After reviewing its documentation, the company concluded that routine preventive maintenance and requalification of manufacturing equipment at the site was overdue. Ben Venue suspended manufacturing so that it could assess the entire site and take appropriate corrective actions to ensure the safety of its products. The suspension will affect Johnson & Johnson, which markets Doxil, as well as Pfizer, Hospira, and Teva.

Last month, President Obama ordered FDA to take various steps intended to prevent and reduce drug shortages. The agency will require advance notice from manufacturers likely to face manufacturing disruptions, and it will expedite reviews of new drug suppliers, production sites, and manufacturing changes.

These steps, while helpful, do not address an important factor that contributes to drug shortages: manufacturing deficiencies. Even before Ben Venue conducted its own review, FDA found 48 quality concerns during an inspection of the Bedford site in May 2011. FDA likely needs a larger pool of inspectors to oversee drug manufacturing sites more thoroughly. But the government’s current desire for austerity will probably preclude the budget increase that would make hiring possible.

Maybe FDA should prioritize manufacturing sites for inspection if they are among a few that produce a medically necessary drug such as Doxil. Greater attention to crucial sites could identify problems earlier and, ideally, resolve them without disrupting drug supply.

As the unemployment rate hovers around 9.1%, the federal government needs to find ways to create jobs. Congress is debating whether a tax break on repatriated money would prompt companies to hire more workers, as I mentioned last week. Meanwhile, the Obama administration is eyeing another potential means of stimulating job growth: investing in biological research.

When he signed the America Invents Act in September, President Obama committed to developing a National Bioeconomy Blueprint by January 2012. The blueprint will describe ways to manage investment in biological research to improve the nation’s health and create the “jobs of the future.” Aside from identifying potentially productive investments in R&D, the blueprint will also describe regulatory reforms to reduce burdens on biopharmaceutical manufacturers.

Illustrating the maxim that great minds think alike, FDA is already seeking to identify and reform burdensome and inefficient regulations as part of its own initiative to stimulate biomedical innovation. At the same time, the agency plans to establish a common understanding among stakeholders to clear the approval pathway for exceptionally promising therapies. These goals are included in the agency’s recent report titled Driving Biomedical Innovation: Initiatives to Improve Products for Patients.

Biological research is the foundation of a significant portion of the American economy, as the White House website notes. The combined efforts of the president and FDA could help discover and develop new therapies. If they also encourage biopharmaceutical companies to hire new employees, they will help mitigate an urgent problem that has not yet been addressed sufficiently.

The Senate’s Foreign Earnings Reinvestment Act, like a related bill in the House of Representatives, would reduce tax rates for CROs and biopharmaceutical firms that repatriated money earned overseas. With the money they saved, companies could hire staff and invest in research, ACRO argues.

WinAmerica, an interest group supported by various firms, says that the bill would repeat the success of a 2004 repatriation tax break. Citing information from the Bureau of Labor Statistics, the group observes that average annual private-sector employment increased by 4,385,000 jobs from 2000 through 2007, and that 98% of the increase occurred during the years when the tax break was in effect (2004 through 2006).

The tax break did not benefit the entire private sector, however. It primarily helped pharmaceutical and technology companies, according to a report by Senator Carl Levin (D-MI). Bristol-Myers Squibb, Eli Lilly, Johnson & Johnson, Merck, and Pfizer were among the top 15 repatriators that time around. After bringing $155 billion in overseas earnings back into the country, these 15 firms reduced their overall US workforce by about 21,000 jobs and spent slightly less on R&D. Instead of creating jobs, the companies used the extra money to repurchase stock and raise their top executives’ pay by about 28%—despite express prohibitions against using the money for these purposes.

The increase in employment that WinAmerica cites seems to have occurred in industries other than those that benefited from the tax break—and for other reasons. The law that granted the previous tax break did not include a means of monitoring compliance. Unless the Foreign Earnings Reinvestment Act can do this, and can impose penalties for noncompliance, it will not create jobs for those who need them. I hope Congress takes heed of Senator Levin’s report as it considers the new bills.

From a US policy perspective, Obama is emphasizing the opportunity while recognizing the challenges. “…We are two free-market economies where people have the freedom to pursue ideas and innovation that can change the world,” said Obama in remarks to a joint session of the Indian Parliament this week. “And that’s why I believe that India and America are indispensable partners in meeting the challenges of our time….In short, with India assuming its rightful place in the world, we have an historic opportunity to make the relationship between the two countries a defining partnership of the century ahead.”

The President outlined three major areas for economic cooperation: developing partnerships for creating high-technology and high-wage jobs in areas such as defense and civil space, pursuing joint research and development for a green economy, and reducing barriers to trade and innovation. He also emphasized the need for working collaboratively on regional and global security issues and strengthening the foundation of democratic governance in India.

But while speaking of the opportunity between the two countries, he also acknowledged the difficulties inherent in forging US–Indian relations. “The United States sees Asia–especially India—as a market of the future…And I am here because I believe that in our interconnected world, increased commerce between the United States and India can and will be a win–win proposition for both countries,” said the President in remarks before the US–India Business Council and Entrepreneurship Summit. “I realize that for some, this truth may not be apparent. I want to be honest. There are many Americans whose only experience with trade and globalization has been a shuttered factory or job that was shipped overseas … In 2010, trade between our countries is not just a one-way street of American jobs and companies moving to India. It is a dynamic two-way relationship that is creating jobs, growth, and higher living standards in both our countries.”

The President’s challenge and also the task facing businesses is and will continue to be how to truly create and maintain a two-way economic relationship between the two countries. The bio/pharmaceutical industry’s experience to date is a microcosm of this larger challenge. So far, the industry has seen both the opportunity in India as a pharmaceutical market, but also has experienced the growing pains, particularly from a suppliers’ perspective, of a new global economic order. Partnerships, collaboration, and mutual economic gains are all positive, but how such ideals translate into specific policy and business decisions is ultimately what matters. Without doubt, it is a delicate balance, but it is one in which it is and will be crucial to keep in sync.

How did we get here? The 2010 report shows that compared with last year’s data, the country’s obesity epidemic is growing steadily. The report’s summary also points out that in 1991, no state had an obesity rate above 20%.

“Obesity is one of the biggest public health challenges the country has ever faced, and troubling disparities exist based on race, ethnicity, region, and income,” said Jeffrey Levi, executive director of TFAH. “This report shows that the country has taken bold steps to address the obesity crisis in recent years, but the nation’s response has yet to fully match the magnitude of the problem. Millions of Americans still face barriers—like the high cost of healthy foods and lack of access to safe places to be physically active—that make healthy choices challenging.”

Some examples of the racial, ethnic, regional, and income disparities Levi mentions are given in the report’s findings:

• Adult obesity rates for Blacks and Latinos were higher than for Whites in at least 40 states and the District of Columbia
• Ten out of the 11 states with the highest rates of obesity were in the South
• Thirty-five percent of adults earning less than $15,000 per year were obese compared with 24.5% of adults earning $50,000 or more per year
•  The number of states where adult obesity rates exceed 30% doubled in the past year, from four to eight.

Perhaps the most troublesome is the data on childhood obesity. The results show that:

•  Childhood obesity rates ranged from 9.6% (Oregon) to a high of 21.9% (Mississippi)
• Eight states, plus the District of Columbia, have childhood obesity rates greater than 20%
• Nine of the 10 states with the highest rates of obese children are in the South, as are nine out of the 10 states with the highest rates of poverty.

A poll on childhood obesity was included in this year’s report. Eighty-four percent of parents said their children are at a healthy weight, however, research shows that one-third of children are overweight or obese, according to the report. This finding suggests that parents do not think of their own children as having a weight problem. Additionally, the poll results showed that 80% percent of Americans identified childhood obesity as a growing problem, and 50% of Americans believe the issue is so important that we need to invest more to prevent it immediately.

In February of this year, Michelle Obama launched the “Let’s Move” program, an ambitious campaign seeking to end childhood obesity within a generation. The program’s goal is “that children born today will reach adulthood at a healthy weight.” Public and private organizations have already started working toward that goal by taking steps to help parents make healthy, informed choices; serve healthier food in schools; help people access healthy, affordable food; increase the number of farmer’s markets; and encourage more physical activity. At the same time as the Let’s Move launch, President Obama announced the formation of a task force on childhood obesity that would identify ways to maximize resources and set benchmarks to achieve the Let’s Move goal.

Following the announcement of the “Let’s Move” campaign, FDA Commissioner Margaret Hamburg wrote an open letter to industry in March calling for better nutrition labeling on food packaging to help consumers make healthier choices. Hamburg focused on the food industry’s use of what could be misleading information to consumers and urged companies to make sure their labeling did not contain unauthorized health or nutrition claims.

And, of course, there are pharmaceutical treatments on the market and in development to fight obesity. Just yesterday, Eisai announced it made a deal with Arena Pharmaceuticals to commercialize the drug candidate lorcaserin, which is designed to control appetite and satiety. Eisai will pay Arena $50 million upfront, up to $90 million in milestone payments, and roughly 30% of product sales. With FDA approval, Eisai will sell the drug in the US. The companies expect an answer from FDA by October of this year.

It is promising that with these measures we can begin to overcome the many complex causes and factors related to the obesity epidemic—physical, emotional, social, ethnic, economic—that we deal with as individuals and as a nation. I sincerely hope that in years to come we can celebrate our country’s 250th 4th of July as a slimmer, healthier America.

First, the Act will mean an increase in drugmakers’ sales, according to a PriceWaterhouseCoopers (PWC) report. About 32 million additional people will be insured by 2019, and about half of them will be covered by Medicaid. The insured are more likely to fill prescriptions, so this is to the industry’s benefit. But the Act will also raise the rebates required of branded-drug manufacturers from 15.1% to 23.1%. Will this hurt drugmakers? Probably not. “The impact of an increase in the Medicaid rebate rate may be less extensive than believed as rebates currently in place already exceed this rate,” says the PWC report.

Previously, pharmaceutical companies often lost sales when beneficiaries entered the doughnut hole in Medicare coverage. But the Act contains several provisions to help patients move through the hole quickly. As of the Act’s signing, the government will pay a $250 rebate to each patient in the hole. By 2011, manufacturers will have to provide 50% discounts on branded drugs to patients in the doughnut hole. Although this might sound bad, the PWC report notes that drugmakers already provide discounts on prescriptions filled in the coverage gap. So this part of the Act might not affect drugmakers much, except perhaps by boosting sales.

On the other hand, the Act requires each pharmaceutical manufacturer to pay a fee based on its share of total branded-drug sales to government programs. Executives told of this detail might have responded, “I knew there was a down side.” Not so fast. The Act divides sales amounts into five ranges and taxes each range at a different percentage. A company with $300 million in sales would pay nothing on its first $5 million, 10% on sales between $5 and $125 million, 40% on sales between $125 million and $225 million, and 75% on sales between $225 million and $300 million. “Given the fixed dollar amount, over time, the impact diminishes relative to pharmaceutical sales,” said the PWC report.

Finally, large biopharmaceutical companies knew right away that healthcare reform would be good for them because the Act gives innovators 12 years of data exclusivity. Many small biopharmaceutical companies and manufacturers of generic biologics likely felt left out when they heard the news, but there’s a silver lining. The Act allocates $1 billion for a two-year temporary tax credit to encourage the development of new therapies. The 50% tax credit will go to companies with 250 employees or fewer, and is intended to help small, undercapitalized biotech companies, according to the PWC report.

At worst, healthcare reform will likely have little effect on drugmakers’ pocketbooks. At best, it will increase their sales without greatly increasing the amount of tax or rebates they pay. Pharmaceutical executives may soon be moved to paraphrase Patrick Henry and say, “If this be socialism, make the most of it.”

At first blush, it looks like drugmakers took a beating. The New York Times said that the drug industry receives “harsh treatment” in the bill. In June 2009, President Obama and the Pharmaceutical Research and Manufacturers of America (PhRMA) agreed that the industry would provide $80 billion in rebates and discounts on branded pharmaceuticals over 10 years. The House bill would require drugmakers to provide another $60 billion in rebates over the same period, making a total of $140 billion in concessions.

These rebates might have been what Ken Johnson, PhRMA’s senior vice-president, had in mind when he said in a press release that the House bill would kill tens of thousands of jobs in the pharmaceutical industry. Yet the additional rebates might not be included in the healthcare-reform bill that the Senate eventually passes.

The House bill also would enable the government to negotiate the prices that Medicare pays for drugs, a policy that the industry has so far opposed. On the other hand, the bill would not allow Medicare to create a formulary. This omission essentially vitiates Medicare’s price-negotiating power, said Steven D. Findlay, senior health-policy analyst of Consumers Union, in the New York Times article.

Ultimately, I think it’s too soon to draw conclusions about what healthcare-reform legislation will mean for the pharmaceutical industry. The Senate has yet to pass its own version of the bill. The Senate bill might not, for example, require the additional rebates from the industry that the House bill does. It might, as the House bill does, give biologics protection from generic competition for 12 years. And after the Senate passes its bill, it will have to be reconciled with the House bill.

Despite its initial alarm, PhRMA seems determined to withhold its judgment. “This is a three-act play, and a good critic doesn’t write a review after the opening scenes,” said Johnson in the press release. Time will tell what shape the final legislation takes. It is at least conceivable that the industry could gain from healthcare reform. The law that Obama finally signs could expand the industry’s market, increase drug sales, and provide incentives for innovation.

In a statement released after the vote, BIO’s President Jim Greenwood said the exclusivity period would ensure innovation, presumably because it would provide incentives for investing in biopharmaceutical innovators. Greenwood also remarked that the legislation would help avoid patient and provider “confusion” over biosimilar products. I can’t understand what Greenwood means by that, unless he takes “confusion” to mean “choice.”

The Generic Pharmaceutical Association (GPhA) also weighed in last week, expressing its disappointment in the House Committee. The Eshoo bill would delay the introduction of affordable medicines, said GPhA President and CEO Kathleen Jaeger in a statement released last week. H.R. 3200 does not include a “reasonable and proven successful period of market exclusivity,” Jaeger said, alluding to the Waxman amendment.

President Obama had reiterated his support for a seven-year exclusivity period for biopharmaceuticals two days before the Committee vote. Party loyalty apparently did not influence the Committee members’ deliberations. The shape of the bill that will end up on Obama’s desk remains to be seen, but BIO can claim an important victory for the moment.

Strong opposition can block legislation quite effectively, as Sen. John McCain (R-AZ) recently discovered. A Senate Committee defeated his amendment to allow the reimportation of prescription drugs when McCain tried to append it to the “Affordable Health Choices Act.” And the amendment was withdrawn from the “Family Smoking Prevention and Tobacco Control Act” before that.

Likewise, an approval pathway for follow-on biologics that does not contain 12 years of data exclusivity will face stiff opposition from BIO. Rep. Henry Waxman’s (D-CA) “Promoting Innovation and Access to Life-Saving Medicine Act” has faced criticism from Congress and industry alike. At first blush, you might predict its fate to be similar to that of McCain’s drug-reimportation amendment.

But, as Senior Editor Patricia Van Arnum noted, the White House has signaled its preference for an approach similar to Waxman’s. BIO called the approach a “risky short cut to biosimilars” and will undoubtedly be bending lawmakers’ ears about its preference. Nevertheless, the Presidential imprimatur could make a great difference. President Obama remains widely popular and might have enough political strength to draw the Congressional support he needs to codify his vision for follow-on biologics.

In testimony before the US House of Representatives’s Subcommittee on Courts and Competition Policy last week, Richard A. Feinstein, director of the Federal Trade Commission’s (FTC) Bureau of Competition, identified pay-for-delay patent settlements as an obstacle to generic competition and to efforts to contain rising healthcare costs. Under pay-for-delay settlements, makers of generic drugs agree to delay the introduction of their products in return for a cash payment. The European Commission called these settlements anticompetitive in a report issued in November 2008.

In his testimony, Feinstein supported H.R. 1706, the Protecting Consumer Access to Generic Drugs Act of 2009, which would prohibit such settlements. A similar bill was introduced in the Senate in February. FTC has attempted to use its antitrust enforcement powers to stop pay-for-delay agreements, but courts have tended to be lenient on them, Feinstein said. Pay-for-delay settlements have thus become a viable strategy for innovators, and antitrust enforcement has gotten difficult as a consequence.

The Pharmaceutical Care Management Association argues that generic drugs could save consumers billions of dollars, but patients cannot buy drugs that are not yet marketed. The courts’ tendency to accept pay-for-delay settlements seems to indicate that legislative action is necessary. Explicitly prohibiting these settlements would likely foster competition, a goal that free-marketeers should certainly get behind. And if the House and Senate bills reduced patients’ expenses (as well as those of government and private healthcare payors), they would represent a step toward achieving Obama’s goal of healthcare reform.