California politics often have a much wider sphere of influence than the borders of the Golden State. Now it has become a battleground for competing theories about providing discounted drugs to low- and moderate-income people. Two ballot initiatives propose different methods for negotiating and distributing discounted drugs.  Gov. Arnold Schwarzenegger and 

 back one. The other is supported by the non-profit organization 

, which is affiliated with the Health Access Foundation.

The Schwarzenegger Cal Rx Initiative Would:

•    Provide a drug discount card for people with family incomes of up to 300 percent of the federal poverty guidelines. The 2005 guidelines include incomes of $19,350 per year or less for a family of four. Participants could not also have drug coverage from another program. Enrolment would require a $15 annual fee from participants.

•    Negotiate discounts with pharma manufacturers on a voluntary basis.

The Health Access Cal Rx Plus Initiative Would:

•    Provide a drug discount card for people with family incomes of up to 400 percent of the poverty level who do not have outpatient drug coverage from Medi-Cal, California’s Medicaid program, or the Healthy Families Program, which provides low-cost insurance for children. Medicare enrollees who are prescribed drugs not covered under that program and people with medical expenses of 5 percent or more of their family’s income would also be eligible.

•    Make it mandatory for companies to negotiate discounts if they want to participate in Medi-Cal. If a company declines to offer Cal Rx Plus discounts it will not be eligible for Medi-Cal contracts unless the drug has no therapeutic equivalent.

•    Work with the California Chamber of Commerce, California Labor Federation AFL-CIO and other organizations to assist small businesses in purchasing discounted prescription drugs. Businesses must pay more than 50 percent of health coverage for employees and their families to be eligible for this program. 

•    Both ballot initiatives’ petitions were certified by the California Secretary of State’s office and will be included on the ballot of a statewide special election, which is scheduled to take place Nov. 8, 2005.

•    The state assembly’s Appropriations Committee passed a legislative version that parallels Cal Rx Plus, sponsored by Assemblyman Dario Frommer (D-Los Feliz). It is currently in the Senate Health committee.

•    The state senate’s Health Committee blocked the legislative version of Cal Rx, sponsored by Sen. Deborah Ortiz (D-Sacramento), in April.

The battle for winning the minds of Californians is now under way. According to a June 23 Field Poll, 60 percent of registered voters would vote “yes” on Cal Rx and 54 percent would vote “yes” on Cal Rx Plus.

    Anthony Wright, executive director of Health Access California, said the public would favor the Cal Rx Plus proposal because it “uses the purchasing power of California” and does not “rely solely on the goodwill of the drug industry.”

    He argued that the countermeasure supported by PhRMA is an admission that “drug prices are too high.” But he cautioned that pharma companies underestimate the depth of anger about the cost of prescription drugs, which will give strength to his organization’s proposal.

    PhRMA plans to spend the next few months educating the public about the “realistic expectations” offered by the Cal Rx program, said Denise Davis, spokeswoman for APCO Worldwide, which is handling PhRMA’s public relations for the California initiative. She described the Schwarzenegger initiative as a “workable solution to a serious problem in the state.”

    Davis claimed that CalRx would triumph because it is based on a similar program in Ohio, which is more successful than the Maine program Cal Rx Plus is modeled after. Although Kim Fox, senior policy analyst at the Rutgers Center for State Health Policy, said that the Maine Rx has been able to get “pretty significant discounts.”

    If either proposal wins the support of Californians, it will be part of popular trend of states seeking rebates from manufacturers, according to Fox. She said these types of initiatives are often enacted in stages, starting with a voluntary program and moving towards a mandatory discount. Fox noted that voluntary programs often fail because not enough companies chose to participate.

Articles

Two ballot initiatives offer different methods for discounting prescription drugs in California. But what are the plans really promising? Get the details of each proposal and an analysis of efforts to sway California voters.

Californians to Vote on Drug Discount Plan

 thinks that partnerships joining the public and private sectors are crucial to developing a vaccine to prevent AIDS, a belief that was given strength June 21 when the organization announced its first collaboration agreement with a major pharma company, 

    “Public/private partnerships can move important therapeutic and preventative needs forward,” said GSK spokeswoman Gail Renegar.

    The partnership is part of a trend that had its seed in 2001 when people began discussing novel ways novel ways to address diseases of the developing world, including tuberculosis, malaria, AIDS, and schistosomiasis, according to Christopher Milne, assistant director of the Tufts Center for the Study of Drug Development. But public/private partnerships have entered the market much more quickly than the other ideas presented at the time, Milne said.

    Prior to 2001, very few large companies were invested in research for preventing or fighting diseases of the developing world because there was little promise of financial gain, Milne said. But public/private partnerships will allow pharma companies to “have it both ways,” he continued. Companies can avoid devoting too many resources to these projects while still “keeping their hand in” research areas that could yield important results if they come to fruition. He also noted that these partnerships are good for boosting a pharma company’s public image.

This is not the first arrangment of this type for GSK, which is also involved in studying tuberculosis with private organizations. Renegar described public/private partnerships as a “viable mechanism to address unmet needs, particularly in developing countries.” She credited IAVI with “pushing us forward in the international community.”

    Emilio Emini, senior vice president and chief of vaccine development for IAVI, said his organization has previously collaborated with biotechs, which the company hopes to continue doing.  But he also expressed interest in future partnerships with pharma companies and academic institutions that have novel tools for eliciting specific immune responses or developing vaccines.

    “One of our goals is to establish collaborations with organizations that have interesting technology that can be applied to prophylactic vaccines,” he said. “The reality is, when more technology is applied to the problem the likelihood of a solution goes up.”

    Emini expressed hope that multiple partnerships will result in a “portfolio of approaches that have the potential to eventually be combined as needed.”

The partnership will focus on studying delivery vectors from non-human primates, which have been altered to be non-infectious. The adenovirus vectors are similar to those that cause colds in humans, Renegar said. The vectors are designed to deliver immunogens of interest, HIV-specific genes that express HIV-specific proteins, according to Emini.

    Renegar said GSK is hoping that the vector is potent and will elicit a strong immune response. Because the vector is from non-human sources, it is unlikely that people will have a preexisting immunity to it, Emini stated.

    The University of Pennsylvania, which developed the technology, licensed its non-infectious adenovirus tool exclusively to GSK, which will now share it with IAVI.

    According to a statement by Jean Stephenne, president and general manager of GSK Biologicals, the adenovirus vector is one of three approaches it is using to research AIDS vaccine development. Renegar said the company might be willing to consider expanding the collaboration to include the other two avenues in the future.

    GSK’s U.S.-listed stock rose 1.6 percent to a closing price of $50 on the day of the announcement.

The trend of public/private partnerships to combat diseases of the developing world continues with collaboration between GSK and the International AIDS Vaccine Initiative. We examine the details of the deal, the science GSK plans to use and the future of this trend.

GSK Inks Deal with Non-Profit to Develop AIDS Vaccine

The U.S. Supreme Court’s June 13 decision in the Merck KgaA v. Integra Lifesciences I Ltd. case shook up the industry’s understanding of the rules governing the use of patented compounds covered by the Hatch-Waxman Act. But only future interpretations by lower courts will determine the scale of the quake.

    Merck was funding experiments at the Scripps Research Institute. The company was interested in finding ways to inhibit blood vessels from growing out of existing vessels. As part of these studies, the researcher at Scripps used a patented protein fragment owned by Integra, which proved effective. Before the initial research agreement expired, Merck renewed its interest in the Scripps investigations, specifically using the Integra fragment.

    Integra sued Merck for patent infringement for using the compound. But Merck responded that the research was covered by the Safe Harbor clause of the Hatch-Waxman Act, 271(e).

The high court reversed the appellate decision in favor of Integra. The Supreme Court also returned the case to the Federal Circuit court, which will have to re-evaluate the case in light of the new interpretation of the Safe Harbor clause.

    In a rare unanimous decision, the Supreme Court determined that the Safe Harbor is not universal but that it does extend beyond the line drawn by the appellate court, dividing clinical trials from pre-clinical research.

    In section III, Justice Antonin Scalia, writing for the court, said that the Safe Harbor includes patented compounds that are “reasonably related to the development and submission of any information under the FDCA.” But in a later footnote, the court declined to offer an opinion about whether 271(e) extends to patented research tools.

    “There is simply no room in the statute for excluding certain information from the exemption on the basis of the phase of research in which it is developed or the particular submission in which it could be included,” Scalia wrote.

    The court chose not to mention the possibility of a common law research exemption, which was mentioned in a dissenting opinion by Federal Circuit Judge Pauline Newman.

Experts agree this decision provides a new understanding of the Hatch-Waxman Act. According to Stan Lovenworth, partner at Dewey Ballantine LLP in New York, the Safe Harbor clause was originally written to allow generic drug manufacturers to conduct experiments on patented drugs prior to the end of the protection. This was supposed to speed up the entry of generic alternatives into the marketplace.

    The Supreme Court’s decision is an “appropriate interpretation,” Lovenworth stated. “It says what it says it [271(e)] says, but it isn’t what was meant.”

    Stephen Maebius, partner at Foley and Lardner LLP, contended that although the clause was created with generics in mind, the legislators “deliberately chose wording that went way beyond generics.” This allowed the Supreme Court to expand the clause to include patented compounds used for pre-clinical research.

    But Lovenworth asserted that if Congress intended a “full-bore research exemption,” it should take some action to solidify that court’s interpretation as law.

    “The next thing I would like to see happen is some congressional hearings,” he said.

    But Maebius asserted that a Congressional re-examination of the Safe Harbor is unlikely because it would be too difficult to balance the interests of pharma companies, which want to keep R&D costs low, and biotechs, which want to preserve their incentive for innovation. He said research toolmakers, who should now have the most interest in solidifying the meaning of the Safe Harbor, do not have enough strength to interest Congress in making the clause narrower.

Although the clause was written with generic drug manufacturing in mind, the Merck v. Integra decision will not have a great impact this sector of the industry, Lovenworth said. But he asserted that for brand pharma companies, “it creates a very different playing field than we thought we had before the decision.”

    According to Sandip Patel, partner at Chicago’s Marshall, Gerstein and Borun LLP, the decision could prompt pharma companies to abandon the conservative approach of waiting until a compound’s patent has expired before using it in research.

    Maebius agreed, saying that drug manufacturers might be more resistant to licensing a product, if they feel they could make it in-house and be protected by the Safe Harbor.

    “It will affect the speed at which new drugs are introduced,” Patel said.

    It could also have a negative impact on biotech companies and other organizations that produce compounds for licensing, Patel said.

But undoubtedly the biggest unanswered question for biotechs and research institutions is how this interpretation will influence future decisions concerning research tools.

    “This definitely leaves the door open for future litigation on that issue,” Patel said.

    Lovenworth predicted that if research tools were not distinguished as different from the compounds in the Merck case, it would decrease “the value of companies that make research tools.” It could also “seriously jeopardize what’s become a huge revenue stream for research universities,” he continued.

    Patel predicted that toolmakers would aggressively enforce patent rights. But Lovenworth asserted that the best bet for these companies is to couple patented items with “real know-how” that is not included in the patent application but retained on a trade secret basis.

    “If there were a way to do it that only Integra knew about, they might have been able to get in on the action,” he contended.

    Maebius said that toolmakers should find ways to optimize their patents. He pointed out that they would not be able to patent the end products of the tools due to the Feb 2004 University of Rochester v. GD Searle and Co. Inc. Federal Circuit Court decision, which said this was overreaching the patent. But toolmakers might be able to find an intermediate area, he said.

Another question left open by the decision, according to Gregory Castanias a partner at Jones Day in Washington, D.C., is how pharma companies can prove the court’s requirement of reasonable belief.

    In the decision, the court said that the Safe Harbor extends as long as there is a “reasonable basis to believe that the compound tested could be the subject of an FDA submission and the experiments will produce the types of information relevant to an IND or NDA.

    Castanias questioned what level of proof would be necessary and wondered if the company using the compound would need to have set out with the initial intention of developing a new drug in order to claim safe harbor.

    Maebius predicted that heads of pharma company research departments would issue memos stating that the purpose of specific studies is to develop a drug to create a paper trail of proof. But he said that the memos can’t be “trumped up.” They will have to show that the company is on the path to drug discovery in a way that outside scientists could evaluate the memos and agree.

    He also questioned how specific the research will have to be in order to demonstrate the reasonable basis of belief.

    “What is enough?” Maebius asked. “A lead compound, structural motif, a mechanism of action?”

    On the other hand, Lovenworth said that the fact that a pharma company is conducting research using a compound would be proof enough.

We asked top intellectual property lawyers about what the Supreme Courts decision will mean for pharma and biotech companies. Here is our forward-looking analysis of their comments.

Pharmaceutical Executive-07-06-2005

Californians to Vote on Drug Discount Plan

GSK Inks Deal with Non-Profit to Develop AIDS Vaccine

Supreme Court: Research Use of Patented Compounds OK