Teva Fights for Biotech Generics

If the U.S. wants to lower its annual bill for pharmaceuticals, there's a plausible way to do it: Permit drugmakers to crank out generic biotech products. Right now, the U.S. Food & Drug Administration has no mechanism for reviewing or approving these complex medicines. But several bills introduced this year seek to clear the way—and Teva Pharmaceuticals (TEVA), the world's largest generic-drug manufacturer, is working like mad to make it happen.

Leading Teva's campaign is Debra Barrett, vice-president for government affairs, who last January helped launch a major public-relations effort called "The Year of Affordable Healthcare." It included a poll showing Americans are forgoing prescription drugs to save money. It also held high-level pow-wows on legal reform in major U.S. cities. This month, while others on Capitol Hill are on recess, Barrett will be in her Washington office plotting the next lobbying blitz.

The biggest hurdle facing generic biologics is lack of consensus on how long biotech drugs should be protected from generic competition. Some health reform bills favor 12 to 14 years, but Barrett insists that's too much time. Nonbiotech drugs get five years, and that should also be long enough for biotechs and their backers to recoup their investments and earn profits, she says. On July 20, Teva and 27 other makers of generics sent a letter to three House members urging them to reconsider the time frame—or simply withdraw all legislation related to biogenerics. "We'd rather have nothing," says Barrett, 38.

That's a veiled threat. Barrett knows health reformers in Congress want generic alternatives to cancer treatments, say, that can cost upwards of $40,000 a year. Teva is asking why it should spend scarce research dollars developing generics if it can't market such treatments for several decades. "By the time competitors are allowed in, the market will have already shifted to newer products," Barrett says.

Complex Proteins Right now, Teva, which is based in Israel, is bargaining from strength. On July 28, it announced record second-quarter results, with demand surging for its generic versions of nonbiotech drugs, such as Aderall for attention deficit disorder. In the first half of 2009 sales rose 21%, to $6.5 billion, and net profits jumped 44%, to $974 million. In the long term, though, Teva CEO Shlomo Yanai says biotech is the best tool to keep profits flowing.

Nobody disputes that the complex proteins used for biotech drugs are different from the chemical variety—and probably require a separate regulatory channel. Five years is simply too short for innovators to get a payback, says James C. Greenwood, CEO of the Biotechnology Industry Organization. Longer protection will "provide more incentives for venture capitalists to invest in small biotechs," he argues.

Teva's Barrett is well prepared to make the counterargument. With a master's degree in public policy from Harvard University, she worked as a health-care policy aide for Senators Patrick Leahy (D-Vt.), Charles Schumer (D-N.Y.), and Chris Dodd (D-Conn.). At age 29, she drafted a bill for Schumer to improve consumers' access to generic drugs. Some of her proposals were enacted as part of the Medicare Modernization Act of 2003. "It's crunch time," she says. "One out of every four new drugs is a biologic. We want to play in that market."

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