharmaceuticals be

lower?

Dr. WOODCOCK. Again, this is beyond my area of expertise. I

apologize.

Mr. BURTON. I will just followup by saying that everybody wants

free enterprise to succeed and they want the pharmaceutical industry to make a lot of money so that they can do continued research,

but when my first wife had cancer—and I have talked about this

before—we went to have her chemotherapy and the tamoxifen that

one woman was taking, she was complaining about the cost being

about $300 a month, and another lady said I’m getting the same

thing from Canada for $50 a month, so it was six times less.

There are a number of us in Congress that would like to see the

FDA working with their counterparts in other countries and the

pharmaceutical companies working with their counterparts in other

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countries and the governments of other countries to find out some

way to level the playing field so that Americans are paying a comparable price for their pharmaceutical products as they do in other

countries. It just doesn’t seem fair to go to Germany or France or

Spain or Canada and find that the very same product is being sold

for much less, and Americans are paying actually a great deal more

for the research and development and the advertising than is being

paid elsewhere.

That is just a suggestion. I appreciate very much your candid answers.

I yield to the chairman.

Chairman WAXMAN. Thank you very much for yielding. The gentleman has a minute and a half, so I will be glad to take it.

If a statute were passed giving FDA broad authority to review

abbreviated applications for follow-on proteins, and if companies

were ready to begin submitting applications as soon as the statute

became law, is it reasonable to assume that FDA would be able to

begin reviewing those applications as soon as they were submitted,

assuming, for the purpose of this question, that the statute did not

require FDA to issue regulations or guidance as a prerequisite to

the review of applications?

Dr. WOODCOCK. FDA is currently, as I said, reviewing applications and also inquiries from companies and so forth, providing

guidance for drugs under the 505(b)(2) regimen. So we have the

technical expertise to perform these functions.

Chairman WAXMAN. Thank you.

Mr. Hodes.

Mr. HODES. Thank you, Mr. Chairman.

Dr. Woodcock, I want to focus for a moment on the issue of comparability.

Dr. WOODCOCK. Yes.

Mr. HODES. It is my understanding that biologics as a group are

so diverse and in some cases so incompletely understood that there

is today no one-size-fits-all set of studies that can demonstrate

comparability. Is that true?

Dr. WOODCOCK. Absolutely. Biologics, as opposed to biotech proteins, range from everything from gene therapy to cells, living cells

of different types, to tissues—a huge range of different kind of

products.

Mr. HODES. And am I correct that biopharmaceutical products

often undergo changes after approval and that pre-change and

post-change products will be comparable, as opposed to identical?

Dr. WOODCOCK. Yes. As we were discussing before, manufacturers need to continue to improve their process or they may need to

open up new plants or increase the level of production, the scale

of production. There are a lot of changes that have to be made.

After each one of those changes, we must assess whether or not the

performance of the product has changed.

Mr. HODES. And the FDA establishes boundaries and batches.

Different batches have to fall within established boundaries for

that product?

Dr. WOODCOCK. Yes. Any product, whether it is a small molecule

or drug, has slight variations lot to lot in any kind of testing parameter that you would put on it, so the traditional approach is to

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establish boundaries within which a product can vary, but it can’t

go outside of those limits.

Mr. HODES. Now, just as the science is evolving on the manufacturing side—certainly from the FDA’s standpoint techniques for assessing the structure and activity of biologics are evolving rapidly—

and our understanding of biological structure and activity is improving all the time; is that correct?

Dr. WOODCOCK. That is correct.

Mr. HODES. If Congress were to tell the FDA what specific types

of clinical data must always be required for approval of follow-on

biologics based on today’s science, could such clinical data requirements become obsolete?

Dr. WOODCOCK. Certainly, from my point of view, flexibility in

enabling us to incorporate the new science into the regulatory process as that science evolves and becomes available is in the best interest of the public as well as the agency and the industry.

Mr. HODES. And if a follow-on statute required a clinical trial in

every case, could it end up requiring perhaps unnecessary and

therefore potentially unethical trials in the future?

Dr. WOODCOCK. Where trials aren’t needed, it is, you know, of

questionable ethics to repeat them. So use of human subjects for

trials that are not needed or done simply to check a box on a regulatory requirement are not desirable.

Mr. HODES. Let me ask you a question about the EU system. The

EU regulations, as I understand them—imperfectly, I might add—

require post-market surveillance; is that correct?

Dr. WOODCOCK. I can’t speak exactly. The Europeans have the

ability to require post-marketing surveillance for any approved

pharmaceutical.

Mr. HODES. Does the FDA currently have any requirements for

post-market surveillance?

Dr. WOODCOCK. We very frequently request post-marketing studies be performed at the time of approval, and those are agreed to

by the firms.

Mr. HODES. So it is the manufacturers who are conducting the

post-market surveillance?

Dr. WOODCOCK. Yes.

Mr. HODES. The FDA relies on the manufacturers for that postmarket surveillance; the FDA doesn’t do any of its own?

Dr. WOODCOCK. Right. The FDA conducts the adverse event reporting system, which is an adverse event reports from doctors and

companies, and we do some limited studies, but in general we do

not have the capacity to do post-marketing surveillance as you are

describing.

Mr. HODES. Do you believe with biogenerics developing as rapidly

as the field is developing, there should be expanded requirements

for post-market surveillance?

Dr. WOODCOCK. All pharmaceuticals when they are approved for

the first time have a fair amount of uncertainty still surrounding

them about their performance, and particularly, as we have discussed already, any protein product that would be approved would

continue to have questions about immunogenicity and perhaps

other side effects that would probably need to continue to be looked

at in the post-marketing period.

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Mr. HODES. Can the FDA require post-marketing studies?

Dr. WOODCOCK. What we do is say to the company: you need to

agree to conduct this study, and if you do then that is part of the

approval the company agrees to do.

Mr. HODES. So, if I understand your answer, the answer is yes,

the FDA does have the authority to require post-market studies?

Dr. WOODCOCK. At the time of approval.

Mr. HODES. And what proportion of post-market studies that you

require are completed?

Dr. WOODCOCK. That is a complicated question. There are many

different types of studies that are requested, and some of them go

on a long time, so there isn’t a really high proportion. I don’t know

the exact number, because it depends on what analysis you are

doing, but many of these studies are not completed.

Mr. HODES. And if you were the last word on this, thinking about

where the science is going with biogenerics, do you see a need for

increased requirements for post-market studies of these

biogenerics, none of which will ever be identical, either in batch or

in actual structure, to the original?

Dr. WOODCOCK. I believe it would be likely in many cases, but,

as I said, this is going to be case-by-case because of all the differences in the different products. In many cases FDA would need

to have post-marketing surveillance or post-marketing studies done

to resolve remaining uncertainties.

Mr. HODES. And, last question, does the FDA have an enforcement mechanism to require completion of any post-marketing studies that you have required of the manufacturers?

Dr. WOODCOCK. We can publicize the fact that the studies have

not been done, and we could take the drug off the market.

Mr. HODES. So the enforcement mechanism is the possible removal of the drug from the market for lack of completion?

Dr. WOODCOCK. Yes.

Mr. HODES. Has that ever been done?

Dr. WOODCOCK. Not to my knowledge.

Mr. HODES. Thank you.

I yield back. Thank you, Mr. Chairman.

Chairman WAXMAN. Thank you. That is called the guillotine, except it is never used.

Dr. Woodcock, I understand that it is quite a bit more complicated to establish interchangeability of two protein products

than to establish their comparable safety and effectiveness. Would

it be possible to demonstrate that a copy of a well-understood protein is interchangeable with the brand name drug if there are no

limits on what studies can be required?

Dr. WOODCOCK. We believe so. The situation in health care right

now is that products that are interchangeable, they may be repeatedly switched back and forth. All right? And where you have a situation where you have a number of similar products on the market,

the same indication, and they are very similar, it might be that

they can be switched back and forth among one another multiple

times for a given patient, depending on the plan and who they contract with and so on. In that situation either the innovator product

could cause antibodies to the follow-on product or vice versa. We

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think we would have to test that in people to make sure, but we

think it would be feasible to do those tests.

Chairman WAXMAN. Is our understanding of protein structure

and activity likely to evolve in a way that will make it possible to

establish interchangeability in the foreseeable future, at least for

some of these proteins, that may not be obvious at the present

time?

Dr. WOODCOCK. It may not be the protein, itself, that causes the

immune response, but it could be different contaminants that are

co-purified from the cell line or during the manufacturing process,

or it can be changes that happen late in manufacturing or during

storage or so forth, so it is really a very complicated situation.

Chairman WAXMAN. For very simple, well-understood proteins,

what kinds of studies might be required to establish interchangeability?

Dr. WOODCOCK. Well, a study that actually performs that activity, which changes the patient back and forth from one version of

the product to the next and follows the immune response.

Chairman WAXMAN. Would that be a difficult study?

Dr. WOODCOCK. No. In some cases there might be ethical issues

that we would have to address very carefully. We would not want

to set any patient up for harm.

Chairman WAXMAN. Might the study requirements lessen over

time as the molecules are better understood?

Dr. WOODCOCK. Yes.

Chairman WAXMAN. Do you think that the FDA would ever declare a copy of a biotech drug regulated under Hatch-Waxman to

be interchangeable if the agency had doubts about whether it could

be safely substituted for the brand name product?

Dr. WOODCOCK. No. I mean, we believe that our finding of an A

rating of interchangeability is our word. We are saying that scientifically we believe those products would be interchangeable, and

we would not do that unless we believed that were the case and

it was substantiated with scientific data.

Chairman WAXMAN. Do you think that the FDA could be trusted

to make appropriate interchangeability determinations for protein

products if the agency were given statutory authority to approve

copies of biologics under the PHS Act?

Dr. WOODCOCK. I believe that the FDA can be trusted to carry

out its mandate from Congress, whatever that might be.

Chairman WAXMAN. And if we gave you an additional mandate,

you feel you would be able to live up to it?

Dr. WOODCOCK. Yes. I believe we have scientific expertise. As we

have already discussed, we have been managing manufacturing

changes for all pharmaceuticals on the market for a very long time.

Chairman WAXMAN. Thank you.

Let me see if any Member wishes additional time for questions?

[No response.]

Chairman WAXMAN. If not, let me thank you very much for your

presentation and your willingness to answer these questions. I

think it has been very helpful for us in our understanding of this

issue. Thank you very much.

Dr. WOODCOCK. Thank you.

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Chairman WAXMAN. The Chair would like to now call forward

our second panel.

Dr. Geoffrey Allan is the president, CEO, and chairman of the

Board of Insmed Incorporated located in Richmond, VA. Insmed is

a biopharmaceutical company focused on the development and commercialization of drugs for the treatment of metabolic diseases and

endocrine disorders with unmet medical needs.

Dr. Theresa L. Gerrard is now the president of TLG Consulting,

Inc., where she assists pharmaceutical and biotechnology companies in product development and regulatory strategy. Prior to that

she spent 11 years as a Division Director in FDA’s Center for Biologics Evaluation and Research, and she has also previously served

as director of development for Amgen.

Dr. Bill Schwieterman is a physician and scientist by training

who now acts as an industry consultant to major biotech pharmaceutical companies on product clinical development issues. Dr.

Schwieterman started his career at NIH and subsequently moved

to FDA, where he worked for 10 years and served as the Chief of

Immunology and Infectious Disease Branch within FDA’s Center

for Biologics Evaluation and Research.

Inger Mollerup has been the vice president for regulatory affairs

at Nova Nordisk A/S since 2004. Nova Nordisk is a pharmaceutical

company which focuses on diabetes care, as well as hemostasis

management, growth hormone therapy, and hormone replacement

therapy.

Dr. Ganesh Venkataraman is co-founder and senior vice president of research at Momenta Pharmaceuticals. Momenta Pharmaceuticals, Inc., is a biotechnology company located in Cambridge,

MA focused on the treatment of disease through an understanding

of sugars and complex biomolecules.

We are pleased to welcome all of you to our hearing today. We

appreciate your being here.

It is the custom of this committee to put all witnesses under

oath. You are not being singled out. I would like to ask you to

please stand and raise your right hands.

[Witnesses sworn.]

Chairman WAXMAN. The record will reflect that each member answered in the affirmative.

We will make your prepared statements part of the record in its

entirety. We would like to ask, if you would, to try to limit the oral

presentation to around 5 minutes.

Why don’t we start with Dr. Allan, and then we will move right

down the line. You see we do have a timer. Dr. Allen.

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STATEMENTS OF GEOFFREY ALLEN, PH.D, PRESIDENT, CHIEF

EXECUTIVE OFFICER, CHAIRMAN OF THE BOARD, INSMED

INC.; THERESA LEE GERRARD, PH.D, PRESIDENT, TLG CONSULTING, INC. (BIOPHARMACEUTICAL CONSULTANTS FORMERLY WITH AMGEN AND FDA’S CENTER FOR BIOLOGICS);

BILL SCHWIETERMAN, M.D., PRESIDENT, TEKGENICS CORP.

(BIOPHARMACEUTICAL CONSULTANTS FORMERLY WITH

FDA’S CENTER FOR BIOLOGICS); INGER MOLLERUP, VICE

PRESIDENT FOR REGULATORY AFFAIRS, NOVA NORDISK A/

S; AND GANESH VENKATARAMAN, PH.D, SENIOR VICE PRESIDENT, RESEARCH, MOMENTA PHARMACEUTICALS, INC.

STATEMENT OF GEOFFREY ALLAN

Mr. ALLAN. Good morning, Chairman Waxman, Ranking Member

Davis, and members of the Oversight and Government Reform

Committee. I am delighted to have the opportunity to testify before

your committee. The focus of my discussion will be the role of

small, innovative biotechnology companies in the current debate regarding the development of a regulatory pathway for approving biogeneric drugs.

My name is Geoffrey Allan, and I currently serve as the chief executive officer of Insmed, Inc. Insmed is a small biotechnology company focused on the development and commercialization of drugs

for the treatment of metabolic and endocrine disorders where there

are clear unmet medical needs.

We received FDA approval for our lead product, IPLEX, at the

end of 2005. IPLEX is a therapeutic protein which is approved for

the treatment of children suffering from a rare growth disorder. We

are currently continuing to develop IPLEX for several major medical illnesses such as myotonic muscular dystrophy and medical

complications associated with HIV infection.

I am here today to talk about biogeneric drug development and

the regulatory path forward. I believe our experience with IPLEX

is very illustrative of the scientific and technical issues confronting

biogeneric drug developers, issues such as comparability testing

and the nature and extent of clinical trials needed to support characterization of a generic biologic. Our experience tells us that these

issues can be addressed using sound, readily available scientific approach.

Insmed has developed significant intellectual capital focused toward protein characterization and purification. We have invested in

building a facility required to manufacture quality proteins. The

biogenerics business is a business in which we would like to specialize. The combination of our proprietary protein platform with a

biogeneric protein platform meets our goal to sustain innovation,

along with the ability to provide safe and affordable drugs to address a growing economic issue.

It is my belief that there are a number of my colleagues in similar-sized companies that are also interested in providing the scientific expertise to meet the challenges of producing biogenerics. I

believe that I am representing the interests of many smaller biotechnology companies and large contract manufacturing companies.

I believe H.R. 1038 provides for a fair balance between reward and

innovation in creating a timely approval pathway in commercializaVerDate 11-MAY-2000 13:48 Apr 07, 2008 Jkt 000000 PO 00000 Frm 00061 Fmt 6633 Sfmt 6633 C:\DOCS\40874.TXT HGOVREF1 PsN: HGOVREF1
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tion of biogenerics in the marketplace; therefore, passing this bill

would be a positive step for the biotech industry and continue to

fuel the cycle of innovation.

As the chief executive officer of a small biotechnology company,

I hope my testimony will provide a different perspective on this important issue and bring to light some of the important reasons why

this bill is the correct model to create a robust, competitive, and

innovation biopharmaceutical marketplace.

IPLEX is a recombinant protein product. In fact, it is a combination of two different recombinant protein molecules. It is a relatively large molecule, larger than insulin, growth hormone, the

interferons, and Epogen, and certainly no less complex in its structural characteristics. As a new drug, along with the demonstration

of safety and efficacy in the target population, structural characterization of the protein and the development of a quality manufacturing process was our central focus during the development of the

product.

During the course of the development of this product, we modified the manufacturing process several times. We changed cell

lines. We changed purification procedures. We changed raw material sources. And on more than one occasion we changed the facilities where this product was manufactured. At all times, good analytical methodology was the bedrock of our comparability testing to

ensure that we produced a consistent, highly purified protein.

Analytical methodology to allow structural characterization of

proteins has evolved enormously over the years. It is sophisticated

and has exquisite sensitivity. For example, we use a battery of sensitive and analytical tests. More than 10 of these tests are used,

one of which is a technology called mass spectroscopy. This technique has such high resolution that on certain molecules we can

detect changes as small as a single proton within the molecule.

This is essentially not a crude science.

During the development of IPLEX we worked closely with the

FDA. They clearly used their discretion to decide what tests we

needed to support our scientific approach as we made changes to

our manufacturing processes. Their recommendations were rational

and certainly not onerous. On the occasion that we changed the

site of manufacture of the drug, moving our process from a U.K.

facility to our own facility in Colorado, we conducted a simple pharmacokinetic study in human volunteers to establish the equivalence of the products after the facility change. We established very

quickly, within 1 month, that the amount of drug in the bloodstream was consistent, regardless of where the drug was manufactured.

IPLEX was being developed for use in children, and as such both

we and the FDA knew that safety at all times was paramount and

was certainly never jeopardized. For example, FDA was concerned

that immunogenicity of the product could vary as we changed the

process. We established surveillance procedures to address this

issue, and we continue to monitor for signs of immunogenicity

today.

I have only given you a very brief overview of the type of scientific and technical issues we had to address in the development

of this product, IPLEX; however, these issues are at the heart of

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what a biogeneric manufacturer would have to confront. The

science has reached a level of sophistication to make this endeavor

entirely possible. All we need now is the regulatory go-ahead.

The proposal introduced by Chairman Waxman is extremely appealing as a next step in stimulating competition in order to address an ever-increasing economic problem facing our health care

system. Based on our company’s experience with the FDA during

the approval process of IPLEX, I am confident that this legislation

is based on sound science and progressive insight into where the

market should be in the coming years.

Once again, thank you for this unique and important opportunity

to share my experience and views. I look forward to your questions.

[The prepared statement of Mr. Allan follows:]

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Chairman WAXMAN. Thank you very much, Dr. Allan.

Dr. Gerrard.

STATEMENT OF THERESA GERRARD

Ms. GERRARD. Good morning, Chairman Waxman, Ranking

Member Davis, and members of the committee. My name is Theresa Gerrard. Thank you for allowing me the opportunity to testify

this morning on the importance of establishing a science-based, abbreviated approval pathway for biogenerics.

From 1984 to 1995 I was with the FDA and was a Division Director with responsibility for IND and BLA review of hundreds of

biotech products. I chaired licensing committees for Amgen’s

Neupogen, Genentech’s Actimmune, and was involved in the review

of beta Interferon from Chiron and Biogen.

After leaving FDA, I was director of development for Amgen in

Boulder, CO, where I had oversight of development of several

biotech products. For the past 9 years I have worked as a consultant, where I have worked with many companies, primarily brand

biotech companies.

The purity of biotech products and the sophistication of analytical testing that exists today allowed the production of safe biotech

drugs. Analytical testing consists of multiple sophisticated tests

that are used to assess the physical, chemical, and biological characteristics of the product. Many more tests are used to assess a biologic than are typically used to assess a drug, because biotech products are more complex than drugs.

These tests set the product specifications or goalposts, if you will,

for every batch of biotech product that must fall between these

goalposts. This is because no two batches of biotech products are

identical. There are always minor variations.

The advances in analytical characterization for well-characterized biologics allowed FDA to develop scientific policy officers on

comparability in the early 1990’s. This gave brand manufacturers

the ability to change the manufacturing processes without the need

for redoing the original clinical outcome trials if the product generated by the new process was shown to be comparable to product

made by the old process.

Now, when we speak of biologic, the focus is on comparability.

Why? Because no two batches of biologic product, whether brand

name or generic, will ever be identical. Therefore, biologics are and

should always be discussed in the context of comparability. Yes,

small changes in manufacturing could have an impact on the final

product, but we have known this for more than a decade and can

detect these changes.

For the past 15 years, FDA has gained substantial experience

and expertise in assessing manufacturing changes and comparability data for a large number of protein products. The underlying scientific principles that guided comparability policy are still valid

and can and should be adopted for generic biopharmaceuticals.

Why? Because the types of post-approval brand product changes

are reflective of the issues biotech and generic companies will face

in bringing generic biotech products to the market.

The primary premise of comparability is that analytical testing

is the most sensitive method to detect differences between two

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products. Clinical trials are rather insensitive in detecting product

differences because the variation among people and their responses

to a biopharmaceutical do not allow one to detect subtle product

differences. Analytical testing, by itself, will not be sufficient in

every case to demonstrate that a generic will have the same safety

and efficacy as the brand name biotech product. In those cases,

FDA can require additional data such as animal studies, human

pharmacokinetic studies, or even clinical trials. There is not a onesize-fits-all model, but FDA can determine the amount of data

needed based on the complexity of the product, the history of the

clinical use, and the extent of analytical characterization to determine its comparability with the brand name product.

Before concluding, the question of immunogenicity has been

raised in the discussion of both brand name and generic biopharmaceuticals, and I would like to take a moment to just briefly

touch on this topic.

Immunogenicity means the body generates antibodies to a specific foreign substance, such as bacteria, and it is a normal response in keeping people healthy. People routinely make antibodies

to many different substances and experience no negative effects.

Some biologics can cause people to generate antibodies which are

specific to that product, but most will not have any affect on safety

or efficacy. For some to imply that immunogenicity reactions are always harmful is just plain incorrect.

FDA can assess the risk for immunogenicity when it reviews the

products for purity, safety, and overall quality and can request additional clinical data when necessary. While immunogenicity is an

important consideration for biogenerics, it is certainly not a hurdle

to their development.

Mr. Chairman, the science exists for a creation of a clear, efficient, abbreviated biogeneric approval pathway. Analytical tests,

combined with additional data when needed, would ensure the

safety and efficacy of generic biopharmaceuticals.

Thank you.

[The prepared statement of Ms. Gerrard follows:]

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Chairman WAXMAN. Thank you very much, Dr. Gerrard.

Dr. Schwieterman.

STATEMENT OF WILLIAM SCHWIETERMAN

Dr. SCHWIETERMAN. Good morning, Chairman Waxman and

members of the Committee on Oversight and Government Reform.

My name is Dr. William Schwieterman. I thank you for the opportunity to appear before the committee today and present the scientific and clinical perspective on the issue of biogenerics.

One of the most disturbing experiences for a physician is to know

that a treatment is available to help your patient, but the cost may

simply be beyond what your patient can afford. For this reason, I

deeply share your goal, Congressman Waxman, of creating a sound,

scientifically based approval pathway for biogenerics. And, given

that I also had the privilege of working at FDA in the area of biotechnology for 10 years, I know that your goal can and should be

achieved.

I come before you today wearing three hats: as a physician, as

a scientist, and as a former FDA reviewer. From this vantage point

I would like to make the following critical points to the committee.

First, with today’s scientific advancements and technologies, we

can assure the safety and efficacy of biogenerics.

Second, the supporting science for this is not new. It has existed

for over a decade.

Third, the issues raised in post-approval brand changes are reflective of the issues that are raised in the field of biogenerics. As

such, the same science that determines comparability for the brand

tech industry can also be adopted to ensure the safety and efficacy

of complaint and interchangeable biogenerics.

Having worked extensively with agency physicians and scientists, it is clear to me that there is just one agency safety standard, and that standard has been and will continue to be applied in

the review and approval of each and every biologic, whether it be

a brand name or a generic.

The standards and science used for current biopharmaceuticals

are informative to us with respect to biogenerics. A critical but not

often publicized fact in the biopharmaceutical industry is that FDA

does not require brand name companies to perform large clinical

outcome studies to retest the product generated by new manufacturing processes. This is because such an approach would not only

be infeasible, but, more importantly, would ignore the utility of existing sophisticated scientific analytic tools and techniques for this

purpose.

Let me briefly summarize what happens in these instances. FDA

starts with an assessment of extensive analytical comparability

data. With these data, and keeping in mind the nature of the drug,

the tests used, and the disease being studied, FDA decides how to

proceed. The agency can give a thumbs-up or a thumbs-down regarding each post-approval brand manufacture change and, if

thumbs-up, have that change be supported by the analytic data,

alone. The analytic data, coupled with pharmacokinetic and/or

pharmacodynamic studies or the analytic data—the studies just

mentioned—plus data from a large clinical outcome study.

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As you already have heard, the vast majority of brand name

manufacturing changes need no further studies when data from

analytic tests show the products to be comparable. For a small

number of brand name products that show small differences in

these analytic tests following manufacturing changes, FDA may require additional analytic tests and pharmacokinetic or

pharmacodynamic tests to be conducted in animals or humans.

These later studies, PKBPD studies, are clinical studies in the

sense that they are conducted in patients in the clinic, but they are

not the large clinical outcome studies commonly used to determine

the product’s ultimate clinical effects.

These pharmacokinetic and pharmacodynamic studies almost always involve fewer than 100 patients, and in general last weeks,

not many months.

Rarely after a brand name manufacturing change does the FDA

require that a brand name company take the last step, repeating

a full-scale clinical outcome study. Such studies are not usually

necessary because the variability and ‘‘noise’’ involved in most clinical outcome studies make them inefficient for determining comparability between agents. In fact, of all the hundreds of brand

name biologic product changes, the vast majority were approved

without large clinical outcome trials.

In sum, FDA’s scientists and physicians routinely make comparability determinations, since manufacturing changes occur

throughout the brand name biologic product development and life

cycle. The comparability algorithm has existed for over a decade to

allow brand name biologic manufacturers to change and improve

their manufacturing processes.

In closing, I want to emphasize to the committee again that the

science of comparability is not a new one, but rather an old one

used by the agency and the brand name industry for more than a

decade to determine comparability.

Chairman Waxman, the Access to Life-Saving Medicines Act will

give FDA the authority and the flexibility it needs to ensure the

safety and efficacy of biogenerics. I commend you for adopting the

same scientific principles, processes, and procedures that exist for

the brand name biologic industry when making post-approval manufacturing product changes to the biogeneric sector.

My mission as a physician reviewer at FDA, and that of all my

colleagues, then and now, is to protect the public by ensuring the

safety of the supply of biopharmaceuticals. No one’s interests is

served if safety is not viewed as paramount.

Thank you very much.

[The prepared statement of Dr. Schwieterman follows:]

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Chairman WAXMAN. Thank you very much, Dr. Schwieterman.

Ms. Mollerup.

STATEMENT OF INGER MOLLERUP

Ms. MOLLERUP. Chairman Waxman, Ranking Member Davis,

members of the committee, thank you for inviting me to testify

today. My name is Inger Mollerup. I am vice president for regulatory affairs of Nova Nordisk, a company with an 80-year history

of producing insulin and other proteins.

I am a scientist, not a lawyer, and as such have for the last 30

years been engaged in the design of manufacturing processes and

development programs for numerous recombinant proteins. In 2005

I represented the drug before the European Medicines Agency

[EMEA], discussing the insulin follow-on guidance, and I also presented to the World Health Organization’s INN Committee on

issues related to naming of all therapeutic proteins, including follow-ons.

Nova Nordisk believes that any pathway for follow-on biologics

must be, first and foremost, constructed to protect patient safety,

be rooted in the best science, preserve innovation, and respect proprietary information.

Three major points from my testimony today are: first, that characterization does not tell the whole story; second, that pre-clinical

and laboratory tests are not sufficient to determine immunogenicity

and other important safety parameters; and, third, that current

science does not support interchangeability.

First, characterization does not tell the whole story. Any pathway must fully address the patient safety considerations of medicines that are similar to or comparable to instead of the same as

the reference product. Given that proposals currently before Congress go far beyond the science in an effort to deem products having minor differences in immuno-acid sequence as highly similar,

I share with you an experience we had at Nova Nordisk as we were

developing a fast-acting insulin analog wherein two potential candidates with one amino acid difference were tested.

All candidates were put into an extensive chemical preclinical

and clinical program. The candidate taken to market had only one

change to the immuno acid sequence from human insulin, resulting

in an analog with significantly shorter timing of action than human

insulin and a unique safety profile.

An earlier candidate, which had also one amino acid substitution,

showed a positive effect on the timing of action, but in full preclinical animal toxicology studies this dark candidate significantly

elevated tumor potential in rats. Development of this candidate

was immediately discontinued.

Even though both analogs were fully characterized, an animal

study was required to demonstrate that this seemingly minor difference had enormous consequences for important safety characteristics. Minor differences can have major safety consequences.

Second, pre-clinical and laboratory tests are not sufficient to determine immunogenicity and other important safety parameters.

Human clinical immunogenicity data must be required, and we

have numerous examples illustrating its vital importance.

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While developing a complete new process for our insulin analog,

we discussed this program with the FDA. FDA stated the no general safety threshold could be applied for new impurities. Even one

as low as 0.1 percent was not acceptable because proteins can be

immunogenic at very low concentrations, and it is not known when

low is low enough. Immunogenicity data from an appropriate clinical study was, therefore, necessary and included in our submission.

Third, current science does not support interchangeability. Based

on today’s science, a follow-on biologic cannot be determined to be

the same as a innovator drug. For this reason and because of the

potential difference in immunogenicity and other drug-specific adverse events, follow-on biologic products must not be allowed to be

interchangeable. The treating physician must at all times be involved in the decision to change from one product to another.

Interchangeability is also not part of the EMEA approval, and

Europe has the further requirement that these products are clearly

identified to support post-market monitoring.

Nova Nordisk believes that any pathway for follow-on biologics

must be, first and foremost, constructed to protect patient safety,

be rooted in the best science, preserve innovation, and respect proprietary information.

Thank you for the opportunity to speak here today. Nova Nordisk

is ready to assist Congress as this issue moves forward.

[The prepared statement of Ms. Mollerup follows:]

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Chairman WAXMAN. Thank you very much, Ms. Mollerup.

Dr. Venkataraman, we are pleased to have you with us.

STATEMENT OF GANESH VENKATARAMAN

Mr. VENKATARAMAN. Good morning, Chairman Waxman and

members of the committee. I want to thank you for the invitation

and opportunity to present to you this morning on this very important topic to our industry and for the general public.

I am Ganesh Venkataraman, co-founder and senior vice president of research at Momenta Pharmaceuticals. I am pleased to

come before you today to discuss the scientific issues behind the

need to create an abbreviated regulatory approval process for generic biologics, which are defined as follow-on protein products in

Dr. Woodcock’s testimony.

The terms that I use are also defined in the written testimony

that we are submitting for the record.

Mr. Chairman, I am a chemical engineer by training, with specific expertise in bioprocess engineering, protein structure characterization, and analytic and quantitative methods for categorizing

complex mixtures. While at MIT I, with Dr. Sasisekharan and Dr.

Langer developed novel analytic technology that enables characterization of complex mixtures. With this platform and co-science and

leadership at MIT, we founded Momenta. We develop novel drugs

and generic versions of complex products. We use cutting edge

science to develop affordable and safe generic versions of these

products.

Momenta has a strong interest in ensuring that Congress acts

this year. We believe our company’s experience demonstrates that

the science is available today and continues to evolve to enable generic versions of complex mixture drugs.

In my written testimony I focused on five major issues that I will

briefly discuss today.

First point, complex biologics can be totally characterized. Not all

biologic products are the same, so when we discuss the characterization challenges we must keep in mind the continuum of complexity. Analytic technologies are here today to characterize the

less-complex biologics, and approaches like ours and others are actively being developed for those that are more complex.

In my testimony I highlight how our testimony is applied to

heparins. While heparins are not biologics, it validates how complex mixtures can be characterized.

The second point is: with such product characterization, generic

companies will be able to design and control the manufacturing

process to reproducibly make biologic drugs with the same quality

as the branded companies. The manufacturing process for biologic

drugs does not occur in a random or uncontrolled system. The living cells are highly specialized systems which, in a very careful and

controlled manner, produce a final product.

Scientific advances in analytical technologies available to the generic as well as the branded industries allow one to link process

parameters to the final product. It is possible and absolutely critical that generic companies build and maintain the same level of

process knowledge.

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Point three: clinical studies, ranging from small-scale PK to clinical outcome studies, should be used to address any residual uncertainty answering relevant scientific questions. Traditional empirical or full-scale clinical trials must not be a requirement for approval in all cases. While the FDA may require full-scale trials for

approval of some biologics, others that have an increased level of

characterization data should require significantly reduced clinical

testing.

We believe FDA is well equipped to work with applicants to determine the degree of testing necessary and define the characterization and trial requirements.

Point four: biologic drugs can be designed to be interchangeable.

Interchangeability is an important public health objective and

products need to be designed and proved to be interchangeable. It

is well within the reach in the near term for a number of products.

This can be done through total characterization and/or through a

proper combination of characterization and clinical trials.

Point five: patient safety and product quality will not be jeopardized. We should hold the entire industry, branded and generic,

alike, to the highest scientific standards, and allow the expertise of

FDA’s scientific staff, which will approve and oversee the marketing of innovator and generic biologics.

In closing, Mr. Chairman, there is an opportunity to drive continued scientific innovation by creating a forward-looking, regulated

system which balances the respective roles that characterization

and clinical data should play. FDA has to be given the opportunity

to make the decisions on comparability, which is interchangeability

based, on the science presented to them. If legislation does not

allow for such a pathway today, scientific innovation from technology companies like ours and many others will be stifled, and access to more-affordable choices would be denied.

I hope that my perspectives will be instructive to this debate. I

am confident that these efforts under your leadership will be a key

contributor to increasing access to safe, effective, and affordable

medications to patients in need.

I thank you again for the opportunity to submit testimony. I look

forward to answering any questions.

[The prepared statement of Mr. Venkataraman follows:]

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Chairman WAXMAN. Thank you very much, Dr. Venkataraman.

To begin the questioning, the Chair recognizes Mr. Burton.

Mr. BURTON. I thank the Chair for recognizing me. I have to go

put a pharmaceutical in my eye at the hospital, so I can attest to

the necessity for those products.

Mr. Chairman, I am not sure this question should be directed to

the panel. It may be directed at you. From everything I have seen,

there can be a minor difference in a biological product, and if the

pharmaceutical company that created the product in the first place

has to give a generic company the information before their patent

expires, it seems to me, because of the minor difference that could

be created by the generic company, they could apply for a license

well before the patent runs out from the original producer. If that

were the case, the scientific research being paid for by the original

company, the pharmaceutical company that developed the product,

could lose its investment after they have created something that is

going to be beneficial to everybody.

So my question is: has that been checked out legally and whether

or not the originating company can be protected for the duration

of their patent?

Chairman WAXMAN. Perhaps we can let one of the panelists answer it, but it seems to me it becomes a patent question. If the

originator of the product has a patent over that product, a minor

variation, as you seem to describe it, would not be permitted as a

competitor, if it is basically the same product.

Mr. BURTON. I think the bill has a great deal of merit.

Chairman WAXMAN. This is, of course, by the way, what we do

right now with generics and brand name drugs. We allow generics

to compete after the patent is over. If there is a new innovation in

it or a minor difference, then the FDA would have to decide if it

is, in fact, a generic.

Mr. BURTON. I understand that. I like the bill. That is one thing

I would like to check out. Thank you, and thank you for yielding.

Chairman WAXMAN. Thank you very much.

The Chair recognizes himself.

Let me address this question to Dr. Gerrard and Dr.

Schwieterman. As you testified, for over 10 years the FDA has allowed brand name manufactures of biotech drugs to make changes

in the process by which they manufacture their products, but without repeating the original safety and effectiveness trials. This policy seems to me to undercut the brand name industry argument

that changes in manufacturing processes can affect safety and effectiveness in ways that could only be assessed through clinical

trials. In your judgment and experience, does permitting companies

to make significant manufacturing changes under a comparability

protocol, but without repeating clinical trials, adequately protect

patients from unsafe or ineffective products?

Ms. GERRARD. I think, as both Dr. Woodcock and Dr.

Schwieterman have said, FDA only has one standard for safety and

efficacy, so when FDA makes the decision that, after a manufacturing change, that the product is comparable, they have decided that

it is going to have the same safety and efficacy as the brand name

product. What we are saying is some of those same principles apply

to the development of generic biotech products.

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Chairman WAXMAN. Yes.

Mr. SCHWIETERMAN. Yes, let me just add to that. The FDA is a

science-based organization. It is filled with scientists. It is filled

with physician reviewers. It is filled with people who are expert in

data analysis and interpretation. Your question really is adking if

the science there to allow in some cases for the absence of clinical

trials, and I would say yes, it is there, but you would have to look

at the data, you would have to look at the techniques, you would

have to look at the actual agent under discussion. You take things

on a case-by-case basis, based upon the science and the data, and

then make that determination.

Chairman WAXMAN. Are there many examples of products approved under comparability protocols that turned out to have

unpredicted safety or effectiveness problems that were only discovered after marketing?

Mr. SCHWIETERMAN. There are none in the United States where

there were major changes in post-marketing that caused this. We

all know the example of Eprex, which occurred post-marketing in

Europe. The patients developed PRCA. But the agency and the biotechnology industry and biopharmaceutical industry in this country

has been amazingly good at protecting the public this way.

Chairman WAXMAN. Does the scientific rationale underlying comparability protocols and FDA’s 10 years of experience implementing

it provide evidence that an abbreviated application process for follow-on proteins and biogenerics based on established comparability

principles could adequately protect patients from unsafe or ineffective products? Dr. Gerrard.

Ms. GERRARD. I think the comparability policies have been enormously successful from FDA’s point, and the American public has

benefited, as well. Brand name companies have been able to make

manufacturing changes and improve their product without the

need to redo clinical trials.

I think we can apply some of those same principles in extending

it one step further to generic biotech products.

Mr. SCHWIETERMAN. I would just like to add that I think the rationale is, in fact, one that can be used, coupled with the data, coupled with the case-by-case to develop a safe and effective biogeneric

use of the principles we outlined.

Chairman WAXMAN. Dr. Schwieterman, Ms. Mollerup testified

that immunogenicity can arise so unpredictably from changes in

biologics that a follow-on biologic will always require a clinical trial

to assess immunogenicity. When a brand name company uses the

FDA’s comparability guidance to make changes to its existing biologic products, are clinical trials always required to demonstrate

that no new immunogenicity concerns have arisen?

Mr. SCHWIETERMAN. Always is an absolute, and absolutes are

only things that can be supported by the data. FDA is a scientific

organization, and I would say no. In every instance ought there be

a clinical trial for immunogenicity? No. It would depend upon the

nature of the case. It would depend on the data that are there. And

I think there are ways and methods for sure beyond clinical trials

to determine immunogenicity. In fact, clinical trials, themselves,

have limitations in this regard, as they do with other infrequent

safety AEs.

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Chairman WAXMAN. Should there be more concern about

immunogenicity for follow-on proteins than for brand name proteins?

Mr. SCHWIETERMAN. I don’t think there should be more or less

concern about immunogenicity. I think that the safety of all agents,

particularly biogenerics and biopharmaceuticals in this country is

a critical issue for the FDA. I think that the same standards, the

same kinds of oversight, the same considerations for biogenerics

ought to apply for them as they do for present-day biopharmaceuticals.

Chairman WAXMAN. Let me ask a question of Dr. Venkataraman

and Dr. Allan. A number of companies have expressed doubts

about whether copies of biotech drugs can be made safely. They

have suggested that the manufacturing process for producing these

drugs is so complex that new companies will not understand biologics manufacturing well enough to produce safe versions of these

products. Isn’t it true that there are a number of companies who

already make brand name biotech drugs, either for themselves or

on contract for other companies, who would be likely to want to

make copies for biotech drugs if there were a legal pathway?

Mr. ALLAN. I believe there are contract manufacturing organizations that do make branded products, either at the research level,

the development stage level, or even at the commercial level.

Chairman WAXMAN. Yes.

Mr. VENKATARAMAN. I would like to add I think the brand name

manufacturers sometimes have made the process to be a black box.

I think the science is there now to be able to go back and decouple

product and relationship to the process so that you could use a different cell line and come up with a different process that would ultimately provide you the same end product. Provided you couple

that with the characterization of looking at process-related impurities and end product, you could get there to the same level of being

in a brand name manufacturer.

Chairman WAXMAN. Thank you very much.

Mr. Davis.

Mr. DAVIS OF VIRGINIA. Thank you, Mr. Waxman.

Ms. Mollerup, let me start with you. The generic system we created for pharmaceutical drugs in 1984, which bears Mr. Waxman’s

name, balanced and abbreviated approval systems for generic

drugs with patent restoration and new exclusivity for innovators.

Doesn’t such a critical balance continue to stimulate the development of new cures for drugs, having that balance?

Ms. MOLLERUP. In my mind it is important that we keep the balance that will still foster innovation, and as this process goes forward toward defining a legislative and regulatory system, that is

acknowledged, because you would still want new drugs to come on

the market in this country.

Mr. DAVIS OF VIRGINIA. What kind of impact would a system that

fails to assure safety or sustain innovator intellectual property

rights have on innovation?

Ms. MOLLERUP. A system that would fail to protect safety I think

would be detrimental for both innovation and follow-on manufactures, and obviously first and foremost for public health. I think it

is very important, as Congress moves forward, that the pathway

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you are moving toward is really constructed to protect patient safety and be rooted in the best science, and there is a lot of strong

and good science available for this.

Mr. DAVIS OF VIRGINIA. The FDA stated in its testimony that

demonstrating the similarity of a follow-on protein product to a reference product is more complex and would require new data. I

guess my question is: does this mean FDA should require clinical

safety data for follow-on biologics, or do you think there are cases

where they could make the determination it wouldn’t?

Ms. MOLLERUP. Based on my experience with those complete second-generation processes that we have developed and are developing at Nova Nordisk, these require immunogenicity data in all

cases for the simpler ones like insulin, described in my testimony.

Besides that, PKPD was required to assess both pharmacokinetics

and efficacy for a more complex one like a co-correlation factor,

substantial clinical data will be required, as well as

immunogenicity.

So, based on the experience that we have with processes that

have less substantial changes than follow-ons, from my standpoint,

where the science is today, immunogenicity trials will always be required.

Mr. DAVIS OF VIRGINIA. Thank you.

Let me ask Dr. Venkataraman and Dr. Allan, you are both from

small biotech companies. FDA stated in their testimony that technology today is not yet sufficient to allow for comparisons of complex protein products. Do you agree with that?

Mr. ALLAN. Well, it has to be viewed on a case-by-case basis. I

think for the product we developed the analytical methodology that

we used, which was fairly extensive, was very adequate to demonstrate the structural characterization of the property.

Mr. DAVIS OF VIRGINIA. DO you think it depends?

Mr. ALLAN. It will depend on the products. There are some proteins that are fairly simple, relatively speaking, and you can characterize them extremely well.

Mr. VENKATARAMAN. I agree. I think on a case-by-case basis

there are several proteins that can be characterized well today, and

science continues to evolve. Academic groups and other companies

I know are working very actively toward creating novel technologies to be able to do this for more complicated products. And

I think a regulatory and a legal legislative incentive is going to propel that technology forward much faster to be able to do this much

more sophisticatedly.

Mr. DAVIS OF VIRGINIA. How close are we, do you think? It is

hard to say, I know, but a couple years, 10 years?

Mr. VENKATARAMAN. It is difficult to say, but 4 years ago, when

we started working on our program, people thought it was impossible to do. We were discouraged extremely. Today we have an application, we have talked to the FDA. It has been completely

solved. I think similar situations have been reported by other people. So it is a matter of providing the right incentives for the scientists to be able to take it on.

Mr. DAVIS OF VIRGINIA. OK. Are there any non-clinical tests or

technologies that could fully substitute for studying the safety of

biotech products in humans?

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Mr. VENKATARAMAN. I would say that the safety, per se, so the

comparability of the two products, characterization becomes a very

important aspect of knowing how close you are to the innovator

product. I think there are multiple analytical techniques that provide you very rigorous estimation of the product quality and product attributes, so yes.

Mr. DAVIS OF VIRGINIA. All right.

Let me ask Dr. Schwieterman and Ms. Gerrard, the FDA highlighted in its testimony the importance of ensuring that facilitating

the development of follow-on product through abbreviated pathways doesn’t discourage innovation and the development of new biological products. They also refer to the Hatch-Waxman Act as a

balanced approach. Do you think an extension of data exclusivity

period and certain patent protections would help encourage innovation and development with biological products?

Ms. GERRARD. I am not a lawyer. I am a scientist. I guess I have

confidence in the innovation of biotech companies that I work with

to continually come up with new and better products.

Mr. DAVIS OF VIRGINIA. All right. From a scientific point of view

it is achievable, but from a policy point of view you are going to

take a pass on it?

Ms. GERRARD. I am not a lawyer. I am a scientist.

Mr. DAVIS OF VIRGINIA. That is fine.

Mr. SCHWIETERMAN. I will take a pass, as well. I am a physician

scientist. From a scientific point of view I agree with what Dr.

Gerrard said.

Mr. DAVIS OF VIRGINIA. Well, Henry and I are both lawyers.

Thank you.

Chairman WAXMAN. Thank you, Mr. Davis.

Mr. Yarmuth.

Mr. YARMUTH. Thank you, Mr. Chairman.

As a child I was left way behind on science, so I am going to pass

on the science questions for a minute and ask something I know

a little bit more about, and that is the business side of this, and

I am asking business questions of a panel of scientists. I understand that.

Am I correct in assuming—and anyone can answer this—I take

it, just reading between the lines, we have several representatives

from generic manufacturing companies and one from a brand name

company. Judging from what we have heard about the complexity

of these biologic drugs as opposed to chemical-based drugs, and we

all know the stories about how chemical-based drugs cost pennies

apiece to produce and they are sold for whatever, but it seems to

me that the economics of biologics are significantly different and

more complex and therefore dramatically more expensive. If I am

correct in that assumption and the process is inherently expensive,

how much money can we save by producing them on the generic

basis or follow-on basis as opposed to the brand name?

I guess a premise, we know that for Claritin and for Zantac and

all these other products, and many of the drugs that are actually

still by prescription, that we have a significant amount spent for

advertising and marketing. I assume marketing, anyway, is still a

big component of the biologics business. But what are we talking

about, either from a historical perspective that you know about or

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potentially that we are talking about saving by allowing these

drugs to be produced generically?

Mr. ALLAN. I can give that a shot. Actually, I don’t think anybody around this table is from the generic industry. Some of us are

from the innovation biotechnology industry.

With regard to price, it is going to be a case-by-case basis. There

is no doubt to make a complex protein is more expensive to make

than a small molecule. The manufacturing facilities that are needed, the overhead, so to speak, that goes into the whole program is

probably larger than the financial commitment you would want to

make for a small molecule plant. So I think intrinsically it is a

more expensive business, but I believe that, you know, certainly

none of us would be sitting around this table if we felt that we

couldn’t make these types of products at a significant price reduction to the innovator product. It will be case-by-case. What would

be the percentage reduction I don’t think we could—I certainly

would not comment on that right now, but, as I said, it will be less

expensive.

Mr. YARMUTH. Go ahead.

Mr. VENKATARAMAN. I was just going to add one comment. I

don’t know if I can give you any numbers, but what I do know is

that the margin between the cost to manufacture and the actual

price is significant. I don’t have exact numbers, but it is quite significant, and I assume that could translate into cost savings in the

long run.

Mr. YARMUTH. Again, I understand I am asking business questions of scientists, but would the savings result, assuming that we

allow an easier pathway to producing generics, would the savings

result more from the competitive aspect, or would they result from

the fact that, just because we have protected the brand name manufacturer, that we have allowed that price to be very, very high,

and that just by eliminating the exclusivity we bring the price

down? Would the savings be inherent? Would they be related to

competition, or is it just because we are allowing exorbitant profits

now, understanding that those profits are being allowed to allow

the company to recover some of its investment?

Mr. ALLAN. I think it will be the introduction of competition, to

a certain extent.

Ms. GERRARD. And my economic knowledge might be right behind my legal knowledge, but I think what we have to understand

is that, while biologics might be more expensive to make than

drugs, that there is still a huge margin there, and that, while the

cost savings, even conservative estimates that say 25 percent,

which we have seen, when you consider that the cost of a biologic

is so high that a 25 percent savings is a huge amount.

Mr. YARMUTH. You look like you want to answer.

Mr. VENKATARAMAN. The pricing for a drug that a company like

Momenta would launch as a generic would be lower by at least 20,

25, 15 percent, depends on the dynamics, but because the lower

prices of the drug I think the cost saving would be achieved.

Mr. YARMUTH. Ms. Mollerup, did you want to comment?

Ms. MOLLERUP. Yes. I mean, cost is an important consideration

and I think that a lower cost of drugs is good, as long as it is not

at the expense of patient safety. I guess, again, back to the need

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for clinical trials, I would like to share with you, an example which

I guess indicates somewhat where the borderline may be. In Europe we have not only had two approvals of follow-ons, but also one

rejection. That was on an Interferon Alpha that did not show comparability in its clinical trial in that more patients had relapse of

their disease after the treatment with Alferon was stopped, compared to the reference product, and there were also more side effects in the Alferon group. Again, I am not an economist. I am a

scientist, but it just goes back to the equation of cost savings, that

some cost savings can be realized but the products are expensive

to produce, and as this example from Europe shows, care really has

to be exercised as to make sure that the appropriate comparable

clinical data, not a copy of the original data set that was handed

in, but appropriate comparable data ensuring comparable efficacy

and safety is included.

Mr. YARMUTH. Thank you.

Chairman WAXMAN. Thank you, Mr. Yarmuth.

Mr. Welch.

Mr. WELCH. Thank you, Mr. Chairman.

Dr. Gerrard, Dr. Mollerup argued that the risk of

immunogenicity from a follow-on product must always be evaluated

with clinical trials. That is my understanding of her testimony. In

your view, are clinical trials the best or the most sensitive method

of detecting this?

Ms. GERRARD. Not always. I think we have to keep in mind that

immunogenicity, as I stated, a product having greater

immunogenicity really is not an issue; it is when there are clinical

consequences. Immunogenicity just means you make antibodies to

the product. Most of the time they are not neutralizing. Many

times they are temporary. Patients continue to be treated. So it is

not always an issue.

Second, is clinical trial the best way to determine

immunogenicity differences between two products? It may not always be the case. Sometimes more rigorous analytical comparisons,

either an assessment of the product and product instability are

really a much more sensitive way of determining whether that

product is going to cause problems.

Mr. WELCH. Thank you.

Dr. Schwieterman, would you agree with that?

Mr. SCHWIETERMAN. Yes, I would. I think the concept of

immunogenicity is one that has been talked about a lot, but, in

fact, it is a quite complex subject. There are certain kinds of

immunogenicities, then there are other kinds. We have had many

day-long conferences about this. The ability of clinical trials to detect immunogenicity depends on what you are talking about. For

most of the things that have been bandied about, actually clinical

trials are rather poor measures for picking up the kinds of outcomes that you have heard.

Mr. WELCH. Thank you.

I would ask this question to both of you, as well. Opponents of

the generic biological pathway, as you know, always raise the example of Eprex, Johnson & Johnson’s European version of Epogen.

Can you explain a little bit about what happened with Eprex? I

will start, I guess, with you, Dr. Schwieterman.

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Mr. SCHWIETERMAN. I don’t know, of course, the data on the

manufacturing changes that were made, nor was I privy to the investigations made. I know that Johnson & Johnson underwent a

great deal of investigations. I mean, just to tell the story as I know

from my standpoint, Eprex, which was one of the erythropoietin—

ESAs, they are called, in general, erythropoietic stimulating

agents—was marketed and approved overseas, and then cases of

autoimmune disease or a very bad autoimmune immunogenic reaction to the drug, itself, ensued. In other words, the body started reacting to its own protein based upon that.

The thing about this particular case that is different is that, No.

1, it occurred overseas, so, you know, there was no real knowledge

of whether the analytic tests that were performed there were adequate or complete and whether they would have been picked up at

the FDA.

No. 2, the ultimate investigation into this product, as I understand it from Dr. Segal’s testimony several weeks ago, picked up

on impurities that are actually determined with analytic tests after

the fact, and most of the investigation ensued upon that; that is to

say, the actual analysis of the product, itself.

From my vantage point, it is clearly an important issue, because

we need to understand it, but it doesn’t visciate, it doesn’t make

the arguments about analytic tests weaker, in my estimation. In

some ways it makes them stronger.

Mr. WELCH. Go ahead, Dr. Gerrard.

Ms. GERRARD. I was just going to add to that. Pure red cell plasma is a very serious disease, but it occurred in 1 in 10,000 patients.

So could this have been detected in a typical clinical trial of, say,

several hundred people? No, it could not. What actually did resolve

the issue for Johnson & Johnson’s Eprex was a more rigorous analytical characterization to resolve that problem.

Mr. WELCH. Thank you. How large a clinical trial would have

been required to identify that side effect?

Ms. MOLLERUP. I think that everyone agrees it would have taken

an extremely large clinical trial, and, from my perspective, the purpose of doing these comparative immunogenicity trials where you

can, from the blood samples, isolate antibodies, characterize them,

find out whether they are benign or not, and I fully agree with Dr.

Gerrard that not all antibody responses are a safety issue.

But with the case of these comparable clinical trials to test

immunogenicity, the real important point here is that such trials

can tell us if there is a major problem. For innovator products, as

well as for follow-ons, it is the long-term safety monitoring that is

also needed in order to pick up on minor problems like this.

Mr. WELCH. How large a clinical trial would have been required,

then, Ms. Mollerup?

Ms. MOLLERUP. I don’t have the clinical for Eprex because I don’t

have that statistic, but, back to Dr. Segal’s testimony, it would take

a study of about 50,000 patients to have a good chance of detecting

a serious effect in a patient, 1 patient out of 1,000. But I don’t have

the statistics on Eprex.

Mr. WELCH. And my understanding—anybody can answer this—

is that Johnson & Johnson, itself, doesn’t argue that the Eprex

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problem would have been avoided, in fact, had they conducted a

clinical trial before marketing the change product. Dr. Gerrard?

Ms. GERRARD. No, they would not have detected it in a clinical

trial. Every product is subject to post-marketing surveillance.

Mr. WELCH. Right.

Ms. GERRARD. So a very rigorous post-marketing surveillance

program is also important for every product.

Mr. WELCH. Dr. Schwieterman.

Mr. SCHWIETERMAN. One point I want to make is you don’t conduct clinical trials for no reason. You are exposing patients to

agents and putting them through a protocol and data collection and

blood drawing and so forth to collect scientific data for scientific

reasons that are pre-established in hypotheses, and so to argue

that clinical trials should be conducted all the time is really to negate the basic premise of a clinical trial, which is the study of question.

In the case of Eprex, it would have been an impossibly large

study to have studied that particular issue; therefore, a clinical

trial not only would have been undetected, insensitive to that particular change; it wouldn’t have offered any information at all.

Mr. WELCH. Just following on your point, would it make scientific sense to argue that the expressed example supports a clinical trial requirement for follow-on products but does not support

that same requirement for brand name products?

Ms. MOLLERUP. I think, from looking at what is required for the

brand name industry, I mean, the trials that we undertake, both

phase two and phase three trials, immunogenicity is an obvious

part of that program, because we are working with proteins and

the immunogenetic profile of our products are also not established

as we take them through the clinical program, so that is certainly

part of the testing we do, as well.

Mr. WELCH. I’m not sure I understand you. You are saying that

you have to have those clinical tests for the follow-on products but

you don’t have to have them for the brand name products?

Ms. MOLLERUP. No. I am saying the exact opposite. I am saying

that we, in the brand name products clinical trials that we use to

take these to the market, immunogenicity studies are an integrated

component, and what we find reasonable to establish clinical comparability for the follow-ons is to also study immunogenicity in an

appropriately sized comparative trial, and that will be a lot smaller

than the innovator phase three studies.

Mr. WELCH. Dr. Schwieterman, go ahead.

Mr. SCHWIETERMAN. I guess I would disagree with that. Mandated clinical trials to study immunogenicity is not something that

is scientific, but rather political. In this particular case, if the

science is there, depending upon the drug, depending upon the

question, the patient, and the test, you could do a clinical study in

certain instances where you believed that information would be

useful from that clinical study. But to mandate it for all studies

would be to also perform it for those cases where it wouldn’t be

useful.

I think that what ought to happen is that the FDA, like they do

now, be able to have the flexibility and the authority to use their

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assessments of the data and the context of that data to make judgments about the need for further clinical studies.

Mr. WELCH. Thank you.

Dr. Gerrard, last word?

Ms. GERRARD. I will just add to that. I think FDA does need that

flexibility. You look at the history of the product, have there been

any clinical consequences to the immunogenicity? What about the

analytical characterization? You look at the whole picture. If there

are remaining questions, of course safety is paramount. We want

FDA to have the ability to request any additional data that they

need to make sure that product is safe.

Mr. WELCH. Thank you. I yield the balance of my time.

Chairman WAXMAN. Thank you very much, Mr. Welch.

Dr. Mollerup, would you support giving FDA the ability to require and enforce post-market studies for both the generic and for

the brand name drugs?

Ms. MOLLERUP. I am from Europe, so I have a fair amount of

knowledge of the regulatory system here in the United States, but

may not be accurate on all the details. From my perspective, the

FDA should be able to put the same requirements to both

innovators and follow-ons, because the same safety issues are involved.

Chairman WAXMAN. Right. In the United States the manufacturer agrees, when the product is licensed, to do followup tests for

post-marketing, but they may not do it because there is not a sanction except to take them off the market, which has never been

used. Do you think FDA should have the power to require postmarketing safety studies? You say it should be for both or either

when it is necessary. Do you think FDA ought to have that power?

Ms. MOLLERUP. The power not only to ask for the data, but also

actually to get it?

Chairman WAXMAN. And to insist it be done?

Ms. MOLLERUP. Yes, I think they should.

Chairman WAXMAN. Thank you.

Well, I thank all of you very much. You have been very helpful,

and I appreciate your testimony. This may be self-serving, but the

bill does allow FDA to require clinical trials. It allows FDA to do

whatever is necessary to determine that the science indicates a generic version is safe and effective.

Thank you very much.

I want to call forward the witnesses for our third panel.

Yvonne Brown is an individual living with multiple sclerosis and

is speaking today on behalf of the National Multiple Sclerosis Society.

Mary Nathan is an individual living with a rare disease called

Gaucher disease, and is speaking today on behalf of the National

Organization for Rare Disorders.

Nelda Barnett is a Board Member for AARP.

Priya Mathur is the vice chair of health benefits, Board of Administration, at the California Public Employees’ Retirement System [CalPERS].

Scott McKibbin is the special advocate for prescription drugs for

the State of Illinois.

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Dr. Henry Grabowski is a professor of economics and the director

of the program in Pharmaceuticals and Health Economics at Duke

University.

Jonah Houts is a senior analyst at Express Scripts, Inc., a pharmacy benefit management company [PBM], representing 1,600 clients, including large, self-insured employers, government payers,

unions, and health insurance companies, and covering more than

50 million people.

We welcome you all to this hearing today. Your prepared statements will be in the record in full. We would like to ask each of

you to limit the oral presentation to around 5 minutes.

It is the custom of this committee, as you have already observed,

having sat through the earlier panels, to ask all of the witnesses

to be sworn in, so I would like to ask each of you to rise and raise

your right hands.

[Witnesses sworn.]

Chairman WAXMAN. The record will indicate that each of the witnesses answered in the affirmative.

Ms. Brown, why don’t we start with you, if you have the mic

passed over.

The timer, by the way, will be green, and then it will turn to yellow for the last full minute, and then red when that last minute

is up.

Thank you so much for being here.

STATEMENTS OF YVONNE BROWN, FOR THE NATIONAL MULTIPLE SCLEROSIS SOCIETY; MARY NATHAN, FOR THE NATIONAL ORGANIZATION FOR RARE DISORDERS [NORD];

NELDA BARNETT, BOARD MEMBER, AARP; PRIYA MATHUR,

VICE CHAIR, HEALTH BENEFITS-BOARD OF ADMINISTRATION, CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM [CALPERS]; SCOTT D. MCKIBBIN, SPECIAL ADVOCATE

FOR PRESCRIPTION DRUGS, STATE OF ILLINOIS; HENRY

GRABOWSKI, PH.D, PROFESSOR OF ECONOMICS, DIRECTOR,

PROGRAM IN PHARMACEUTICALS AND HEALTH ECONOMICS, DUKE UNIVERSITY; AND JONAH HOUTS, SENIOR ANALYST, EXPRESS SCRIPTS, INC.

STATEMENT OF YVONNE BROWN

Ms. BROWN. Thank you, Chairman Waxman and distinguished

members of the committee, for inviting me to provide testimony at

this hearing, and thank you, Chairman Waxman, for your leadership on this issue.

My name is Yvonne Brown. I live in Waldorf, MD. I have multiple sclerosis [MS]. I am not a pharmaceutical company. I am not

a lobbyist. I am simply a 44-year-old woman who struggles every

day with the devastating effects of MS and the unaffordable cost

of treatment.

MS is chronic, it is unpredictable, an often disabling disease of

the central nervous system. It basically stops people from moving

in one way or another. There is no cure. MS causes loss of coordination, memory, extreme fatigue, paralysis, blindness, and many

other symptoms. These problems can be permanent or they can

come and go.

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More than 400,000 Americans have MS, and every hour someone

is newly diagnosed. The National Multiple Sclerosis Society recommends treatment with one of the FDA approved disease modifying drugs to lessen the frequency and severity of attacks and to

help slow the progression of disability. Unfortunately, the cost is

often financially devastating. I know this personally.

Four of the six FDA approved disease modifying drugs are con- sidered biological drugs. They range from $16,000 to $25,000 a

year. That is about twice the amount of Social Security disability

I receive annually. For me, sometimes the financial struggle to get

my treatment can be troubling, more troubling than this incurable

disease.

I am here today to appeal to the committee. My personal story

is an example of the immediate need for this legislation that Chairman Waxman has introduced.

In the past I have struggled a lot with my MS and with trying

to get the prescriptions I need to feel a little better. I was diagnosed with MS in April 2000 at 37 years old. In August 2000, I was

prescribed Avonex, a biological drug from Biogen. The cost of

Avonex is high, and I did whatever I could to afford my prescribed

therapy. I sold my computer, I disconnected my phone, I skipped

paying a lot of my bills. Despite this, I lost my home before the end

of 2001 and I was living in my car. From 2001 to 2005 I was homeless.

I struggled for years to get approval from Social Security and I

tried for over 3 years to be approved for subsidized housing. I was

even turned down for help at shelters because of my MS. The staff

there felt that I was a health liability due to my problems with balance and frequent falls. I became accustomed to begging, borrowing, and pleading for any help so I could get treatment.

Unfortunately, access to my treatment was sporadic and I paid

the consequences with increased symptoms and more frequent attacks. It was a terrible cycle. As a result of not having access to

Avonex for an extended period of time in 2004 I was hospitalized.

The cost of my 24 hour hospital stay was nearly $1,000. I am still

trying to pay that bill.

Today, after finally being approved for Social Security disability,

I receive $1,100 a month, and I am covered under Medicare. I have

coverage for my medications, but my co-payment is $220 a month

just for Avonex. When you only have $1,100 a month to live on,

$220 might as well be $220 million.

I don’t want to be homeless or live in my car again, so I cannot

miss rent. I don’t want to risk my health, so I cannot skip too many

meals. I often skip paying bills, but I cannot get too far behind or

risk losing my electricity or other vital services. And I do my best

to pay my share to those who provide my treatments. Even today

I must miss my treatments occasionally. There is simply nothing

I can do sometimes.

It is a misconception that help is readily available. Existing programs are often difficult to navigate, have varying criteria, take a

long time, and sometimes run out of money. For example, last year

I was finally approved for assistance by the National Organization

for Rare Disorders. Before I received my assistance they ran out of

funding. It was also possible to get assistance sometimes from

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Biogeniodec. After asking them for help over a year ago, I think I

am close to getting help with coverage during the Medicare part D

donut hole, which I will already enter in April. I learned my lesson,

though. This time I know not to count my chickens before they

hatch.

As a person with MS, I take other prescription drugs for hypertension, depression, and several supplements. The difference is

that the generics are available. This keeps my co-payments low and

manageable. Most importantly, I do not have to miss these treatments because I cannot afford them. But this is not true for my MS

therapies and never will be unless something changes.

Hopefully you can help with a solution. I am a person with a

chronic, life-long, costly disease, but I want to stay out of a wheelchair, I want to stay out of the hospital, I want to contribute my

talents to the community, I want to pay my taxes, I want to be

healthy so I am able to help others who have MS. I want to stay

on my treatment. If I don’t have access to treatments, my health

will decline.

The stress from the story I have told you, which I live with, has

caused me to begin to lose my hair. Frankly, I don’t really care. I

just want to battle this beast that is trying to take away my movement.

My story is not unique. Millions rely on biologic drugs. Millions

struggle terribly with the cost. If I can leave this committee with

one thought, it is that no matter how good a drug is supposed to

be, it has no chance of being effective if it is not affordable to those

who need it.

For a long time no treatments were available for MS. Now there

are. The sad thing is it doesn’t matter. Some people just can’t afford them. The cost is too much. We have to change that. This legislation has the power to move us a little closer. We all know that

providing more affordable medications for all Americans is a serious priority. For biologic MS therapies, we will never, ever reach

that goal if we don’t start by simply providing the pathway. It is

a necessary first step.

Thank you again for your invitation and attention. I hope you remember me, and people like me, as you consider this legislation.

Please help provide more affordable biological drugs for those who

desperately need them. Help establish a regulatory pathway for the

FDA to review and approve follow-on biological therapies.

Thank you.

Chairman WAXMAN. Thank you very much, Ms. Brown.

Ms. Nathan.

STATEMENT OF MARY NATHAN

Ms. NATHAN. Mr. Chairman and distinguished members of the

committee, I want to thank you for the opportunity to testify before

you today. My name is Mary Nathan, and I am affected by

Gaucher disease.

As one of 4,800 people being treated worldwide with Cerezyem,

I understand, in a very practical way, what it means to be alive

because of a recombinant biological medicine. I also understand

what happens when the cost of a life-saving drug is unaffordable.

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Gaucher disease is a rare genetic disorder classified into three

categories and characterized by the deficiency of an enzyme necessary to break down fats called glycolipids. Because the enzyme

is in short supply, lipids collect in the spleen, liver, bone marrow,

and other organs. Left unchecked, the accumulation of lipids causes

problems such as anemia, bleeding, organ dysfunction, abdominal

enlargement, deterioration of the joints and bones, breathing problems, fatigue, and reduced ability to fight common infections. Type

I is the most common. It strikes 1 in 40,000 people in the general

population, and 1 in 600 Jews of Eastern European origin.

When I was diagnosed in 1966 at the age of 11, very little was

known about Gaucher disease. Given the increased size of my

spleen and my low blood count, doctors scheduled me for a splenectomy within weeks of my diagnosis. Shortly after that I was hospitalized with a high fever, excruciating pain, and an inability to

walk. We learned later that lipids had migrated quickly to my

bones, since the doctors had removed my spleen. We also learned

that I had experienced a Gaucher bone crisis, a painful episode

that would repeat often as my disease progressed.

By the time I entered college there was little doubt that I had

a severe form of what is known as Type I Gaucher disease. At the

age of 23 I underwent orthopedic surgery to straighten my leg and

replace my destroyed hip. After a long recovery I was able to walk

without pain for the first time in years. This respite lasted until

1988, when the implanted prosthesis became painful and unstable,

so again I underwent surgery and began to experience complications that left me fighting for my life.

My red blood cell count was dangerously low due to a reaction,

depriving my bones of oxygen. I then began to experience an ongoing cascade of bone infarcts, vertebrae fractures, and a serious fracture of my other hip.

To head off further damage, my doctor suggested a surgery of

last resort known as a girdlestone procedure to repair my hip. Few

patients ever walk again after this procedure.

What happened next marked a historic medical breakthrough

that would change the course of my life and my disease. After 30

years of intensive scientific research, scientists at the National Institutes of Health discovered a treatment for Gaucher disease, and

in April 1991, the Food and Drug Administration approved a commercial version called Ceredase.

After 3 years of enzyme replacement therapy, my overall health

improved to a point where reconstructive hip surgery was possible.

In November 1994, after 7 years in a wheelchair, I took my first

real steps.

There is no question in my mind that I am alive today because

of the orphan drug Ceredase. What concerns many of us, however,

is that the miracle drug is priced out of the reach of individuals,

and thus poses unprecedented challenges for patients who need the

drug, for the doctors who treat us, for employers struggling with

the high cost of health insurance, and for insurers and government

programs helping to pay our medical bills.

In 1994 most patients were converted to Cerezyme, the Genzyme

Corp.’s newly approved orphan drug, to replace Ceredase. The cost

of Cerezyme differs from patient to patient because dosages are

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based on body weight. My dosing regimen is 60 units per kilogram

of body weight for infusion. At 130 pounds, my treatment runs

about $12,600 per administration, or about $300,000 a year for 24

doses. An additional $25,000 in cost is added for administering the

drug and testing and monitoring my response and overall health.

This brings the cost for all charges related to my treatment to over

$328,000 a year. Now, over a 16-year period since its approval in

1991, I estimate that the payments for my drug have reached well

over $4.5 million.

In conclusion, the wave of the future in medicine is biotechnology

to treat rare diseases like mine and those diseases affecting wider

populations. There is no reason why biogenerics cannot take their

rightful place in America’s marketplace alongside generic drugs.

Based on some estimates, it is said that biogenerics could save

between 10 percent and 20 percent. If that holds true, millions of

dollars could be saved annually just for the 4,800 patients currently on Cerezyme.

Mr. Chairman, I want to thank you personally for introducing

your legislation. It is time to make safe and effective life-saving

biotech therapies accessible and affordable to the millions who need

them.

The Access to Life-Saving Medicines Act will create competition

in the marketplace and, in turn, foster innovation. Hopefully a balance will be struck that encourages innovation yet allows more affordable follow-on biologics to come to the marketplace.

Thank you for your time and attention to my testimony.

[The prepared statement of Ms. Nathan follows:]

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Chairman WAXMAN. Thank you very much, Ms. Nathan.

Ms. Barnett.

Ms. NATHAN. You are welcome.

STATEMENT OF NELDA BARNETT

Ms. BARNETT. Mr. Chairman and members of the committee, I

am Nelda Barnett of AARP’s Board of Directors. AARP appreciates

the opportunity to testify in support of creating a pathway for generic biologics.

AARP has endorsed the Access to Life-Saving Medicine Act because we believe this legislation will enable the FDA to establish

a process for the approval of safe, comparable, and interchangeable

versions of biologics. We call on Congress to pass the legislation

this year.

Biologics are used every day to treat serious diseases such as

cancer, multiple sclerosis, anemia, and rheumatoid arthritis. While

biologics hold great promise for treating some of the most serious

diseases, these treatments can be expensive, costing tens and hundreds of thousands of dollars. Some people are fortunate enough to

have insurance coverage or the means to be able to afford these

medications, but many are not so lucky.

Nothing illustrates how important it is that we have a pathway

to lower-cost generic versions than the stories of millions of Americans who currently cannot afford high-priced biologic drugs, such

as we have just heard.

My colleague on AARP’s board of directors, Bonnie Cramer, could

not be here today, but she has asked that I share with you one particular story. Bonnie suffers from severe rheumatoid arthritis, and

over the years has undergone a variety of treatment options, including a biologic drug, Enbrel, which has helped her. Bonnie has

encountered many people who suffer from her condition who are

not able to afford medication. One particular woman was so affected by the disease that her fingers were gnarled and she had difficulty walking and used all of her energy just to get through the

day. This woman recounted how she was trying to find a way to

get access to Enbrel but could not due to the high cost of the drug.

Bonnie tells it best in her own words. She says, ‘‘Having lived

with this disease for 40 years, I know how incapacitating it can be

and how the pain can be unbearable. I know what hope biologics

can give to someone whose life is affected. To know that it cannot

be obtained by other people with deadly diseases is brutal. How do

you tell someone that they cannot have a treatment that may alter

their lives significantly?’’

The astronomical cost of these drugs not only impacts consumers,

but also health care payers such as employers, private health care

plans, public programs such as Medicare and Medicaid. One way

to control these costs is to provide a pathway for the approval of

generic versions of these drugs. Any prescription drug therapy

treatment must be affordable and safe in order to be effective for

individuals. H.R. 1038 leaves the scientific determinations up to

those who are best equipped to address them, the FDA. Common

sense, alone, tells us that the agency that has the scientific knowledge to approve the brand name biologics, surely has the ability to

provide a pathway for generic approval of the same biologic.

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The Hatch-Waxman Act created a pathway for FDA to approve

generic prescription drugs. Twenty-three years later the time has

come for generic approval of biologics. H.R. 1038 provides FDA the

authority to produce the safe, comparable, or interchangeable version of the biologic. Our members and all Americans need Congress

to enact this bipartisan legislation this year. We are pleased to see

this committee and Members from both Houses of Congress and

both sides of the aisle moving forward on this issue.

Thank you again for inviting us here. I am happy to answer any

questions.

[The prepared statement of Ms. Barnett follows:]

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Chairman WAXMAN. Thank you very much, Ms. Barnett.

Ms. Mathur.

STATEMENT OF PRIYA MATHUR

Ms. MATHUR. Good afternoon. Mr. Chairman and members of the

committee, I commend you for convening today’s hearing and for

the introduction of bipartisan legislation to enable consumer participation in the biopharmaceutical marketplace.

On behalf of the California Public Employees’ Retirement System

[CalPERS], I welcome the opportunity to testify about this issue of

importance to our members, to our State, and to our Nation.

Let me begin by introducing myself and CalPERS. My name is

Priya Mathur, and I was elected by 400,000 public sector employees to serve on the board of CalPERS, to invest their $230 billion

of retirement assets, and to manage their multi-billion-dollar

health care program.

CalPERS’ health program covers 1.2 million active and retired

public employees and their families. Notably, CalPERS is the thirdlargest purchaser of employee benefits in the Nation, behind only

the Federal Government and General Motors, and it is the largest

purchaser of health benefits in California. This year CalPERS will spend almost $5 billion on health bene- fits, or $13.4 million per day. Of that amount, CalPERS, for the

first time, will spend over $1 billion on members’ prescription

drugs. At a time when our State is trying to expand health insurance coverage to more Californians, slow the rate of growth in

health care costs, and make our health care system more efficient,

the high cost of biopharmaceutical products presents an

unsustainable challenge to calPERS and to our entire health care

system.

CalPERS has long been a leader in implementing cost effective

health care programs. Among many strategies, we have instituted

innovative prescription drug benefit cost-sharing designs to maximize the use of generics and therapeutically appropriate brand

name drugs. CalPERS has actually achieved tremendous success in

controlling prescription drug costs through the use of generics. This

has been possible thanks to the chairman, whose efforts two decades ago led to the enactment of the Drug Price Competition and

Patent Term Restoration Act of 1984, what we call Waxman-Hatch.

As you well know, Waxman-Hatch gave the FDA the authority

to provide an abbreviated approval process for those products

deemed equivalent to an innovator product after patent expiration.

Without generic substitution, we estimate that our costs would be

about 60 percent higher than they are today. Generics save our enrollees and our State taxpayers hundreds of millions of dollars

every year.

In spite of all of our cost containment efforts, CalPERS has seen

an average annual increase of about 13.5 percent for our HMO and

PPO products since 2002.

Mr. Chairman, CalPERS’ spending for biotech products is distressingly substantial and rising at a rate that is significantly higher than traditional pharmaceuticals. Because of the complex delivery requirements of many biopharmaceuticals, it is exceedingly difficult to break out a stand-alone spending line for these products.

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However, we believe that our spending on so-called specialty drugs

is a good proxy, because biotech products make up the great majority of spending in the specialty drug category. Total spending for specialty drugs was $83.7 million in 2006, a

1-year increase of 16.9 percent, compared to a 5.4 percent increase

in traditional prescription drugs. On average, spending for biotech

products was at least $55 per day, compared to traditional drugs

at only $2 per day.

CalPERS supports a competitive health care marketplace that

leads to innovation and life-saving medicines; however, competition

does not exist today because the FDA asserts that it does not have

the authority to approve biogeneric products. As a result, today’s

biotech companies are benefiting long after patents expire and are

profiting at the expense of all Americans.

CalPERS supports giving the FDA explicit authority to approve

biogeneric products that are safe. Without the ability to access lessexpensive comparable and interchangeable biopharmaceuticals,

CalPERS ultimately will be forced to raise prescription drug copays or raise premiums, shifting the increasingly unaffordable

costs onto the individuals who can least afford them.

Mr. Chairman, before I conclude I need to address one important

issue. The opponents of this legislation—as you point out, they are

limited to the biotech industry—are claiming that those who support your legislation are ignoring the safety threat of bringing

biogenerics to the marketplace. I want to be perfectly clear. The

safety and health of our members comes first in any decision we

make on any health care policy. Therefore, we strongly support providing FDA with full discretion to make the ultimate decision about

whether and when any prescription drug product, be it brand name

or generic, comes to market. Your legislation does just that.

Mr. Chairman, CalPERS is proud to add our support to the growing and diverse list of stakeholders who support your legislation to

open the door to biogeneric competition. Thank you for giving us

this opportunity.

I would be happy to answer any questions.

[The prepared statement of Ms. Mathur follows:]

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Chairman WAXMAN. Thank you very much for your testimony.

We are going to ask questions after everybody is finished.

Mr. McKibbin.

STATEMENT OF SCOTT MCKIBBIN

Mr. MCKIBBIN. Thank you, Mr. Chairman, and thank you for the

opportunity to speak on behalf of Illinois Governor Rod R.

Blagojevich in support of establishing a pathway for generic biopharmaceuticals.

I want to applaud Chairman Waxman for his vision, recognizing

that escalating cost of biopharmaceuticals to States and consumers

is creating an economic burden on Illinoisans and State budgets

nationwide. These costs will continue to make it more difficult to

balance cost control and access for patients to affordable, life-saving biopharmaceuticals, both in Illinois and in the Nation as a

whole.

Further, I would like to recognize Illinois Congressman Emmanuel for his cosponsorship of H.R. 1038, the Access to Life-Savings

Medicine Act, and for supporting these important measures.

In my present role as a Special Advocate for Prescription Drugs,

I have functional accountability for overseeing prescription drug

spending for the State of Illinois. I am also a two-time kidney cancer survivor, and can speak personally from experience on both the

value and the cost of therapies that treat such dreaded diseases as

cancer.

I want to make it clear that I have a dual role as Special Advocate. The State of Illinois, as every State, has a responsibility to

ensure that prescription drug pharmaceuticals available to consumers are safe and effective, so I would like to dispense with the issue

of safety as a given for the discussion of generic legislation.

While some in this debate are seeking to obscure the real issue

with inflammatory rhetoric about the potential lack of safety of generic biopharmaceuticals, it is my position that this legislation authorizes FDA to take those scientifically sound steps that are appropriate to ensure the safety of generic biopharmaceuticals.

I want to focus the bulk of my testimony on the reality of biopharmaceutical costs and the value of generic competition in this

arena.

Illinois is a partner with the Federal Government in providing

and paying for prescription drugs. We are also responsible for providing and nurturing a sound economy in our State, one that does

not allow health care costs to bankrupt our State or to negatively

impact employers or the overall business climate of our State. To

this end, Governor Blagojevich has introduced a comprehensive

program to expand coverage to the 1.4 million uninsured between

the ages of 19 and 64, and to offer relief to many of our residents

who struggle every day to pay for health care costs covered under

the existing insurance plans.

There is some debate as to whether the annual increase of the

cost of biopharmaceuticals is 15, 17, or 20 percent, but the difference is, in fact, not material. If, as I believe and my data will

show, these expenditures for products are rising at an average of

slightly larger than 15 percent annually, then within 5 years what

Illinois spends on these drugs today will double. That would have

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a dramatic negative effect. We would not be able to afford these

medications.

Many States probably don’t realize the depth of what they are

spending now on biopharmaceuticals. According to IMS, biopharmaceutical sales in 2006 grew to $40.3 billion. While the

spending has escalated, a debate over potential for generic biopharmaceuticals has spanned four FDA Commissioners, all with a

variety of prioritization on how to establish a biopharmaceutical generic approval process.

States need more than continued discussion on this issue. We

need action. Chairman Waxman’s bill is a great first step in actually getting us on the road to creating a framework to permit generic competition and the savings it will create.

To understand the breadth and impact of spending on biopharmaceuticals for Illinois, we examined the leading products and

what the State of Illinois spends on these products. The results

were staggering.

For our 227,500 member employee retiree group, the State of Illi- nois spent $33.2 million on a select list of approximately 100 biopharmaceuticals during the fiscal year that just ended July 2006.

With that trend, this represents over 12 percent of our entire cost

for drugs, and is growing at an astronomical rate both on the price

and the utilization side of the ledger. The ingredient cost increase

was 49.9 percent, and the plan cost per member was 50.3 percent.

The number of prescriptions for this select list of biopharmaceuticals also rose significantly, a nearly 29 percent increase. For

programs administered under the State Medicaid Agency, we have

seen similar cost and utilization increases, but on a much larger

scale. For the most recent year in which data is available, the cost

of 61 biopharmaceuticals was $1,662,000, paid for under the pharmacy benefit side, and an estimated $75 million paid for under the

medical and the Part D wrap-around program. The grand total exceeded $200 million a year, without trend.

Now, much has been said about the potential cost savings of generic competition. Opponents to creating a pathway for generic

competition argue that the cost savings may be only 10 or 20 percent. But let’s look at the worst case scenario, a 10 percent savings.

If Illinois was able to reduce its 15 percent, 16 percent annual increase in spending on biopharmaceuticals by even 10 percent, then

we not only extend our ability to pay for these drugs, but we also

extend our ability to continue, under State programs, to provide increased access to them.

The other issue to consider about savings is this—it appears an

obvious one from my perspective, but seems lost in this debate. In

the past year, biopharmaceutical expenditures have increased at

double digit rates. If we do nothing for the rest of 2007, we will

end the year even higher expenditures associated with those biopharmaceuticals. Every day that we delay in creating a pathway

for generic competition is a day of potential lost cost savings to

States, to taxpayers, and to consumers. We can not afford to wait

any longer to begin the savings, even if, as opponents predict, the

savings would initially only be modest.

Chairman WAXMAN. Thank you very much, Mr. McKibbin. Are

you just about to conclude?

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Mr. MCKIBBIN. I have just a few more words, Mr. Chairman.

Chairman WAXMAN. OK.

Mr. MCKIBBIN. I appreciate it.

I would just like to urge Congress to approve this legislation to

authorize the FDA to apply sound scientific regulatory criteria that

would give Illinois and other States and every consumer and taxpayer lower biopharmaceutical products and increased access, the

result from the cost savings.

Thank you, Mr. Chairman.

[The prepared statement of Mr. McKibbin follows:]

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Chairman WAXMAN. Thank you very much for your testimony.

Dr. Grabowski.

STATEMENT OF HENRY GRABOWSKI

Mr. GRABOWSKI. Thank you, Mr. Chairman and members of the

committee. I am Henry Grabowski, professor of economics at Duke

University.

My comments will focus on the differences between generic drugs

and follow-on biologics and how these differences affect the expected budgetary savings. I also will discuss the importance of data

exclusivity for innovation incentives. With my colleagues, I have

examined these issues in two recent peer reviewed studies. I will

make these studies available for the record, along with my statement.

Based on our analysis, we conclude that the cost of entry will be

significantly higher for follow-on biologics than generic drugs. We

expect fewer firms will enter, and average prices will decline less

for follow-on biologics. Consequently, conservative budgetary scoring is appropriate in terms of expected savings to the Government

and to other payers.

Second, in designing a pathway for follow-on biologics it is also

very important that Congress balance price competition and innovation incentives. In this regard, it is important to include in the

legislation a data exclusivity period that takes account of the high

cost and risk of developing new entities. My statement provides

data from a new study that is peer reviewed and co-authored with

Joe DiMasi in this regard. The cost of R&D for a representative

new biologic is now over $1 billion when one takes account of preclinical and clinical expenditures, the cost of failures, the cost of

capital, and process engineering, which is higher for biologics than

pharmaceuticals.

So let me now briefly summarize some of the key differences between follow-on biologics and pharmaceuticals that will affect cost

savings in scoring procedures.

The first is clinical trial cost. As we have heard earlier today,

some clinical trial data is going to be necessary to demonstrate

comparable safety and efficacy, at least for the foreseeable future.

In the case of European filings, the estimates range from $10 to

$40 million for preclinical studies. This contrasts with $1 to $2 million costs for bioequivalents for generic drugs.

Second is development times. Estimates from generic firms indicate development times for a follow-on biologic are likely to range

from five to 8 years. By comparison, generic drugs seldom require

more than a few years to do required tests and gain regulatory approval.

Third is manufacturing cost and risk. The required capital investment in property, plant, and equipment and the cost of manufacture are also likely to be significantly higher for follow-on biologics.

Fourth, there are important differences on the demand side. It

is unlikely that most follow-on drugs will be designated as interchangeable by the FDA, at least not for the foreseeable future and

without extensive clinical trials. As a result, we expect the physicians will initially be cautious with respect to the substitution of

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follow-on products. Health care providers and patients are likely to

be wary until clinical experience has accumulated and shown that

a follow-on product is a satisfactory therapeutic alternative to the

original innovator products.

These costs and demand side differences have important implications for entry and price competition. In our research, we find the

number of entrants and the priced discounts of a follow-on biologic

are highly sensitive to fixed cost. As a consequence, even very

large-selling biologics are likely to have only a few entrants. For

markets with only one to three entrants, we project price discounts

will be in the range of 10 to 25 percent. This is in accordance with

European experience to date.

These differences also have important implications for scoring

cost savings. In particular, cost saving estimates based on the experiences of generic drug utilization and pricing are subject to strong

upward biases. A correct accounting of this and all other relevant

factors would substantially lower the savings estimates in studies

such as that by Express Scripts and the PCMA.

A recent analysis by Avalier Health has very different assumptions in some important dimensions, find much lower cost savings.

The remainder of my statement covers R&D costs and innovation

incentives. I understand the bills under consideration have no data

exclusivity provisions or patent restoration features for innovators.

The fact that there is no data exclusivity provision would allow generic firms to challenge innovators’ patents from the date of first

marketing approval and to enter the market soon thereafter. The

resulting uncertainty in IP litigation would have significant negative incentive effects on capital market decisions for private and

public biotech firms with pipelines. Many of these firms are entrepreneurial in nature and have few if any profitable products.

The exclusivity period for pharmaceuticals under Hatch-Waxman

is 5 years. R&D costs have increased substantially since HatchWaxman was enacted 20 years ago. Five years does not provide

enough time for firms to recoup the high cost of discovering and developing a new medicine. Break-even returns on R&D for the average new drug and biological product now exceed more than a decade.

Since this legislation will essentially define the terms of competition between innovators and imitators for decades to come, it is

critical that it maintains strong incentives for R&D investment in

new biopharmaceuticals, as well as provide incentives for price

competition.

A data exclusivity period of at least 10 years in length would recognize the high cost and risk of developing new biological entities

and deter patent challengers from occurring and entering until a

more mature phase of the product life cycle. This would also preserve incentives for the development of new indications for existing

drugs and harmonize U.S. law with that of the European Union.

Thank you.

[The prepared statement of Mr. Grabowski follows:]

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Chairman WAXMAN. Thank you very much, Dr. Grabowski.

Mr. Houts.

STATEMENT OF JONAH HOUTS

Mr. HOUTS. Good afternoon, Chairman Waxman and fellow committee members. My name is Jonah Houts. I am a senior analyst

with Express Scripts. I am pleased to be here today to discuss the

issue of biogenerics from the perspective of a leading pharmacy

benefit management company. Express Scripts would like to thank

the chairman for his leadership in introducing this legislation,

which we believe will fundamentally improve health outcomes by

giving patients access to lower-cost biological alternatives.

Express Scripts monitors prescription drug trends and expenditures for 1,600 clients, including large self-insured employers, government payers, unions, and health insurance companies. I would

like to talk about three basic issues today. First, I would like to

speak about the trend of specialty drug spending, especially biologic agents. Second, I would like to describe the tools used by the

PBM industry to control the increase in cost of prescription drugs.

Third, I would like to describe how we would apply these tools to

biogenerics and the potential benefit to patients, plan sponsors, and

the Government.

Spending on pharmaceuticals now represents 11 percent of total

health care spending. Within the pharmaceuticals are specialty

drugs. These are the most high-priced biologic agents, which we are

discussing here today.

I brought an exhibit which may demonstrate the increased growth here. In 2006, spending on specialty drugs was $54 billion,

representing 20 percent of pharmaceutical spending. The rate for

specialty drugs will almost double by 2010 to $99 billion. This rate

of increase is the second highest in all of the health care field, exceeded only by diagnostic imaging tests.

In total, Express Scripts manages the pharmacy benefit for over

50 million individuals in this country. Our mission is to make the

use of prescription drugs safer and more affordable. To this end, we

have developed sophisticated tools, such as formularies, tiered copayments, step therapies, and drug utilization management programs, just to name a few. These tools promote the most clinically

sound and cost effective use of pharmaceuticals.

One of the most potent tools that we have is the promotion of generic medications. These therapies are time tested and thus are

clinically effective. They also have well characterized safety profiles. The additional advantage is that they are the most affordable

for both patients and plan sponsors. For these reasons, patients

achieve higher compliance rates with these therapies. Utilizing programs like I previously described, our company has an industry

leading generic fill rate of 60 percent.

But it is important to recognize that all of our programs for promoting the use of generics or less expensive branded medications

are reviewed by our external pharmacy and therapeutics committee. This committee is made up of both specialty and general medicine doctors, and pharmacists who are not employees of Express

Scripts. Safety has and always will be of primary concern to Express Scripts.

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As we have stated, spending on biologic agents is increasing at

an alarming rate. This legislation will allow for a pathway at the

FDA for companies to bring to market generic versions of these important medications.

The PBMs have the tools to assist patients in switching to the

most cost-effective biogenerics. In fact, our switching tools will be

even more effective in this market because of the limited number

of patients, the limited number of prescriptions, the limited prescribing community, and the potential for enormous savings. Our

plan sponsors will be very motivated to have us pursue each and

every savings opportunity.

We are pleased to hear the FDA today not rule out interchangeability in the future, but, regardless, if the FDA deems a product

is interchangeable or just comparable, will be quite effective at

working with the prescribing physician to aid patients in receiving

the most cost-effective and clinically appropriate therapy.

In the realm of branded pharmaceuticals, drugs compete on their

research and development and marketing. It would be irrational for

branded drugs to compete on price, as they are competing within

a finite group of patients, and price reductions would result in reduced revenues for all manufacturers in the class. Generic drugs,

however, can only compete on price. Without this extensive research and development, the only way for a generic to capture market share is on price. This price competition benefits payers, plans,

and the Government.

This historic legislation would allow patients, payers, physicians,

and PBMs to work together to make these wonderful therapies

more available, with improved health outcomes and tremendous

savings.

[The prepared statement of Mr. Houts follows:]

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Chairman WAXMAN. Thank you very much, Mr. Houts.

I want to thank all of you for your testimony, especially Ms.

Brown and Ms. Nathan. Your very moving testimony is what this

legislation is all about. When drugs are miracles, but the miracles

are too expensive for people, they are not going to be there for

them, and that is why we need to figure out a way to hold down

costs. Providing generics is certainly, to me, one of the best ways

to hold down costs. Others have suggested other ideas, but competition, market forces I think do work and have worked in the past.

Ms. Mathur, I find it stunning that in California spending on bio- logics or specialty drugs in 2006 was $83.7 million, and that is at

a cost of $55 per day, compared to $2 per day for traditional drugs.

If those kinds of spending trends are maintained, what will be the

impact on CalPERS and your members in the future?

Ms. MATHUR. I think we really are at unsustainable levels, and

what we fear is that in the future we will have to shift more of the

cost on to the member, either through increases in co-pays or by

raising premiums. We have already heard stories from some of our

members that, as the cost of health care increases overall, they are

less and less able to afford health care, even through our program.

I would hate to see some of our members drop health care coverage

that is available to them simply because they cannot afford it.

Chairman WAXMAN. Dr. Grabowski asserts that the savings from

generic competition in the biologics context will be modest, in the

range of 10 to 25 percent. What would even those modest savings

mean for CalPERS? And let me ask this also of Mr. McKibbin for

Illinois.

Ms. MATHUR. I’m sorry, Mr. Chairman. I thought you were directing that to Mr. Grabowski.

Chairman WAXMAN. The 10 to 25 percent savings, Dr. Grabowski

says those are modest.

Ms. MATHUR. Yes.

Chairman WAXMAN. What will that mean, however?

Ms. MATHUR. I think it would be extremely significant. I mean,

the cost for some members, $300,000 a year, 10 to 15 percent or

10 to 25 percent is a significant savings. So even though on a percentage basis the savings for biotech drugs or biogenerics might be

less than for synthetic drugs, it is certainly, on an aggregate total

cost basis, going to be a very large number.

Chairman WAXMAN. Mr. McKibbin.

Mr. MCKIBBIN. For Illinois, Mr. Chairman, we are talking about

$20 to $50 million, depending on when we start it, if we start it

this year. And those are numbers that come out of the base, so, as

you know, if this trend continues at 15 percent plus, we, too, like

California, will reach this point where it is not sustainable, so we

will either have to make those tough choices of trying to pass more

costs or to limit access, which is untenable.

Chairman WAXMAN. Thank you.

Mr. Houts, one of the frequent assertions we hear from BIO, the

trade association for the brand name biotech drugs, is that when

a generic pathway for biologics is established we are not going to

see much in the way of savings because generic biologics won’t be

interchangeable like they are with traditional generic drugs. Obviously, we might disagree on the number of biologics that will end

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up being interchangeable, but assuming BIO is correct that a high

number of biologics will be just comparable instead of interchangeable, what kind of impact will that have on spending on biologics?

Mr. HOUTS. There is still a significant savings opportunity, even

if interchangeability is not granted by the FDA. Managed care

plans and the PBMs, a recent example would be in the statin market, where there was a high-priced, effective statin, Statin A, and

then a lower-priced and still effective Statin B. While they were

different chemical entities, we were able to move market share to

the cost-effective product.

We were actually able to move 49 percent of the market share

when they weren’t interchangeable, as you will. And so there is

still a significant opportunity in the area of biologics to move patients to the preferred safe, effective, cost-effective products.

Chairman WAXMAN. Well, you said it would be safe. When therapeutic switches are made, what process is in place to protect patient safety?

Mr. HOUTS. All of those decisions are reviewed by our pharmacy

and therapeutics committee that I referred to in my testimony, and

this is composed of specialist physicians, and other physicians to

ensure that drugs in those classes will have no adverse effects on

patients.

Chairman WAXMAN. Thank you very much.

Mr. Danny Davis.

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Chairman.

Once again, let me thank you for calling and conducting this

hearing. It has, indeed, been informative, and I want to thank all

of the witnesses for their testimony. I especially want to echo the

sentiments that you expressed, Mr. Chairman, relative to the impact of the testimony of Ms. Brown and Ms. Nathan, consumers for

whom all of us work. Hopefully, as a result of their experiences and

their testimony, the hearing heightens the recognition that we

must do something, and do it as quickly as possible, to try and

make sure that we have available the very best and the most cost

effective medical care that the country can provide. So I certainly

want to again thank both Ms. Brown and Ms. Nathan for being

here and for their testimony.

Mr. McKibbin, let me just commend the Governor for the State

of Illinois. When I see the kind of interest that Rod Blagojevich has

shown relative to health care, and especially the effort to try and

make sure that pharmaceuticals are available to all of our residents at a cost for which they can pay, it makes me proud to live

in the State of Illinois and proud to know that he is, indeed, our

Governor. Please convey that to him.

Mr. MCKIBBIN. I will.

Mr. DAVIS OF ILLINOIS. If I could direct your attention to the

chart located over here, which shows the five largest Medicare Part

B drug expenditures in 2005—and you may not be able to see, but

listed are all of the medicines listed of biotech drugs that are regulated as biologics. Spending on Epogen, an anemia treatment,

alone, was over $1.7 billion, but it was actually even higher than

that, because those numbers on the chart do not include spending

on the end-stage renal disease, ESRD program. Three of the other

drugs are also anemia treatments, and they collectively represent

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over $2.1 billion in Medicare spending. Remicade, an arthritis medicine, accounted for $541 million.

My question is: are we seeing those same kind of trends in the

State of Illinois? And in terms of State spending, what are the five

top biologics in the State of Illinois?

[The information referred to follows:]

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Mr. MCKIBBIN. Well, Congressman, we are seeing those similar

type of numbers, and anyone who has a television will recognize

those drugs because they are fairly heavily advertised, but those

five drugs on your screen, I did a quick analysis and we are talking

about $23 million a year, a little over $23 million for those five

drugs on your particular chart.

For us, I took a look at the top five for just our State employee

retiree group, and those top five were Enbrel, Humira, Avonex—

which was talked about earlier—Lantus, and Forteo. Those were

the top five drugs from a total dollar amount. On a per patient

basis they are slightly different, but those five drugs are our top

five, and not dissimilar to your chart. In some cases the difference

may be because of Medicare and where Medicare may cover, versus

an employee group, but we are seeing those similar types of trends.

Mr. DAVIS OF ILLINOIS. I know that all of us throughout the

country moan and groan and talk about the speculation of Medicare and Medicaid and whether or not there are going to be increases or decreases. Many of the hospitals kind of operate on

shaky ground every year. They are wondering whether or not they

are going to experience severe cuts.

Are they going to have to close departments or, in some instances, actually go out of business? Should we continue to see increases in pharmaceutical drug costs, what impact do you think

that would have on the hospitals, for example, in the State of Illinois, as well as throughout the Nation?

Mr. MCKIBBIN. Certainly, Congressman, it could be the tipping

point, and that is something that we are very concerned about. I

know yourself and others in the delegation are concerned, and we

would urge that this legislation be passed sooner rather than later.

As I said earlier, you know, every day that goes by is a day that

is a lost opportunity, and it may be, in fact, a tipping point for hospitals in the Illinois, metro Chicago, and the rest of the United

States.

Mr. DAVIS OF ILLINOIS. Mr. Chairman, I see that the light is on,

but could I ask Mr. Houts if he could respond to that same question relative to the continued escalation of pharmaceutical costs

without relief, how this will affect the Medicare/Medicaid programs, and certainly their impact on our hospital infrastructures?

Mr. HOUTS. It is not really a field of expertise for me as far as

government payers. What I can say is that there is an exceptional

opportunity for the Government in terms of Part B and end-stage

renal disease, especially looking at those top drugs listed there, to

save a pronounced amount of money. And so, as you consider this

legislation, you may want to find ways to make Part B and the

ESRD program more comparable to the commercially insured market and adopt some of the tools we use to manage trend.

Mr. DAVIS OF ILLINOIS. Well thank you very much.

Mr. Chairman, again, I just simply want to commend you for

your insight in introducing this legislation, the leadership that you

continue to provide. I have always known of your strong interest

in health care. You probably would not remember it, but way back

in a different life when I used to come to D.C. to lobby on behalf

of the National Association of Community Health Centers, you

were always the person that we felt that we could come to and get

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some understanding. I mean, Senator Kennedy over in the Senate

and Representative Waxman here in the House, you were our guys.

I want to thank you again.

Chairman WAXMAN. Thank you. Now you are one of our guys,

too. Thank you for your kind comments.

I very much appreciate all of our witnesses in this panel, as in

the previous panels.

I would like to ask unanimous consent that all Members have 5

days to submit additional questions for the record to the witnesses

that have appeared before us today.

That concludes our hearing, and our meeting is adjourned.

Thank you very much.

[Whereupon, at 1:29 p.m., the committee was adjourned.]

[The prepared statement of Hon. Elijah E. Cummings and additional information submitted for the hearing record follow:]

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