There is not a simple answer to that question as both the innovator-drug industry and the generic-drug industry are taking decidedly different positions. So far, the innovator-drug industry as a whole is offering a measured view of the Senate proposal. On Nov. 19, the Pharmaceutical Research and Manufacturers of America (PhRMA) Senior Vice-President Ken Johnson released a statement in the wake of the Senate’s decision to proceed with debate. “While we are still reviewing the Senate bill, we remain committed to do our part to make comprehensive healthcare reform a reality this year,” he said in the statement. “We believe that all Americans should have access to high-quality, affordable healthcare coverage and services. If done in a smart way, healthcare reform will benefit patients, the economy, and the future of America. Compared to the House bill, which would have a chilling effect on medical progress in America, the Senate approach provides a much better blueprint for reform.”

PhRMA has supported healthcare reform, offering an $80-billion commitment over 10 years to close gaps in Medicare prescription drug coverage. It, however, objected to measures in the recently passed House bill, which would impose mandatory rebates in Medicare Part D coverage. “PhRMA and its member companies share the goal of closing the Medicare Part D coverage gap for affected seniors and have agreed to provide a 50% discount on brand-name medicines purchased in the so-called ‘doughnut hole,’ said PhRMA in an Oct. 29, 2009 press release. “However, the Congressional Budget Office has warned that the House bill, which imposes mandatory rebates in Part D, would ultimately lead to a 20% increase in Part D premiums paid by beneficiaries.”

In offering a more supportive position toward the Senate provision, PhRMA says that it remains committed to working with parties to get a healthcare measure passed this year. “What’s critical now is that we remain focused on the important goal of helping pass a comprehensive health care reform bill that can get to the President’s desk this year. We will continue to be a constructive partner to help meet this goal,” said Johnson in the statement.

Meanwhile, the generic-drug industry is voicing disagreement with the Senate bill. Generic Pharmaceutical Association (GPhA) President and CEO Kathleen Jaeger sharply criticized the biologics provision of the Senate healthcare reform proposal. “Just when you think the pro-BIO and PhRMA provisions in healthcare reform couldn’t get any more favorable for them, the Senate healthcare reform bill has further disappointed consumers by adding additional monopoly protection to expensive biologic medicines,” she said in a Nov. 19 statement. “Regardless of the motivation, the biologic provision in this bill takes the already egregious and unwarranted 12 years of exclusivity and extends it. The Senate leadership had the opportunity to address the deficiencies of the House HCR [healthcare reform] bill and to fulfill the Senate HELP [Health, Education, Labor and Pension] Committee’s commitment to close down a major loophole known as ‘evergreening’ and deliver a more reasonable biogenerics pathway to consumers, labor, businesses, generic manufacturers, and employers. Instead, they have provided further hurdles to access more affordable medicines.”

No doubt both the innovator-drug and generic-drug industries will be participants among the many interests in the massive upcoming discourse on healthcare reform. To put it succinctly, let the debates begin.

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.

Not exactly. BIO restated familiar concerns that the proposal would provide insufficient protection to innovators and hamper the quest for cures. GPhA countered by citing the Federal Trade Commission’s (FTC) finding that long exclusivity periods are not needed to spur innovation. GPhA added that FTC provides “extremely robust intellectual-property protection” that, they imply, eliminates the need for market exclusivity, although GPhA did not explain why this was the case.

BIO noted that the proposal before the HELP committee provides nine years of base data exclusivity “only to a new ‘major’ substance” and grants no exclusivity to a product that is “similar to a previously approved product.” This language seems intended to prevent evergreening. Surprisingly, GPhA did not mention this language approvingly (or even at all) in its statement.

Though BIO and GPhA have not introduced new arguments to the debate, GPhA gives the impression of being more flexible. Although generic-drug companies prefer a five-year term of exclusivity, as the Hatch–Waxman bill would establish, GPhA accepts the seven-year period that the president supports as a helpful compromise. BIO’s most recent public statement gives no indication that the organization is willing to accept anything less than the long exclusivity period it has always demanded. In this regard, GPhA might be winning the public-relations battle.

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 a press statement, Senator Jon Kyl (R-AZ) said that the economic stimulus bill, which allocated $1.1 billion for CE research, could allow the government to micromanage medicine and use CE research to ration healthcare. He introduced the Preserving Access to Targeted, Individualized, and Effective New Treatments and Services Act of 2009, which would bar the federal government from denying insurance coverage of a treatment based on its cost.

House Democrats introduced a discussion draft on Friday that could allay fears of healthcare rationing. The draft would establish a Center for Comparative Effectiveness Research and also an independent Comparative Effectiveness Research Commission, which would oversee the Center.

The Commission would include representatives of consumers, physicians, insurance companies, clinical researchers, and payers. The draft states that the Center would have to “develop rigorous scientific methodologies for conducting comparative effectiveness studies” and that “all aspects of the prioritization of research, conduct of the research, and development of conclusions based on the research shall be transparent to all stakeholders.”

I think the Democrats’ discussion draft would ensure that CE research wouldn’t let the government “dictate treatment,” in Senator Kyl’s words. Sharing the results of CE research would likely improve the quality of healthcare and make consumers’ and patients’ lives easier. To my mind, CE research would provide benefits too great to be dismissed. The discussion draft shows how it could preserve doctors’ and patients’ rights to exercise their own discretion.

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.

Some details that FDA has given about its plans are encouraging. For example, it intends to increase the number of field tests of imported drugs from roughly 2870 this year to 6197 next year. The agency also wants to inspect more high-risk international and domestic manufacturing facilities than before. The target is 700 for 2010, which is 100 more than this year. Sounds good so far.

But here’s the catch. The number of unique FDA inspections of domestic and international facilities will remain the same in 2010 as in 2009. If the agency focuses on high-risk facilities, couldn’t problems easily crop up elsewhere, like in a frustrating game of whack-a-mole?

FDA’s stated intention to rely on state authorities and on international regulators’ inspection data could provide us additional protection. FDA has more than 70 agreements to share manufacturing information with regulators in countries such as China.

I’m all for cooperation, but I’d be more reassured if Congress gave the agency more muscle so that it could stand on its own. The Drug and Device Accountability Act of 2009, recently introduced by Senator Grassley, would give FDA more funds and more authority. The bill would increase the agency’s power to inspect foreign and domestic drug-manufacturing facilities and give FDA the power to issue subpoenas and detain products at the border if it suspected they were adulterated or misbranded.

The budget request is a good start, but the agency needs even more tools to ensure drug safety effectively.

On Jan. 1, 2009, the Pharmaceutical Research and Manufacturers of America’s (PhRMA) voluntary ban on noneducational gifts to physicians took effect. The ban is part of PhRMA’s revised Code on Interactions with Healthcare Professionals and is intended to counter “misperceptions that company interactions with healthcare professionals are not based on informing them about medical and scientific issues,” according to the Code.

In a Jan. 2, 2009 press release, the American Medical Student Association (AMSA) commended PhRMA for its ban on gifts. Brian Hurley, AMSA’s president, called the ban “a good first step,” but noted that pharmaceutical companies must take profits into consideration and “cannot be expected to self-regulate.”

For this reason, AMSA supports passage of the Physician Payment Sunshine Act of 2008 (S.2029), which would require disclosure of payments to physicians by the pharmaceutical industry. Disclosure would be required for payments such as honoraria, continuing medical education, and research support. AMSA joins other groups such as the Medicare Payment Advisory Commission (MedPAC), an independent agency that advises Congress about issues that affect the Medicare program, in supporting the legislation.

I agree with AMSA and MedPAC that Congress should help regulate the pharmaceutical industry’s interactions with doctors. Transparency and oversight could provide added reassurance that doctors make decisions based on scientific information rather than on marketing materials. Public health and the industry’s public image would both benefit.

Therapeutics Daily reported that PhRMA paid for ads that praise lawmakers who supported the extension of a children’s health-insurance program. Some of the lawmakers portrayed positively in the ads; including Rep. Gerald McNerney (D-CA), Carol Shea-Porter (D-NH), Paul Kanjorski (D-PA), and Steve Kagen (D-WI); are in tough re-election battles. No doubt the ads are partly intended to help re-elect these candidates.

A spokeswoman for the group directly responsible for the ads said they were designed to shore up continued support for the children’s health-insurance program. Leaving the particulars of the program aside, its goal is worthy.

If you’re skeptical of displays of benevolence and altruism, Massie Ritsch, a spokesman for the Center for Responsive Politics, will provide grist for your mill. The ads also serve the interests of the drug industry, he said. “Obviously, the drug industry has an interest in anything that will provide a steady stream of government money to pay for their products.”

Lesson for the election and beyond: follow the money, look for the full story, then make your judgment.