[House Hearing, 110 Congress]
[From the U.S. Government Printing Office]



 
                   ASSESSING THE IMPACT OF A SAFE AND
                   EQUITABLE BIOSIMILAR POLICY IN THE
                             UNITED STATES

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 2, 2007

                               __________

                           Serial No. 110-40


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov




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                    COMMITTEE ON ENERGY AND COMMERCE

    JOHN D. DINGELL, Michigan, 
             Chairman
HENRY A. WAXMAN, California
EDWARD J. MARKEY, Massachusetts
RICK BOUCHER, Virginia
EDOLPHUS TOWNS, New York
FRANK PALLONE, Jr., New Jersey
BART GORDON, Tennessee
BOBBY L. RUSH, Illinois
ANNA G. ESHOO, California
BART STUPAK, Michigan
ELIOT L. ENGEL, New York
ALBERT R. WYNN, Maryland
GENE GREEN, Texas
DIANA DeGETTE, Colorado
    Vice Chairman
LOIS CAPPS, California
MIKE DOYLE, Pennsylvania
JANE HARMAN, California
TOM ALLEN, Maine
JAN SCHAKOWSKY, Illinois
HILDA L. SOLIS, California
CHARLES A. GONZALEZ, Texas
JAY INSLEE, Washington
TAMMY BALDWIN, Wisconsin
MIKE ROSS, Arkansas
DARLENE HOOLEY, Oregon
ANTHONY D. WEINER, New York
JIM MATHESON, Utah
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana               JOE BARTON, Texas
                                         Ranking Member
                                     RALPH M. HALL, Texas
                                     J. DENNIS HASTERT, Illinois
                                     FRED UPTON, Michigan
                                     CLIFF STEARNS, Florida
                                     NATHAN DEAL, Georgia
                                     ED WHITFIELD, Kentucky
                                     BARBARA CUBIN, Wyoming
                                     JOHN SHIMKUS, Illinois
                                     HEATHER WILSON, New Mexico
                                     JOHN B. SHADEGG, Arizona
                                     CHARLES W. ``CHIP'' PICKERING, 
                                         Mississippi
                                     VITO FOSSELLA, New York
                                     STEVE BUYER, Indiana
                                     GEORGE RADANOVICH, California
                                     JOSEPH R. PITTS, Pennsylvania
                                     MARY BONO, California
                                     GREG WALDEN, Oregon
                                     LEE TERRY, Nebraska
                                     MIKE FERGUSON, New Jersey
                                     MIKE ROGERS, Michigan
                                     SUE WILKINS MYRICK, North Carolina
                                     JOHN SULLIVAN, Oklahoma
                                     TIM MURPHY, Pennsylvania
                                     MICHAEL C. BURGESS, Texas
                                     MARSHA BLACKBURN, Tennessee


                           Professional Staff

 Dennis B. Fitzgibbons, Chief of 
               Staff
Gregg A. Rothschild, Chief Counsel
   Sharon E. Davis, Chief Clerk
   Bud Albright, Minority Staff 
             Director

                                  (ii)
                         Subcommittee on Health

                FRANK PALLONE, Jr., New Jersey, Chairman
HENRY A. WAXMAN, California          NATHAN DEAL, Georgia,
EDOLPHUS TOWNS, New York                 Ranking Member
BART GORDON, Tennessee               RALPH M. HALL, Texas
ANNA G. ESHOO, California            BARBARA CUBIN, Wyoming
GENE GREEN, Texas                    HEATHER WILSON, New Mexico
    Vice Chairman                    JOHN B. SHADEGG, Arizona
DIANA DeGETTE, Colorado              STEVE BUYER, Indiana
LOIS CAPPS, California               JOSEPH R. PITTS, Pennsylvania
TOM ALLEN, Maine                     MIKE FERGUSON, New Jersey
TAMMY BALDWIN, Wisconsin             MIKE ROGERS, Michigan
ELIOT L. ENGEL, New York             SUE WILKINS MYRICK, North Carolina
JAN SCHAKOWSKY, Illinois             JOHN SULLIVAN, Oklahoma
HILDA L. SOLIS, California           TIM MURPHY, Pennsylvania
MIKE ROSS, Arkansas                  MICHAEL C. BURGESS, Texas
DARLENE HOOLEY, Oregon               MARSHA BLACKBURN, Tennessee
ANTHONY D. WEINER, New York          JOE BARTON, Texas (ex officio)
JIM MATHESON, Utah
JOHN D. DINGELL, Michigan (ex 
    officio)
                                 ------                                

                           Professional Staff

                       John Ford, Senior Counsel
                          Jack Maniko, Counsel
                    Robert Clark, Policy Coordinator
              Ryan Long, Minority Chief Counsel for Health
                         Melissa Sidman, Clerk

                             C O N T E N T S

                              ----------                              
                                                                   Page
 Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     1
Hon. Mike Rogers, a Representative in Congress from the State of 
  Michigan, opening statement....................................     3
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     3
 Hon. Nathan Deal, a Representative in Congress from the State of 
  Georgia, opening statement.....................................     5
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................     6
Hon. Mike Ferguson, a Representative in Congress from the State 
  of New Jersey, opening statement...............................     7
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     8
Hon. Tim Murphy, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     8
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     9
Hon. Lois Capps, a Representative in Congress from the State of 
  California, opening statement..................................    10
Hon. Hilda L. Solis, a Representative in Congress from the State 
  of California, opening statement...............................    11
Hon. Heather Wilson, a Representative in Congress from the State 
  of New Mexico, opening statement...............................    11
Hon. Jim Matheson, a Representative in Congress from the State of 
  Utah, opening statement........................................    12
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, prepared statement......................................    12
Hon. Tammy Baldwin, a Representative in Congress from the State 
  of Wisconsin, opening statement................................    14
Hon. Darlene Hooley, a Representative in Congress from the State 
  of Oregon, opening statement...................................    14
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................    15
    Prepared statement...........................................    16
Hon. Jan Schakowsky, a Representative in Congress from the State 
  of Illinois, opening statement.................................    17
Hon. Bart Gordon, a Representative in Congress from the State of 
  Tennessee, prepared statement..................................    18
Hon. Edolphus Towns, a Representative in Congress from the State 
  of New York, prepared statement................................    18

                               Witnesses

Janet Woodcock, M.D., Deputy Commissioner, Chief Medical Officer, 
  Food and Drug Administration...................................    20
    Prepared statement...........................................    22
    Answers to submitted questions...............................   176
William Schwieterman, M.D........................................    63
    Prepared statement...........................................    66
David Schenkein, M.D., vice president, clinical hematology/
  oncology, Genentech, Incorporated..............................    77
    Prepared statement...........................................    78
    Answers to submitted questions...............................   182
Geoffrey Allan, president, chief executive officer, chairman of 
  the board, Insmed, Incorporated................................    87
    Prepared statement...........................................    89
    Answers to submitted questions...............................   157
Richard F. Kingham, partner, Covington & Burling.................    91
    Prepared statement...........................................    94
Bruce Downey, chairman of the board, Generic Pharmaceutical 
  Association, chairman and chief executive officer, Barr 
  Pharmaceuticals, Incorporated..................................   115
    Prepared statement...........................................   116
    Answers to submitted questions...............................   161
Ruth Hoffman, executive director, the Candlelighters Childhood 
  Cancer Foundation..............................................   121
    Prepared statement...........................................   123
Ed Weisbart, M.D., chief medical officer, medical affairs, 
  Express Scripts, Incorporated..................................   125
    Prepared statement...........................................   127
    Answers to submitted questions...............................   168

                           Submitted Material

AARP, statement..................................................   145
William Samuel, director, Department of Legislation, AFL-CIO, 
  statement......................................................   152
Scott McKibbin, special advocate for prescription drugs, State of 
  Illinois.......................................................   153
Priya Mathur, vice-chair, health benefits-board of 
  administration, California Public Employees' Retirement System, 
  statement......................................................   140
Coalition for a Competitive Pharmaceutical Market, statement.....   142


 ASSESSING THE IMPACT OF A SAFE AND EQUITABLE BIOSIMILAR POLICY IN THE 
                             UNITED STATES

                              ----------                              


                         WEDNESDAY, MAY 2, 2007

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:05 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Frank 
Pallone, Jr. (chairman) presiding.
    Members present: Representatives Pallone, Waxman, Gordon, 
Eshoo, Green, DeGette, Capps, Allen, Baldwin, Schakowsky, 
Solis, Hooley, Matheson, Dingell, Deal, Wilson, Pitts, 
Ferguson, Rogers, Myrick, Sullivan, Murphy, Burgess, Blackburn, 
and Barton.
    Also present: Representative Inslee.
    Staff present: Jack Maniko, John Ford, Bobby Clark, Virgil 
Miller, Lauren Bloomberg, Melissa Sidman, Jesse Levine, Nandan 
Kenkermath, Chad Grant, and Ryan Long.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. This hearing is called to order. Today the 
subcommittee is meeting to hear about assessing the impact of a 
safe and equitable biosimilar policy in the United States. 
Needless to say, the topic of today's hearing is of great 
importance and has generated a lot of interest over the past 
few months. Recent advancements in science have resulted in a 
new class of innovative medicines commonly referred to as 
biologics. These biotech drugs are complex molecules that are 
typically derived from living organisms which are designed to 
treat a number of chronic and often debilitating diseases. 
While older versions of these products have existed for many 
years, manufacturers have made great strides in developing a 
broader range of biologic products that treat a greater number 
of conditions and illnesses. Diabetes, cancer, heart disease, 
multiple sclerosis are among a range of devastating illnesses 
for which there are now new treatments because of improvements 
in the research and development of biologics. As a result, 
these lifesaving and life-enhancing therapies have given 
patients and their families a renewed sense of hope for a 
longer and better life.
    Because of the great promise biologics hold, they are one 
of the fastest-growing components of the pharmaceutical market. 
Unfortunately, however, they are one of the most expensive. The 
price of a biologic can be substantial as well as prohibitive. 
Take insulin, for example. It was noted in a recent New York 
Times article that the drug cost State Medicaid programs $500 
million in 2005. Furthermore, people who suffer from diabetes 
in this country, as well as Government and private insurers, 
spend a combined $3.3 billion a year on insulin. Researchers 
have suggested, however that the price of insulin might drop 25 
percent if generic or follow-on versions were made available. 
The savings would accrue to many, including patients, 
employers, and insurers. Competition from generic versions of 
chemical drugs have proven to be an effective way to help lower 
healthcare costs. As we all know, a generic drug can cost 30 
percent to 80 percent less than its equivalent brand-name drug. 
In 2005, the average prescription filled with a brand-name 
product cost $95.54. The average cost for a generic filled with 
a generic drug was $28.71, and that is a savings of nearly $70 
on the average prescription.
    We need to apply what we learn from generic versions of 
chemical drugs and biologic products so that we can produce 
measurable savings. That is what I believe that Mr. Waxman has 
attempted to, with introduction of his legislation. He has 
introduced a bill called the ``Access to Lifesaving Medicine 
Act'' of which I am a co-sponsor. In 1984, you all know that 
Mr. Waxman paved the way for safe and affordable generic drugs 
to enter the market easily, and we were still preserving 
incentives for brand-name companies to develop new and 
innovative therapies. As we search for a way to lower costs and 
preserve innovation with biologics, Mr. Waxman is once again an 
authoritative voice in this debate, and I thank him for 
directing our attention to this important issue. Thank you, 
Henry.
    Congress, I believe, needs to approve a pathway for generic 
biologics to be brought to the market, and this will be a 
priority for our subcommittee. I know many of my other 
committee members, and I will mention Mr. Inslee, Mr. Green, 
Ms. Baldwin, Ms. Eshoo, and others have also indicated their 
eagerness to address this important issue; and I am looking 
forward to gathering their input as we move forward as well.
    While I am a co-sponsor of the Access to Lifesaving 
Medicine Act, I will be the first to admit that the legislation 
is not without controversy. Over the course of the past few 
months, I have heard from numerous stakeholders on this issue 
and believe that each side has its own merits. Several 
questions continue to arise. What level of science will be used 
to determine comparability standards for these new products? 
What amount of science should be used to determine 
interchangeability? Who should make such determinations? Should 
it be Congress or the expert agency that we have typically 
charged with the regulation of drugs and biologics? How do we 
preserve innovation while achieving price competition? And how 
do we strike a balance between protecting intellectual property 
but ensure that generic versions of biologics are approved and 
enter the market in a timely manner. These are some of the 
questions whose answers will shape the debate and help us 
determine how the FDA approves safe and effective generic or 
follow-on versions of biologic products.
    I just want to thank all of our witnesses for being here 
today. You represent the experts in the field and will tell you 
that the members of the subcommittee are eager to hear what you 
have to say and ask questions of you, so thank you for being 
here and I am certain that today's hearing will be extremely 
informative for all of us.
    Mr. Deal will be here soon, so I will now introduce the 
gentleman from Michigan, Mr. Rogers.

  OPENING STATEMENT OF HON. MIKE ROGERS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Rogers. Thank you, Mr. Chairman. I will be brief. I am 
looking forward to the testimony.
    I do get concerned about the direction we take. The average 
biologic takes about 15 years in development, $1.2 billion to 
develop. And the harder we make it for people to go through 
that process, or at least some degree of certainty to recoup 
their losses and their investment, it concerns me greatly. I am 
not sure that we are going to insert any great innovation to 
cheaper and better and quality drugs.
    My other great concern in the bill is that we haven't 
really addressed the security issue. A lot of these biologics 
now are using twin-strand therapeutic issues. Bryson, abrin, 
viscumin, things that were highly regulated by the FDA; and if 
we had to throw this open, I get very, very concerned about how 
we keep and maintain the safety and security of those 
particular agents when developing these biologics.
    So I have a lot of questions today, and I look forward to 
the debate and I know all our intentions are good; and 
hopefully at the end of the day, we will do no harm before we 
seek to do any good.
    Thank you, Mr. Chairman. I yield back.
    Mr. Pallone. Thank you, and I recognize Mr. Waxman.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you, Mr. Chairman, for calling this 
hearing today.
    Biotech drugs, also known as biologics, have emerged as one 
of the fastest-growing categories of drugs. Some of these 
medicines are literally lifesavers for people with a host of 
serious diseases, but these products are also among the most 
expensive medications for U.S. consumers. Patients who need 
these drugs often have to pay hundreds of thousands of dollars 
a year for them. Although it is true many people have insurance 
to cover the cost of these drugs, those who have 20 percent co-
pays still owe thousands of dollars a year, and it is obviously 
a very serious problem for the 47 million uninsured. They have 
to pay the whole price. More likely than not, they go without 
the lifesaving drugs.
    The rapidly escalating cost of biotech drugs will have 
drastic consequences for the healthcare system. These medicines 
are steadily driving up the cost of Medicare, Medicaid, and 
health insurance overall. This is a burden that cannot be 
sustained. The Federal Government will be hard pressed to 
afford it. The private sector is already pleading for relief.
    I have long believed that marketplace competition is the 
best way to bring down drug prices, but unless the FDA is given 
the clear, legal authority to approve copies of biologics, 
there will be no generic competition for biotech drugs, leaving 
employers, insurers, and the Federal Government to pay the 
staggering monopoly prices we have today.
    Earlier this year, Mr. Chairman, you and I and some of our 
colleagues introduced the Access to Lifesaving Medicines Act. 
This bill ensures only safe and effective biologics will be 
approved. It gives FDA complete discretion to require a full 
complement of testing, including clinical testing on the 
product, if FDA believes that is necessary to require tests. If 
FDA does not believe it is necessary is only another way to 
delay generic competition.
    There are a lot of issues to be discussed here, patient 
safety, intellectual property rights, the incentives for 
innovation to name a few; but I would like to note that since 
we first introduced this bill the debate on these issues has 
dramatically changed. At first the opposition claimed there 
should not be an abbreviated pathway for generic biologics at 
all. Now, the question that everyone is asking, even the 
opposition, is not if but how to establish a pathway. It is 
important to note there is a very broad base of support for 
this legislation. There is currently a wide-ranging coalition 
of over 40 consumer groups, health plans, and businesses who 
have endorsed the bill. With so many supporters of the bill, we 
had some hard decisions about our witnesses today and we 
obviously could not have all of them present. So I would like 
to ask unanimous consent to add to the printed record the 
written statements of some of these groups that could not be 
here today. I have statements from the AARP, the Coalition for 
Competitive Pharmaceutical Marketplace, the California Public 
Employees Retirement System, and the AFL-CIO.
    These and many other groups all recognize that the time to 
move forward with establishing an abbreviated pathway is now. 
Opponents have attempted to attack the bill by arguing 
competition will only lower prices by a small amount. Well, 
even a small amount could bring in billions of dollars of 
savings. We have to find a way to introduce competition into 
this market. We need that balance that we tried to achieve in 
1984, and we were successful at doing it, giving incentives for 
development of new products but bringing about the benefits of 
competition in the marketplace. Too often we hear now, as we 
heard in the mid-1980's, we need all the incentives. Give us a 
permanent monopoly. Don't provide competition, these 
competitors are not as good, they can't be as safe. Well, let 
us look a little bit more skeptically because those were the 
arguments we heard then. They were wrong then and they are 
wrong now. Thank you, Mr. Chairman.
    Mr. Pallone. Thank you, Mr. Waxman. Without objection we 
will introduce those statements into the record.
    Mr. Deal. Mr. Chairman, could I ask unanimous consent that 
others might introduce similar-type comments on this, any other 
member of the committee?
    Mr. Pallone. Absolutely.
    I will recognize the ranking member.

  OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Mr. Deal. Thank you, Mr. Chairman. This morning's hearing 
addresses an exciting and changing realm of the pharmaceutical 
industry. The biologic pharmaceutical market has grown 
dramatically in recent years, and the FDA has steadily approved 
new biologic medications. Growth in this market is only 
forecast to increase in the future. I am sure most members at 
this point understand that biologics have a greater complexity 
than traditional drugs, and there is not an appropriate pathway 
at the FDA for follow-on protein products. I would hope this 
hearing would help guide the committee to inform us about what 
framework would be suitable for the approval of follow-on 
products in a manner that assures patient safety because for 
me, that is the heart of this issue.
    I realize there are varying opinions along this line. Some 
contend legislation ought to mandate clinical trials while 
others feel this determination should be left to the FDA. 
Certainly we must ensure the FDA has the tools to approve safe 
and effective medications and allow them to use their 
discretion and expertise when evaluating follow-on product 
applications.
    We also ought to act in a way that will adapt to the 
changes and signs in the field of biotechnology in the coming 
years. While the Hatch-Waxman Act was passed over 20 years ago, 
legislation has largely stood the test of time and provided a 
workable solution to get low-cost generic products to 
consumers. As the biologic drug market continues to grow and 
the science advances, legislation should be able to accommodate 
those changes, not hinder them, recognizing that while the 
science may not be there today, it could be tomorrow.
    One of the most difficult aspects of this issue is to 
provide a balance between incentives for innovation while 
allowing similar lower-cost products to come to market. Hatch-
Waxman provides these incentives for innovation in the form of 
market exclusivity and patent term restoration. As we strike 
this balance, I believe we do need to provide some period of 
market exclusivity as an incentive for innovation while 
ensuring that the judicial process and patent litigation can be 
resolved in a fair and timely manner. Other countries are 
already acting on this issue, and the Congress needs to provide 
a pathway for the approval of follow-on biologics in this 
country. We have an opportunity to provide patients access to a 
lower cost alternative for their needed medications. While the 
fund is unclear, the degree of savings that could be achieved 
with a follow-on protein product for status quo is no longer 
acceptable and ignores the possibilities presented by generic 
biologics. By no means does the committee face an easy task. 
This is a complex subject, and we must wrestle with a number of 
scientific, regulatory, intellectual property, and safety 
issues. However, I do believe we can resolve and balance these 
issues in order to provide patients' access to safe, lower-cost 
medications.
    Thank you, Mr. Chairman. I will yield back my time.
    Mr. Pallone. Thank you. I recognize our vice chair, Mr. 
Green.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman, for holding the hearing 
on follow-up biologics and the issues we must consider for 
developing a pathway for regulatory approval of biosimilars. 
This extremely complex issue and whatever way we resolve it 
will have significant implications for employers, innovators, 
generic industry, and most importantly, the patients who depend 
on these life-improving and lifesaving therapies. There is no 
question we have to get this right, and this hearing represents 
a good first step toward the goal by giving Members a chance to 
dig deeper into this issue and weigh the risk and benefits of 
any movement forward on biosimilars.
    I think we can agree that there needs to be the regulatory 
pathway in this country to follow-on biologics. Canada, the 
European Union, and Australia each put in place pathways for 
the approval of follow-on biologics.
    We have also recognized the undeniable fact that biologics 
are very different from small molecule drugs and present unique 
concerns about safety and effectiveness. Unlike small molecule 
drugs, biologics are created using living cells that are 
intended to imitate proteins that will naturally occur in the 
body if the patient were healthy. The time and expense that 
goes into making biologics is much greater than the process of 
manufacturing a small molecule drug. So it is no surprise that 
these therapies are quite expensive for consumers and 
purchasers. I share the goal of lowering patients' cost of a 
follow-on pathway but not at the expense of those same 
patients' safety and not if it results in stifling the 
innovation that would produce new, more effective therapies and 
potentially a cure for the incurable diseases we see too many 
of our family members and neighbors fight day in and day out.
    The issue of drug safety is at the heart of this debate and 
the primary reason why I co-sponsored the legislation sponsored 
by my colleague from Washington, Jay Inslee. We all seem to 
come to the same conclusion that an exact replica of a biologic 
product cannot be made. The questions remain what effect does a 
small change in the amino acid sequence produce and is that 
effect large enough and concerning enough to warrant additional 
clinical trials before the follow-on biologic is available to 
the public? Can we in good conscience consider these follow-on 
drugs safe if they have never been tested on a human 
population? Several of my colleagues will certainly reply that 
the FDA is equipped to make that decision on a case-by-case 
basis and that we shouldn't be legislating science. I have no 
doubt the FDA has top-rate scientists on its payroll and are 
more than capable of making these decisions. But it would be 
disingenuous for us to point to the Vioxx and Ketek and why we 
need drug safety reform at FDA and in the next breath give FDA 
carte blanche authority to approve any follow-in biologic 
without some sort of clinical trials for safety and 
effectiveness.
    We also need to make sure we don't cut off our nose to 
spite our face in this debate. Biologics offer tremendous 
promise in the treatment of disease, but there are too many 
patients out there waiting for the improved treatment or cure 
that can only be achieved through innovation. My concern is we 
will rush to facilitate copies of old therapies at the expense 
of new therapies. Any action by this committee is to balance 
the desire to lower the cost of biologics with the need to 
preserve the incentives for innovation so that more Americans 
can benefit from the therapeutic promise of biologic products.
    Mr. Chairman, I hope the committee will keep this delicate 
policy balance at the forefront of the debate as we move 
forward, and again, I would like to thank our witnesses for 
appearing today; and I yield back my time.
    Mr. Pallone. Thank you. I recognize my colleague from New 
Jersey, Mr. Ferguson.

 OPENING STATEMENT OF HON. MIKE FERGUSON, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Ferguson. Thank you, Mr. Chairman, and thank you for 
holding this hearing.
    The creation of a pathway for the approval of follow-on 
biologics is really a tremendous opportunity, and it has to be 
done with a great deal of thought and with thorough 
consideration for all of the potential risks and benefits that 
might come with such a pathway; and it has to be done with 
obviously a great deal of scrutiny and a great deal of 
thoughtfulness.
    It is a great opportunity but is one that has to provide 
the framework to ensure that the public is not placed in danger 
by being exposed to replicas of these complex biologics that 
haven't been thoroughly vetted for safety. We must ensure that 
the approval of follow-on biologics is based on the same 
rigorous standards of safety and purity and potency that is 
applied by the FDA for the approval of the original biological 
product. I think common sense would dictate that.
    Clinical trial data and evidence are vital for establishing 
the safety and efficacy of highly complex biologic products. 
Testing has to be done to avoid putting patients at risk for 
effects of an adverse immune system response. In addition to 
safety, we also have to handle this opportunity correctly so as 
not to risk the development of future lifesaving therapies. We 
must include proper protections to foster innovation and 
further secure our position as the world's medicine chest, 
leading the world of lifesaving therapies to humanity's most 
horrific diseases. The creation of a pathway for approval to 
follow-on biologics is laudable, but we should not rush to 
create a pathway while being blinded by potential savings from 
follow-ons. We shouldn't rush to save a buck and put people's 
lives in danger.
    A recent analysis from the healthcare research firm, 
Avalare, finds that follow-on biologics will save about $3.6 
billion over 10 years. Now, $3.6 billion is a lot of money. It 
is considerable, but we have to ask the question of what is the 
cost of those savings?
    Mr. Chairman, we have a great opportunity but also a 
tremendous responsibility. Today is the first step toward 
taking on that responsibility and taking advantage of this 
opportunity. I look forward to working with you and the others 
on this committee to make sure that we get this right. And I 
yield back.
    Mr. Pallone. Thank you. I now recognize the chairman of our 
full committee, Mr. Dingell.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Chairman Dingell. Thank you for holding this hearing. It is 
important. We are here to discuss the anticipated impact of a 
safe and equitable biosimilar policy in the United States. When 
the Congress granted the Food and Drug Administration the 
authority to approve generic versions of pharmaceuticals in 
1984, we could not have foreseen the need for a similar pathway 
for generic biologics. Since then, the biotechnology industry 
has grown tremendously, and a number of biological products are 
on the market, treating a variety of medical conditions 
including life-threatening illnesses such as cancer, multiple 
sclerosis, diabetes, and HIV/AIDS. In some instances, these 
biological products are the only available therapy. In others, 
biotechnology represents a clear clinical advantage over all 
other available therapies. As this industry continues to 
discover potentially lifesaving therapies, more patients will 
depend on these products. Unfortunately, not all patients can 
afford these needed therapies and must therefore forego needed 
treatments. We must find a way to ensure greater access as this 
science progresses. There is broad agreement that we should 
create a pathway for biosimilars.
    As we explore this idea, it is necessary that our solutions 
are grounded in science and fair to consumers. Innovators as 
well need financial stability to sustain their research into 
groundbreaking therapies. One issue that confronts us now as 
policymakers is the science behind biosimilars. What standards 
will ensure that the generic biologics are as safe as the 
original products? How will they function in the human body? 
Should clinical trials be required for approval of biosimilars? 
Can a generic product be created that is genuinely 
interchangeable? Can and should a manufacturer of a biosimilar 
product duplicate the innovator's manufacturing process to 
avoid potentially adverse reactions? Patients' safety must be 
our guiding principle in searching for an appropriate pathway.
    I am pleased that this hearing is being held today. I look 
forward to the testimony of our witnesses as well as the input 
of our members. It is my intention to work with my colleagues 
on the committee to craft a sensible and fair biosimilar policy 
and to work with my colleagues to achieve this goal in the 
110th Congress. Your efforts this morning, Mr. Chairman, and 
this hearing is a very important part of our effort in that 
regard. Thank you.
    Mr. Pallone. Thank you, Chairman Dingell. Mr. Murphy.

   OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Murphy. Thank you, Mr. Chairman. This hearing again 
points out the cycle of the issues Congress must deal with. We 
want medications that will save our lives, enhance our lives, 
and also treat disease. In order to do that, we need research 
and development work which costs billions of dollars. Clinical 
trials must be undertaken in a scientifically balanced and 
reliable fashion, that we want Government agencies such as the 
FDA to review them carefully to test the products while they 
are trying to balance the pressure to get drugs to the public 
and the market in order to save lives and treat disease but at 
the same time having pressure on them to make sure they test 
them for all the safety factors. All this comes in the context 
of the public's call for affordable drugs because what good is 
a drug to treat a disease if you can only window-shop that 
medication and cannot really use it.
    And so we are here dealing with the issue of generic or 
biosimilars, to cut costs to provide some market competition, 
to drive costs down, but make sure that the companies have 
enough money left at the end for their research and development 
which, of course, takes us back to the beginning of this whole 
cycle. It is a matter that Congress constantly must deal with 
that is an important part of our role here. The issues that we 
must deal with in any of these bills that deal with biosimilar 
drugs is to make sure that we do have portions in them that 
drugs do not get to market unless thorough testing is part of 
that and to make sure throughout this whole process that we are 
dealing with safety, affordability, and continuing on ways that 
maintain the research track which has given us so many 
medications which have saved our lives.
    In all of this, I hope we continue to focus on patients as 
we move through healthcare issues such as these that emphasize 
patient quality, patient safety, and patient choice. These 
biosimilar drugs would provide all three of those if we do this 
right. So I am looking forward to the comments from the 
panelists today.
    Thank you, Mr. Chairman. I yield back.
    Mr. Pallone. Thank you. And now I recognize the gentlewoman 
from Colorado.
    Ms. DeGette. Mr. Chairman, I think we all have the same 
goals of finding the balance, and I am looking forward to 
hearing the testimony so I will waive my opening statement.
    Mr. Pallone. Thank you. The gentlewoman from Tennessee.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman. I do want to thank 
you for holding the hearing and to our witnesses that will be 
with us today.
    We have all talked about the complex issue that follow-on 
biologic medications present because they are similar, because 
they are not identical like a generic drug; and so we do have 
to carefully consider the standards for approval, the potential 
of risk that are in that approval pathway.
    When the healthcare costs are skyrocketing, and we hear 
this every time we come in for a committee hearing, we know 
that people are looking for new options for lowering drug 
costs; and we do know that patient safety has to be a priority. 
And Mr. Chairman, I hope that we will continue our discussion 
on this issue at another time and look at the intellectual 
property protections and infringements that may be there and 
the need for recognition of that as we view what is going to be 
a follow-on process.
    We had the hearing a few weeks back with the FDA 
Commissioner von Eschenbach, and Ketek, the drug that is there 
to fight the bacterial infections, the side-effects that were 
there with the clinical trials, the problems that existed. So I 
think it is interesting that we are looking at a follow-on 
biologic approval pathway that would not require further safety 
testing.
    So I am looking forward to the discussion today. I am 
looking forward to what we set as a pathway and hearing from 
our witnesses and having a discussion not only on the issue of 
safety which is before us today but also the scientific 
liability and legal consequences that may be a part of this 
process, and I yield back.
    Mr. Pallone. Thank you. The gentlewoman from California, 
Mrs. Capps.

   OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Capps. Thank you, Mr. Chairman. In 1984, Congress 
passed a bill that created a pathway for generic versions of 
traditional chemical drugs. It was a difficult and contentious 
time. But we have seen over the past 23 years how effective 
this has been on accessibility to medications and lowering drug 
prices, most importantly, providing continued incentives for 
drug innovation without compromising public safety.
    So here we are in 2007 looking at a way to create a pathway 
for generic versions of biologic drugs, and we are now tasked 
with preserving the same goals of innovation and safety. 
Supporting innovative research into new lifesaving medications 
is vitally important. I know this especially because my State 
of California is such a world leader in biotechnology. I have 
been impressed with how important it is that we make sure to 
address patient protection and market exclusivity. However, it 
is extremely important also that we improve patients' ability 
to afford lifesaving medications. Quite frankly, with no 
competition on the markets, biologics remain out of economic 
reach for most of the people who need them.
    I hope to hear today from witnesses on how we can balance 
innovation with patients' needs for cheaper, more accessible 
drugs. Just as for generic chemical drugs, generic biologics 
have the potential to reduce costs for consumers. But we also 
have to ensure that as we reduce drug prices, we maintain 
safety and effectiveness. Recent drug recalls highlight the 
importance of FDA's role in ensuring the safety of our drug 
supply. We can't stress this point enough. So I look forward to 
hearing about FDA's ability to assess follow-on biologic 
safety. Also, I hope to hear more about the FDA's capability to 
determine whether clinical trials may be necessary to determine 
if the drug is safe for the public and in what way they can be 
conducted. Scientific discovery has been moving at an 
astronomical pace, and we in Congress need to encourage it as 
much as possible. However, we also need to ensure that these 
discoveries reach those who would benefit from them and that 
the treatments are safe and effective.
    I look forward to listening to today's witnesses as we 
explore this very important topic. And I yield back the balance 
of my time.
    Mr. Pallone. Thank you. Dr. Burgess.
    Mr. Burgess. Thank you, Mr. Chairman. I will waive my 
opening statement and reserve time for questions.
    Mr. Pallone. Next we have Ms. Solis.

 OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Solis. Thank you, Mr. Chairman. Thank you for holding 
this hearing today as we begin the discussion on whether FDA 
has the authority to approve similar versions of biologic 
medicines. I would like to thank my colleagues, Representatives 
Waxman, Inslee, Baldwin, and Green for their leadership on 
follow-on biologics or biosimilars. Recent scientific and 
technological advances have led to the development of biologic 
medicines which have great potential to address numerous 
diseases, including diabetes, cancers, HIV and AIDS, all of 
which affect many underserved communities, including the one 
which I represent.
    The strides we have made in science are exciting. The 
manufacture of biologic medicines has the potential to save 
millions of lives, and biologics account for approximately $30 
billion in sales. However, the cost of developing and 
manufacturing these biologics are extremely high; and the 
average cost of a 1-day supply of biologic medicines is $45. As 
a result, the cost for patients, insurers, private companies, 
and Government payers are quickly growing. And I am very 
concerned about the high cost of these medicines, especially 
the cost of those treatments for many who lack healthcare 
insurance or who are underinsured. We must strike a critical 
balance between patient safety and patient access to lifesaving 
medications.
    I am committed to ensuring that all people have access to 
affordable medicines that are safe and effective. Despite the 
differences between chemical drugs and biologics, I believe 
that there is a way to provide patients with generic biologic 
medicines without compromising safety. The scientific experts 
at FDA should be allowed to have flexibility to determine what 
clinical tests are required, and we must find a balance to make 
sure that new medicines continue to be developed.
    I look forward to hearing from our witnesses. I yield back 
the balance of my time.
    Mr. Pallone. Thank you. I now recognize the gentlewoman 
from New Mexico.

 OPENING STATEMENT OF HON. HEATHER WILSON, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW MEXICO

    Mrs. Wilson. Thank you, Mr. Chairman, and thank you for 
having this hearing. I think we all recognize that there are 
some very difficult balances here. We all want a path or some 
kind of pathway for generic biologics. We are all concerned 
about safety, and of course we need to protect intellectual 
property rights and give predictability to investors so that we 
will allow and encourage continued innovation in the future.
    And I think there is probably also general agreement that 
the certification process for saying that something is 
essentially identical is much more difficult in this case 
because we are talking about living organisms. We are not 
talking about a chemical compound. Products made from living 
tissue use proteins to change the course of a condition and 
have a therapeutic effect on a disease. This is very different 
from dealing with chemical compounds, and I think all of us 
recognize the very difficult balances we are going to have to 
strike here and what was difficult with the generic drug law, 
as my colleague from California mentioned, what was very 
difficult at that time will be multiplied tenfold in getting 
this right because the compounds are quite different and the 
legislation that addresses this will be a very difficult 
balance to strike.
    Nonetheless, I commend the chairman and members of his 
committee for their determination to tackle this issue to see 
whether there is something we can do so that we create a 
pathway for generics that might be at less cost for a new class 
and a new kind of therapy in the area of medicine.
    Thank you, Mr. Chairman.
    Mr. Pallone. Thank you. I recognize the gentleman from 
Utah.

  OPENING STATEMENT OF HON. JIM MATHESON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    Mr. Matheson. Thank you, Mr. Chairman. I think it is very 
important that we are talking on this issue, and I am pleased, 
Mr. Chairman, that you are conducting this hearing. I think 
this is a great opportunity for the legislative process to 
produce a good result because this is a complicated issue. 
There are some different pieces of legislation that have been 
introduced now that kind of lay down some different points of 
view on the issue. But my sense, having met with a number of 
stakeholders over the last few weeks about this, is that there 
is a reasonable solution; and if we work in a comprehensive and 
bipartisan way, I think that that reasonable solution will be 
attained and I think we can build consensus.
    I look forward to participating in this hearing today and 
in the future hearings and being part of driving towards a 
reasonable solution.
    With that, Mr. Chairman, I yield back the balance of my 
time.
    Mr. Pallone. Thank you and I now recognize our ranking 
member of the full committee, Mr. Barton.
    Mr. Barton. Thank you, Mr. Chairman. I will put my full 
statement into the record. I think this is an important 
hearing. It is a new subject and something that we need to get 
right, we need to get right on a bipartisan basis, and I look 
forward to the testimony and the work product that follows.
    [The prepared statement of Mr. Barton follows:]

  Prepared Statement of Hon. Joe Barton, a Representative in Congress 
                        from the State of Texas

     Mr. Chairman thank you for holding this hearing. The issue 
of follow-on biologic products has been the source of great 
debate.
     This is an important, but very complex issue. Some have 
suggested rushing the legislative process and include follow-on 
biologic legislation on the reauthorization of the Prescription 
Drug User Fee Act. I think that this is an imprudent course of 
action and does a disservice to the deliberative nature of our 
committee. To do so will result in policy that is not fully 
vetted and the unintended consequences of our actions in this 
case could risk lives.
     I believe it is important that the terminology we use this 
debate be accurate and precise. Generic biologics are not on 
the immediate horizon; the science just isn't there. Some have 
coined that term for use in this debate, but it not accurate 
and muddies the waters of our discussions. Generic denotes that 
the products are the same and can be freely substituted. 
Follow-on products are not the same and can have different 
characteristics that could result in different safety and 
efficacy profiles.
     No one should have a patent in perpetuity. As we have seen 
with the Hatch-Waxman law of 1984, competition in 
pharmaceuticals can lead to lower prices without jeopardizing 
research and development into new products. follow-on biologic 
competition could be a good thing if done right. I believe we 
can and should create a pathway for follow-on biologic products 
to be approved without having to undergo the full blown 
biologics license application process. However, any abbreviated 
pathway must have two important elements.
     First, we should not short-change safety in the interest 
of brevity. These are fundamentally different products. We will 
have two witnesses today who will testify to the science of 
these biologic products. The development of living organisms 
into a therapeutic treatment safe for humans is not an easy 
task and it is difficult top replicate. Most importantly, 
however, is that any minor modification to the sequencing of 
the properties of the product could have a profound effect on 
the safety profile of the product. For generic drug 
applications under section 505(j) of the Food, Drug, and 
Cosmetic Act, applicants are not required to undergo clinical 
tests to be granted approval. This can be done because the 
generic applicant is producing essentially the same product 
that is bioequivalent. Some have suggested that concept be 
translated to the approval of follow-on biologic products. 
Chemical and biologic products are truly apples and oranges, 
and we should not minimize these differences or complexities of 
the issues before us today.
     I am looking forward to the testimony today that can shine 
some light on the true scientific and safety issues this 
committee should consider when drafting legislation to approve 
follow-on biologic products.
     Ensuring safety is our utmost priority, but we must also 
consider the consequences our actions will have on the 
development of new drugs and cures that have yet to be 
discovered. Two weeks ago, we heard the testimony of Jim Thew, 
who suffers from Lou Gehrig's disease. Only one drug is 
available to treat this devastating disease, and that drug is 
over 10 years old. We cannot close the door to innovation 
because by doing so we will be closing the door to hope for the 
millions of Americans who want and need the next breakthrough 
therapy that will treat Lou Gehrig's, cancer, and a host of 
other diseases.
     To protect innovation and medical progress we must protect 
the incentives necessary to induce investment in these areas. 
Allowing a follow-on to be approved a few short years after the 
innovator product may reap some short-term savings, but it will 
have a devastating impact on American companies' ability to 
produce new therapies. We can not be short-sighted in this 
debate. Like every other industry, intellectual property must 
be respected and protected. If it is not, we will see a 
dismantling of the biotechnology industry in this country, 
capital will find its way into other industries, and sick 
Americans will get sicker.
     Again, it is important to note that we are not talking 
about products that are the same as we have for chemical drugs 
approved under the Food, Drug, and Cosmetic Act. These 
therapies are different and thus the paradigm established under 
Hatch-Waxman of a short exclusivity period followed by patent 
restoration may not be appropriate. We must recognize this 
fundamental difference and build a regulatory scheme that 
accounts for it. If a follow-on manufacturers only has to 
develop a product that is comparable and not the same it may be 
easier to engineer around patents. I look forward to hearing 
from our witnesses on what should be the appropriate incentives 
for continued innovation.
     Again, Mr. Chairman, thank you for holding this hearing. 
We have a distinguished panel of witnesses. I urge all Members 
wto take an active, engaged role today because these are 
complicated issues. This committee has a history of being 
deliberative busy, we should develop policy based off the facts 
at hand. This is especially true when we are talking about 
products that are so important to the well being of millions of 
Americans.
                              ----------                              

    Mr. Pallone. Thank you. I recognize the gentlewoman from 
Wisconsin.

 OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF WISCONSIN

    Ms. Baldwin. Thank you, Mr. Chairman, and thank you to the 
witnesses for joining us today. I am really pleased that this 
subcommittee is taking up the issue of creating a pathway at 
the FDA for approval of biosimilars, and as many have noted 
this is a complicated issue full of highly technical, 
scientific terms and procedures. The fact that we have so many 
ways to refer to this issue, biosimilars, biogenerics, generic 
biologics, follow-on biologics, illustrates just how 
complicated the issue is and how it clearly warrants thoughtful 
and thorough discussion. So I appreciate the opportunity to 
delve into some of the details.
    Mr. Chairman, I believe that we should have an established 
process by which the FDA can approve biosimilar products. 
Biologics have shown great promise in fighting a variety of 
diseases and conditions, and I believe that we must ensure that 
patients have access to affordable treatment. That said, I 
think we also need to remember those patients who are still 
waiting for their miracle treatment to be discovered. I do not 
think that we should compromise future innovation so that we 
can save a finite amount of money today. There is a balance 
that can and actually must be struck between mere term cost 
savings and future innovation. I was proud to join my 
colleagues, Mr. Inslee and Mr. Green, in introducing a bill 
that seeks to strike this balance. The bill establishes a 
pathway, ensures that patient safety protections are in place, 
yet gives the FDA flexibility in this area and provides 
incentives for scientists to continue innovating and developing 
potentially lifesaving treatments.
    Mr. Chairman, I think one final thing for us to remember is 
that the majority of biotechnology companies are not mega-
corporations or even profitable businesses. The majority of 
biotech companies are small, private startups who are years 
away sometimes from even having a commercial product. They are 
made up of a few highly talented scientists who have made a 
discovery and who want to continue to explore and refine this 
discovery in hopes of one day curing cancer or finding a 
treatment for Alzheimer's or growing new skin for burn victims 
or responding to a host of genetic disorders for which there is 
no treatment or cure or creating a better treatment for a 
disease that already has a treatment, like diabetes. We should 
encourage this innovation so that future patients can have 
access to needed treatments just as we should ensure that 
current patients have access to affordable treatments today.
    Thank you, Mr. Chairman.
    Mr. Pallone. Thank you. I recognize the gentlewoman from 
Oregon.

 OPENING STATEMENT OF HON. DARLENE HOOLEY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Ms. Hooley. Thank you, Mr. Chairman. The Drug Price 
Competition and Patent Term Restoration Act of 1984, better 
known as the Hatch-Waxman, was instrumental in expanding access 
to pharmaceuticals by instituting competition and thus lowering 
prices. I believe it is important for Congress to examine the 
creation of a pathway to allow the Food and Drug Administration 
to approve follow-on biologics. Creating a pathway for follow-
on biologics are generally much more complex than the small-
moleculed generic drugs that have been approved under the 
process established by Hatch-Waxman.
    First and foremost, as we discuss the creation of a follow-
on biologics pathway, safety must obviously be our No. 1 
concern.
    Second, Congress must ensure science and scientists guide 
the approval process. Hatch-Waxman struck an appropriate 
balance between expanding access to affordable generic 
medications while still encouraging innovation. Biologics have 
provided some extraordinary pharmaceutical breakthroughs that 
have made a real difference in the lives of people. However, in 
part because of that complexity and the very high cost of 
bringing biologics to market, they are often extraordinarily 
expensive. It is not uncommon to see treatment cost in the 
thousands and sometimes tens of thousands of dollars a year per 
patients in some biologics. The savings that a follow-on 
biologic pathway may provide to consumers and the increased 
access that would result would be an important step forward. 
However, it is also imperative that innovators be allowed to 
recoup their investment. If we do not include reasonable 
protection for innovators, we may discourage the development of 
new products in the future; and that would be even worse for 
consumers in the current situation.
    America is a leader in pharmaceutical innovation, and I am 
committed to ensuring that we continue that legacy. I look 
forward to a discussion of intellectual property and patent law 
issues raised by biosimilars, and I look forward to our 
witnesses.
    Thank you.
    Mr. Pallone. The gentleman from Oklahoma.
    Mr. Sullivan. I waive my opening statement.
    Mr. Pallone. Ms. Eshoo.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Eshoo. Mr. Chairman, thank you for having this hearing. 
I am going to place my printed statement in the record. I just 
want to say a couple of things and that is in this hearing that 
you have called, which is a very important one, Assessing the 
Impact of a Safe and Equitable Biosimilar Policy, I think the 
two words that are really the operative words are safe and 
equitable. And we are going to explore that today. I am 
troubled by different parts of Mr. Waxman's bill. He has always 
been thoughtful when it comes to issues relating to the FDA. 
The quarrel here is not pathway. Everybody is for a pathway. I 
think everyone that has spoken has used that word in their 
opening statement. We agree on that. Do we all want lifesaving 
drugs and processes to continue to help save people's lives and 
improve their lives? Everybody wants that. So there isn't any 
disagreement about that. How this is done is really the rub of 
the whole debate, and that is what we have to explore. I have 
really never seen in legislation that has come before this 
Health Subcommittee, since I have been on it since 1994, when a 
legislation actually defined structural characteristics. I 
mean, I thought that was the job of the FDA.
    So I am looking forward to this debate. I think we need to 
have bipartisan legislation in this area. Why? Because that is 
what the American people will ultimately have confidence in. We 
have to build that consensus. So I look forward to it. I am 
eager to hear from the witnesses and question them and thank 
you for having this very important hearing.
    [The prepared statement of Ms. Eshoo follows:]

Prepared Statement of Hon. Anna G. Eshoo, a Representative in Congress 
                      from the State of California

    Thank you Mr. Chairman for holding what I expect will be an 
enlightening hearing about a very important issue.
    The greatest advances in medicine in recent decades has 
been the development of powerful treatments and therapies for 
disease that not only treat their symptoms, but also attack 
them at the molecular level. This is made possible by 
biotechnology.
    We've mapped our own genome and are developing an 
understanding of how deadly diseases like cancer, diabetes, 
HIV, and heart disease actually attack the body and its organs.
    Biotech researchers are able to analyze the mechanisms of a 
disease, understand how it functions, and create 
countermeasures that can cause the disease to stop reproducing, 
attack itself, or starve it for nutrients. Other biologics help 
the human body develop an effective response or, in some cases, 
repress an overactive immune response.
    This research is cutting edge, it's risky, and it's 
expensive. The biotech industry spends billions on research 
into new biologic treatments, but only a few hundred new 
biologics are currently in clinical trial, and only a handful 
of ``blockbuster'' treatments have emerged.
    An example is Genentech, which is considered a founder of 
the biotech industry over 30 years ago, and remains one of the 
largest companies in the industry. Today it has only 14 
products on the market. The vast majority of biotech firms have 
only a single product approved or a small handful in 
development, and it costs upwards of a billion dollars to bring 
a single biologic to market.
    I think it's imperative to consider this framework as we 
evaluate any proposal to allow ``copycat'' versions of these 
life-saving products to take advantage of the research and 
investment made in biotech.
    A lot of the discussion in the debate over follow-on 
biologics has focused on increasing ``access'' to life-saving 
medicine. Certainly the high cost of biologics can stress 
patients and families, insurance companies and health care 
providers. We should look at ways to make biologic products 
more cost-effective. However, simply making copies of products 
already on the market will not increase the number of biologic 
products options available to patients. There will be nothing 
to copy if we don;t ensure sufficient incentives exist to 
develop these already life-saving medicines in the first place.
    Finally, we can't lose sight of what I believe is our most 
fundamental responsibility, and that of the FDA--protecting the 
American public.
    Whatever else we do, patient safety has to remain our 
foremost objective and we shouldn't limit the FDA's authority 
to establish mechanisms to ensure the safety and efficacy of 
any medicines introduced in the market.
    I agree with those who have said that a pathway for new 
versions of biologic products whose patents have expired is 
necessary. We also should rely on sound science and develop a 
system that preserves incentives for the development of new 
therapies and cures, protects patients, and allows for 
competition.
    I look forward to the witnesses' testimony and their 
responses to our questions.
                              ----------                              

    Mr. Pallone. Thank you. The gentlewoman from Illinois, Ms. 
Schakowsky.

 OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. Thank you, Mr. Speaker. Let met take a 
second to express my thanks for your leadership in bringing 
this extremely important legislation before our subcommittee.
    Biopharmaceuticals are growing at an astonishing rate in 
the United States, almost twice that of traditional medicines. 
So as our country, this Congress, and this committee take on 
the challenge of finding cost savings in our healthcare system, 
this certainly seems like a good place to start. While opinions 
vary about the level of the savings patients and the Federal 
Government could gain from a pathway for generic biologics, no 
one seems to dispute that the potential for savings exists; and 
I think it is important to recognize that this discussion is 
taking place at the State level, too. In my own State of 
Illinois, for example, a compilation of approximately 100 
biopharmaceuticals cost $33.2 million last year and the number 
of prescriptions for these drugs rose nearly 30 percent. In 
1984, the need to bring affordable prescription drugs to those 
who need them was recognized with the passage of the Hatch-
Waxman Act which now brings generic versions of drugs to 
consumers at about one-third of the cost. Ensuring that this 
kind of access to lifesaving medicines is expanded to biologics 
is a critical goal. I think that above and beyond the potential 
for cost savings lies an obligation, one that I think no one 
would dispute, to provide Americans with effective and safe 
medications in a timely way.
    Scott McKibbin, a special advocate for prescription drugs 
for the State of Illinois, is an expert on issues relating to 
access to safe prescription drugs. He has prepared testimony 
for the subcommittee's hearing today. I would ask unanimous 
consent, Mr. Chairman, to submit his remarks into the record.
    Mr. Pallone. Thank you.
    Ms. Schakowsky. No, I wanted to submit remarks into the 
record from Scott McKibbin.
    Mr. Pallone. Absolutely. So ordered and I indicated earlier 
that we would allow members on both sides to submit additional 
statements.
    [The information appears at the conclusion of the hearing.]
    Ms. Schakowsky. Let me just finish. Mr. McKibben's 
testimony is an account of how State budgets are being 
stretched to the limit as they struggle to maintain access to 
often lifesaving biologics.
    I look forward to hearing from each of our witnesses today 
as well as working on the issue in the near future. Thank you, 
Mr. Chairman.
    Mr. Pallone. Thank you. The gentleman from Tennessee, Mr. 
Gordon.
    Mr. Gordon. Thank you, Mr. Chairman. I have a splendid 
opening statement that I am going to submit for the record. I 
think it is time to hear from our witnesses, so let me just 
quickly say that healthcare costs are rising at 7 percent a 
year, much outpacing economic growth in this country. It is 
certainly the fastest-growing part of the Federal budget. 
Probably for most families and businesses, it is probably the 
fastest-growing part of their budget. So we need to look for 
savingswhere we can, and I think generic drugs is certainly one 
area.
    However, I am concerned that follow-on biologics at this 
point cannot be safely put in that same category; but I 
compliment Mr. Waxman for putting this issue in play, and I 
agree with Mr. Matheson that after a thorough review of this 
that we can come up with a good solution here. And so I am 
anxious to hear from our witnesses. Thank you.
    [The prepared statement of Mr. Gordon follows:]

 Prepared Statement of Hon. Bart Gordon, a Representative in Congress 
                      from the State of Tennessee

    Each year, health care consumes a larger portion of the 
Nation's gross domestic product. Health care spending is 
growing at 7 percent a year--far outpacing our economic growth.
    Clearly, we must find ways to bring down the cost of health 
care. The broader use of generic drugs will surely help. But, 
sound science must support the decisions we make to ensure 
patient safety is protected.
    I have serious concerns about the assertion that biologics 
can be treated the same as chemical pharmaceuticals. Biologics 
are very different from traditional chemical drugs both in 
their structural complexity and the way they are manufactured. 
Any process for review and approval of generic biologics or 
bio-similars must recognize these differences.
    Generic chemical drugs can be examined in a laboratory with 
a simple test to show that the compound is identical to the 
brand name drug. Biologics can not be tested in the same way. 
Currently, there is no simple battery of tests to ensure that a 
generic biologic is not only comparable to the original 
biologic but can be safely substituted for the original 
biologic. We need a process of characterization of the 
biologics to ensure that the medication is what we believe it 
should be.
    The Food and Drug Administration has told Congress that it 
could be a decade or more before the science is available to 
safely approve generic versions of biologic drugs. I hope it 
will take less than a decade to develop reliable tests for 
biologic drugs. And, we should look closely at the European 
model that relies heavily on clinical testing before 
deployment.
    Mr. Chairman, I thank you for holding this hearing and look 
forward to learning more from the witnesses on these issues.
                              ----------                              

    Mr. Pallone. Thank you. I think that concludes our opening 
statements. Any other statements for the record will be 
accepted at this time.
    [The prepared statement of Mr. Towns follows:]

Prepared Statement of Hon. Edolphus Towns, a Representative in Congress 
                       from the State of New York

     Thank you, Mr. Chairman, for holding this important 
hearing today on what is truly a very complex issue.
     Advances in science during the past 25 years have resulted 
in tremendous breakthroughs in how diseases are treated today. 
Biotechnology has been at the forefront of these advances and 
holds the greatest hope for patients who suffer from 
devastating diseases such as cancer, multiple sclerosis, and 
diabetes. These biotech treatments, called biologics, are 
highly complex proteins made from living cells--they are 
fragile molecules which are thousands of times larger than the 
simple, small molecule chemical pills that we find in our 
medicine cabinets. This molecular complexity requires a costly 
research and development process that results in a high price 
for healthcare payers.
     I thank the chairman of this committee for bringing forth 
the debate on how to lower these costs and provide greater 
access to these life-saving drugs for our constituents. I 
believe that Congress should act this year to establish an 
abbreviated process for follow-on-biologics, just as we did in 
1984 for chemical pills through Hatch-Waxman. However, the 
science is different and far more advanced than in 1984 and we 
need to take that into account as we craft a new pathway for 
follow-ons. While a generic company can take a chemical pill 
and replicate its structure to make an exact copy, I understand 
the same may not be true for biologics.
     Since follow-on products will be made from different cell 
lines and produced through different processes than the 
original innovator products, it seems that there will 
inevitably be variability in any attempted copies. Given these 
differences, the traditional generic drug approval pathway 
seems inappropriate. It is imperative that the FDA know how any 
differences between biological products and processes will 
affect a patient before we allow shortcuts to be taken in the 
approval process, and I believe that clinical trials are 
crucial to ensuring patient safety. Dr. Janet Woodcock 
testified in front of the Oversight and Government Reform 
Committee last month that it will likely be a matter of 10 
years before the science is available to fully classify and 
compare these drugs. In our rush to save dollars, we must not 
ignore that there is a great deal that we do not know, and I 
look forward to learning more from Dr. Woodcock this morning.
     The issue of follow-on biologics is a very complex one and 
it would be irresponsible of this Congress to act in this area 
without knowing all of the scientific facts. We need to be sure 
that we understand the science before we rush into legislating. 
I urge the committee to do just that--take the time and not 
rush the learning process and not stick a bill onto the first 
moving vehicle.
     To balance the concerns over cost, patient safety, and 
protection of U.S. innovation, I became a co-sponsor of H.R. 
1956, the Patient Protection and Innovative Biologics Medicines 
Act. This bill was introduced by our colleagues, 
Representatives Inslee, Baldwin, and Green and takes a balanced 
approach to the issue. Any legislation we move out of this 
committee must strike the appropriate balance in getting 
follow-on biologic medicines approved and on the market, while 
at the same time providing incentives for innovation so that 
America retains its lead in the field of biotechnology and the 
next-generation of life-saving medicines continue to be 
developed.
    We are all aware of the critical problem of rising health 
costs, and the havoc it is wreaking on budgets. There is 
probably nothing more welcome in these halls than a chance to 
save taxpayers money on healthcare. Visions of dollars saved 
are a powerful motivator. My concern is that we don't stampede 
common sense in the rush to save money. Let's not, for example, 
create a bill that eliminates rewards for creating the latest, 
most ground-breaking medicines. Let's be sure to include clear 
safety requirements that are appropriate for the level of 
complexity of the different drugs. Let's allow doctors, not 
insurers, to decide which of these drugs are appropriate for 
patients. This is a new scientific arena that Congress is 
entering. Dr. Jane Woodcock testified in front of the 
Government Oversight Committee last month that it will likely 
be a matter of 10 years before the science is available to 
fully classify and compare these drugs. In our rush to save 
dollars, we must not ignore that there is a great deal that we 
do not know. In situations where we don't know, I feel we must 
err on the side of protecting patients from undue harm, and 
protecting their futures by not squelching the pipeline for new 
treatments.
    Any legislation we move out of this committee must strike 
the appropriate balance in getting follow-on biologic medicines 
approved and on the market, while at the same time providing 
incentives for innovation so that America retains its lead in 
the field of biotechnology and the next-generation of life-
saving medicines continue to be developed.
     Thank you Mr. Chairman, for holding this hearing today so 
that we all may learn more about this issue. I yield back.
                              ----------                              

    Mr. Pallone. I did want to mention without objection that 
Mr. Inslee will be joining us. He is not on this subcommittee 
but is on the full committee, so he will be joining us for 
questions of the witnesses.
    So let me move onto our first panel which just consists of 
one witness. Dr. Woodcock, if you want to come forward? 
Welcome. Dr. Janet Woodcock is Deputy Commissioner and Chief 
Medical Officer for the Food and Drug Administration. You have 
5 minutes for an opening statement which becomes part of the 
hearing record, and you may in the discretion of the committee, 
submit additional brief statements in writing for inclusion in 
the record. Right now I recognize you for 5 minutes. Thank you 
for joining us.

  STATEMENT OF JANET WOODCOCK, M.D., DEPUTY COMMISSIONER AND 
      CHIEF MEDICAL OFFICER, FOOD AND DRUG ADMINISTRATION

    Dr. Woodcock. Mr. Chairman and members of the subcommittee, 
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 not 
only relied on my experience in leading the Center for Drug 
Evaluation and Research for over a decade, but also in my 8 
years of experience in working for the Center for Biologics 
Evaluation and Research, or CBER. While in CBER, I served as 
Acting Deputy Center Director and 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 current generic drug 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 that constitute more than 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. These generics provide affordable medicines for 
millions of Americans.
    The topic for discussion today is variously referred to as 
follow-on proteins, follow-on biologics, generic biologics, 
biosimilars, and so forth. Many of these terms are very 
imprecise and confusing. Largely what the interest is is in 
copies of biotechnology-produced protein products that FDA 
calls follow-on proteins. In the U.S., proteins are regulated 
either as drugs under the Food, Drug, and Cosmetic Act or as 
biological products under the Public Health Service Act. 
Whether regulated as drugs or biological products, proteins fit 
into the category of complex molecules that can be difficult to 
fully characterize. Copies of protein products that are 
regulated as drugs may be considered for abbreviated 
application pathways that exist under section 505 of that Act. 
For the very simplest peptide products, manufacturers may be 
able to demonstrate that they contain the same active 
ingredient as the innovator product and thus may be considered 
under 505(j) which is what is commonly regarded as the generic 
drug pathway.
    In contrast, copies of approved protein products that are 
regulated as drugs would currently be considered for 
abbreviated applications under 505(b)(2), as scientific 
techniques are not available to demonstrate sameness of these 
types of molecules.
    Now, as already hasbeen said, an abbreviated pathway, 
though, does not exist for copies of protein products that are 
approved under the Public Health Service Act. FDA has approved 
several follow-on proteins under 505(b)(2) including a 
recombinant, hyaluronidase and a recombinant version of human 
growth hormone.
    We are currently preparing a guidance document on the 
general scientific framework for preparing abbreviated 
applications for follow-on proteins under 505(b)(2), and we 
expect to follow this with guidance on technical issues such as 
immunogenicity and physical characterization methods.
    FDA is frequently asked how difficult or feasible it is to 
approve a copy of an existing protein using an abbreviated 
pathway such as 505(b)(2). Simple proteins that can be 
extensively characterized by analytical and functional tests 
can often be shown to be very similar to an approved protein, 
and thus the manufacturer might not have to perform extensive 
clinical testing. However, the clinical tests needed, even for 
simple proteins, would still be more than what is ordinarily 
done for a small-molecule generic drug. In contrast, very 
complex proteins, especially those that are difficult to 
characterize functionally are more challenging. Using today's 
science, it would not be possible by using analytical and 
functional tests alone to be sure that a complex follow-on 
product was very similar to an innovator product. Therefore, 
more extensive clinical testing would probably be needed. 
However, this clinical testing might still fall short of what 
would be needed for stand-alone new drug application.
    Protein products vary in their physical complexity and how 
well their mechanism of action is understood and the relevance 
of functional tests as adequate surrogates for their effects, 
the complexity of their clinical indications, and many other 
factors. These all must be taken into account in determining 
how much additional data would be needed to be submitted in an 
application for a follow-on protein under 505(b)(2). These 
determinations require a significant amount of scientific and 
medical expertise. However, FDA is well-prepared to undertake 
these evaluations given our over 20-year history of regulating 
recombinant products.
    I will be very pleased to answer your questions.
    [The prepared statement of Dr. Woodcock follows:]
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    Mr. Pallone. Thank you, Dr. Woodcock. I am going to 
recognize myself for 5 minutes for questions, and then we will 
go around the committee; and each member will have some 
questions.
    Many people have focused on your previous testimony before 
the Oversight and Government Reform Committee which you 
reiterated in your written testimony today. Specifically you 
state, and I quote, that

    the amount and type of new data that will be needed to 
demonstrate the safety and effectiveness of a follow-on protein 
product will be influenced by the extent to which the follow-on 
protein product can be demonstrated to be sufficiently similar 
to an approved protein product to permit some degree of 
reliance on the findings of safety and effectiveness for the 
approved product.

    Now, you went on to discuss the clinical trial should not 
be conducted simply for checking a box as part of the 
regulatory procedure for FDA approval, and I am hoping that you 
can expand on these statements today. But specifically, can you 
tell me whether or not you think clinical trials should be 
required or mandatory for every follow-on protein as you used 
the term and that applies for FDA approval or do you think that 
it makes more sense to allow the FDA to have the authority to 
determine what types of studies or level of science is required 
to determine approval which is basically what Mr. Waxman has 
proposed in his legislation.
    Dr. Woodcock. With the science we have today, we are not 
able to determine everything about a protein product based on 
tests in the test tube so to speak, in the laboratory, and in 
animals. And we would foresee right now, with the science we 
have today for protein products, we would be looking at 
additional clinical trials. Depending on the situation, those 
might be very limited. They might really have to do with the 
safety issue called immunogenicity, the ability or the 
propensity of the protein to cause an immune response in 
people. That is something we really have great difficulty 
predicting just from laboratory tests, and it is influenced to 
a great extent by the kind of contaminants that are in the 
product which has to do with how the product is produced.
    Mr. Pallone. So you want the flexibility as to whether to 
have the clinical trials, depending on the circumstance?
    Dr. Woodcock. I think it needs to be considered that the 
science will advance over time. As many of the members have 
alluded to, science is advancing very rapidly. What we can do 
today is somewhat limited, but analytical and functional 
technologies are advancing rapidly and we may be able to make 
more exact comparisons in the future.
    Mr. Pallone. OK. I wanted to ask about the issue of 
interchangeability. You stated in your testimony today, and I 
quote,

    from many follow-on protein products, in particular the 
more complex proteins, there is a significant potential for 
repeated switches between products to have a negative impact on 
the safety and/or effectiveness. Therefore, the ability to make 
determinations of substitutability for follow-up protein 
products may be limited.

     That is your quote.
    Now, has the FDA ever approved a follow-on protein product 
as interchangeable with a reference product and if so, can you 
characterize these products in your ability to determine 
interchangeability? In other words, were these products simple 
or more complex molecules and depending on the level of 
complexity what levels of studies were used to determine 
interchangeability?
    Dr. Woodcock. We have not approved protein products as 
interchangeable. We have not. We have ideas, as I said. We are 
considering issuing a guidance on immunogenicity, and that 
would include this issue of switching. Immunogenicity does not 
really enter in so much with small molecules. Some small 
molecules actually do cause an immune response, but under the 
generic program that we have, they are identical. We know that 
generic copies are identical to the original copies and would 
be expected to have the same immune response. However, with 
proteins, proteins themselves, even one product, an innovator 
product, will vary slightly from batch to batch because they 
are very complex. So we don't know if you were taking one and 
if you were switching to another and you switch back and so 
forth if this might set up an immune response that wouldn't 
occur if you had just stayed on the same product all along. And 
that could be very dangerous in some circumstances.
    Mr. Pallone. OK. And then lastly I wondered if you could 
comment on whether or not you think it would be appropriate to 
have open and public procedures for all stakeholders to 
participate in the development of criteria for the approval of 
follow-on products, as well as what types of post-markings, 
surveillance, or studies should be required of follow-on 
protein products? Should the market for pre-market approval and 
requirements for post-marketing differ from follow-on protein 
products than reference or products or should they be the same?
    Dr. Woodcock. That is a lot of questions.
    Mr. Pallone. I know.
    Dr. Woodcock. We attempt to always have an open and public 
process for the scientific and technical standards that are 
used to approve products, and actually we work internationally 
with the other international regulatory bodies on standards so 
that different trials don't have to be repeated in different 
countries and so forth. So it is very important to have an open 
and public process. We have had multiple scientific meetings, 
some with various scientific bodies at the New York Academy of 
Sciences on various aspects of characterization of proteins and 
so forth and so on. So yes, it is very important that we have 
continuing, high-level scientific input and dialogue on all of 
this, including the clinical parts of it.
    Mr. Pallone. OK. Thank you. Mr. Deal.
    Mr. Deal. Thank you, Dr. Woodcock, for being here today. We 
are dealing here with two statutes, and you referenced the 
Food, Drug, and Cosmetic Act, specifically 505(b)(2) as a 
certain pathway and then of course the section 351 of the 
Public Health Service Act that I believe you say is where the 
biologics have generally been registered, is that correct?
    Dr. Woodcock. That is correct.
    Mr. Deal. Would the pathway for follow-on biologics need to 
be addressed in both of those statutes?
    Dr. Woodcock. As I said, we have already approved several 
follow-on proteins under 505(b)(2). There is a pathway already 
there. We have approved human growth hormone which is a 
recombinant product and hyaluronidase which is actually a very 
complicated protein. So that pathway is currently available. 
However, the protein products approved under 505 are typically 
only the hormones and the enzyme products. Most of the others 
are under the Public Health Service Act which does not have a 
pathway.
    Mr. Deal. So specifically as to the Public Health Service 
Act, there would need to be a pathway of some sort. One of the 
issues that we have all been concerned about is the safety and 
effectiveness of a follow-on or any product, and I believe you 
said FDA has the capacity to make those determinations. Am I 
correct that the current law does not mandate the way that you 
determine that in terms of mandating clinical trials, that that 
is simply something you have done under the auspices of 
legislation, that you have set out those kind of protocols?
    Dr. Woodcock. Under the Public Health Service Act?
    Mr. Deal. Yes.
    Dr. Woodcock. The Public Health Service Act requires that 
the products be pure, potent, and so forth and safe. It does 
not require specifically clinical trials or any given----
    Mr. Deal. But you have the ability to do those trials 
because you are charged with the safety and efficacy issue?
    Dr. Woodcock. Right, and obviously the products have to be 
safe and effective.
    Mr. Deal. Right. I want to get into a little bit of a 
detailed discussion about an area that I still don't fully 
understand. We have had private conversations and in trying to 
make an analogy to the current generic drugs, the discussion 
dealt with what FDA can do with the data from the licensed or 
patented product. And there was a distinction that you made 
between having access to the data and being able to rely on the 
data for follow-ons or for generics.
    As I understand it Hatch-Waxman allows you to rely on the 
data for abbreviated new drug applications, is that correct?
    Dr. Woodcock. That is correct.
    Mr. Deal. OK. Would you elaborate on what you need in this 
area of follow-on biologics as it relates to this already-
accumulated data? What are your restrictions and what do you 
foresee as reasonable expansions of your current right to 
either rely on or have access to the data?
    Dr. Woodcock. To explain this to the members who may not 
be--this is pretty arcane, I think. Our legal interpretation of 
the current statute that we rely on says that we rely on the 
fact of the approval of the innovator product. We are not going 
in and comparing the data that is in the application of the 
innovator product to the data that is submitted by the generic 
manufacturer, all right? So we are relying on the fact that it 
was approved, safe, and effective and we can bridge back to 
that approval by the fact that the generic small molecule is 
the same small molecule and it also is the same dosage for them 
and so forth and it is bio-equivalent, all right? So then we 
say if you meet those criteria, then the fact that we approved 
that product pertains to the generic product.
    With follow-ons, it is a little more complicated for the 
505(b)(2) world. We are also still relying upon the fact of the 
approval of an innovator product, but the follow-on protein may 
not be an exact copy. But again, we are not going in and 
looking at the data in the innovator application and applying 
it to the follow-on.
    For future products that we would look at, this of course, 
is somewhat limiting to the FDA in the fact that we can't make 
direct comparisons of perhaps the pharmacokinetics of one 
product to the pharmacokinetics of the follow-on product unless 
that is in the literature somehow or somehow otherwise 
available. So the extent to which we can approve complicated 
follow-on products is somewhat governed by the ability to which 
we can refer to and look at data about an innovator product. We 
cannot do that now.
    Mr. Deal. Thank you. My time has expired.
    Mr. Pallone. Thank you. Mr. Waxman?.
    Mr. Waxman. Thank you, Mr. Chairman. Dr. Woodcock, as I 
understand what you are saying is that it is a lot easier to 
approve the generics under the Hatch-Waxman Act because you are 
showing that it's the same drug in effect. Now we have 
something a little bit more complicated, but we shouldn't throw 
up our hands and say it is impossible because under a quirk in 
the FDA law now, you are able to approve a follow-on drug for 
some proteins that would be in that category of these 
biogeneric drugs, is that correct?
    Dr. Woodcock. That is correct. We have approved some.
    Mr. Waxman. You have approved some? So you have some 
experience. You have said to us that some of these others are 
going to be more complicated and therefore more difficult 
because the science hasn't caught up with it. The biotech 
industry argues in their testimony today that any legislation 
authorizing approval of follow-on biologics must require 
substantial pre-clinical testing and clinical studies including 
comparative clinical trials to determine whether there are 
significant differences between follow-ons and reference 
products in terms of safety and effectiveness. Do you believe 
good science will always into the future require that 
substantial pre-clinical and clinical studies include 
comparative clinical studies and effective are going to be 
required? Is that micromanaging FDA too much?
    Dr. Woodcock. I believe that there will always be 
substantial non-clinical, in other words, laboratory and to 
some extent there will be animal studies in the foreseeable 
future comparing two products or characterizing the follow-on 
product. That is just a routine standard for any drug that we 
get onto the market, as it would have very extensive testing 
before it would be put on the market.
    For 505(b)(2)'s, the extent to which clinical trials would 
be required depends on all the factors I went over in my oral 
testimony. There are a great many factors that have to be 
brought into play, and there is a spectrum of----
    Mr. Waxman. Well, science is going to evolve. Right now you 
would probably agree that there ought to be clinical trials for 
some of the biologic generics, in other cases you might not. I 
guess the question is would it be mandated that under every 
circumstance there would be a clinical trial and wouldn't that 
end up requiring unnecessary and therefore unethical trials in 
the future if we required it by statute rather than leaving it 
to FDA's discretion?
    Dr. Woodcock. Well, as we said in the testimony, requiring 
trials simply to require trials is not usually considered a 
fair use or ethical use of human subjects. We should do trials 
in people if we need information in people. Right now as I said 
for proteins, we believe we will need immunogenicity trials in 
people because we cannot predict the immunogenicity answers 
without doing human trials.
    Mr. Waxman. Do you believe it is better to have a statute 
that freezes the science as of the date of enactment or that 
gives FDA the flexibility to tailor requirements as science 
evolves?
    Dr. Woodcock. Because the science is so dynamic and none of 
us can predict where the science is going to go over the next 
decade, it is evolving unbelievably fast, obviously we all need 
to be humble before that and have a scheme that I think allows 
the science to operate.
    Mr. Waxman. You responded to Mr. Pallone that public 
process is important for establishing standards for drug 
approval. I understand you to mean general standards applicable 
to all drugs or biologics, is that correct?
    Dr. Woodcock. It depends on the question. I think it is 
very important in this area, follow-ons, that we stay up to 
date with the science; and therefore, we have a dynamic public 
process that keeps giving us the scientific input that we need.
    Mr. Waxman. Well, do you think it appropriate to always 
have a public process to establish the correct approval 
standards for each new product before FDA can take any action 
or would that cause unnecessary delays?
    Dr. Woodcock. We have not done that. For example, with the 
hyaluronidase product that we approved and so forth. So it is 
going to depend on the situation. In some cases, it might be 
desirable to have a public process because of so many open 
questions. In other cases, obviously the path will be very 
clear.
    Mr. Waxman. Well, I guess it comes down to in my mind these 
are some tough decisions. Who ought to make them, politicians 
here in Washington with Congress saying this is how you must 
decide the science or should we give you the flexibility with 
the standards and ask you to make sure the product meets those 
standards? That is what we have done with all other drugs, both 
the new drugs especially and other generics or simple or only 
has to be a copy. In this case, it is not just a copy, but the 
decision has to be made; and I would trust the FDA to make that 
decision, not Members of Congress spelling it all out.
    Thank you, Mr. Chairman.
    Mr. Pallone. Thank you, Mr. Waxman. Our ranking member, Mr. 
Barton.
    Mr. Barton. Thank you, Mr. Chairman. Dr. Woodcock, if 
currently I am a manufacturer of a biologic drug and I am 
making it in batches, is each batch identical?
    Dr. Woodcock. Not to the state that you would use for 
identical for chemical drug because we can't tell. For most of 
the complex proteins, they have a range of forms within the 
product. It isn't just one protein. There are minor variations 
in most products that are part of the product. Second, the 
extent of those variations will change a little bit from batch 
to batch.
    Mr. Barton. When you say a little bit, what percentage 
terms? Half a percent, a thousandth of a percent?
    Dr. Woodcock. Maybe half a percent or so.
    Mr. Barton. Now, will each batch have the same efficacy, 
the same result?
    Dr. Woodcock. What we do is we control variability to the 
point that the product, whether it is a drug or a biologic, 
should have the same clinical effect time after time. That does 
not mean though that that product is identical time after time. 
And that is true with any manufacturing process. You have to 
control variability down to the point where it doesn't make an 
impact on the customer.
    Mr. Barton. Well, if the patent expires on a biologic and 
the same manufacturer in the same location using the same 
equipment and the same process and the same ingredients made 
the same product after the patent expired, would that be the 
same as a generic drug for a biologic drug?
    Dr. Woodcock. The innovators continue often to make their 
products after the patent expires. They continue to market 
their products under their brand. That is still considered the 
innovator drug.
    Mr. Barton. It would not be considered generic-similar 
drug?
    Dr. Woodcock. No. Now, sometimes manufacturers take that 
product and they give it a different name and they market it.
    Mr. Barton. We understand what a generic is for a normal 
drug. We understand that for biologics, you really can't call 
it a generic but is it fair to say that it is similar to a 
generic?
    Dr. Woodcock. It would be similar to a generic because the 
doctors and patients could use it and expect to have the same 
effect as the innovator drug.
    Mr. Barton. Your standard is going to be the same clinical 
effect, then you are going to label it as a biologic-similar 
generic, generic-similar?
    Dr. Woodcock. That would be one scheme, all right? However, 
we wouldn't label as interchangeable as we already discussed, 
that one could be switched for the other unless that had been 
proven that that was safe to do.
    Mr. Barton. We are kind of going around each other here. 
What I am trying to get at, when the pharmaceutical reps come 
in to see me and I assume everybody else on this committee, 
they don't come right out and say, oh, no, we don't want the 
generic for biologics. They are not fighting that. They are 
just saying make sure you do the clinical trials, make sure 
that it has the effect, depending on the standard that the FDA 
establishes. You could make it almost impossible, you, the FDA, 
to have an equivalent to a generic drug for biologics. Do you 
understand what I am saying?
    Dr. Woodcock. I do. First of all, let me say we have 
approved several follow-on recombinant proteins under the Food, 
Drug, and Cosmetic Act already. They have very similar 
indications to all the other products that they are similar 
to----
    Mr. Barton. What I am trying to get at, and I am not doing 
it in a very efficacious fashion, but I want to hear somebody 
like yourself, the FDA, says it makes good policy sense to set 
up a scheme to do biologic follow-ons because we think it is 
possible and we think it would save consumers money if we do 
it, instead of these are too large and too complex protein 
molecules and we just don't think it makes sense because they 
are so dissimilar to regular drugs.
    Dr. Woodcock. Yes. Well, as I have said, we feel it is 
possible and we are doing it under the pathway, where we have a 
legal pathway. We have done these approvals already, No. 1. 
Number 2, however difficult it might be now for some proteins, 
it can be expected in the future as science evolves, we will be 
able to make these comparisons more readily and we will be able 
to do this more easily.
    Back in 1984 after the first of the generic drug amendments 
were passed, there was a period where there was great 
difficulty in establishing the standards and so forth. But as I 
said, we now have 9,000 generic drugs.
    Mr. Barton. What do we need to do as a Congress and this 
subcommittee to make it easier to facilitate the review and 
approval of biologic follow-ons?
    Dr. Woodcock. There is no pathway under the Public Health 
Service Act. So although there is a pathway under 505(b)(2) of 
the Food, Drug, and Cosmetic Act, and we are using that 
pathway, there is no similar pathway under the Public Health 
Service Act.
    Mr. Barton. Do you think it is possible legislatively to 
create such a pathway?
    Dr. Woodcock. We would look forward to working with the 
Congress on these discussions.
    Mr. Barton. Thank you, Mr. Chairman. That is the answer I 
wanted.
    Mr. Pallone. Thank you. Our vice chairman, Mr. Green?
    Mr. Green. Thank you, Mr. Chairman. Dr. Woodcock, since 
biologics are derived from living cells and there is always the 
chance the patient would develop an undesirable immune system 
response to a follow-on biologic, the safety issues concerned 
to me and many patients on biologic therapies already have 
vulnerable immune systems, is it correct to say that we do not 
currently have laboratory animal models that can correctly and 
reliably predict unwanted immune responses for humans?
    Dr. Woodcock. That is correct.
    Mr. Green. Within the large group of biologic products, I 
understand we know a great deal about insulin and human growth 
hormone but considerably less about other newer therapies. 
However, human insulin and human growth hormones, so-called 
simple proteins, the following example in Europe has suggested 
that testing for a negative immunity response is critical. For 
example, and this is a very long question that I will run out 
of time just going through it, but Novo Nordisk worked to 
develop the second generation of insulin, one that would be 
fast acting to help control mealtime rise in blood glucose for 
individuals with diabetes. Two of their next generation drug 
candidates were fully characterized and both included only one 
different amino acid. During pre-clinical studies in Europe, 
Novo Nordisk pulled one candidate because of increased tumor 
potential found in rats. The other candidate, which hadonly one 
amino acid, NovoLog, which during trials was determined to have 
a safety level on par with human insulin.
    We have a second example of the European system, Omnitrope, 
a second-generation human growth. Because Europe requires 
clinical trial data for biosimilar applications, the 
manufacturer conducted a clinical trial and again, I could go 
on.
    Is there any instance in which you think a clinical trial 
to determine immune system response is unnecessary?
    Dr. Woodcock. For very short peptides which are not really 
proteins. They are very, very short, small protein-like 
molecules. That would probably be the case. However, at this 
time, as I said, for proteins we feel we would need a human 
trial for immunogenicity at the minimum because we cannot 
predict immunogenicity from the lab and animal tests. However, 
I also would like to say that a change in even a single amino 
acid is not a trivial change whatsoever. That is a very big 
change and it is easily detectible and we would know all about 
it. That wouldn't be identical to an innovator product because 
it would be an obvious change. We refer to that as a second-
generation product because it has been changed for some reason.
    Mr. Green. OK. So to answer the question, you think 
clinical trial, even those for second generation are needed?
    Dr. Woodcock. Currently for immunogenicity. Clinical trials 
might also be needed to answer other questions if there are 
remaining uncertainties. I think it is important to understand 
that there is a wide range of clinical trials. An 
immunogenicity trial can be fairly straightforward. You expose 
people to the product and you see what happens to the immune 
response.
    Mr. Green. In response to Chairman Pallone's questions 
about interchangeability, you touched on dangers that result in 
patients from switching biologic products. Given your answer to 
the question, would you have concerns with Congress allowing, 
for example, a pharmacist to dispense a follow-on product 
outside a physician's orders?
    Dr. Woodcock. The system we have right now, the States 
regulate of course the practice of pharmacy, but FDA provides a 
rating, an interchangeability rating, for products that we 
approve. And if they get that rating, that means that FDA 
thinks they are interchangeable, and often then the States will 
follow that and allow the switching at the pharmacy level.
    Mr. Green. OK.
    Dr. Woodcock. So at this point in time for proteins, none 
of those have been granted interchangeability.
    Mr. Green. And I guess our concern, we want to make sure 
the tests are done particularly on the second generation.
    Thank you, Mr. Chairman. I yield back my time.
    Mr. Pallone. Thank you. The gentleman from Michigan, Mr. 
Rogers.
    Mr. Rogers. Thank you, Mr. Chairman. I am just going to go 
down just a little bit of a different path if I may here. The 
CDC and the Department of Agriculture have deemed 44 
particularly dangerous pathogens and toxin, they call them 
select agents, like ricin or anthrax, smallpox, others I 
mentioned in my opening statement. You are aware that some of 
these biopharmaceutical companies are using some of these 
select agents in the development of their product, is that 
correct?
    Dr. Woodcock. Yes. Obviously the Government would be aware 
any time a select agent is being used in manufacturing.
    Mr. Rogers. But that is not something you regulate through 
the FDA? It is regulated through Agriculture, CDC, if they are 
going to get access and use these particularly dangerous select 
agents. Do I understand that correctly?
    Dr. Woodcock. If for research or experiments that don't 
involve humans, the FDA may not be involved, similar to what 
research goes on at universities or companies. Once 
manufacturing is leading to human trials, then the FDA is 
involved, including the manufacturing.
    Mr. Rogers. So the manufacturing side but if I am going 
through the process of developing a product, would you have 
anything to do with them gaining access?
    Dr. Woodcock. No, as I said, similar to universities or 
other sites, this is regulated by the entities you referred to.
    Mr. Rogers. And I only bring this up, I was in Libya 
recently and was at a factory where they were making, and have 
subsequently cooperated with the United States and have turned 
it over, but they were making mustard gas and they were using 
one of these 44 particularly dangerous agents to try to 
weaponize this particular agent. So it is pretty dangerous 
stuff which is why we regulate it, and you would agree that we 
need to continue to regulate that pretty closely, do you not?
    Dr. Woodcock. Certainly.
    Mr. Rogers. If we are going to expand this, I am concerned, 
how do we make sure--we go through a pretty select process now 
for these companies which following the regulation costs money, 
right, and adds to this $1.2 billion in their development. How 
is the FDA going to ensure that we do not allow these select 
agents from these products widespread use and increase the 
number of entities acquiring and using select agents?
    Dr. Woodcock. Well, first of all, let me say that the vast 
majority of biological products are not made from select agents 
or have nothing to do with select agents. What you are talking 
about is some of the vaccines and perhaps certain cancer 
therapies that may have various toxins linked to them.
    Mr. Rogers. And pain care, as well, is it not? It is my 
understanding that there are those that who working to--when 
they are talking about some pain treatments?
    Dr. Woodcock. That is possible, however----
    Mr. Rogers. Anatoxins, tetrotoxins.
    Dr. Woodcock. Right. The types of biotech products that are 
being talked about here today, the vast majority of them do not 
involve any of that, OK? That is a very small universe that I 
would think everyone would agree requires very good oversight.
    Mr. Rogers. But it is important that we keep an eye on 
those, don't you think?
    Dr. Woodcock. Absolutely.
    Mr. Rogers. And so if we are going to get into this, don't 
you think that we ought to be very careful about how we look at 
who has access to these types of select agents? It is very 
important that these biopharmaceutical companies have access 
for research on these kind of things. They can have some 
certainly medicinal effects. I guess the venom from an 
Australian marine cone snail is even used in some of these 
developments. We should encourage that but my fear is that we 
throw open the door. Is this something that the FDA has thought 
about if we go to this next generational research entities 
using these dangerous toxins?
    Dr. Woodcock. Well, let me reiterate, generally the firms 
doing follow-ons will not be engaged in R&D of that type. They 
are not going to be engaged in basic research and so forth. 
They are going to be focused on making copies of these existing 
products.
    Mr. Rogers. But in order to do that you would have to have 
these select toxins if that in fact is a component----
    Dr. Woodcock. If it is a component, yes, and that can 
exist. It is a very small universe and requires and has very 
special controls on it.
    Mr. Rogers. It is a small universe now but if we go to 
generics just by definition, won't it be a larger universe?
    Dr. Woodcock. Yes, I can't predict where the market--it 
depends on how attractive the particular agents are for 
copying.
    Mr. Rogers. In the average time of that 15 years and $1.2 
billion, how much of that was FDA or Government money, on the 
average in the development of a biotech drug? Does the FDA give 
them money?
    Dr. Woodcock. No.
    Mr. Rogers. So pretty much all of that money is private-
industry generated, and wouldn't you think it is important that 
when we go through this we should try to find some answer here 
but shouldn't we protect that private investment of $1.2 
billion? There's not enough money in the world for us to come 
up with that $1.2 billion?
    Dr. Woodcock. Right. I think that is one of the tasks 
before Congress.
    Mr. Rogers. Thank you, Mr. Chairman.
    Mr. Pallone. Thank you. The gentlewoman from Wisconsin.
    Ms. Baldwin. Thank you, Mr. Chairman. Dr. Woodcock, we have 
certainly heard from some innovators that because they make 
manufacturing changes to their products, sometimes without 
clinical trials, sometimes with, that perhaps the logical next 
step is that we could allow generic companies to make 
biosimilars without requiring clinical trials. But I wonder if 
there is an equivalency here because sometimes the simple 
manufacturing changes by brand manufacturers, like changing a 
filter, for example, are these the same as the type of changes 
that can be anticipated and I think expected of a follow-on 
biologic company that does not have access to the original cell 
line or the original manufacturing process? I wish you would 
speak to that.
    Dr. Woodcock. There is obviously a great spectrum of 
changes that could be made to a product, and manufacturers 
frequently make small changes to their production process. They 
often have to do extensive testing, but it is usually not to 
human testing but it might be very extensive laboratory and 
sometimes, say, animal pharmacokinetic tests. And even 
sometimes change of filter has resulted in a dramatic change. 
It is very interesting.
    So change of a whole manufacturing site, a new cell line, 
and so forth is of much greater magnitude and would require 
even much more extensive testing, whether it was the innovator 
manufacturer or there was a follow-on. Change to a whole new 
manufacturer with a whole new process in cell line and so forth 
is the largest kind of change you can imagine and would require 
obviously more testing and so forth than any of these other 
kinds of changes.
    So there is a spectrum. FDA has a lot of experience 
regulating these manufacturing changes within the innovator 
industry, and we also bring that experience to bear in looking 
at a much bigger change which is a whole new manufacturer of 
the product.
    Ms. Baldwin. Just one other question. As you approach this 
topic and of course, we are delving into it more deeply and 
learning a lot about a very complex issue, but it seems to me 
that when you start out regulating something that there is very 
little experience with, one wants to start erring on the side 
of caution by going slow and engaging in strong safety studies. 
And I just would ask very generally, would the safety 
assessments that you spoke of during your testimony be as 
strict as those for the original biologic? Is that what you 
would contemplate at this point?
    Dr. Woodcock. As I said, there is a spectrum. In some 
cases, very extensive safety testing in humans may really not 
be necessary because we know enough about the product from long 
time clinical experience as you said, for example, insulin. 
There are many, many varieties of insulin on the market right 
now. In other cases, we might need extensive clinical safety 
testing. In some cases we may need human pharmacokinetic 
studies and pharmacodynamic studies and pardon me if I am 
getting into too much jargon here, but there is an ever-
widening spectrum of clinical testing that could be done 
depending on how much certainty remains. After you look at all 
the pre-clinical testing that has been done and you compare the 
two products and you say how uncertain are we? Well, if we are 
very, very uncertain still, it is going to require a lot more 
human testing. If we are pretty certain and we have a lot of 
confidence, then it will maybe require immunogenicity testing, 
perhaps not much more.
    Ms. Baldwin. Thank you.
    Mr. Pallone. Mr. Ferguson.
    Mr. Ferguson. Thank you, Mr. Chairman. Dr. Woodcock, thank 
you for being with us today. I want to read a quotation, 
something you said last week. I quote, ``Unlike small molecule 
drugs whose chemical composition can easily be determined to be 
the same as an approved product, the very nature of protein 
products makes comparison of one protein to another, including 
to establishing safety and efficacy, more scientifically 
challenging.'' I thought that was important and particularly in 
light of several questions that I have. I have several and I 
want to get through them as quickly as I can, so I would 
appreciate your brevity as well.
    Do the safety concerns with biologic products dictate the 
need for pre-market and post-market clinical studies and post-
market surveillance for follow-on biologic products as well?
    Dr. Woodcock. As I have said, there is a spectrum. 
Ordinarily we would expect some pre-market clinical studies. I 
think we may well expect some post-market clinical observations 
at least to confirm what we have found pre-market.
    Mr. Ferguson. Other countries obviously do this already. 
The U.S. in your opinion would not want to be the first country 
that leaves the door open to follow-on biologics without 
clinical trials, is that correct?
    Dr. Woodcock. We have approved several follow-on biologics 
already. They have had clinical trials. We regard that most 
proteins now would require some degree of clinical testing.
    Mr. Ferguson. Should we do it without clinical trials?
    Dr. Woodcock. We shouldn't do anything that leaves us with 
too much uncertainty about the results. We need to know that 
the products would be safe and effective.
    Mr. Ferguson. Do you think a lack of clinical trials leaves 
uncertainty?
    Dr. Woodcock. Currently it would because we can't predict 
immunogenicity.
    Mr. Ferguson. OK. Under what circumstances could the FDA 
anticipate that no clinical data would be needed to approve a 
follow-on? Is there any circumstance that you can think of 
currently?
    Dr. Woodcock. As I said, right now for peptides, which are 
related to proteins, very simple peptides are of the same 
magnitude, of size, and complexity of certain small molecules; 
and we can approve very short peptides as generic drugs without 
anything but a bioequivalence trial. Don't forget, even generic 
drugs ordinarily have a human trial of bioequivalence.
    Mr. Ferguson. But of course that sounds pretty dissimilar 
from most follow-on biologics which of course as you have said 
and others have said are incredibly complex?
    Dr. Woodcock. That is correct.
    Mr. Ferguson. Are there situations where the FDA would not 
find clinical investigation of immunogenicity warranted?
    Dr. Woodcock. We feel that for proteins right now we would 
need clinical testing for immunogenicity.
    Mr. Ferguson. In the absence of any accurate or reliable 
laboratory or animal model to predict unwanted immunogenicity 
in humans, how can we be sure that a follow-on protein product 
which has never been administered to a human being before won't 
induce some unwanted immune response?
    Dr. Woodcock. We can't be sure and that is why we need to 
do testing.
    Mr. Ferguson. OK. In looking at Mr. Waxman's bill, I see a 
listing of differences between follow-on biologic and innovator 
that would be required to be deemed to be, quote, highly 
similar by the FDA. Do you believe that Congress should be 
telling the FDA in statute how to make these comparability 
determinations right now given the technology or the 
information that we have right now?
    Dr. Woodcock. I think this is a very complicated area that 
requires some extensive discussion because of the complexity of 
proteins.
    Mr. Ferguson. Would you be satisfied or comfortable if 
Congress decided at this moment, given what we know right now, 
for the Congress to tell the FDA how and when to make these 
decisions?
    Dr. Woodcock. I think that----
    Mr. Ferguson. That is a yes or no if you can do it. I am 
almost out of time.
    Dr. Woodcock. I can't do it. Thank you.
    Mr. Ferguson. It sounds like you would not be comfortable 
right now, is that accurate? Would you have other questions, 
concerns?
    Dr. Woodcock. We look forward to working with the Congress.
    Mr. Ferguson. She is good, you got to give it to her. She 
is good. It seems to me there is a major disconnect between the 
standards that FDA imposes on innovator products and the one 
that some are espousing that we use on follow-on biologics. 
There is a big disconnect there. And if we give the FDA 
authority to approve follow-ons, what agency initiative will be 
necessary to reconcile these very two different sets of 
standards if we were to approve something say in Mr. Waxman's 
bill?
    Dr. Woodcock. Now, I can't comment directly on the pending 
legislation. I do believe as I said earlier that the science is 
going to continue to evolve, and as the Congress contemplates 
this, they should make room for evolving science because it 
will change over the decade in a dramatic way; and what we are 
capable of doing now, which is a lot but somewhat limited in 
making comparisons, is going to change over time.
    Mr. Ferguson. Thank you very much. I appreciate it.
    Mr. Pallone. I think, Dr. Woodcock, we are going to have to 
let you catch your breath or something here as we move on. Next 
is the gentlewoman from California, Ms. Eshoo.
    Ms. Eshoo. Thank you, Mr. Chairman. Thank you, Dr. 
Woodcock, for your testimony. It is instructive and 
enlightening, and if I am hearing correctly what you have 
presented both in your opening statement and in your response 
to the questions that members have posed is, well, several 
things, but that when it comes to safety and efficacy, it is 
either in the clinical trial or in the trials that the FDA 
conducts. Is that correct?
    Dr. Woodcock. We don't conduct any trials, OK?
    Ms. Eshoo. But you require them?
    Dr. Woodcock. Yes.
    Ms. Eshoo. But you require them. Now, my understanding is 
from what you have said is that there can be an immune response 
to biologics, and it seems to me that this is a key hurdle 
because when it comes to biologics that the cure can be worse 
than the disease, I mean, in the complexity of it.
    Dr. Woodcock. The proteins are much more prone than the 
small molecules to cause various types of immune responses.
    Ms. Eshoo. Now, if a biotech company notified the FDA that 
it was making changes to its cell line or its manufacturing 
process, altering the manufacturing process, what would be the 
response of the FDA today?
    Dr. Woodcock. Manufacturers are very well aware before they 
make any changes to a marketed product, or even a product 
within the investigational process, they have to get approval 
from the FDA to make those changes before those products would 
be used in people.
    Ms. Eshoo. All right. Now, if we move to the follow-on 
biologics that are obviously being proposed with all of the 
laudable outcomes of broader and more affordable access to 
them, what do you prescribe as being the process for that? I 
think that is where the disagreement comes. I really do. I 
think it is not whether it should happen or not but how to do 
it, and I think that is the rub of the debate.
    Dr. Woodcock. Well, I think I can describe what we are 
doing under 505(b)(2) right, under the Food, Drug, and Cosmetic 
Act. And what we do there is the follow-on product is required 
to submit very, very extensive physical and functional 
characterization, in other words, laboratory testing 
comparisons to the innovator product, animal testing of 
different kinds, and then you have to decide how much clinical 
testing is needed, depending on how certain you are from all 
that other work that----
    Ms. Eshoo. But you don't believe that there should be a 
shortcut where the FDA is prohibited from requiring what you 
just described, if in fact the FDA believes that it should take 
place?
    Dr. Woodcock. Many of these products will require 
additional clinical testing to give you the level of certainty.
    Ms. Eshoo. Yes. Let me ask you this. There is a provision 
that requires the FDA to find a biologic follow-on and the 
referenced biologic to contain, ``highly similar, principle 
molecular structural features if they are'', and I am going to 
read this because I am not a scientist but I have to rely on 
the exact language in the proposed legislation, two protein 
biological products with, ``minor differences in amino acid 
sequence.'' You have talked about amino acids and what they 
represent which to me is kind of scary if you fool around with 
them. Two polysaccharide biological products with differences 
in post-polymerization modifications, two glycosated protein 
products with differences in structure between them solely due 
to post-translational events, infidelity of translation or 
minor differences in amino acid sequence. This is statutory 
language. Have you ever seen this before in legislation? 
Statutory language that is that specific?
    Dr. Woodcock. It is very specific.
    Ms. Eshoo. Well, it is highly specific. Well, you are not 
going to answer this. I am just going to put this out to my 
colleagues that are still here. I don't know if you understand 
this and I don't know if you could all stand by this, but I 
don't think this is the role of the Congress. I really don't. I 
think it is up to the FDA to make the call on defining this 
particular--we shouldn't get into statutory language and be 
prescribing this.
    Mr. Pallone. Will the gentlelady yield?
    Ms. Eshoo. No, because I don't have that much time. I would 
like to but I can't. I would like to ask you, Doctor----
    Mr. Pallone. Actually, your time has run out.
    Ms. Eshoo. Did you include the minute and 2 seconds I 
didn't use in my opening statement?
    Mr. Pallone. No.
    Ms. Eshoo. No? Can I have that?
    Mr. Pallone. It would be better if you did it as a written 
question. We are going to allow written questions because she 
is----
    Ms. Eshoo. It is just in the European model and maybe 
someone else will ask that and what----
    Mr. Waxman. Mr. Chairman, I would like to ask unanimous 
consent the gentlelady be given 2 additional minutes if she 
would yield me one of them.
    Mr. Pallone. Is there objection?
    Ms. Eshoo. If there isn't, then I will just yield that time 
to Mr. Waxman because I think Mr. Gordon is going to raise the 
question about how the FDA views the European model in the 
follow-on biologic areas. So I will yield the time to you.
    Mr. Waxman. Thank you very much. Just on that one point 
where we spell out in my bill this language about deeming 
certain molecules, that is from an FDA reg and it is not 
spelling out a broad universe, it is narrowing the universe of 
possible follow-through drugs, and then once you narrow it, 
then they have to meet the second standard in the legislation 
which is that it is just clinically significant--no clinically 
significant differences in terms of safety. So it is not 
deeming something to be a generic, it is narrowing all the 
different fields to make sure it is a good candidate to be a 
follow-on biologic but we still require FDA to use that very 
strict test in your scientific judgment whether it
    Ms. Eshoo. Yes, can I just jump in here since I yielded 
you?
    Mr. Waxman. She is shaking her head yes.
    Ms. Eshoo. You are still saying it is a regulation, though?
    Mr. Waxman. Are you saying yes for the record? Am I 
correct?
    Dr. Woodcock. That is correct. See, in the original Hatch-
Waxman, you used the term same active ingredient. That doesn't 
apply here because as we have discussed extensively, they are 
not exactly the same. So the question arises, what actually 
would be a candidate for being considered under some scheme? 
How close does it have to be? That is the question.
    Mr. Pallone. OK. Time is expired, and we move to the 
gentlewoman from Tennessee.
    Mrs. Blackburn. Thank you, Mr. Chairman. Dr. Woodcock, you 
have been so patient and as you can tell, we are not scientists 
and researchers but we all want to be certain that new 
protocols and new therapies have the ability to make it to our 
patients, and we want to be certain that there is a fairness 
applied to this entire process as we look at the follow-on 
process.
    Let me come at this from a different angle. In my opening 
statement I mentioned to you intellectual property concerns, 
and I have thought, reading your testimony and we appreciate 
that coming forward to us and then I also have a May 5 report 
from CRS on the follow-on biologics that I have done a little 
bit of reading on. So let us take it this way. You have got the 
applications for approval of biologics, and these contain trade 
secrets, correct?
    Dr. Woodcock. Yes.
    Mrs. Blackburn. OK. And when you render a finding that a 
biologic is safe, pure, potent, you are relying in part on that 
trade secret data, correct?
    Dr. Woodcock. Yes.
    Mrs. Blackburn. OK. So explain to me how you think you can 
rely on the finding of one biologic to approve a second or 
similar biologic without using that trade secret data and 
without compromising that intellectual property which I see as 
a private property right.
    Dr. Woodcock. We don't have that ability now under the PHS 
Act and so we do not approve follow-on proteins under the PHS 
Act. Under the Food, Drug, and Cosmetic Act, the scheme that 
was set up under Hatch-Waxman allows FDA to rely on the fact of 
approval of prior products, and that is how we do it. We do not 
rely, we don't go in and look at the data when we approve all 
these generic drugs.
    Mrs. Blackburn. So then you feel as if you are doing that 
without exposure to the person that is the creator or the 
intellectual property holder of a specific trade secret?
    Dr. Woodcock. Well, obviously I probably don't understand 
your question fully. To my understanding, Hatch-Waxman set up 
kind of the balance between the protection of the innovator for 
a certain amount of time, patent extensions and so forth, and 
then the ability at the end of that for copies to come in and 
the FDA to have the ability to approve copies.
    Mrs. Blackburn. OK. I thank you for that. I think that for 
some of us that represent so many individuals that work in the 
innovative and creative community if you will, and in our State 
of Tennessee as we see a biotech industry that is beginning to 
grow, we look at lessons learned and places that we can go for 
lessons learned. Much of that is through our creative 
community, through our songwriters, through our auto engineers, 
people who have seen copyright infringement, who have seen 
intellectual property violations. And it raises a specific 
concern and a guard, and they highlight that with us that there 
is concern there that it is a very fine line, it is a very 
complex issue, and that we have to step very, very carefully.
    Following on with that, would you say yes or no, are we 
jumping the gun to try to create a follow-on pathway? Are we 
trying to get ahead of ourselves as Congress, as legislators?
    Dr. Woodcock. Well, I have said, FDA has approved some 
follow-on products where we have a pathway available. So 
obviously FDA believes that this is possible. It is possible to 
approve certain follow-on products. A pathway is not available 
under Public Health Service Act, so that balancing that you 
refer to, the innovation and need for innovation and the need 
for affordable treatments is something only I think the 
Congress can deal with.
    Mrs. Blackburn. OK. Thank you. I yield back.
    Mr. Pallone. Thank you. The gentlewoman from Illinois, Ms. 
Schakowsky.
    Ms. Schakowsky. Thank you, Dr. Woodcock. This is not an 
area where I have any sort of expertise, so let me ask some 
very basic questions.
    Recently you testified at a House Oversight and Government 
Reform hearing that the negative immunogenicity's response from 
Eprex may have only been discovered in a 50,000-person clinical 
trial. Has a pharmaceutical manufacturer ever submitted a 
safety study of this size?
    Dr. Woodcock. That is a good question. Possibly of that 
magnitude. That is a very, very large study and so would be 
very unprecedented.
    Ms. Schakowsky. So it is not common?
    Dr. Woodcock. No.
    Ms. Schakowsky. So if not, then what types of tests could 
have been conducted to provide FDA with relevant safety 
information for this drug or others like it?
    Dr. Woodcock. There is a wide-variety of laboratory tests 
that can be done and animal tests to look at things like 
immunogenicity, and limited human studies can be done. However, 
with most rare drug side-effects, which would require 50,000, 
100,000, 1 million people to be exposed, to find them we use 
post-marketing to evaluate that because all drugs have rare 
side-effects sometimes that are serious and to require them 
before the drug would be put on the market would mean we 
basically wouldn't have any drugs available to people. So we 
need a robust post-marketing safety system to find these things 
so that we can learn about them.
    Ms. Schakowsky. So you again have to figure out the balance 
of what you do pre-marketing and then if it is a cost benefit 
sort of thing?
    Dr. Woodcock. Yes, however, let me say that that is not the 
only kind of immune response that can be negative. You can have 
a very common immune response to a protein that can have an 
adverse affect, and that could be picked up in a small trial. 
So it really depends on what you are looking for.
    Ms. Schakowsky. OK. I know that the ranking member asked 
about different batches and whether they could be the same but 
I wanted--but most comparability decisions are confidential, 
there is one involving the biotech drug Avonex, that is public, 
and I am wondering if you could tell us a little bit more about 
what kind of changes the FDA permitted in that case without 
repeating--and this is a follow-on used to treat relapses of MS 
and it is made by Biogen which is a generic company as you 
know--what kind of changes the FDA permitted in that case 
without repeating the original safety and effectiveness trials?
    Dr. Woodcock. Right. Those changes included manufacturing 
site, the cell line, and they were very, very extensive changes 
that were done; but very extensive characterization was done to 
assure comparability of those two molecules.
    Ms. Schakowsky. But it did not require the repeating of the 
original safety and effectiveness trials?
    Dr. Woodcock. That is correct. Now, the second manufacturer 
had access to quite a bit of the data about the manufacturing 
process and so forth that was originally done.
    Ms. Schakowsky. There are several biologics that are 
regulated under the Food, Drug, and Cosmetic Act that have been 
approved based on abbreviated data; and I believe the FDA 
provided a letter to Chairman Stupak and Chairman Dingell in 
February citing these examples. And in some cases low 
complexity products, that is what you have been talking about, 
the short, have been rated interchangeable. So the FDA has 
already demonstrated that it is possible to approve at least 
some biologics based on abbreviated data and even make 
interchangeable decisions. Am I just basically repeating what 
you have already said?
    Dr. Woodcock. Yes, the interchangeable decisions were for 
peptides, and they were very, very small versions of protein 
that are more like a small molecule drug. We have not approved 
any proteins really under the (j) process, any recombinant 
proteins.
    Ms. Schakowsky. And I also have a question that I am 
curious what the FDA views as the appropriate level of 
discretion in this decision-making process. I guess you get 
back to you want to work with us?
    Dr. Woodcock. Yes.
    Ms. Schakowsky. I thank you. Thank you, Mr. Chairman.
    Mr. Pallone. Thank you. Dr. Burgess.
    Mr. Burgess. I guess that statement is the key point, and 
we do clearly need to work together on this. Let me just ask 
you on some of the stuff we have heard this morning and your 
written testimony, the parts you make about the hyaluronidase 
that required the additional testing because of allergic 
reactions because of its recovery from the tissue, if you end 
up having to do all of that, are we still going to see price 
savings in the product when it is delivered?
    Dr. Woodcock. Well, obviously there is a debate about that. 
However, it is the large-scale clinical safety and efficacy 
studies that are the very expensive part of development, as 
well as the R&D that goes into producing the innovation in the 
first place. So there would be reduced costs to producing a 
follow-on because you wouldn't have to do the original research 
and you may not have to do the clinical efficacy studies. 
However, it wouldn't be of the same magnitude of reduction of 
cost of development that you would have for a small molecule.
    Mr. Burgess. But in doing so, and I think Mrs. Blackburn 
already addressed this, said in doing so, do you not out of 
necessity have to use some of the proprietary information from 
the original manufacturer?
    Dr. Woodcock. Under the 505(b)(2) process we do not go into 
the originator application and look at anything, but we know we 
approved it so we are relying upon the fact of the approval.
    Mr. Burgess. So the fact of approval, is it the public 
domain and not proprietary information?
    Dr. Woodcock. Right. Yes.
    Mr. Burgess. Do you have any thoughts with all of the 
questions you have been asked this morning in your extensive 
testimony which we all appreciate, have you any thoughts about 
how we go about minimizing uncertainty for the FDA in this 
rather complicated new world that we find ourselves in?
    Dr. Woodcock. Well, I agree that there need to be extensive 
discussions and we look forward to working with the members.
    Mr. Burgess. Do you have any thoughts as to how we on this 
side of the table, not this side of the aisle, but how we can 
give you the flexibility that you are going to require in order 
to make room for this evolving science?
    Dr. Woodcock. Well, for example, we feel probably that 
under 505(b)(2) we do have a great deal of flexibility the way 
that program has been implemented over the years, and we will 
have approved follow-ons that have had extensive clinical 
trials and we approved, for example, the hyaluronidase that 
simply had a immunogenicity trial. Although hyaluronidase is a 
very complicated protein. It shows the spectrum of things that 
can be done under that scheme, under that pathway.
    Mr. Burgess. Now, have there been products that you thought 
initially this shows a lot of promise for follow-up biologic 
that you have had to pull back and require additional testing? 
Some of the things that you mentioned earlier, the change of 
the filter, the change of the atmospheric pressure outside when 
you filter the compound, the change of a stopper composition 
that would perhaps be different from one lab to another?
    Dr. Woodcock. Right. Well, for the more complicated 
proteins, those issues pertain to manufacturing. Say if the 
manufacturer wants to change sites which happens sometimes, or 
open up a new site. Then all those factors from environmental 
factors all the way to how the production process is done have 
to be looked at very carefully to make sure they are making the 
same product, and that is the same manufacturer.
    Mr. Burgess. Even under the original manufacturer?
    Dr. Woodcock. Yes.
    Mr. Burgess. That is even before you get into a follow-on 
situation?
    Dr. Woodcock. Yes, we have a lot of experience in 
regulating all these manufacturing changes because some of 
these products, for example, become very successful and 
additional production capacity, scale up, new plants and so 
forth have to be opened. And in those cases, the manufacturer 
has the burden of showing that the molecule they are making in 
there will perform the same as the original one.
    Mr. Burgess. Let me ask you, if we do this legislation, are 
the people who work at the FDA, the people who are tasked with 
ensuring that our Nation's drug supply is safe and effective, 
do you detect any concern on the part of the staff of the FDA 
that they are going to be under any pressure to deliver these 
products before the testing is actually complete? Mr. Green 
referenced Ketek and the Vioxx situations. Are we setting 
ourselves up because this is inherently more complicated than a 
Ketek or a Vioxx? Are we setting ourselves up for that? Let me 
just ask you it this way. Do you detect concern among the 
staff, the career people at the FDA, that we are tasking them 
with something that is virtually impossible?
    Dr. Woodcock. I think as I said we have the technical, 
scientific, and medical expertise necessary to make these 
decisions. We require adequate resources to do that, and 
obviously if a new statute were passed, it would have to be 
sensible. It would have to take all the parameters that have 
been discussed today into consideration so that it could be 
implemented properly.
    Mr. Burgess. But again, are you detecting any undercurrent 
from the staff that there is going to be--we are the ones that 
are going to have oversight over that. You see the level of 
expertise that we present today. You guys are the experts. Are 
you detecting concern from the experts within the FDA itself 
about how this is going to be regulated?
    Dr. Woodcock. I think the experts' concern only is that we 
need to have access to resources in the ongoing scientific 
expertise that would enable them to make these decisions.
    Mr. Burgess. Mr. Chairman, you have been very kind, and I 
realize that means we have a vote. I mean, I think it is so 
important that we give you the flexibility and you look back to 
the days when Sir Alexander Fleming discovered penicillin, it 
was more of a parlor trick that he was able to inhibit 
bacterial growth in a Petri dish, and it wasn't until somebody 
figured out the manufacturing process that made it clinically 
useful. The same could be said for cortisol, that after it was 
derived it was very, very difficult to come up with amounts 
that would be clinically useful until that manufacturing 
process came about. So we are kind of on the cusp of that type 
of change in medicine right now. It is so important that we get 
it right. I think we were read a passage from the bill, and the 
part about the two similar saccharide repeating units, even if 
the number of units differences, and there are differences of 
the post-polymerization modification, saccharide being sure and 
basically we are talking about the difference between cane 
syrup or cellulose or a celery stock and you can see you could 
end up with a completely different product that will have a 
completely different intent. We have to be so careful as we go 
through this, Mr. Chairman.
    Mr. Waxman. OK. Let me yield.
    Mr. Burgess. I would be happy to yield to my friend.
    Mr. Waxman. I think your line of questioning is very 
thoughtful and got right to the nub of it. Dr. Woodcock, you do 
have this 505(b)(2) authority now which gives you all the 
flexibility. If we had the same kind of provision giving the 
FDA the same level of flexibility to require whatever you need 
without any deadline to approve a drug, not approve it at all 
until you reach that conclusion that it is just as safe and 
effective, would that be sufficient authority for you?
    Dr. Woodcock. I----
    Mr. Waxman. You already worked with that.
    Dr. Woodcock. I really can't comment. I can say that we are 
approving drugs under that pathway right now, and that has 
flexibility. It doesn't have some of the issues that pertain to 
all the biological products that are now approved and have not 
been under this scheme.
    Mr. Pallone. There is no time left, and I have got to 
figure out what we are doing here. We have 11 minutes before 
the first vote. This is a 15-minute vote followed by two 5-
minute votes. I wouldn't be that long, so I am hoping you can 
wait for us to come back because we have another three or four 
members that would like to ask questions, OK?
    Dr. Woodcock. I would happy to do so.
    Mr. Pallone. Thank you. But maybe we will get in--let me--
there is a 15-minute vote of which there is 11 minutes left and 
then two fives. If you would like to ask your questions, Mr. 
Gordon, we can do that now? I just want the Members to know 
after Mr. Gordon we will vote and come back.
    Mr. Gordon. Dr. Woodcock, you are doing a good job. If you 
were my chemistry teacher, I think I might have amounted to 
something.
    Let me ask you one question. It is my understanding that 
the Europeans have already started a process for follow-on 
biologics. Could you tell us what they are doing, what you 
think are the pros and cons, and how it is similar, dissimilar 
to what is happening here?
    Dr. Woodcock. I think we have to realize that Europe has a 
somewhat different setup and scheme than the United States, so 
it is not really strictly extrapolatable to here. However, in 
Europe the plan is that the EMEA, the medicines regulatory 
agency will make these decisions. They did not have the 
distinction between a Public Health Service Act and a Food, 
Drug, and Cosmetic Act. These products were all under their 
ordinary scheme already.
    They have a program called Biosimilars, and for Biosimilars 
the Medicines Agency will construct a guidance for each product 
area and will put that guidance out and then submissions can 
come in that conform with the guidance. We work very closely 
with the Europeans, the EMEA, and we are quite aware of what 
they are doing. And their approach to Omnitrope for example is 
very similar to the approach that we took subsequently.
    Mr. Gordon. Do you have an opinion as to the pros and cons 
of what they are doing?
    Dr. Woodcock. I don't know that their approach is, as I 
said, directly applicable to here in the United States. 
However, I think they are using good science and a public 
process to move forward.
    Mr. Gordon. Thank you. You represent your agency very well.
    Dr. Woodcock. Thank you.
    Mr. Pallone. Thank you. So we will now be in recess until 
after these three votes, and then we will come back and you 
will wait. Thank you, Doctor.
    [Recess.]
    Mr. Pallone. We are back in business. The gentleman is 
recognized.
    Mr. Inslee. Thank you. Dr. Woodcock, I wanted to focus on 
the issue of clinical trials, the advisability of that. It is 
important. My mother was an insulin-dependent diabetic, my 
brother is an insulin-dependent diabetic, I am going to be in a 
race with 5,000 insulin-dependent diabetics here in a couple of 
weeks and I would like to tell them if we come up with a 
biologic that it is going to be safe and we can have confidence 
about that. I want to make sure I understand. You are of the 
belief at this time given the present state of scientific 
knowledge that it is important to have some level of clinical 
trials for follow-on biologics to prevent unwanted 
immunogenicity.
    Dr. Woodcock. That is correct, and in some cases we may 
need additional clinical trials, if there are additional things 
that we aren't certain about.
    Mr. Inslee. Now, you have also alluded to the potential 
that there might be scientific advances to obviate the 
necessity of clinical trials. You made some reference to that. 
So I just wanted to ask you about that. Can you give us with a 
reasonable degree of certainty that in fact that will happen 
for all of these drugs?
    Dr. Woodcock. No. I believe that the science of 
characterization will advance over time, and therefore we will 
be able to do better and better comparisons in the laboratory 
and functional comparisons and so forth so that we will have 
less uncertainty about how similar they are. We will be much 
more sure about how similar they are. That doesn't mean though 
that we will be able to completely rule out clinical trials.
    Mr. Inslee. Could you say that in the next 5 years most 
follow-on biologics scientific knowledge would advance so that 
you would not require clinical trials for most incidents?
    Dr. Woodcock. No, I think the opposite is true. Over the 
next 5 years, we would need clinical trials of some sort for 
most proteins, follow-on proteins.
    Mr. Inslee. I and others have introduced a bill that would 
have a statutory requirement for some level of clinical trials, 
and frankly for the reason it is sort of like seatbelts. We 
have requirements for seatbelts. There may be science developed 
some day that we get arround airbags or some other, but the 
best science we have right now we require seatbelts and that is 
an appropriate legislative decision. So I am asking, I guess is 
there any reason why we should be the first country to not 
require clinical trials in these contexts?
    Dr. Woodcock. I think from the FDA standpoint, we would 
require clinical trials, say, under the 505(b)(2) whenever they 
are necessary, and right now they are going to be necessary for 
almost every protein. In the future, they may not be necessary 
for some category of proteins. Right now, for example, for very 
short peptides which are very tiny versions of proteins, we 
don't think we need clinical trials other than perhaps the 
bioequivalence type of studies, it would be done for a generic 
drug.
    Mr. Inslee. If Congress does require clinical trials on a 
bill similar to mine or others, would there be any damage to 
the pace of scientific inquiry by doing that? Is there any 
downside in that regard?
    Dr. Woodcock. I think it would depend on how specific you 
were or how proscriptive you were. There are many kinds of 
clinical trials, everything from bioequivalence trials that 
mainly look at the pharmacokinetics of a drug to a codynamic 
trial, safety trials, efficacy trials. Each of those have 
different ramifications. So we think right now that we would 
probably need in most cases immunogenicity trials as well as 
probably human pharmacokinetic trials.
    Mr. Inslee. And I think if you ran by your opening 
statement, you would find that you pretty much described the 
bill that I had introduced as far as giving you that level of 
flexibility to determine which ones that would require some 
clinical trials. And I for one believe it is appropriate for 
Congress to set some level of protection. We have done this in 
various contexts in the Food Quality Protection Act. We 
established actually numerical requirements for pesticide 
residues. In the 1996 Safe Water Drinking Act they had 
numerical standards for lead, mercury residues and we thought 
that that was appropriate. Could you tell us with any more 
degree of certainty at all to characterize when you think 
science probably will obviate the necessity of clinical trials? 
Can you give us any greater certainty as to time, this decade, 
the following decade?
    Dr. Woodcock. As I said in the last hearing, I think within 
this decade we will be able to characterize some of the very, 
very simple proteins well enough that we probably will be able 
to decide that they are similar enough to an innovative 
product. That is within this decade. But there are many other 
complicated products that are very important products that I 
think we would still not be able to do them in the next 10 
years.
    Mr. Inslee. So I guess what you are saying we are dealing 
in probabilities here. You think there is some probability that 
within this decade some of the simpler proteins may be 
categorized without this, but the bulk of them and the more 
complex ones would not in this decade, is that a fair 
assessment?
    Dr. Woodcock. That is my prediction but I don't have a 
crystal ball.
    Mr. Inslee. Well, I thank you very much. Take care.
    Mr. Pallone. Thank you. I think we are out of questions. 
Thank you, Doctor. I really appreciate your testimony and 
bearing with us through the votes and all that.
    Dr. Woodcock. I am happy to do so.
    Mr. Pallone. And we may send written questions to you 
within the next 10 days or so for you to respond to.
    Dr. Woodcock. We would be pleased to do that.
    Dr. Woodcock. Thank you.
    Mr. Pallone. And now we will have the second panel come 
forward.
    Welcome. Thank you for being with us today. I am just going 
to introduce everybody with their titles here. First is Dr. 
William Schwieterman who is from Tekgenics in Mobile, Alabama. 
Next is Dr. David Schenkein, vice president, clinical 
hematology/oncology at Genentech from south San Francisco; Dr. 
Geoffrey Allen, president, CEO, chairman of Insmed Incorporated 
from Richmond; Mr. Richard Kingham who is a partner in 
Covington & Burling here in DC; Mr. Bruce Downey who is 
chairman of the board of the Generic Pharmaceutical 
Association, actually from Woodcliff Lake, New Jersey; and then 
we have Ruth Hoffman, executive director of the Candlelighters 
Childhood Cancer Foundation from Kensington, Maryland; and Dr. 
Ed Weisbart who is the chief medical officer for Express 
Scripts from Maryland Heights, Missouri.
     Thank you for being here today. We have 5 minutes' opening 
statements, and if you would like to submit some additional 
information for the record that is pertinent, we will also 
allow that and we will start with Dr. Schwieterman.

   STATEMENT OF WILLIAM SCHWIETERMAN, M.D., TEKGENICS, INC., 
                           MOBILE, AL

    Dr. Schwieterman. Thank you very much, Chairman Pallone, 
and good morning members of the Subcommittee on Health, Energy 
and Commerce.
    My name is Dr. William Schwieterman, and I thank you for 
the opportunity to appear before the committee today and 
present a 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. 
Sadly, this is what many patients who need treatment with brand 
biopharmaceuticals are facing in today's world. For this 
reason, I strongly believe that Congress must give FDA the 
authority it needs to create a workable, scientifically based 
abbreviated 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 this can and should be 
achieved.
    I was heartened to hear during the House Oversight and 
Government Reform Committee in hearing that the FDA Deputy 
Commissioner Janet Woodcock also believed that this goal could 
be achieved, stating that the FDA can be trusted to carry out 
its mandate from Congress, whatever that might be and the long-
anticipated FDA white paper recently released by FDA also 
validates their ability to prove biogenerics for efficacy and 
safety.
    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. 
First, with today's scientific advancements in technologies, 
FDA can assure the safety and efficacy of biogenerics. Second, 
the supporting science for this is not new. It has existed for 
over a decade. The FDA white paper confirms that FDA has 
already been using a science-based approach case by case to 
approve biopharmaceuticals and more importantly changes in 
biopharmaceuticals. Third, the issues raised in post-approval 
brand product changes are reflective of the issues that are 
raised with biogenerics. In other words, the same science that 
determines comparability for the brand to biotech industry can 
also be adopted to ensure the safety and efficacy of comparable 
and interchangeable biogenerics. This point is particularly 
important when it comes to the issue of conducting clinical 
trials.
    As Dr. Woodcock noted at another House hearing, it is a 
common misperception that clinical trials are always the most 
sensitive studies for detecting changes in safety or 
effectiveness due to process changes. I agreed with her when 
she went on to state, ``Where trials aren't needed, it is of 
questionable ethics to repeat them, so use of human subjects 
for trials that are not needed that are simply to check a box 
on a regulatory requirement are not desirable.'' The necessity 
and type of clinical trials required for biogenerics should be 
determined based only upon a scientific standard established by 
FDA on a case-by-case approach. Having worked extensively at 
FDA with many physicians and scientists and listening to the 
words of Dr. Woodcock and other FDA officials these past few 
months, I also want to emphasize there is just one safety 
standard at FDA and that standard has been and will continue to 
be applying the review and approval of each and every biologic, 
whether it be brand or generic. It is relevant to note that the 
standards and science used for current biopharmaceuticals are 
informative for us with respect to generics. A critical but not 
often publicized fact about the biopharmaceutical industry is 
that FDA does not require brand 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 analytic 
comparability data. With these data, and keeping in mind the 
nature of the drug, the test used, and the disease being 
studied, FDA decides how to proceed. The agency can give a 
thumbs up and a thumbs down regarding each post-approval brand 
manufacturer change and if thumbs up, have that change be 
supported by analytic data coupled with pharmacokinetic or 
pharmacodynamic studies or the studies just mentioned, plus 
data from a large clinical outcome study.
    It should also be noted the vast majority of brand 
manufacturer changes need no further studies when data from 
analytic tests show the product to be comparable. For a small 
number of brand products that show small differences in 
analytic tests for following manufacturer change, FDA may 
require additional analytic and pharmacokinetic or 
pharmacodynamic tests to be conducted in animals or humans.
    The latter studies are clinical studies in the sense that 
they are conducted in patients in the clinic but they are not 
the large 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 last weeks, not months. Rarely after a brand 
manufacturing changes the FDA required that a brand company 
take the last step, repeating a full-scale clinical outcome 
study. In fact, of all the hundreds of brands of biologic 
products changes, the vast majority were approved without large 
clinical outcome studies.
    In sum, FDA scientists and physicians routinely make 
comparability determinations between similar biologic products 
since manufacturing changes occur throughout the brand biologic 
product development life cycle. The scientific essence and 
basis of comparability determinations used by FDA is therefore 
not new but rather has existed for over a decade to allow brand 
biologic manufacturers to change and improve their 
manufacturing processes.
    The Access to Lifesaving Medicines Act will give the FDA 
the authority and flexibility it needs to ensure the safety and 
efficacy of biogenerics. It adopts the same scientific 
principles, processes, and procedures that exist for the brand 
biologic industry when making post-approval manufacturing 
product changes in the biogeneric sector.
    I would like to emphasize the need for science----
    Mr. Pallone. Doctor, if you could summarize because you are 
over the 5 minutes.
    Dr. Schwieterman. Thank you. A truly workable pathway for 
biogenerics is one that that is fully scientifically based, 
consistent with regulatory experience, and brings safe and 
effective biogenerics to patients in a timely manner. Thank you 
so much.
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    Mr. Pallone. Thank you. Dr. Schenkein.

 STATEMENT OF DAVID SCHENKEIN, M.D., VICE PRESIDENT, CLINICAL 
              HEMATOLOGY/ONCOLOGY, GENENTECH, INC.

    Dr. Schenkein. Good afternoon, Mr. Chairman, and members of 
the committee. My name is Dr. David Schenkein, and I am vice 
president of Clinical Hematology and Oncology of Genentech. I 
have been a practicing oncologist for the past 20 years, and I 
am pleased to come before you today on behalf of the 
Biotechnology Industry Organization.
    Genentech is considered the founder of the biotechnology 
industry. We began 31 years ago with the goal of developing a 
new generation of therapeutics created from genetically 
engineered copies of naturally occurring molecules important in 
health and disease. Our mission is to end the death sentence 
that cancer currently represents by creating medicines that 
will transform cancer into either a curable illness or a 
chronic condition.
    In order to ensure that innovative biotechnology products 
continue to reach patients and physicians, it is essential that 
Congress adopt six key principles in creating any regulatory 
pathway for follow-on biologics. First and foremost, 
legislation must ensure patient safety. Patients should not 
have to accept greater risks or uncertainties in using a 
follow-on product and an innovator's product. In addition, 
legislation must recognize that biologics are far more complex 
than small-molecule chemical drugs. It must maintain the 
physician-patient relationship and allow only treating 
physicians to determine whether a follow-on product is 
interchangeable for the innovator product. It must preserve 
incentives for innovation, must ensure a transparent regulatory 
process, and must continue to prioritize the FDA's review of 
new therapies and cures.
    In oncology we treat life-threatening illnesses. For many 
patients the first therapy is the chance for a cure that 
evaporates if the disease recurs, making it incurable. It is a 
critical window of opportunity. Take for example the situation 
that women with Her2 positive breast cancer face every day. At 
diagnosis, women are treated with a balance of chemotherapy and 
biologic Herceptin, along with surgery and radiation. For the 
majority of these women, in part because of the effectiveness 
of Herceptin, their cancer will not return. Imagine a situation 
where a woman is treated with a follow-on biologic in this 
setting that has even a slightly different profile which allows 
her cancer to return years later. The disease has now spread 
and her chances of survival are reduced significantly. What do 
we tell that woman and her family, that we never tested that 
follow-on biologic in humans but we thought it was similar 
enough to Herceptin and relied on those data to support its 
approval and to advocate for its use?
    I firmly believe there will always be a need for clinical 
testing of a follow-on biologic. The amount and type of testing 
will depend on the specifics of the product and assessment of 
potential risks, and those determinations should be left to the 
FDA. Clinical trials will always be important to address 
questions such as immunogenicity. I would never take a biologic 
that had not been tested in humans. The risks are too high. New 
legislation should not court the others who may be less 
informed to do so.
    In addition to scientific considerations, I would also like 
to address the importance of incentives. As an oncologist, I am 
extremely concerned about the potential that limited or no data 
exclusivity would have on agavent or early stage cancer drug 
development. It is in this setting that we hope to translate 
breakthrough discoveries into cures. Insufficient data 
exclusivity could strangle the incentives to continue investing 
in trials beyond the advanced or metastatic setting. Agavent 
studies are typically started only after positive phase three 
trials in metastatic cancer and are after-return data late in 
the patent life of the product. Trials of agavent therapy are 
intended to catch the cancer at the time before it spreads 
where our therapies could have the greatest impact for 
patients.
    The approval for Herceptin in the agavent setting occurred 
8 years after the original approval in the metastatic setting 
and involved more than 3,500 women in multiple randomized 
clinical trials. These trials can take easily more than 5 years 
from inception to completion at huge cost without any assurance 
of clinical success. Herceptin in the agavent setting reduced 
the risk of cancer occurrence by 50 percent, and if the cancer 
doesn't recur, these women cannot die from it.
    This is our mission, to beat cancer through science, but 
without a substantial period of data exclusivity, it would be 
difficult for Genentech and others to invest in this critical 
but costly research. I am excited every day when I look at the 
pipeline we have at Genentech. We are developing biologics that 
starve tumors, cause cancer cells to self-destruct, and program 
them to behave differently in the body. It is my hope and that 
of BIO and Genentech that a transparent public process that 
leverages known scientific considerations will provide a 
framework and pathway for the approval of follow-on biologics. 
The stakes are simply too high to risk patient safety and 
potential cures by moving too quickly and not following the 
science.
    Again, I thank you for the opportunity to testify before 
you today and look forward to answering any questions you may 
have.
    [The prepared statement of Dr. Schenkein follows:]

                   Statement of David Schenkein, M.D.

    Good morning, Mr. Chairman and Members of the Committee. My 
name is Dr. David Schenkein and I am vice president of Clinical 
Hematology and Oncology at Genentech, a leading biotech company 
headquartered in South San Francisco, California. I am pleased 
to come before you today on behalf of the Biotechnology 
Industry Organization (BIO) to offer my perspective on the 
issues relevant to any proposed framework for the abbreviated 
approval of follow-on biologics.
    BIO represents more than 1,100 biotechnology companies, 
academic institutions, state biotechnology centers and related 
organizations across the United States and 31 other nations. 
BIO members are involved in the research and development of 
health care, agricultural, industrial and environmental 
biotechnology products.
    I hope you will find my contribution to this discussion 
constructive and useful as you seek out a sound, science-based 
path forward for follow-on biologics while preserving patient 
safety and incentives for biomedical innovation.
    By way of introduction, I have been a medical oncologist 
and hematologist for over 20 years. I have spent most of my 
career caring for patients with life threatening illnesses. 
It's been my job to sit with patients and their families and 
make decisions on the most appropriate therapy to choose--- 
many times a choice of risk benefit that has life and death 
implications. Prior to joining Genentech, I spent 17 years in 
academic and clinical medicine as an attending physician in 
Hematology Oncology at the Tufts-New England Medical Center in 
Boston, where I was an associate professor and held the 
position of director of the Cancer Center. I will soon be on 
the oncology faculty at the Stanford Cancer Center.
    I previously served as the senior vice president of 
Clinical Research at Millennium Pharmaceuticals in Cambridge, 
where I oversaw the clinical development of Velcade, a first-in 
class cancer therapy now approved to treat multiple myeloma and 
non-Hodgkins lymphoma. In my current role at Genentech, I am 
responsible for leading the medical and scientific strategies 
for our BioOncology portfolio, including overseeing the 
development of a robust pipeline of novel cancer therapies and 
marketed products, including Avastin, Herceptin, Rituxan and 
Tarceva.
    My company, Genentech, is considered the founder of the 
biotechnology industry. Genentech was founded 31 years ago with 
the goal of developing a new generation of therapeutics created 
from genetically engineered copies of naturally occurring 
molecules important in human health and disease. Within a few 
short years, Genentech scientists proved it was possible to 
make medicines by splicing genes into fast-growing bacteria 
that produced therapeutic proteins.
    Today, Genentech continues to use genetic engineering 
techniques and advanced technologies to develop medicines that 
address significant unmet needs. Genentech is among the world's 
leading biotechnology companies, with 14 products on the market 
for serious or life-threatening medical conditions, over 50 
projects in the pipeline and more than 10,000 employees.
    The researchers and clinicians at Genentech are working to 
fundamentally change the way cancer is treated by developing a 
broad portfolio of innovative targeted therapies designed to 
improve and extend the lives of cancer patients. Put simply, we 
are trying to end the death sentence that cancer currently 
represents by creating medicines that will transform cancer 
into either a curable illness or a chronic condition. We strive 
for the time when a diagnosis of cancer leads to a discussion 
similar to the one that occurs today around high blood pressure 
or diabetes.
    I would like to begin by noting that I appreciate the 
concern Congress has shown for patient access to biologic 
therapies. It is a concern that I share--as does Genentech, and 
as does BIO. While legislation on follow-on biologics has the 
potential to increase access to some medicines, that 
legislation must be well-founded in science and ensure that the 
medicines to which access is provided are no less effective or 
safe than medicines already on the market. I believe that 
through the proper process, those critical goals can be met.
    In order to ensure that new pioneer biotechnology products 
continue to reach patients and physicians, it is essential that 
Congress adopt six key principles as it explores the creation 
of any regulatory pathway for follow-on biologics. I will touch 
on these principles in my testimony, but will focus principally 
on the first three since my expertise is as a physician and a 
scientist.

      Ensure Patient Safety. Patients should not have 
to accept greater risks or uncertainties in using a follow-on 
product than an innovator's product.
      Recognize Scientific Differences Between Drugs 
and Biologics. Biologics are much more complex than small 
molecule chemical drugs.
      Maintain the Physician-Patient Relationship. The 
current state of science is not sufficient to establish 
interchangeability for complex follow-on biologics. 
Accordingly, Congress should ensure that patients are not given 
follow-on biologics unless expressly prescribed by a physician.
      Preserve Incentives for Innovation. Any statutory 
pathway for follow-on biologics must include a substantial data 
exclusivity period; must respect our intellectual property 
rights; and must provide adequate notice and process rights.
      Ensure Transparent Regulatory Processes. Any 
legislation must require FDA to follow a transparent and public 
process in determining data requirements for the approval of 
specific follow-on biologics.
      Continue to Prioritize FDA Review and Approval of 
New Therapies and Cures. Congress must ensure that workload 
associated with follow-on applications does not harm the FDA's 
ability to efficiently review new drugs and biologics.

    First and foremost, patient safety must be assured. I trust 
that patient safety is a concern that we all share and that it 
will be a guiding concern for Congress as you consider a 
statutory pathway for follow-on biologics.
    If follow-on biologics are to achieve the same standards of 
safety and efficacy as pioneer biotechnology products, then 
clinical trial evidence and data must be a fundamental 
requirement, and must be conducted on a product-by-product 
basis. The safety and effectiveness of a follow-on biologic 
simply cannot be assured without clinical testing, and in 
particular, immunogenicity testing, which is necessary to avoid 
putting patients at risk of adverse effects from immune 
reactions.
    The stakes are too high to take the risk of moving too 
quickly and not following the science. In oncology, like in 
other therapeutic areas, we make our decisions on therapy 
selection based on clinical data and a deep understanding of 
both safety and efficacy: the risk to benefit ratio. Somewhat 
unique to oncology is the life-threatening nature of the 
illnesses we treat and the consequences of a wrong choice. For 
many patients, the first therapy is a chance for a cure that 
evaporates if the disease recurs, making it incurable.
    Take for example the situation that women with Her2 
positive breast cancer face every day. At diagnosis, women are 
treated with a balance of chemotherapy, including the biologic 
Herceptin, directed at the cancer protein along with surgery 
and radiation. For the majority of these women, their cancer 
will not return. Imagine a situation where a woman is treated 
with a follow-on biologic in this setting that has even a 
slightly different risk-to-benefit ratio, which allows her 
cancer to return years later. The disease has now spread and 
her chances of survival are reduced significantly. What do we 
tell that woman and her family? That we never tested that 
follow-on biologic in humans, but we thought it was similar 
enough to Herceptin and relied on Herceptin's data to support 
its approval and to advocate for its use?
    To understand why we should always expect some need for 
pre-market clinical testing and immunogenicity testing of 
follow-on biologics, it is important to understand the nature 
of biologics in general and how they differ from small molecule 
therapies.

                Differences Between Biologics and Drugs

    With small molecule drugs--for example, the conventional 
pills you see on pharmacy shelves and in medicine cabinets--you 
are working with substances that are relatively small, 
relatively simple in structure, and relatively easy to 
replicate using carefully controlled processes. Most 
importantly, their relatively small size and simple structure 
allow precise characterization and detection of even minor 
changes in the product.
    Biologics are vastly different from small molecules in all 
these aspects. In contrast to small molecules, biologics are 
very large--typically several hundred- or thousand-fold larger. 
They are produced not by well-controlled chemical processes but 
by complex living cells and organisms through extremely 
complicated and sensitive manufacturing processes.
    As innovator companies' experience with respect to pioneer 
biotechnology products has shown, and as FDA has long 
emphasized through its regulation and guidance, small product 
or manufacturing differences in biologics can result in 
significant safety and/or effectiveness differences. To a far 
greater extent than small molecules, biologics frequently can 
bind to themselves to form pairs or aggregates, can change 
their shape over time or with minor changes in conditions, and 
can interact with materials in their containers and packaging. 
They are relatively unstable and are sensitive to how they are 
handled, processed and stored as they have the ability to 
assume many forms and variants. They are typically not 
homogeneous in chemical structure; rather, they are a large 
family of molecules with related, but not identical, 
structures. They cannot be fully characterized, so not only are 
differences common, they can be extremely difficult to detect, 
and their effects on the product's safety and efficacy are 
extremely difficult to predict.
    As a result, the regulation of biologics is largely based 
upon strict control of the manufacturing process to minimize 
the likelihood of changes to safety and efficacy. Additional 
clinical testing is often required when substantial changes to 
the manufacturing process occur, and certainly the type of 
changes and differences in manufacturing necessary to producing 
a follow-on product would meet such a threshold.
    While the ability to characterize biological products using 
physical, chemical, and biological testing has improved as 
science has advanced, current laboratory testing--without 
testing in patients--is still very far from sufficient to 
ensure that a follow-on biologic is without differences from a 
reference product. These differences could adversely affect its 
safety or efficacy.
    Furthermore, the methods used by innovators to demonstrate 
continued safety and effectiveness after a manufacturing 
process change are insufficient to demonstrate safety and 
effectiveness of a follow-on biologic made by a different 
manufacturer using a different process. When a biologics 
manufacturer makes a substantial change to its process (e.g., 
new cell line), given the incomplete ability of laboratory 
testing to identify or predict differences, FDA requires 
substantial testing in humans (clinical testing) to validate 
the comparability of the product. And clinical testing often 
reveals differences. This is important because by definition, 
the manufacture of a follow-on will necessarily involve very 
substantial manufacturing changes--a new cell line, a new 
facility, and a new process. These changes will result in a 
different product, and vastly increase the likelihood of 
clinically important differences, which can only be understood 
through clinical testing in humans.
    The manufacturer of a new follow-on biologic also faces 
several limitations in its ability to identify clinically 
important differences short of clinical testing. When a 
manufacturer makes substantial changes in its manufacturing 
process, that manufacturer is able to compare not only the 
final product but also various components and intermediates 
that are produced during various stages of the new and old 
manufacturing process. For example, depending on the changes 
made, comparisons might be made of the unpurified biologic 
(made by the old and new processes), and/or of purified product 
prior to formulation. Such comparisons may detect important 
differences that remain in the final product, but at levels 
that make them undetectable in the final product. Manufacturers 
of follow-on biologics will not have these materials for 
testing and will only have access to the final, marketed 
reference product.
    Additionally, optimal comparisons of ``before change'' and 
``after change'' materials require an understanding of which 
parameters are key to ensuring the safety and efficacy of the 
molecule and what the best approaches are to assessing them. 
This understanding comes from years of working with the 
reference product, which is not available to manufacturers of 
follow-on biologics. Further, when differences are detected, 
the key question becomes whether the difference is clinically 
important. While manufacturers of innovator products have 
extensive experience that sometimes helps address this 
question, the manufacturer of a new follow-on biologic will 
have limited experience with the molecule.
    Thus, the ability of an innovator to make changes to its 
own manufacturing process, subject to the FDA's comparability 
guidelines, is simply not analogous to a follow-on company 
proving ``comparability'' when entirely different manufacturing 
processes are used. A manufacturer of a follow-on biologic will 
face significantly more limitations in demonstrating 
``comparability'' than a manufacturer modifying its own 
process. When we make changes that might affect the clinical 
effects of a product, we also face an appropriate requirement 
for clinical studies to ensure safety and efficacy. How can we 
accept a lesser standard of evidence from the manufacturers of 
follow-on biologics who face even greater limitations in 
laboratory testing, without significant concerns for safety?
    Clinical trial evidence and data are fundamental for 
evaluating and demonstrating the safety and effectiveness of a 
follow-on biologic
    In light of the limitations described above, and based on 
my experience, I firmly believe that there will always be a 
need for clinical testing of a follow-on biologic to provide 
adequate assessment of potential changes. The amount and type 
of testing will depend on the specifics of the products and 
assessment of potential risks, and those determinations should 
be left to the FDA. Clinical trials will always be important to 
address questions such as immunogenicity, pharmacokinetics, and 
common adverse events under controlled conditions before a 
product is marketed. I would never take a biologic that had not 
been tested in humans; the risks are too high. New legislation 
should not cause others, who may be less informed, to do so. 
Congress should not create two standards for these products--
those appropriately tested for safety and efficacy and those 
that are not.
    There are many examples of how seemingly minor changes in a 
biologic's manufacturing process have resulted in significant 
changes in the product--changes that could only be detected 
through clinical testing. I would like to use some specific 
examples to ensure that this Committee's members understand 
that my concerns are not theoretical or alarmist in nature, but 
are in fact very real issues that need to be considered.
    In our case, Genentech was working with a business partner, 
Xoma, to develop a product for psoriasis. When it came time to 
transfer the technology from Xoma's facility to our own state-
of-the-art manufacturing plant, we were unable to produce 
material that met the pre-defined statistical definition for 
comparability. During Phase III testing, minor manufacturing 
modifications were made to allow for large-scale material 
production. The pharmacokinetic (PK) studies we conducted 
suggested that the Genentech material achieved a slightly 
higher serum concentration than the Xoma material. Because we 
could not be sure that the product we produced at Genentech, 
which was different than that produced at Xoma, was safe, we 
agreed to do additional clinical testing. Fortunately, 
Genentech was able to prove to the FDA that the new material 
was safe, but FDA approval of the product was delayed by more 
than a year.
    While this is a good example of a manufacturing change 
resulting in differences that, once re-tested, proved to be 
acceptable, there are plenty of examples where seemingly minor 
differences have had catastrophic consequences. Irrespective, 
we agreed with the FDA's decision that we must re-test our 
product to ensure its safety and effectiveness.

 Immunogenicity Testing is Necessary to Avoid Putting Patients at Risk 
                of Adverse Effects From Immune Reactions

    Special attention should be given to the problem of 
immunogenicity: the ability of most or all biologic products to 
stimulate an immune system response in the body, prompting the 
formation of antibodies. Immunogenicity is particularly 
important in the context of manufacturing changes for biologics 
because (I) product differences that are difficult or 
impossible to detect can lead to changes in immunogenicity; (2) 
changes in immunogenicity can impact on safety and efficacy in 
many ways and (3) immunogenicity can be assessed only through 
clinical testing. The immune system evolved to distinguish 
foreign proteins (e.g., bacteria, viruses, proteins from other 
people) from its own proteins as a means of survival. This 
means that our immune systems can be exquisitely sensitive to 
differences in proteins.
    Thus, there is great potential for seemingly minor changes 
in therapeutic protein products, even those not detected by 
physical, chemical, and biological testing, to result in 
clinically significant changes in immunogenicity.
    Most biologic products have some degree of immunogenicity; 
that is, they will cause formation of antibodies in some 
patients. For vaccines, this is desirable. For therapeutic 
proteins, these antibodies can inactivate the protein or cause 
it to be cleared from the body, resulting in a loss of efficacy 
and the progression of the disease. Patients with hairy cell 
leukemia treated with interferon alfa, for example, have been 
reported to experience a relapse of disease when antibodies 
develop. Similarly, some patients receiving insulin and blood 
clotting Factors VIII and IX have been reported to lose 
responsiveness after developing antibodies.
    In addition to inactivating or clearing a drug, antibodies 
bound to a drug can also play a direct role in causing various 
adverse effects. Patients who have developed antibodies to 
experimental biologics have experienced consequences including 
joint swelling, fever, and encephalitis. Even for approved 
biologics, it is not uncommon that the development of 
antibodies during treatment increases the likelihood of having 
adverse reactions, sometimes even severe, at the site of 
subsequent injections or following subsequent infusion into the 
blood stream.
    In addition to these effects, and more serious still, 
antibodies can also inactivate the body's naturally occurring 
protein, resulting in adverse and even life- threatening side 
effects. Patients who received an experimental biologic version 
of thrombopoietin, a protein that stimulates production of 
platelets critical for blood clotting, developed antibodies 
which neutralized not only the biologic, but also their own 
naturally produced thrombopoietin, resulting in problems with 
bleeding.
    The case of EPREX, a biologic product sold in Europe by 
Johnson & Johnson companies, illustrates how even a seemingly 
minor change can increase a product's immunogenicity and cause 
harm to patients. In 1998, J&J changed the stabilizer in its 
EPREX formulation at the request of European authorities 
because of concern in Europe that the human serum albumin 
stabilizer could theoretically transmit Mad Cow Disease. The 
switch from the old stabilizer to another well-established one 
seemed simple enough and relatively benign. Indeed, it was 
intended to improve the safety profile. It was applied to a 
variety of product presentations, including single-use vials 
and pre-filled syringes with both Teflon-coated and uncoated 
rubber stoppers.
    However, shortly after this seemingly minor change, there 
was an increase in the incidence of antibody-mediated pure red 
cell aplasia (PRCA) among patients taking EPREX. Pure red cell 
aplasia is a serious condition in which the bone marrow ceases 
to produce red blood cells. Patients suffering this adverse 
event must undergo blood transfusions weekly for the remainder 
of their life. It took four years of extensive investigations 
involving more than 100 experts from clinical, pre-clinical, 
manufacturing, process sciences, logistics, quality, 
analytical, and regulatory fields and in excess of one hundred 
million dollars to identify the cause. The conclusion was that 
uncoated rubber stoppers, when exposed to the new stabilizer, 
released substances called leachates into the EPREX formulation 
and that these substances were most likely responsible for the 
increase in the product's immunogenicity and the resulting 
increase in patients developing pure red cell aplasia.
    It's important to note that the examples I have given are 
just some of the cases in which immunogenicity concerns have 
arisen. Most biologics have some degree of immunogenicity. 
Immunogenicity levels can change with even slight changes in 
their manufacturing process and can have clinically important 
consequences. Scientifically, the only way to detect 
immunogenicity is through clinical testing.
    In summary, extensive experience confirms that 
manufacturing differences, such as those between the processes 
of an innovator and follow-on, are likely to lead to 
differences in product safety or efficacy, which will be 
detected best or only through clinical testing. That is not to 
say that a full clinical testing program must be required for 
follow- on biologic products. Abbreviated clinical testing will 
sufficiently address key areas of uncertainty regarding safety 
and efficacy on a product-by-product basis, particularly where 
there exist good measures of desired effects (so called 
pharmacodynamic measures) and where a high degree of similarity 
is demonstrable. But experience has made clear that clinical 
studies must be considered a necessary and mandatory part of 
properly evaluating any and all biologic products, and must be 
a fundamental foundation upon which any proposed regulatory 
pathway for the approval of follow-on biologics is created.
    In addition, we believe that a follow-on product should be 
approved only for conditions for which the reference product is 
approved. For all the reasons discussed earlier, the safety, 
purity, and potency of the follow-on product for each 
indication must be supported independently, and attention must 
be paid to special safety risks (including possible 
immunogenicity) in different patient populations.
    Interchangeability and substitutability: Congress should 
ensure that patients are not given follow-on biologics unless 
expressly prescribed by a physician
    Given the complexity of biologics, the high potential for 
process differences to result in clinically meaningful product 
differences, and the limited ability to detect differences 
between a follow-on and reference biologic, a determination of 
comparability for a follow-on product is particularly 
challenging. Ensuring comparability of a follow-on biologic to 
a reference biologic with an acceptable degree of assurance 
will be made much more challenging by the follow-on 
manufacturer's limited access to information about, and lack of 
experience with, the innovator's process as well as their lack 
of access to intermediate, in-process materials. As a result, 
we believe that establishing the interchangeability of 
different products is not feasible, and therefore, is a 
decision that is only appropriately made by a treating 
physician.
    No amount of non-clinical testing of a biologic product can 
ensure or predict it will have identical effects to another 
product. Although clinical testing can place limitations on the 
possible extent of differences, for most products, only 
extensive comparison studies could rule out clinically 
significant differences. For example, if a reference biologic 
caused a serious or fatal effect in one patient in 1000, and a 
new drug had twice the risk, it would take a study of about 
50,000 patients to have a good chance of detecting this 
important difference.
    Given the risk of clinically important differences always 
at play and the possibility that substituting products would 
increase the risk of clinically important antigenicity, it is 
imprudent and potentially dangerous to allow the follow-on 
biologic to be considered ``interchangeable'' with its 
reference product.
    The European Union (EU) rightly acknowledged in its own 
process of developing a pathway for follow-on biologics that 
follow-ons can be similar, but never identical to an innovator 
biologic. After very careful review of the data, the EU 
recognized the danger of applying ``interchangeability'' status 
to follow-ons, a misnomer that could lead physicians and 
patients to inappropriately assume sameness and substitute one 
for the other, with potentially serious adverse health 
consequences. Just a few months ago, the French Parliament 
adopted legislation to prevent follow-on biologics from being 
treated in the same way as traditional generics, and banned the 
automatic substitution of one biologic medicine for another.
    Given the current paradigm allowing for the 
substitutability of generic drugs with the innovator products 
they copy, a determination of interchangeability in this 
context would likely encourage the substitution of one product 
for another. The FDA itself expressed concerns about 
substitution of one biologic medicine for another in a 
statement last September: ``Different large protein products, 
with similar molecular composition may behave differently in 
people and substitution of one for another may result in 
serious health outcomes, e.g., generation of a pathologic 
immune response'' (http://www.fda.gov/cder/news/
biosimilars.html, September 2006). Even if products have a 
determination of comparability but not interchangeability, 
substitution could occur, potentially unbeknownst to the 
prescribing physician or patient and potentially with adverse 
health outcomes.
    In addition, it will be important for Congress to ensure 
that follow-on biologics are assigned a unique name--one that 
has not be adopted for any protein manufactured by a different 
person--so that it is readily distinguishable from that of the 
innovator's version of the product. Assigning the same name to 
a product that is not the same would be confusing and 
misleading to patients, physicians, and pharmacists, could 
result in inadvertent substitution of the products, and would 
make it difficult to quickly trace and address adverse events 
that may be attributable to either the innovator or follow-on 
product.
    Furthermore, if aspects of a follow-on biologic's approach, 
such as the designation of interchangeability, led to 
substantial numbers of patients switching between therapies, it 
could severely impair the ability of pharmacovigilance systems 
to deal with emerging safety problems. When a new adverse event 
emerges or a known one increases in frequency, it may be 
impossible to attribute the adverse event to a specific product 
if patients experiencing the event have received multiple 
products. This is especially the case for some types of adverse 
events, such as those due to immunogenicity, that tend to arise 
in patients well after receiving the causative product. Should 
a particular follow-on biologic be associated with such a 
safety problem, the impact of being unable to determine which 
``interchangeable'' biologic was responsible could be 
devastating. The ability to detect that a new follow-on 
biologic has a significantly higher risk would be highly 
impaired and the difference in risk could go unnoticed. When 
new risks are noticed, it could well be impossible to determine 
to which ``interchangeable'' biologic it was attributable, and 
appropriate use of the entire group of therapies might be 
severely impaired because of a concern with one. Such a class 
effect is not in the best interest of patients or the industry 
generally, as overall confidence in biologics would be damaged.
    Follow-on biologics should be properly evaluated through 
post-marketing surveillance and post-marketing clinical studies
    All approved follow-on biologics will inevitably be 
associated with some risk that potential safety problems will 
become apparent only in the post-marketing period because (1) 
not all differences between a follow-on and reference product 
will be detectable in pre-market testing, (2) one cannot 
predict with certainty which differences may have adverse 
impacts on safety and efficacy, and (3) some risks may become 
apparent only after extensive use. To optimize patient safety 
and to control such risks, it is critical that the FDA not be 
limited in its ability to require post-marketing clinical 
studies when appropriate. Follow-on manufacturers should also 
be required to monitor a product for safety problems through a 
robust post-marketing safety surveillance program.
    After all of the attention Congress has given to the issue 
of drug safety evaluation, it would be intellectually 
inconsistent for this Committee to pass legislation that does 
not put forth specific provisions enabling adequate regulatory 
requirements for post-marketing safety surveillance programs 
and clinical studies of follow-on biologics. It would be 
equally problematic for any follow-on legislation to limit the 
ability of expert reviewers to negotiate for post-marketing 
clinical studies that could protect public safety.
    Since it is not possible to make two biologic products 
identical, follow-on biologics policy will, by definition, 
allow abbreviated applications for molecules that are highly 
similar to a reference, despite known or potential differences. 
However, a follow-on product must be as similar to the 
reference product on which it relies as can be achieved, in 
view of current scientific knowledge and technological 
capabilities. It must have the same route of administration, 
dosage form, and strength as the reference product.
    In addition, one must draw a line as to how much of a 
difference should be allowed as there is no scientific basis 
for allowing abbreviated testing of a new biologic on the basis 
of it being only distantly related to an existing one. Some 
differences are so substantial that the biologics should be 
considered different products entirely.

                   Differences in Amino Acid Sequence

    The amino acid sequence defines a protein. Even a minor 
difference creates a different (mutant) protein, and a product 
containing a mutant protein is a different product from the 
non-mutant form. Given the potential for such a product to have 
different effects, any such product should be subject to all 
the standard safety and efficacy testing to which you would 
subject any innovator drug.
    Differences in even just one amino acid can have 
devastating effects on the function of a protein. Single amino 
acid mutations in a person can be lethal or result in serious 
diseases such as sickle cell anemia and cystic fibrosis. Single 
amino acid mutations in a virus can change it from benign to 
deadly or from treatable to resistant to treatment. And single 
amino acid changes in therapeutic biologics, sometimes made in 
an attempt to improve potency, durability or other desirable 
traits, often have adverse effects on the molecule, with the 
potential to pose great danger to patients.
    The AspB 10 insulin analogue is a prime example. This was a 
biological product that had only one amino acid difference from 
the insulin amino acid sequence. At the time it was being 
studied, it seemed reasonable to think that this insulin 
analogue would be safe. However, to the great surprise and 
concern of all involved, when AspB 10 was given to laboratory 
rats, it triggered the development of breast cancers.
    When a change in an amino acid has occurred during 
premarket development, FDA has required extensive testing of 
the new molecule rather than assuming the properties of the 
former molecule were retained. To allow marketing of new mutant 
protein therapeutics with anything short of the testing 
required of any new protein therapeutic potentially exposes 
patients to very real risks.
    As noted above, the need to tolerate some differences in a 
follow-on biologic from its reference product arises from 
technical limitations on the inability to exclude, or in some 
cases to identify some differences. But there is no technical 
limitation preventing a manufacturer of a follow-on biologic 
from producing one with an amino acid sequence identical to 
that of a reference.

                Differences in Post-Translational Events

    ``Post-translational modification'' refers to the important 
processes that occur after the backbone of a protein has been 
synthesized. It can result in major chemical modifications of 
the protein, such as attaching additional chemicals, modifying 
the chemical structure, cross-linking, and removing large parts 
of the protein. Post-translational modifications can, and often 
do, have a major impact on the activity, half-life in 
circulation, and immunogenicity of a protein. Many types of 
post-translational modifications leave no scientific basis for 
a determination of comparability and submission of abbreviated 
applications.
    Any difference in post-translational modification will 
require significant clinical testing to determine what 
difference it makes clinically. But many are so profound, they 
should simply be considered to make the biologic a different 
biologic, requiring a full application.

                   Preserve incentives for innovation

    In order to preserve incentives to research, develop and 
manufacture new innovative therapies and cures, as well as new 
indications for such products, any statutory pathway for 
follow-on biologics must also provide a substantial period of 
data exclusivity; must respect intellectual property and other 
legal rights; must provide adequate notice and process rights; 
must ensure a transparent statutory and regulatory process; and 
must continue to prioritize the review and approval of new 
therapies and cures. The importance of these measures is 
explained below.
    Include substantial non-patent data exclusivity, during 
which time follow-on manufacturers could not rely on the FDA's 
prior approval of pioneer biologics to support approval of 
their own products. Such data exclusivity is necessary because 
a follow-on biologic may be similar enough to a pioneer 
biologic for regulatory approval purposes, but different enough 
to avoid infringing the innovator's patents. Thus, non-patent 
exclusivity is necessary to maintain effective market 
protection. Further, the fledgling nature of the biologics 
industry, its heavy dependence on access to significant amounts 
of high-cost public and private investment capital, and the 
high risks and costs involved in the development of new 
biologic medicines all warrant a substantial period of 
exclusivity.
    Respect intellectual property and other legal rights. 
Follow-on biologic products should not be approved until after 
all statutory protections, including data exclusivity and 
patent protections, are no longer available for the approved 
pioneer product. Any follow-on biologics pathway should fully 
respect existing protections for trade secret and confidential 
commercial information, and not permit the use of such 
protected data for the purpose of approving follow on products. 
It also must not abrogate or limit constitutional or statutory 
rights of patent holders to protect against infringement.
    Provide adequate notice and process rights. Any follow-on 
biologics regulatory pathway should ensure that patent 
challenges are litigated or otherwise resolved prior to 
marketing approval of the follow-on product, in order to 
protect the innovator's intellectual property rights and avoid 
confusion in the medical, patient, and payer communities. 
Further, any follow-on biologics regulatory pathway should not 
create special patent litigation rules that favor follow-on 
biologics manufacturers.
    Ensure transparent statutory and regulatory processes. 
Manufacturers of innovator products should be provided full and 
fair opportunities to engage Congress and other stakeholders in 
a meaningful public process. Establishing a balanced and 
rigorous statutory pathway for follow-on biologics requires 
deliberative evaluation of numerous complex scientific, legal, 
intellectual property and economic issues. Further, any such 
pathway must require that FDA follow a transparent and public 
process in determining data requirements for the approval of 
specific follow-on biologics.
    Continue to prioritize FDA review and approval of new 
therapies and cures. Any applications for approval of follow-on 
biologics will raise novel and complex questions of science and 
law, requiring substantial time and additional resources to 
ensure a thorough regulatory review for safety, purity, and 
potency. In order to avoid slowing down the FDA's review and 
approval of new therapies and cures, many for currently 
untreatable and serious diseases, Congress must ensure that 
workload associated with these new applications does not harm 
the FDA's ability to efficiently review new drugs and 
biologics, and that new treatments continue to have the highest 
review priority.
    As an oncologist and leader of a comprehensive oncology 
clinical development program, I am extremely concerned about 
the potential that limited or no data exclusivity would have on 
adjuvant--or early-stage--cancer drug development. It is in the 
adjuvant setting that we hope to translate the breakthrough 
discoveries into cures for many of the incurable cancers that 
face us all. Limited data exclusivity in a follow-on biologics 
bill will lessen or eliminate the incentive successful cancer 
innovators have to continue investing in trials beyond the 
metastatic--or advanced stage - disease setting, since 
successful adjuvant trials are apt to return data suitable for 
an FDA submission late in the patent life of the product.
    This is a significant issue because it could hinder 
research and development in the adjuvant setting. These studies 
are typically started only after positive Phase III trials in 
metastatic cancer and could take too long to be valuable and 
allow us to re-invest further in developing innovative 
therapies. Trials of adjuvant therapy are intended to catch the 
cancer at the time before it spreads, where our therapies could 
have the greatest impact for patients. Therefore, the need for 
randomized controlled trials is at its strongest in the 
adjuvant setting and requires a significant investment of time, 
money and human resources, as these trials are much larger in 
size. I will provide a couple of examples to help explain just 
how important this is to patients and our ability to 
potentially end the death sentence that cancer now represents.
    In the case of our drug for HER2 positive breast cancer, 
Herceptin, we were only able to show that the drug could cut 
the recurrence of breast cancer in half in women with adjuvant 
HER2 positive disease years after completing a rigorous 
clinical trial and submission program in metastatic HER2 
positive breast cancer. Prior to completing additional clinical 
studies of Herceptin, a diagnosis of HER2 positive breast 
cancer was among the most deadly a woman could receive. The 
approval for Herceptin in the adjuvant setting occurred 8 years 
after the original approval in the metastatic setting, and 
involved more than 3,500 women in multiple randomized clinical 
trials. These trials can take easily take more than 5 years 
from inception to completion at the cost of hundreds of million 
dollars each, without any assurance of clinical success.
    The Herceptin adjuvant program marked a first step in a 
major initiative to conduct studies of Genentech's targeted 
therapies in earlier stages of disease. This is again a 
critical issue when I think about the potential Avastin may 
have to treat patients with early-stage cancer. There are 
currently more than 300 clinical trials of Avastin underway 
today in more than 20 tumor types--including ovarian, brain and 
adjuvant colon cancer. Our investment in the robust Avastin 
development program is based on what we learned about the 
safety and efficacy of Avastin in metastatic colon, lung and 
breast cancer trials over the past decade.
    Avastin is designed to interfere with the blood supply to a 
tumor by inhibiting VEGF, a protein that plays a critical role 
in angiogenesis, the formation of new blood vessels to the 
tumor. Genentech scientists identified the gene for VEGF more 
than 15 years ago and despite approval to treat patients with 
metastatic colon and advanced non-small cell lung cancer in the 
past 3 years, we are still years away from fully understanding 
how Avastin can best help patients with early-stage disease in 
the critical time before their cancer spreads.

                     The EU Approach to Biosimilars

    We are fortunate that the EU has already made substantial 
progress in developing and implementing a policy based in good 
science and public health, and is consistent with their unique 
regulatory and health care framework. We should be able to 
leverage that work to have a frank and transparent scientific 
debate here in the United States, allowing us to develop a 
model which will be compatible with our own regulatory and 
health care system.
    The key features of the EU process stem from the 
recognition of the unique characteristics of biotechnology 
derived proteins. Several years ago, EU legislation clearly 
distinguished a ``biosimilar'' (the term they use for follow-on 
biologics) from a ``generic'' because of the manufacturing 
principles for biologics that are discussed above. The EU 
legislation did not attempt to define the scientific standards 
for approval of biosimilars. Instead, the EMEA, the science-
based body responsible for approving the marketing of drugs in 
the EU, was trusted with that task. Furthermore, the EU 
legislation did not seek to constrain the ability of the EMEA 
to require data to ensure the safety and efficacy of biologics. 
The EU legislation clearly distinguished a ``biosimilar'' from 
a ``generic'' due to the many scientific concerns discussed 
above; the EU also recognized the inherent dangers of 
interchangeability.
    The EMEA provided a broad regulatory framework, including 
the development of guidance documents, which outline the data 
requirements necessary to for the approval of these products. 
They pursued a science-based, transparent and open process to 
establish concept papers and draft guidances, starting first 
with basic principles for all biosimilars. This was followed by 
more specific guidances, which enumerate testing requirements 
on a product class-by- product class basis. This transparent 
process included public scientific workshops in which all 
parties were invited to offer input. The EU testing 
requirements do allow for abbreviations in testing where 
science and safety permit; however, clinical testing, 
immunogenicity testing, and post-marketing safety surveillance 
are all critical parts of those requirements. In fact, those 
requirements were deemed essential to minimize the risk to 
patients. The EU pathway strives to achieve follow-on biologics 
that are truly highly similar to a reference product while 
acknowledging that important clinical differences may still 
exist upon market approval, making post-marketing clinical 
studies and safety surveillance important.
    In conclusion, I sincerely hope that the experiences and 
principles I have discussed have informed this debate. It is my 
hope that as you examine proposed legislative pathways for 
follow-on biologics, you will pursue a scientifically driven 
public debate to ensure that public policy is well- founded in 
science and supports the development of follow-on biologics 
that are safe and effective. We must ensure that we pay the 
appropriate attention to the principles of patient safety that 
are being discussed in this country and in these halls right 
now.
    It is my hope, and that of BIO and Genentech, that a 
transparent public process leveraging known scientific 
considerations will provide a framework and pathway for the 
approval of follow-on biologics in the United States--a pathway 
that has an overriding concern for patient safety and well-
being. It is also critical that such a framework appropriately 
provide incentives for innovation so that the promise of new 
and innovative biologic therapies will be realized for 
generations of patients to come.
    Again, I thank you for the opportunity to submit testimony 
for this hearing, and look forward to answering any questions 
you may have.
                              ----------                              

    Mr. Pallone. Thank you. Dr. Allan.

STATEMENT OF GEOFFREY ALLAN, PH.D., PRESIDENT, CEO, CHAIRMAN OF 
                THE BOARD, INSMED, INCORPORATED

    Mr. Allan. Good afternoon, Chairman Pallone, and members of 
the Health Subcommittee. Thank you for the opportunity to 
testify today.
    I am Geoffrey Allan, president, CEO, and chairman of the 
board for Insmed, Incorporated, a small biotechnology company 
whose goal is to provide therapeutic products for metabolic and 
endocrine disorders. I am here this afternoon, to urge Congress 
to pass legislation that defines a practical, science-driven 
approval pathway for biogenerics based on the key principles 
that timely approval and timely commercialization of 
biogenerics will create savings to publicly financed healthcare 
programs and will accelerate research and development of new 
and improved lifesaving medications.
    As a pharmacologist, I have spent 27 years in drug research 
and development at both mature pharmaceutical companies and 
early-stage companies like Insmed. I entered this field because 
I understand complex molecules and I have dedicated my work at 
Insmed to helping patients with rare disorders. It is now my 
mission to utilize the scientific experiences and capabilities 
of our industry to bring medicines to patients where there is 
an unmet medical need. My goal is to extend our mission to 
include working with the backbone of the biotech industry, the 
researchers, the contract manufacturers, and like-minded small 
research and development companies to unleash our scientific 
expertise for the development of biogeneric molecules.
    In 2005 Insmed received FDA approval for a drug called 
IPLEX. This drug is an orphan drug to treat children with a 
rare growth disorder. It is a recombinant protein molecule and 
it is similar in complexity to many of the recombinant protein 
products that are the topic of discussion regarding 
biogenerics.
    We believe our experience with the development and approval 
of IPLEX has positioned us to successfully manufacture 
biogenerics. We have developed the infrastructure for the 
manufacture, the preclinical and clinical evaluation for 
recombinant protein products, and we now want to leverage that 
expertise for the development of generic recombinant proteins. 
As I said, we have the scientific and technical experience, the 
personnel, and the facilities to produce safe and affordable 
generic biologics. I believe our experience with IPLEX is very 
illustrative of the scientific and technical issues that 
confront biogeneric drug developers, issues such as 
comparability testing, the nature of clinical data needed to 
support the characterization of a biogeneric product. Given our 
experience of the manufacturing and clinical development of 
IPLEX and including structurally characterizing proteins, 
ensuring potency and purity, I believe the scientific expertise 
and capability exists for many companies to manufacture safe 
and affordable biogeneric products.
    In an effort to provide scientific insight into our 
experiences, Insmed implemented several manufacturing changes 
during the production of IPLEX. We changed cell lines, we 
changed locations, we changed overall facilities. We still 
maintained the purity, the consistency of the product. The 
impact of the manufacturing changes was assessed by 
comparability testing in which we used extensive analytical 
tests and short-term clinical studies to determine if any 
changes to the product resulted. Our experience with IPLEX gave 
us the expertise also in longer term clinical outcome studies 
and in the assessment of the immunogenicity which measures the 
potential antibodies to the IPLEX product.
    One might ask how our expertise in the production of one 
recombinant protein product would allow us to develop any 
generic protein. Although the manufacture of each product is 
unique, they all share the same types of manufacturing 
processes, the same internal quality control systems are used 
to monitor these processes. The manufacturing procedures for 
different proteins have actually more in common than they are 
dissimilar. The same basic technologies and principles are 
applied to fermentation, expression, and purification of any 
recombinant protein product produced. We would not need 
information on the manufacturing methods used for the brand 
product but instead would use our own expertise and tailor it 
to the specific generic protein of interest.
    In fact, some of the exact test methods or specifications 
set by the innovator company that were to standardize the brand 
product may well be outdated. Analytical technology has 
advanced considerably over the last 20 years, and therefore 
there is a real possibility that generic protein drugs will 
have a more robust characterization than the innovator product.
    Brand companies have been quick to point out that sometime 
things can go wrong during the manufacture of a recombinant 
protein product. That is true. I do not know of any industry 
where occasional errors do not happen. However, it is critical 
to understand that there are safeguards that prevent any 
potential errors from ever affecting the safety of the product. 
Patient safety is paramount, and I believe we enforce good 
manufacturing practices that manufacturers do follow, as well 
as the process and the testing, the evaluation that is 
conducted by the Food and Drug Administration in order to 
obtain approval, whether the product is brand or generic. There 
is no reason to believe that a generic biologic would be of a 
lesser quality and less safe than a brand product. The FDA has 
only one single standard to approve safe and effective 
products.
    You have heard that the science now exists to allow for the 
safe production----
    Mr. Pallone. Doctor, if you can summarize, you are about a 
minute over.
    Dr. Schenkein. I apologize. The summary is essentially we 
know that the science is here, we would like to be involved in 
the development of these products, and I would like to thank 
you very much for the testimony this afternoon.
    [The prepared statement of Mr. Allan follows:]

                      Statement of Geoffrey Allan

     Good morning Chairman Pallone, Chairman Dingell, Ranking 
Members Deal and Barton, and Members of the Health 
Subcommittee. Thank you for the opportunity to testify today.
     I am Geoffrey Allan, president, CEO and chairman of the 
board of Insmed Incorporated. I testify before you this morning 
as Chairman of the Coalition for Biotechnology Innovation 
(CBI), and it gives me great pleasure to announce the launch of 
this newly formed organization to give a voice to small 
biotechnology companies that are being brought together by a 
shared interest in advancing innovation in the biotechnology 
industry. Our primary goal is to pass legislation in the 110th 
Congress that defines a practical, science-driven approval 
pathway for biogenerics. Collectively, members of CBI will 
stand together on the key principle that timely approval and 
timely commercialization of biogenerics will create savings to 
publicly-financed health care programs, and will accelerate 
research and development of new and improved life-saving 
medications.
     As a pharmacologist, I have spent 27 years in drug 
research and development at mature pharmaceutical companies in 
combination with my experience at an early-stage company like 
Insmed. --I entered this field because I understand complex 
molecules, and I have dedicated my work at Insmed to helping 
patients with rare disorders. The scientific advancement in the 
biotechnology field has been tremendous, and as the CEO of a 
small biotechnology company whose goal is to provide 
therapeutic products for metabolic and endocrine disorders, it 
is my mission to utilize the scientific experiences and 
capabilities of our industry to bring medicines to patients 
where there is an unmet medical need. My goal is to extend our 
mission to include working with the backbone of the biotech 
industry the researchers, contract manufacturers, and like-
minded small research and development companies to unleash our 
scientific expertise in developing biogenerics.
     As I learned about Congress' interest and role in creating 
a biogenerics market, I felt compelled to contribute to the 
creation of a platform for our coalition to educate Congress 
about the burgeoning interest among smaller biotechnology 
companies to compete in a biogenerics market. I believe we all 
agree that when a generic version or multiple versions of a 
therapy are available, competition will drive down overall cost 
of these life saving medicines. --The development of 
biogenerics will create an explosion of both investment and 
innovation in the biologics market.
     Innovation is at the core of biotechnology and solving the 
mysteries of disease is the goal of our industry. 
Unfortunately, protecting monopolies and the financial bottom 
line has had an impact on this mission. Our hope is Congress 
will allow the FDA to evaluate biogenerics on the basis of 
scientific facts and not the politics of the bottom line. In 
addition, small biotech companies often face financial hardship 
due to the high cost of development, but with the ability for 
small biotech to compete in the biogeneric market, they will 
have a source of revenue to invest into research and 
development of new and improved therapies.
     In 2005 Insmed received FDA approval for the drug, IPLEX, 
to treat children with a rare growth disorder. IPLEX is a 
recombinant protein product that is similar in complexity to 
many of the recombinant protein products that are the topic of 
discussion regarding biogenerics.
     We believe our experience with the development and 
approval of IPLEX has positioned us to successfully manufacture 
biogenerics. Insmed has developed the infrastructure for the 
manufacture, preclinical and clinical evaluation and approval 
of recombinant proteins that we now want to leverage for the 
development of generic recombinant proteins. We have the 
scientific and technical experience, the personnel, and the 
facilities to be able to produce safe and affordable generic 
biologics. 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 of clinical data needed to support 
characterization of a biogeneric product. The same scientific 
approach we applied to the development and approval of IPLEX 
can be applied to the development of biogenerics.
     I believe the scientific expertise and capability exist 
for many companies to manufacture safe and affordable 
biogeneric products. During the development of IPLEX, Insmed 
gained valuable experience in the manufacture and clinical 
development of recombinant protein products. We have developed 
expertise in all aspects of the manufacture of a protein 
product and in the many analytical assays that are used to 
structurally characterize proteins and ensure potency and 
purity. Insmed implemented several manufacturing changes during 
the development of IPLEX, including a change in the cell line 
used to produce IPLEX. The impact of the manufacturing changes 
was assessed by comparability testing in which extensive 
analytical tests were used to determine if any changes to the 
product resulted.
     Insmed also developed several clinical approaches to 
establish safety and efficacy during the development of IPLEX. 
These included pharmacokinetic studies to determine the level 
of product in the blood and how long it lasts and 
pharmacodynamic studies that were short-term to determine the 
effect of the product on a specific relevant clinical marker. 
Pharmacokinetic studies, and in some cases pharmacodynamic 
studies can also be useful to assess comparability. These 
short-term clinical studies were used together with several 
analytical tests to determine any potential differences in the 
product after a manufacturing change. Our experience with IPLEX 
also gave us expertise in longer-term clinical outcome studies 
and in assessment of immunogenicity, which measures potential 
antibodies to the IPLEX protein.
     One might ask how our expertise in the production of one 
recombinant protein product would allow us to develop any 
generic protein. Although the manufacture of each product is 
unique they all share the same types of manufacturing processes 
and the same internal quality control systems are used to 
monitor these processes. The manufacturing procedures for 
different proteins have more in common than they are 
dissimilar. For example, the same basic technologies and 
principles are applied to the fermentation, expression and 
purification of any recombinant protein product. We would not 
need information on the manufacturing methods used for the 
brand product but instead would use our expertise and tailor it 
to the specific generic protein of interest.
     There is a similar ability to leverage one's knowledge 
regarding structural and analytical characterization of one 
protein to the development of a generic protein. While the 
types of analytical tests are tailored to each product there 
are well established batteries of tests that are common for 
proteins. One would not need the exact test methods or 
specifications set by the innovator company that were used to 
standardize the brand product. In fact, some of the tests used 
on the brand product may well be outdated. Since analytical 
technology has advanced considerably over the last 20 years, 
there is a real possibility that a generic protein drug will 
have a more robust characterization than its innovator product.
     There is sometimes a misconception that the skill and 
expertise of generic manufacturers is less than that of brand 
manufacturers. I assure you that at Insmed, our personnel are 
highly skilled and have years of experience in manufacturing 
recombinant protein products. Many of our employees came from 
the brand industry and were involved in the manufacture of the 
brand products that are now under consideration as biogenerics. 
We retain a highly skilled workforce.
     Brand companies have been quick to point out that 
sometimes things can go wrong during a manufacture of a 
recombinant protein product. That is true and I do not know of 
any industry where occasional errors do not happen. However, it 
is critical to understand that there are safeguards that 
prevent any potential errors from ever affecting the safety of 
the product. Patient safety must be paramount. One of these 
safeguards is that every manufacturer must follow strict 
Federal laws and make their product according to Good 
Manufacturing Practices, which mandates multiple internal 
controls and the establishment of precise product 
specifications. Further safeguards are provided by FDA in that 
the FDA thoroughly reviews the manufacturing process, the test 
methods and the quality and integrity of multiple batches 
before it would approve any product, whether brand or generic. 
The FDA also inspects the manufacturing facility before 
approval and at regular intervals after approval to assure the 
quality and integrity of the product, the manufacturing 
facility and compliance with good manufacturing processes. 
There is no reason to believe that a generic biologic would be 
of a lesser quality and less safe than a brand product. The FDA 
has only a single standard to approve safe and effective 
products.
     You have heard that the science exists to allow for the 
safe production of biogenerics. I have told you that Insmed, 
like many other companies, currently has the expertise and 
capability to produce biogenerics. What is lacking at this time 
is legislation that provides the regulatory pathway. We need a 
pathway for biogenerics that gives the FDA authority and 
flexibility. The FDA can determine the scientific issues and 
the amount of data required for the approval of biogenerics on 
a case-by-case basis.
     We expect the FDA to issue general guidance documents at 
some time regarding biogenerics, but guidance documents are not 
absolutely necessary. Furthermore, we would not wait for the 
issuance of guidance before submitting applications to the FDA. 
Insmed believes that close interaction and dialog with the FDA 
on a case by case basis would allow a more robust approval 
process than would result from a broad guidance system. At 
Insmed, we have shown that we can successfully work with the 
FDA and plan to continue to work closely with the FDA during 
the development of future biogeneric products.
     In summary, we have seen that the science is there for 
biogenerics. The expertise and capability also exists for the 
manufacture of biogenerics. However, the regulatory pathway is 
not available and we are asking you to support legislation that 
would create such a regulatory pathway. This would allow not 
only Insmed to make safe and affordable biogenerics available 
to the American public but would open the floodgates for all 
the small biotech firms with the drive, technology, and know 
how necessary to create a new and competitive biogenerics 
industry that will generate savings and new innovation for all.
                              ----------                              

    Mr. Pallone. Thank you. Mr. Kingham.

 STATEMENT OF RICHARD F. KINGHAM, PARTNER, COVINGTON & BURLING

    Mr. Kingham. Thank you very much, Mr. Chairman. I am a 
partner in Covington & Burling. I am assigned to both the 
Washington and London offices, and my practices involves 
regulation of biologics and biotechnology products under both 
U.S. and European community law.
    I submitted a prepared statement that discusses in detail 
the criteria that ought to be applied in establishing a 
legislative pathway for follow-on biologics and also summarizes 
the European community experience with establishing a system 
for so-called similar biological medicinal products.
    In my time now, I would like to focus on a single criteria 
that I believe any such system should satisfy and that is the 
need for a substantial period of non-patent data exclusivity. 
Now, this is a period of time during which follow-on applicants 
may not rely on the safety and effectiveness data submitted by 
an innovative manufacturer in support of a reference product. 
Every developed nation in the world has such a period of time 
that it allows for medicinal products. Data exclusivity serves 
a different purpose from patents. Patents protect inventions, 
any sort of invention, and they are available for any type of 
product and indeed for things that are not even products. 
Innovative medicines present a special societal issue, and that 
is the need to do lengthy, expensive and commercially risky 
studies to demonstrate their safety and effectiveness to meet 
FDA approval requirements. Today it takes about 15 years from 
the time of the original invention to bring a new biotechnology 
product to market, and the fully allocated costs of research 
and development are estimated to be about $1.2 billion per 
product. Even with all this, there is no guarantee that a 
particular product will get to market or that it will recover 
R&D costs if it does. Investments and risks of this magnitude 
are I think unique to the pharmaceutical industry. Whether or 
not patents are available to protect products of this kind, 
society has a profound interest in assuring that there are 
adequate incentives to do the studies necessary to bring these 
products to market.
    Now everything I have said up to now is applicable really 
to all pharmaceutical products, though some of the figures for 
timing and cost may be greater for biotechnology drugs. But 
there are special issues posed by biotech products which I 
believe more clearly justify a substantial data exclusivity 
period.
    Under the Hatch-Waxman Act as applied to small-molecule 
drugs, a generic product for which an abbreviated new drug 
application, or ANDA, is filed must contain an active 
ingredient which has demonstrated to be the same as or 
identical to that of the referenced drug upon which it relies. 
This means that if there is a patent for that active ingredient 
and that patent is valid, it is likely that that applicant will 
run head on into the patent which protects the referenced 
product and therefore the referenced product will enjoy a 
period of effective market exclusivity equal to the life of 
that patent.
    But under any legislative pathway, and I refer not simply 
to the one that Representative Waxman has proposed, but any 
scientifically reasonable approach to the issues presented by 
follow-on biologics, it will in fact be necessary to allow FDA 
the discretion to consider applications for products which are 
similar to but not identical to the referenced products. Dr. 
Woodcock explained the scientific reasons why that is true, and 
that means that the possibility exists for different processes 
and different structures to be used in producing the active 
ingredients of follow-on products so that they will avoid the 
protection of both product and process patents that protect the 
innovator. This creates the real potential for patents not to 
serve the same protective market purpose that is served by 
patents for small-molecule drugs under Hatch-Waxman.
    Now that is the biggest point, but there are subsidiary 
points. Increasingly, for example, the Patent and Trademark 
Office and the courts have required that the patent 
applications, the claims for biotechnology products be even 
more narrowly drawn than in the past, thereby increasing the 
plausibility that people can make small changes in the 
structure of follow-on products and avoid the patents for the 
innovative product. And even if a patent contains claims which 
cover a wide variety or an extensive variety of molecular 
structures, if patent term restoration is granted, it will 
apply only to the specific molecule that was approved by FDA, 
not to the other structures that may be covered by broader 
patent claims. And of course, we saw only last Monday in KSR 
against Teleflex that the Supreme Court is increasingly 
scrutinizing that patents should be granted at all and applying 
a tougher standard with respect to what constitutes a 
significant innovation that warrants protection under the 
patent laws.
    Now, these are all very legitimate issues for patent 
lawyers to be concerned with and for policy discussions to be 
held about. But whatever we decide with respect to the scope of 
patents, there remains an overwhelming need of society to 
provide the incentive for the studies necessary to develop 
these products. What is the period of time that should be 
provided? Well, the Congress said in 1984 that an effective 
patent life of 14 years a period of market exclusivity 
guaranteed by the patent life of a drug was the appropriate 
time. If patent protection is not fully adequate, and I think 
it may not be, then I think the period of 14 years is still the 
right number.
    Thank you very much.
    [The prepared statement of Mr. Kingham follows:]
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    Mr. Pallone. Thank you, Mr. Kingham. Mr. Downey.

   STATEMENT OF BRUCE DOWNEY, CHAIRMAN OF THE BOARD, GENERIC 
      PHARMACEUTICAL ASSOCIATION, CHAIRMAN AND CEO, BARR 
                 PHARMACEUTICALS, INCORPORATED

    Mr. Downey. Thank you, Mr. Chairman. Thank you, Ranking 
Member Deal for inviting me to testify today. I have prepared a 
written statement and I ask that it be accepted into the 
record, and I would like to expand on that in just a few 
points.
    First I would like to say that while I am chairman of the 
GPHA, the Generic Trade Association, I am actually appearing 
today in my capacity as CEO and chairman of Barr 
Pharmaceuticals, a company that is a member of the Generic 
Association and one that aspires to make generic biologics 
which are the subject of this hearing.
    I note at the outset that we are at a historic time, and I 
was thinking as I came over this morning it is a 23-year cycle. 
In 1938, the Food, Drug, and Cosmetic Act was amended to 
require drugs be proven to be safe. Actually 22 years later, 
the Kefauver amendment required they be proven to be effective. 
Twenty-two years after that the Hatch-Waxman bill adds a 
pathway for generic pharmaceutical products, and we are here in 
2007, 23 years later we hope to add a pathway for generic 
biologics.
    And I think we have reached an amazing consensus over the 
last 2 or 3 years hearing members of the committee on both 
sides of the aisle, the number of organizations listed by 
Congressman Waxman in his statement, there really is an 
emerging consensus that it is not whether there should be a 
pathway but what that pathway should look like and what other 
provisions it should contain. I think we all agree or could 
agree that safety is the number one issue, and we as a 
potential manufacturer of generic biologic product certainly 
want to manufacture safe and effective products. So we don't 
disagree with that at all. And we think FDA is the proper 
arbiter of what safety standards should be applied.
    We also think there should be a balance between those in 
the innovator industry and those in the generic industry, a 
balance similar to the one struck in the Waxman-Hatch Act. And 
there were two provisions in that Act that dealt with 
exclusivities and rights of innovators. One was the patent term 
restoration component which as a formula to add patent life to 
products were lost in regulatory review, and I point out that 
that patent term restoration provision not only applies to 
pharmaceutical products but applies to the biologic products 
developed by innovators. So they have already got the 
prepayment on the biologic side of the patent term restoration 
features of Hatch-Waxman.
    Now, Hatch-Waxman also included a 5-year exclusivity--and I 
personally don't object to that period. I certainly will 
disagree with the 14-year period but 5 years I think is an 
appropriate number and one that I could certainly support. I 
can't again speak for my trade association on that point. And 
the third is we all want to ensure that innovation is 
protected, and I would argue and I think correctly argue that 
the pathway for generic pharmaceuticals was the greatest boon 
to pharmaceutical innovation in history because it forced brand 
manufacturers to replenish their products in the face of 
generic competition.
    And so you look at the statistics, and I didn't prepare it 
for today but I certainly could and submit it if the committee 
wants, the rate of investment in R&D in the brand industry 
skyrocketed post Hatch-Waxman because of the threat of generic 
competition. And I think the same will happen here in the 
biologics business. If there is a generic pathway, you will see 
increased innovation and increased spending on R&D.
    I would like to quickly, in my last 90 seconds, cover three 
points. One is that in the pathway that I think we should 
follow, the same standard for BLA, that is innovator biologic 
products, NDA's, ANDA's, and that is a pathway that is sponsor-
initiated, we propose the product, we propose the clinical 
trial, and the FDA responds and it adds requirements or agrees 
as they see proper. I think that provides the great level of 
safety that we all seek. It also provides an efficient and 
flexible system that can deal with different products in 
different ways.
    Second, I think we need to have a provision that would 
permit resolution of intellectual property disputes in advance 
of launching the product. These are very contentious issues. 
Many of these products do not have one or two patents, but 30, 
40 patents and there are disagreements about whether we 
infringe or if they are valid, and there needs to be a 
mechanism that allows those issues to be decided before there 
is a launch of the product that allows both innovator and 
generic companies to manage the risks that they confront and it 
also allows for the earliest lawful entry of the product and 
doesn't allow the litigation post-exclusivity period, post-
patent to delay the launch of a product.
    And then finally I think we need to have the flexibility 
for the FDA to establish the requirements on an individual 
product basis, and I urge we reject the idea of this public 
hearing with all the comments and first to get a draft guidance 
and refine it once it is out. I think that simply delays the 
process, and the process currently followed where your sponsor 
initiated products are presented it to the FDA, the FDA 
comments, we carry it out, has provided safety and efficacy 
over all sorts of pharmaceutical and device products and would 
work very well here. It works for the innovators in the 
biologic area, and I would point out that H.R. 1038 has all 
three of these features and I would urge that whatever 
legislation comes out has them also. Thank you very much.
    [The prepared statement of Mr. Downey follows:]

                      Testimony of Bruce L. Downey

     Chairman Pallone, Ranking Member Deal and members of the 
House Energy and Commerce Committee Subcommittee on Health. I 
am Bruce Downey, the chairman and chief executive officer of 
Barr Pharmaceuticals, a leading global generic pharmaceutical 
company.
     I want to thank you for convening this hearing and for 
allowing me to express my company's views on issues so vital to 
the continued success of the generic pharmaceutical industry--
an industry that saves consumers and taxpayers literally 
billions of dollars each year in prescription drugs costs. 
Indeed, no other industry has made, or continues to make, a 
greater contribution to affordable health care than the generic 
pharmaceutical industry.
    While my testimony today is on behalf of Barr 
Pharmaceuticals, I also serve as chairman of the Generic 
Pharmaceutical Association, which represents more than 100 
generic manufacturers, distributors and suppliers of bulk 
active pharmaceutical chemicals worldwide. I mention my role in 
GPhA because it is important to note that the issue we address 
today--that of generic biological medicines--is at the top of 
the association's priority list of legislative and policy 
initiatives.
     Mr. Chairman, this Congress holds the key that will open 
the door for generic and other manufacturers to provide 
affordable access to many of the life-saving biological 
medicines used in the treatment of diabetes, cancer, rheumatoid 
arthritis, HIV/AIDS and other diseases. Today, the cost of 
these treatments can put them out of reach of many consumers. 
The rheumatoid arthritis and psoriasis treatment Enbrel, for 
instance, costs an average of $16,000 a year per patient. 
Biological drugs for multiple sclerosis range in price from 
$16,000 to $25,000 a year. Neulasta, used to correct 
chemotherapy-induced white blood cell deficiency, costs an 
average $3,500 per chemotherapy cycle.
     What becomes frightening from the cost perspective is that 
not only are the costs of biological treatments getting more 
expensive each year, but the utilization of these medicines is 
growing, as well. These two factors coupled together yields 
exponential growth in the amount we are spending on biologics 
every year.
     According to the 2006 Drug Trend Report released in April 
by Express Scripts, biotech drug spending increased 21 percent 
last year, even as growth in traditional prescription drug 
expenditures slowed. The report showed that growth hormone 
deficiency spending rose nearly 23 percent in 2006 due to a 
10.7 percent increase in utilization, coupled with the increase 
in product cost.
     This dual impact of higher prices and greater utilization 
presents a recipe for disaster which will end in price 
controls. The alternative, as we are seeing in the chemical 
drug sector, is competition.
     Thus, creating a pathway that allows for the introduction 
of safe and affordable generic alternatives to these medicines 
is vital. It not only will save consumers and taxpayers 
billions of dollars a year, but, again, will allow more 
patients access to these important medicines.
     This committee is well aware of the role traditional 
chemical generic drugs play in helping consumers, insurers, and 
the government in achieving billions of dollars in savings each 
year. Generic drugs filled more than one-and-a-half billion 
prescriptions in the U.S. last year. That is nearly 55 percent 
of all prescriptions dispensed nationwide. Considering that the 
average cost of a generic prescription is less than $30, while 
the average cost of a brand prescription is close to $95, it is 
easy to see how the Congressional Budget Office estimates the 
savings generated by generic drug use to be between $8 billion 
and $10 billion each and every year.
     As this committee knows, Congress made these savings 
possible over 20 years ago with the 1984 enactment of the 
Hatch-Waxman Amendments to the Federal Food, Drug, and Cosmetic 
Act. Hatch-Waxman achieves a critical balance between access to 
less costly generics and innovation of new brand-name drugs. I, 
and many others, believe that it is time for Congress to take 
the next step and let generic companies provide savings in the 
biological field. Doing so, however, will require brushing 
aside the current political maneuvering that threatens progress 
on this issue, and enacting appropriate legislation that would 
allow FDA to begin approving safe, effective, and affordable 
generic biologics.

                               Discussion

     Today, I want to briefly discuss three points that I hope 
this committee will consider as you move forward on generic 
biologics legislation:

     legislation must provide a regulatory pathway for 
approving generic biologics that is free of artificial barriers 
and unnecessary roadblocks, as well as a mechanism for allowing 
expeditious resolution of patent disputes that would delay 
generic market entry;
     market competition generated by generic biologics 
would unleash incentives for further innovation of newer 
medicines, just as Hatch-Waxman did over twenty years ago; and
     generic biologics will provide a market-based 
mechanism to help manage private and Federal expenditures and 
achieve significant savings.

                        I. Legislative Framework

     Effective generic biologics legislation must include two 
parts: a regulatory pathway that allows FDA to expeditiously 
approve safe and affordable generic biologics and a mechanism 
for allowing generic companies to resolve certain patent 
disputes without delaying FDA approval. I will discuss some 
important aspect about both of these issues.

                           A. Approval Pathway

     Effective biologics legislation must include a regulatory 
approval pathway that does not impose unnecessary barriers to 
prompt market entry. Hatch-Waxman was largely successful in 
achieving this goal for generic drugs regulated under the 
Federal Food, Drug and Cosmetic Act, and this legislation 
should do the same for biologics regulated under the Public 
Health Service Act. An adequate abbreviated pathway must 
include, for example:

      clearly defined comparability criteria;
      provisions giving FDA discretion to require the 
needed tests--and only the needed tests--to make safety and 
effectiveness determinations;
      provisions setting forth the circumstances under 
which FDA can deny approval;
      provisions setting forth the contents of an 
abbreviated biological application;
      the ability to obtain an interchangeability 
rating that is immediately operative;
      no unique names for generic biologics, which is 
fully consistent with FDA's position that unique biologic names 
should not be used to differentiate products with the same 
active ingredient(s) when credible scientific data demonstrate 
that no pharmacologically relevant differences exist;
     a timely review process that allows a company to 
discuss with the FDA research and testing and to know when 
action on the application can be anticipated; and
     an approval process that gives FDA flexibility as 
to what should be required on the label.

     Equally as important, effective biologics legislation must 
not include provisions like those advocated by groups such as 
BIO--provisions that would unnecessarily delay approval and/or 
prevent consumers from receiving the biggest benefit from 
generic biological products. For example, legislation should 
not include:

      a requirement that all generic applications 
include full clinical and human trials, or any clinical trials 
other than those that FDA deems necessary to the relevant 
scientific issues;
      further legislation, or Congressional 
authorization/oversight or FDA regulations or guidances before 
the agency can give an interchangeability rating to a generic 
product;
      unique names for generic biologics, which would 
impede interchangeability findings and thus prevent the 
substitution of generic for brand that is essential for cost 
savings;
      provisions requiring agency-issued guidance or 
notice and comment rulemaking, which can take years and years 
to complete, before FDA can accept or approve a generic 
biologic application; and/or
      provisions requiring the generic company to have 
an identical label to the reference product, particularly where 
the brand has patented certain labeling information.

    There is no justification for provisions like these, which 
will delay generic market entry and the interchangeability 
rating needed for consumers to benefit most from generic 
competition. They are entirely unnecessary to ensuring approval 
of safe and affordable generic biologics.
     For example, while today clinical data may be needed for 
most biological products, Congress should not impose rigid 
requirements for such testing in all circumstances. Rather, 
Congress should give FDA the ability to draw on its decades of 
experience with these compounds by granting the agency the 
discretion to require such tests only when it determines that 
such clinical studies are needed.
     It is significant that FDA agrees. FDA Deputy Commissioner 
Janet Woodcock addressed this during Congressman Waxman's 
Oversight & Government Reform Committee hearings last month, 
testifying that the ``use of human subjects for trials that are 
not needed but are simply to check a box on a regulatory 
requirement is not desirable.'' Dr. Woodcock added that the 
ability to physically characterize protein molecules and other 
complex substances ``has evolved and is continuing to evolve'' 
and that ``flexibility in enabling FDA to incorporate the new 
science into the regulatory process...is in the best interest 
of the public as well as the agency and the industry.'' 
Congress has entrusted FDA to make scientific judgments 
regarding drugs and biologics. This scientific advice from the 
agency should be headed.
     Barr urges Congress to pass a regulatory framework for 
approving generic biologics that is free of unnecessary 
barriers and roadblocks in the form of artificial requirements, 
such as clinical studies and agency guidances. Such a framework 
will give FDA the flexibility it needs to approve safe and 
interchangeable generic biological products as quickly as 
possible.

              B. Patent Provisions and Other IP Provisions

     A key part of effective generic biologics legislation is a 
mechanism that allows the generic company to resolve certain 
patent disputes without that litigation impacting FDA approval. 
This was also a goal of Hatch-Waxman, although the brand 
industry has found ways around the law's intent, which was that 
patent disputes be resolved early, so that the generics can 
enter the market at the earliest time after valid and 
applicable patents have expired. Barr submits that any bill 
providing a pathway for generic biological products should take 
into account what we have learned from our 20-plus years of 
experience with the Hatch-Waxman patent provisions and improve 
upon that system in order to ensure that affordable biological 
products reach the public as quickly as possible. Thus, an 
effective generic biologic bill must, at the very least, 
contain patent provisions like the following:
      First, companies need patent certainty prior to 
marketing. Without it, companies will not invest in bringing 
affordable, comparable products to market prior to patent 
expiration because doing so could subject them to enormous 
patent infringement damages. Thus, effective legislation must 
include provisions that allow a generic company to obtain the 
required certainty--through litigation if necessary--while FDA 
is reviewing the application.
      Second, equally as important, however, is the 
fact that generic companies not be forced to litigate every 
patent relating to the brand product in order to obtain the 
patent certainty needed to launch. Thus, a biological patent 
system should provide a mechanism for litigating only those 
patent disputes that the generic company believes would delay 
its launch. There will be other patents--for example patents 
applicable to manufacturing processes that the generic company 
is not using--for which the only effect of early litigation 
would be unnecessary delay. I am not suggesting that the brand 
company should forever be foreclosed from asserting its 
patents. The brand company should have that opportunity, just 
not before the generic company markets its product. 
Accordingly, the system that will allow for the most 
expeditious generic market entry is one that permits the 
generic company to select the patents that will be litigated 
pre-product launch. This system also protects the brand 
company's intellectual property by allowing for suit on any 
patent that can reasonably be asserted after the generic 
company begins marketing.
      Third, generic companies need to be able to 
resolve patent disputes without those disputes delaying the FDA 
approval process, as we now experience with small molecule 
drugs under Hatch-Waxman.
      Fourth, generic companies must be able to 
litigate patent disputes quickly and efficiently. This will 
only happen if the generic company is permitted to designate a 
forum that would allow for more efficient litigation 
resolution. Right now, the brand company has the ability to 
bring suit against an ANDA applicant in virtually any district 
court in the country. Brand companies increasingly have brought 
suit in districts with the longest time to trial. In some 
courts, its takes from three to five years just to get to 
trial. Where certainty is essential, this means more delayed 
market entry.
      Fifth, if a brand company refuses to participate 
in the patent process, as increasingly happens with small 
molecule applications, the generic company must be allowed to 
enter the market without risking potentially massive damages. 
Under proposals such as those found in H.R. 1038, generic 
companies have some protection in the event that the brand 
company refuses to participate in the patent process. Brand 
companies have complained that this takes away substantive 
patent rights and forces them to give what amounts to a 
compulsory patent license. Not true. These provisions only 
apply if the brand company violates its statutory obligation to 
participate in the patent process. If the brand company follows 
the law, all of its patent rights would remain intact.
    Finally, part of the so-called IP discussion surrounding 
generic biologics is the idea of exclusivity. On the generic 
side, the issue is clear: consumers and taxpayers, without 
question, will see the most significant savings from 
interchangeable products. Thus, it is essential that any 
generic biologics bill incentivize generic companies to do the 
work necessary to achieve an interchangeability rating from 
FDA. At present, no such incentive currently exists and, 
therefore, will need to be included in the legislation.
     On the brand side, the issue also seems clear: lengthy, 
new exclusivity periods for brand companies are not necessary 
because the law currently provides more than enough incentive 
to continue innovating. For example, brand companies already 
get significant incentives, including multiple provisions 
allowing for patent term restorations, orphan drug exclusivity, 
and various tax credits. If the brand companies disagree, they 
are free to come forward and present data to support their 
argument. Indeed, Representative Waxman has invited discussion 
on this issue. However, the brands have not yet come forward 
with any concrete data that would suggest that additional 
incentives are necessary. It is my view that only if they do 
come forward with such evidence should Congress consider 
enacting new exclusivity periods.

              II. Generic Competition Will Spur Innovation

     There is a misconception that market competition from 
generic biologics would diminish the incentive for originators 
to innovate new biologics. Generic competition will not slow 
innovation. In fact, just the opposite would be true. Market 
competition generated by generic biologics would accelerate 
further innovation of new biological products, while at the 
same time lowering the cost of treatment with existing 
medicines.
     For example, Dr. Scott Gottlieb, recently the FDA Director 
of Medical Policy Development and Deputy Commissioner for 
Medical and Scientific Affairs, has explained: ``Legislation to 
expose today's biologics to easier competition, after 
legitimate patents have expired, is going to accelerate 
development of improved products, not just lower-cost. Those 
making static assumptions .--.--. about how much savings this 
legislation is likely to bring are losing sight of the 
competition and progress it will have unleashed.'' [Forbes 4/
17/07 edition (emphasis added)]. Similarly, the January 2007 
study released by the Pharmaceutical Care Management 
Association concluded that increased competition from generic 
biologics would not only create pressure to reduce the cost of 
these products, but also produce added incentives for further 
innovation. Thus, generic biologics legislation would provide 
the dual benefit of increased savings and advancements in 
medical treatments.

                              III. Savings

     No one can legitimately dispute that generic biologics 
will provide a market-based mechanism to help manage private 
and Federal expenditures and achieve significant savings. And 
no one can dispute that the American health care system has 
ever needed those savings more than it does today.
     As the use of life-saving biological drugs continues to 
increase, so does the amount consumers and taxpayers spend. 
Indeed, spending on biotech drugs increased 21 percent in 2006, 
to approximately $40 billion, according to the 2006 Drug Trend 
Report. Spending in this sector is expected to grow to $100 
billion over just the next four years. By 2010, biological 
medicines will account for 26 percent of total drug spending in 
the U.S. It is particularly important to note that Medicare 
spending for biological drugs continues to escalate 
disproportionately to Medicare funding. To put things in 
perspective, Medicare and Medicaid will spend $2.5 billion this 
year on just one biological drug--the anemia treatment Epogen--
which is a half-billion dollars greater than the entire fiscal 
year 2007 budget of the Food and Drug Administration.
     The solution to managing this spending is, of course, the 
use of safe and effective, lower-cost generic biologics. Just 
as generic chemical drugs have saved billions of dollars so, 
too, will generic biological drug products. A study released by 
Express Scripts in February 2007 showed that generic biologics 
would save payors $71 billion over 10 years. An Engel & Novitt 
study in January 2007, as well as other independent economic 
analyses we have seen, show that generic biologics would 
generate significant savings for Medicare Part B reimbursed 
medicines. Now, the brand companies take issue with some of 
these studies. Significantly, though, they do not take issue 
with the fact that generic biologics will save billions of 
dollars. They only take issue with how many billions will be 
saved. But in the end, whether the number is $71 billion or 
$7.1 billion, we simply cannot afford to lose the savings that, 
without question, would be achieved through use of generic 
biological medicines.
     Congress should act now and pass legislation giving FDA 
authority to review abbreviated applications for generic 
biologics. The agency would be able to begin reviewing those 
applications as soon as they were submitted and the public 
would be assured that when the FDA approves a generic version 
of a biological product, just as has been the case with 
traditional drugs over the past 30 years, it will be safe, 
effective and have the same performance as the innovator 
product.
     Chairman Palone and Members of the Committee, Barr always 
has been deeply committed to providing the public with 
affordable, safe generic drug products, and to do so as 
expeditiously as possible under the circumstances. That is why 
Barr has joined with consumer groups like AARP, Consumers 
Union, Families USA; employee unions life AFL-CIO and AFSCME; 
major corporations like Caterpillar, Ford, GM, and Kodak; 
healthcare providers Aetna, Blue Cross Blue Shield and Kaiser 
Permanente; pharmacy leaders like CVS/Caremark and the National 
Association of Chain Drug Stores; and no less than 18 of the 
nation's governors in calling on Congress to pass legislation 
creating the framework for the approval of safe, effective and 
lower-cost generic biological drugs.
     Congress has the opportunity this year to create--a huge 
win for patients, for taxpayers and for employers alike.-- 
Indeed, effective generic biologics legislation very well could 
be the most important piece of consumer legislation enacted 
this year. We urge Congress to move forward in this effort.
     Thank you, Mr. Chairman. I am happy to respond to any 
questions you and the committee may have.
                              ----------                              

    Mr. Pallone. Thank you. Ms. Hoffman.

      STATEMENT OF RUTH HOFFMAN, EXECUTIVE DIRECTOR, THE 
           CANDLELIGHTERS CHILDHOOD CANCER FOUNDATION

    Ms. Hoffman. Chairman Pallone, Ranking Member Deal, and 
members of the committee, I sincerely thank you for giving me 
the opportunity to testify on an issue of great importance to 
the childhood cancer community and to me personally.
    I am here today to explain the crucial role of biologics in 
the ongoing war on childhood cancers. Children with cancer have 
unique needs. They are not simply little adults; children have 
their own biological systems and unique tumor 
characterizations. Current toxic therapies that have proven 
effective for adults aren't a solution for children with 
cancer. In fact, these treatments are causing secondary cancers 
in the children who do survive to adulthood.
    The best hope for children with cancer rests in the 
research and development of new and targeted biologics. So 
please don't deprive children with cancer future cures by 
depriving the biotech industry of incentives to innovate.
    My name is Ruth Hoffman, and I am the executive director of 
the National office of Candlelighters Childhood Cancer 
Foundation. Candlelighters was founded in 1970 by concerned 
parents of children with cancer, and today we have a membership 
of over 50,000 families at the national office and more than 
100,000 families across the country.
    Advocating for children with cancer is my job, but I am 
also the mother of eight children, including a 20-year survivor 
of childhood cancer.
    On July 10, 1987, my world changed forever. My 7-year-old 
daughter had been sick for 9 months. She had been diagnosed by 
her family physician as having a bug bite, a virus, an 
infection--she was on antibiotics; ear infections--she had 
tubes put in; tonsillitis, she had her tonsils and adenoids 
removed; and a neurotic mother, who is me. Despite these 
attempts to explain her failure to thrive, Naomi continued to 
deteriorate to a mere 32 pounds. So in shear desperation, I 
carried her to the emergency ward of our local Children's 
Hospital and it was on that day in July that I heard the words 
that seared my heart and my soul forever, my daughter had 
cancer.
    Naomi was diagnosed with acute myelogenous leukemia, M5, 
the bad leukemia. Her prognosis was poor. Few survived AML in 
1987. Fortunately, bone marrow transplants were just beginning 
as a potential therapy to treat children with AML, and her 9-
year-old brother was a perfect donor match. Her treatment 
included IV chemotherapy for 5 days on, 24 hours a day, 
followed by 3 weeks off, and that continued for 5 months. This 
was followed by high-dose chemotherapy and total body 
radiation. After 9 months of living in a complete bubble 
environment where for many months she never was able to get off 
her bed, Naomi was considered cured.
    What I didn't know then but I sadly know now is that 
childhood cancer is for life. The 5-year survival rate used to 
determine adult cancers as ``cured'', has little meaning to 
children who complete treatment at 8 years of age. We are 
treating children with intensive toxic therapies at a time in 
their lives when they have growing bodies and developing 
brains. You can't treat a young child's body with these kinds 
of invasive therapies and not impact their overall health for 
the rest of their life.
    Naomi did not emerge from her treatments unscathed, either. 
She has cataracts, heart damage, endocrine dysfunction, and is 
sterile. Then 2\1/2\ years ago, I received a second call that 
made my life stand still once again. Naomi was diagnosed with 
papillary thyroid carcinoma, metastatic to her lymph and bones, 
a second cancer but this was caused directly by the total body 
radiation that she received as a little girl to treat her first 
cancer.
    Treatment for children with cancer really hasn't changed 
much since Naomi was originally diagnosed in 1987. Today all 
children with cancer continue to be treated solely, and I say 
solely with highly toxic cancer drugs that were developed 20 to 
30 years ago. Only one new drug has received marketing approval 
by the FDA for childhood cancer in the last decade. That drug 
too was not a new class of smart drugs or biologics, it too was 
another toxic chemotherapy agent.
    These traditional chemotherapy drugs have not provided a 
cure for many childhood cancer tumor types. Cancer remains the 
No. 1 disease killer of America's children, more children still 
die from cancer than cystic fibrosis, muscular dystrophy, 
asthma, and AIDS combined.
    Those who do survive face lifelong late effects including 
severe drop in IQ, heart damage, sterility, deafness, severe 
growth deficits, and most shockingly, secondary cancers. What 
is even more disturbing is that these mortality rates have not 
changed in the last decade. I want to repeat that. Toxic 
chemotherapy and radiation treatments have not increased the 
survivorship of children within the last 10 years. We have 
reached a plateau with survival rates, and we have reached a 
limit of toxicity from current chemotherapy drugs and radiation 
treatments that we can give our children. I can't offer hope to 
any more families whose children are diagnosed with cancer 
today than I could 10 years ago.
    Is there hope for these youngest cancer patients in this 
country? Absolutely. We stand at the threshold of a new era in 
the genetic treatment of disease. Large research initiatives 
are underway to identify the genetic fingerprints of many types 
of adult cancers, but funding for targeted therapeutic research 
for childhood cancer is minimal. What kids need is increased 
incentives for industry to develop new types of targeted 
therapies to treat children with cancer, not fewer incentives.
    Children with cancer need treatment breakthroughs. They 
need new molecular-based therapies that will kill the cancer 
and not the kid. Biologic drugs have proven to be an effective 
weapon in the war on cancer for adults.
    Today you are considering the important issue of allowing 
for abbreviated approvals of biosimilar products. We fully 
support increasing access to affordable drugs, but what kids 
with cancer really need most is access to drugs that can truly 
treat and truly cure their disease. Please don't create 
legislation that reduces costs by reducing incentives for 
biotech companies to develop targeted therapies for cancer. For 
me and for the parents I represent, lifesaving trumps cost 
saving any day.
    My daughter Naomi draws her inspiration from something 
Ralph Waldo Emerson wrote: ``Do not go where the path may lead, 
go instead where there is no path and leave a trail.'' We are a 
nation of trailblazers and innovators. I want to thank 
Representatives Inslee, Baldwin, and Green for introducing 
legislation that will enable this tradition of innovation to 
thrive in service to our Nation's children with cancer.
    Candlelighters' motto is ``...because kids can't fight 
cancer alone!'' and I urge the members of this committee to 
think hard about the impact of your decisions on young lives. 
Kids can't fight cancer alone. They rely on adults like you and 
me to offer them hope so that they too may live a long a 
healthy life.
    [The prepared statement of Ms. Hoffman follows:]

                       Testimony of Ruth Hoffman

    Chairman Pallone, Ranking Member Deal, and members of the 
subcommittee, I sincerely thank you for giving me the 
opportunity to testify before you today on an issue of great 
importance to the childhood cancer community, and to me 
personally.
    I'm referring to the crucial role of biologics in the 
ongoing war on childhood cancers. Children with cancer have 
unique needs. They are not simply ``little adults;'' children 
have their own biologic systems and unique tumor 
characterizations. Current toxic therapies that have proven 
effective for adults aren't a solution for kids with cancer--in 
fact, these treatments are causing secondary cancers in some of 
the children who survive to adulthood. The best hope for 
children with cancer rests in the research and development of 
new and targeted biologics. I am here today to explain to the 
committee how important it is that you not deprive children 
with cancer of future cures by depriving the biotech industry 
of incentives to innovate.
    My name is Ruth Hoffman, and I am the executive director of 
the national office of Candlelighters Childhood Cancer 
Foundation. Candlelighters was founded in 1970 by concerned 
parents of children with cancer. Our mission, then and now, is 
to provide information and awareness for children and 
adolescents with cancer and their families, to advocate for 
their needs, and to support research so every child has the 
opportunity to survive and lead a long and healthy life. Today 
we have a membership of over 50,000 members of the national 
office and more than 100,000 members across the country linked 
to our 37 affiliate offices in 28 States.
    Advocating for children with cancer is my job as Director 
of Candlelighters. But I am also the mother of a 20-year 
survivor of childhood cancer.
    Twenty years ago, on July 10, 1987, my world changed 
forever. I was 31 years old, had a 9-year old son, a 7-year old 
daughter (Naomi), a 1-year old son--and I was 5 months pregnant 
with identical twin boys. My daughter Naomi had been sick for 9 
months. She had been diagnosed by our family physician as 
having a bug bite, virus (put on antibiotics), ear infections 
(had tubes put in), tonsillitis (tonsils and adenoids removed), 
and a neurotic mother--me! Despite these attempts to explain 
her ``failure to thrive,'' Naomi continued to deteriorate to a 
mere 32 pounds. She was no longer able to walk. So in sheer 
desperation, I carried her to the emergency ward of our local 
Children's hospital. It was on that day in July that I heard 
the words that seared my heart and my soul forever: ``Your 
daughter has cancer.''
    Naomi was diagnosed with Acute Myelogenous Leukemia (M5)--
the ``bad'' leukemia. Her prognosis was poor. Few survived AML 
in 1987. Fortunately, bone marrow transplants were just 
beginning as a potential therapy to treat children with AML, 
and her 9-year-old brother was a perfect donor match for Naomi. 
Her treatment included I.V. chemotherapy for 5 days on, 24 
hours a day, followed by 3 weeks off, for 5 months. This was 
followed by high dose chemotherapy and total body radiation. 
After 9 months of living in a complete bubble environment, 
Naomi was considered ``cured.'
    What I didn't know then, that I sadly know now, is that 
childhood cancer is for life. The 5-year survival rate used to 
determine adult cancers as ``cured'' has little meaning to 
children who complete treatment at 8 years of age. We are 
treating children with intensive toxic therapies at a time in 
their lives when they have growing bodies and developing 
brains. You can't treat a child's young body with these kinds 
of invasive therapies and not impact their overall health for 
the rest of their life.
    Naomi did not emerge from her treatments unscathed. She had 
cataracts, heart damage, endocrine dysfunction, and was 
sterile. But she had her life, and she was determined to live 
it to the fullest. Then, 2\1/2\ years ago, shortly after Naomi 
graduated from college, I received the call that made my life 
stand still once again. Naomi was diagnosed with papillary 
thyroid carcinoma, metastatic to her lymph and bones--a second 
cancer--but this one was caused directly by the total body 
radiation that she received to treat her first cancer.
    Naomi just keeps living her life and doing her best to 
invest it with meaning. She currently works at Children's 
National Medical Center here in Washington, DC, where she's 
employed as a clinical trial coordinator for a study of boys 
with Duchenne Muscular Dystrophy. She volunteers as a camp 
counselor for children with special needs including cancer, and 
she recently attended the Lance Armstrong Summit in Texas, 
where she represented and advocated for survivors of childhood 
cancer.
    Naomi lives every day with the fact that, in all 
likelihood, cancer will end her life prematurely. But she 
hasn't given up hope. On the contrary, she's more committed 
than ever to making her life matter--not just to herself, but 
to other young people with cancer. She's so committed to the 
search for new molecular-based therapies for children with 
cancer that she is organizing her own fundraiser this November. 
Naomi's Hope for a Cure will raise money for research towards a 
genomic characterization of pediatric AML.
    Treatment for children with cancer hasn't really changed 
much since Naomi was originally diagnosed in 1987. Today, ALL 
children with cancer continue to be treated solely with highly 
toxic cancer drugs that were developed 20 to 30 years ago. Only 
one new drug has received marketing approval by the FDA for 
childhood cancer in the last decade. That drug was not a new 
class of ``smart drugs.'' It too was another toxic chemotherapy 
agent.
    These traditional chemotherapy drugs have not provided a 
cure for many childhood cancer tumors, and they leave those 
children who do survive facing lifelong late-effects, including 
severe drop in IQ, heart damage, sterility, deafness and--most 
shockingly--secondary cancers. As a result, cancer remains the 
number one disease killer of America's children--more children 
still die from cancer than Cystic Fibrosis, Muscular Dystrophy, 
Asthma, and AIDS combined.
    Every day I get calls from frantic parents around the 
country, looking for guidance and for hope. Just last week, I 
got a call from a young father whose 10-day old son, Jack, had 
just been diagnosed with a brain stem tumor. My job was to tell 
him that all doctors can offer infants like Jack is 
chemotherapy--they can't radiate children under three. What I 
did not want to tell him was that even with treatment there's 
only a 10 percent chance that Jack will survive to see his 
second birthday. Jack is not alone. Only half of children 
diagnosed with metastatic bone cancer will survive 5 years. 
Even today, half of children and teens diagnosed with Naomi's 
original cancer--acute myelogenous leukemia--will die within 5 
years.
    What is even more disheartening is that these mortality 
rates have not changed in the last decade! I want to repeat 
that: the toxic chemotherapy and radiation treatments that we 
are giving our children with cancer have NOT increased 
survivorship in the last 10 years! We have reached a plateau 
with survivorship rates, and we have reached the limit of 
toxicity for current chemotherapy drugs and radiation 
treatments. I can't offer any more hope to families whose 
children are diagnosed with cancer today, than I could 10 years 
ago.
    As director of Candlelighters, I've come here to tell you 
that the status quo is not good enough for children with 
cancer. As Naomi's mother, I'm asking you: ``Can't we do better 
for our children?''
    Is there hope for this youngest cancer patients? The answer 
is a resounding YES! We stand at the threshold of a new era in 
the genetic treatment of cancer. Large research initiatives are 
underway to identify the genetic fingerprints of many types of 
adult cancers--but funding for targeted therapeutic research 
for childhood cancer is minimal, and lagging behind today's 
adult cancer research initiatives. What kids need is increased 
incentives for industry to develop new types of targeted 
therapies to treat children with cancer.
    Children with cancer need treatment breakthroughs. They 
need new molecular-based therapies that will ``kill the cancer, 
not the kid.'' Biologic drugs have proven to be an effective 
weapon in the war on cancer for adults, and one of the most 
promising treatments for the future. Because conventional 
chemotherapy and radiation treatments are so dangerous to 
children, young cancer patients are depending on innovative 
biotech companies to continue to develop more effective and 
targeted treatments in the future.
    At this critical moment when targeted therapies are finally 
bearing the fruit of decades of research and providing new hope 
for cancer patients and their families, it is essential that we 
not undermine the development of these life-saving biologic 
agents.
    Today you are considering the important issue of allowing 
for abbreviated approvals of biosimilar products. We fully 
support increasing access to affordable drugs. But what kids 
with cancer need most is access to drugs that can treat and 
cure their disease. A policy that produces more copies and less 
innovation will not help the children and their families living 
with cancer. Please don't create legislation that reduces costs 
by reducing incentives for biotech companies to develop 
targeted therapies for cancer. For me, and for the parents I 
represent, life-saving trumps cost-saving any day.
    Elizabeth Edwards said in her statement to the press upon 
her relapse of breast cancer, ``Femara didn't exist 5 years 
ago. I don't expect to get yesterday's medicine. If I can help 
it, I'd like to get tomorrow's medicine.'' Don't our children 
with cancer deserve the promise of tomorrow's drugs as well? 
The R&D pipeline for new biologics is a lifeline of hope for 
these kids and their families. Please don't shut it off.
    My daughter Naomi draws her inspiration from something 
Ralph Waldo Emerson wrote: ``Do not go where the path may lead, 
go instead where there is no path and leave a trail.'' We are a 
nation of trailblazers and innovators. I want to thank 
Representatives Inslee, Baldwin, and Green for introducing 
legislation that will enable this tradition of innovation to 
thrive in service to our Nation's children with cancer. And I 
want to thank the committee for recognizing that the future of 
biologics can't be measured in dollars and cents alone--that 
the bottom line for patients and their families is the 
priceless currency of life, health, and hope.
    Candlelighters' motto is ``... because kids can't fight 
cancer alone!'' I urge the members of this committee to think 
hard about the impact of your decisions on young lives. Kids 
can't fight cancer alone. They rely on adults like you and me 
to offer them hope, towards a healthy adult future of their 
own.
                              ----------                              

    Mr. Pallone. Thank you, Ms. Hoffman, and thank you for 
telling the story about your daughter and implications that you 
think it has for the legislation. We appreciate it.
    Dr. Weisbart.

STATEMENT OF ED WEISBART, M.D., CHIEF MEDICAL OFFICER, MEDICAL 
                 AFFAIRS, EXPRESS SCRIPTS, INC.

    Dr. Weisbart. Thank you. First I want to just tell you how 
sorry I am for the problems in your family.
    I am Dr. Ed Weisbart. I am the chief medical officer at 
Express Scripts, and I am a practicing physician; and I am 
delighted to be here today to talk about the issue of 
biogenerics from the perspective of a leading pharmacy benefit 
management company. Express Scripts would like to thank you and 
the committee for consideration of this historic policy which 
we believe will fundamentally improve health outcomes by giving 
people access to lower-cost biologic alternatives.
    Express Scripts is one of the Nation's largest pharmacy 
benefit managers. We monitor prescription drug trends and 
expenses for 1,600 clients including large, self-insured 
nationwide employers; Government payers; unions; and across the 
sector health insurance companies, with over 50 million 
American lives. We work every day on behalf of our clients and 
their patients to make prescription drugs safer and more 
affordable. It should come as no surprise that with the rise in 
cost of biotech pharmaceuticals that our clients are looking to 
us for advice on how to manage this ever-increasing biotech 
drug spend. In fact, our clients are demanding that we help 
deal with this issue.
    I would like to make three main points today. First, 
specialty drug spending, especially in biologic agents, is 
growing at an alarming rate. Second, pharmacy benefit managers 
have developed many highly effective tools to manage the 
increasing cost of prescription drugs, and third, we are eager 
to apply these tools to biogenerics with the potential benefits 
to patients, plan sponsors, and the certainly to the 
Government.
    Spending on pharmaceuticals is now 11 percent of total 
healthcare spending. Within pharmaceuticals are specialty drugs 
which are mostly the highly priced biologic agents we have been 
discussing. As spending for non-specialty pharmaceuticals now 
slowed to single-digit growth, specialty drug spending is now 
up to 26 percent increase in 2006.
    In 2006, spending on specialty drugs was $54 billion, 
representing 20 percent of the pharmaceutical spending. In 
2010, spending for specialty drugs will nearly double as we 
heard today to almost $100 billion. This rate of increase is 
the second highest rate of increase in healthcare today, 
exceeded only by diagnostic imaging tests, the second largest 
today.
    As I said, Express Scripts represents 1,600 clients, 
managing the pharmacy benefit for over 50 million Americans. We 
have sophisticated tools such as formularies, tiered co-
payments, step therapies, and a variety of other 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 we have is the promotion of 
generic medications. Generic medications are time-tested, 
proven to be clinically effective, and have highly 
characterized safety profiles. An additional advantage, of 
course, is that they are the most affordable option for 
patients and plan sponsors. Because of the affordability and 
the other reasons, patients actually have higher compliance 
rates with generic medications than with the newer brand 
medications. Using these programs, our company leads the 
industry in filling as many as 60.3 percent of all 
prescriptions with generic drugs. If I had more time, I would 
be delighted to tell you of the success we have had lately in 
promoting the adoption of generics in the statin category last 
year. In that category alone, we saved over $230 million for 
our clients and their members, just since January 2006. 
Reducing costs safely, while preserving clinical outcomes and 
not shifting costs to patients is our core competency as a 
pharmacy benefit manager.
    The money spent on biologics is increasing at an alarming 
rate. The legislation before you would allow for a pathway for 
FDA for companies to bring to market generic versions of these 
important medications. We have the tools today to assist 
patients in transitioning to these more cost-effective 
biogenerics. In fact, our transitioning tools would be even 
more effective in this market because of the limited number of 
patients involved, a limited number of prescriptions, and the 
limited number of treating physicians, not to mention the 
enormous potential savings. Our plan sponsors, our clients, are 
extremely motivated to have us help pursue each and every one 
of these savings opportunities.
    Regardless of whether the FDA deems a product 
interchangeable or comparable, we will be quite effective at 
working with prescribing physicians to help patients receive 
the most effective and clinically appropriate care. Many 
studies, including a detailed one by Express Scripts, have 
sought to demonstrate the potential savings associated with the 
FDA's ability to approve biogeneric products. They each differ 
in methodology assumptions but what is clear about each one of 
these studies is that the Federal Government as well as all 
payers stand to find savings in the billions of dollars. That 
is billions with a B, not a number you can ignore in healthcare 
today.
    In closing, this historic legislation will allow patients, 
payers, physicians, and PBM's to work together to make these 
wonderful therapies more available with frankly improved health 
outcomes and tremendous savings.
    Thank you for allowing us to talk about this.
    [The prepared statement of Dr. Weisbart follows:]

                     Testimony of Ed Weisbart, M.D.

    Good Morning Chairman Pallone, Ranking Member Deal and 
other distinguished members of the committee.
    I am Dr. Ed Weisbart, chief medical officer at Express 
Scripts, and 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 and committee for their consideration of this 
historic policy issue which we believe will fundamentally 
improve health outcomes by giving patients access to lower-cost 
biologic alternatives.
    Express Scripts is one of the Nation;s largest pharmacy 
benefit managers. We monitor prescription drug trends and 
expenditures for 1,600 clients including large, self-insured 
employers, government payers, unions and health insurance 
companies with over 50 million lives. We work every day on 
behalf of our clients and their patients to make prescription 
drugs safer and more affordable. It should come as no surprise 
given the dramatic rise in the cost of biotech pharmaceuticals 
that our clients look to us for advice on how to manage this 
ever-increasing biotech drug spend. In fact, they have been 
demanding action to make these therapies more affordable.
    In my testimony today, I want to make three basic points:

     First, specialty drug spend, especially biologic 
agents, is growing at an alarming rate;
      Second, pharmacy benefit managers have developed 
many tools to manage the increasing cost of prescription drugs; 
and
      Third, how we would apply these tools to 
biogenerics and the potential benefit to patients, plan 
sponsors and the government.

    I. Trends in Specialty Spend
    Spending on pharmaceuticals now represents 11 percent of 
total health care spend. Within the pharmaceuticals are 
specialty drugs, which are mostly the high priced biologic 
agents being discussed today. As spend for non-specialty 
pharmaceuticals has slowed to single-digit growth, specialty 
drug spend increased 21 percent in 2006. \1\
---------------------------------------------------------------------------
    1 Express Scripts, Inc., 2006 Drug Trend Report, www.express-
scripts.com/ourcompany/news/outcomesconference
---------------------------------------------------------------------------
    In 2006, spending on specialty drugs was $54 Billion, 
representing 20 percent of the pharmaceutical spend. In 2010, 
spend for specialty drugs will almost double to $99 billion. 
This rate of increase is the second highest in health care 
field, exceeded only by diagnostic imaging tests.

                           II. Tools of PBMs

    As I said, Express Scripts represents 1,600 clients, 
managing the pharmacy benefit for over 50 million individuals. 
To this end, we have developed sophisticated tools, such as 
formularies, tiered copayments, step therapies and drug 
utilization management programs to name a few. These tools 
promote the most clinically sound and cost effective use of 
pharmaceuticals.
    One of the most potent tools we have is the promotion of 
generic medications. These therapies are time-tested, proven to 
be clinically effective, and have well characterized safety 
profiles. One additional key advantage is that they are the 
most affordable option for patients and plan sponsors. For 
these reasons, patients achieve higher compliance rates with 
these therapies. Utilizing these programs, our company leads 
the industry in filling as many as 60.3 percent of all 
prescriptions with generic drugs.
    When a particular drug comes off patent and can be filled 
with a generic, that fill rate climbs to about 96 percent. An 
example of this would be when simvastatin came onto the market 
as a generic version of Zocor.
    Where there is considerable patient monitoring needed, such 
as the case in preventing transplant rejections, what we call a 
narrow therapeutic index, physician prescribing patterns are 
more cautious and we see a generic fill rate of 83 percent.
    These generic fill rates are based on empirical drug spend 
data.
    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 independent self-governing 
committee is made up of both primary care and sub-specialty 
physicians and pharmacists, none of whom are employed by 
Express Scripts.

            III. How We Would Apply PBM Tools to Biogenerics

    As we have stated, the money spent on biologic agents is 
increasing at an alarming rate. This legislation will allow for 
a pathway at FDA for companies to bring to market generic 
versions of these important medications. PBMs have the tools to 
assist patients in transitioning to the more cost-effective 
biogenerics. In fact, our transitioning tools will be even more 
effective in this market because of the limited numbers of 
patients, prescriptions and treating physicians, and the 
potential enormous savings. Our plan sponsors will be very 
motivated to have us pursue each and every savings opportunity.
    Regardless of whether the FDA deems a product as 
interchangeable or just comparable, we will be quite effective 
at working with the prescribing physician to aid patients in 
receive the most cost effective and clinically appropriate 
therapy.
    To use a non-biologic example, Express Scripts' P&T 
Committee reviewed the potency of drugs called statins to 
determine the degree that they lowered LDL or ``bad'' 
cholesterol. Our independent P&T Committee concluded that three 
statins were in the ``high-potency'' category.
    In this case, statin A had a much higher price than statin 
B. So, we educated consumers and physicians about the lower 
cost alternative brand product. We successfully moved 49 
percent of market share to the preferred brand product within 6 
months, and the outcomes for the patients are equally 
successful.
    At the same time, statin B's product went generic. And, 
Express Scripts simultaneously moved 96 percent of market share 
to the preferred generic agent within 3 months, resulting in 
$230 million of savings since January of 2006 in the area of 
anti-cholesterol drugs alone.
    While they have remained a relatively small percentage of 
prescriptions, biologics are the single, largest segment of 
drug spend, with an additional 400 to 700 biologics in the 
pipeline. The average cost per day of a biopharmaceutical is 
$45 compared with $2 per day for a traditional medicine. In the 
traditional drug market, generic medications decrease prices 
60-90 percent as compared to branded oral-solid medications.
    Many studies--including a detailed one by Express Scripts--
have sought to demonstrate the potential savings associated 
with the FDA's ability to approve biogeneric products. What is 
clear about each of these studies is that the Federal 
Government--as well as all payors--stands to find savings in 
the billions of dollars.
    In closing, this historic legislation will allow patients, 
payers, physicians and PBMs to work together to make these 
wonderful therapies more available, with improved health 
outcomes and tremendous savings.
    Mr. Chairman and Members of the Committee, thank you for 
allowing me to testify before the Committee on this important 
issue. I would be happy to answer any questions you may have.
                              ----------                              

    Mr. Pallone. Thank you, Doctor. We will now go to questions 
from the members, and I will start. I am recognizing myself for 
5 minutes.
    I wanted to ask Mr. Kingham, as you heard, Dr. Woodcock--
well, I don't know if you were here when she testified, 
presumably.
    Mr. Kingham. Yes, I was.
    Mr. Pallone. She, at least I think she said, that clinical 
trials should not be mandated or required for the approval of 
follow-on biologics. She argued that FDA should have the 
flexibility to require different levels of testing depending on 
the complexity of the follow-on product and that while clinical 
trials might be required for the more complex molecules today, 
that could change with advancements in science. Now that seems 
to be at odds with your written testimony which states that 
clinical trials should be required for all products, and my 
question really is if the FDA is telling us that clinical 
trials shouldn't be mandated and we shouldn't have flexibility, 
why should we disregard that and require them? Aren't they the 
real experts that we should be listening to?
    Mr. Kingham. Well, first of all, Congress has told FDA what 
to do with respect to the data to support applications for 
drugs on a number of occasions, so it is not unprecedented. And 
then the FDA has to do what you tell them to do. You did that 
in 1962 when you required proof of efficacy by only one type of 
clinical trial, not just clinical trials adequate and well-
controlled clinical investigations. And in the legislation that 
Representative Waxman cosponsored in 1984 that Congress 
specified a particular type of comparative clinical trial, a 
bioequivalent study to demonstrate that generic drugs should be 
approvable.
    So you have done it many times. But the fact is that at the 
present time, both in Europe and the United States, nobody has 
seen a protein product of the type that we are dealing with 
under section 351 that can be approved without some use in 
humans. I think as a matter of basic science and policy, it is 
entirely reasonable to require some experimentation, some 
clinical use of a product before it is introduced into medical 
practice in those circumstances. I am quite happy that the FDA 
has substantial discretion as to the exact testing that is 
required. Right now where they have that discretion they are 
requiring substantial clinical tests, not minor ones but major 
clinical tests lasting months and involving substantial numbers 
of patients.
    Mr. Pallone. So you think there should at least be some 
trials, it is just a question of what they would do?
    You give flexibility in what they do but----
    Mr. Kingham. I think the thing that disturbs me in at least 
one of the bills that is before this committee, H.R. 1038, is 
that while the legislation does ultimately give the FDA the 
power to require a clinical trial, it segregates the clinical 
trial issue from other types of data and attaches to it a sort 
of warning to the agency that they better not require 
duplicative or unethical tests. Now, I have never seen anything 
like that in a bill directed to the FDA before, but the message 
that it clearly sends is you shouldn't really be doing this. 
The message I heard from Dr. Woodcock was most of the time, 
probably all the time for the foreseeable future, for the types 
of proteins that are regulated under section 351, some form of 
clinical testing is going to be necessary.
    Mr. Pallone. I will admit that it wasn't totally clear what 
she was saying. I would like to ask Dr. Allan. When Hatch-
Waxman was enacted in 1984, his detractors claimed that it 
would stifle innovation, yet the number of new technologies 
developed in the last 20 years, particularly in biologics, has 
been staggering. You noted in your testimony that the pending 
legislation would be a positive step for the biotech industry 
and would continue to fuel the cycle of innovation. You want to 
just elaborate on that a little if you could? Now, I am talking 
about Mr. Waxman's legislation.
    Mr. Allan. Yes. I think the innovation that would be 
stimulated by an act of this type would be enormous in the area 
of analytical methodology to characterize proteins, there would 
be an absolute rush to the door for people to develop this 
methodology, to assist in the development of these novel 
protein products. We were hearing this morning that science 
might be many years away. I would absolutely guarantee that if 
the incentive was provided to the scientists out there in both 
research laboratories within universities or biotech companies 
that there would be an enormous leap in our knowledge of how to 
characterize proteins efficiently and effectively.
    Mr. Pallone. OK.
    Mr. Allan. And this argument would disappear.
    Mr. Pallone. OK. Thank you. Ms. Hoffman, I appreciate your 
being here and what you said. But the way I see it, innovators 
have a virtual monopoly on the market now and aren't 
necessarily doing the research and development that you say is 
needed. So I guess what I don't understand is how the approval 
of the follow-ons which we are talking about today would 
dramatically change the playing field. In other words, if we 
approve a pathway for follow-ons, then why would that mean that 
there would be any less innovation along the lines of what you 
suggest or what you think is needed?
    Ms. Hoffman. I guess I was saying that in terms of orphan 
diseases--diseases like childhood cancer, it doesn't appear 
that there is enough incentive to be producing biologics and 
new treatments and new therapies for these patient populations; 
and I can't see that by reducing any sort of incentive that 
that is going to make things better.
    So my proposal is that anything to cut back on incentives 
is going to make things even worse. I mean, we are already at 
zero, but we have no hope, none at all, to even get on the 
playing field. And I mean, it is not just childhood cancer, it 
is all orphan diseases, whether it is muscular dystrophy or 
other children's diseases, it is a huge issue. And if we take 
that incentive away from biotech companies, I just don't see 
that there will be cures that come down.
    Mr. Pallone. I understand your concern. You want to make 
sure that we don't eliminate incentives.
    Ms. Hoffman. Yes.
    Mr. Pallone. Thank you. Mr. Deal.
    Mr. Deal. Thank you. I want to thank all the witnesses. You 
have been very helpful, very informative and your written 
testimony elaborates even further than your 5 minutes did. I 
thank you for that.
    Mr. Kingham, let me ask you specifically some questions so 
I can clarify some terms here and thank you for refining your 
testimony down to talking about the issue of exclusivity. I do 
believe that is one of the two, in my opinion, major areas. The 
other big major area I would classify would be the overall 
safety issue, and I want to talk to some of you about that in 
just a second.
    Let me first of all understand: patent extension currently 
extends to biologics, does it not?
    Mr. Kingham. Yes, it does, sir.
    Mr. Deal. OK. In your literature and in your attachment in 
particular, the terms market exclusivity and data exclusivity 
are used. Are they the same information? Is it the same term? 
Does it mean the same thing?
    Mr. Kingham. No, not necessarily. Market exclusivity is a 
term for a period during which there is not competition because 
of some regulatory or other legal protection. It can be a 
patent, it could be orphan exclusivity under the orphan drug 
amendments, something like that. Data exclusivity is the period 
during which someone cannot rely upon your data to get a 
follow-on product approved. Data exclusivity does not preclude 
another company that is prepared to do research and development 
and do its own clinical trials from obtaining approval of a 
competitive product. That is why we have multiple biologic 
products in a number of therapeutic categories today because 
different companies did the work to support their products.
    Mr. Deal. So when you were talking about the 14 years, you 
were talking about market----
    Mr. Kingham. That is correct. What I am saying is that I 
believe Congress made a judgment in 1984 that that was a 
reasonable period to provide the incentives needed to do the 
research and development.
    Mr. Deal. OK. Now, in terms of data EE, that comes to the 
issue of how much can a follow-on piggyback onto what FDA 
currently has submitted by the original innovator, am I 
correct?
    Mr. Kingham. That is correct.
    Mr. Deal. All right. Are you advocating a period of data 
EE?
    Mr. Kingham. Yes, I am.
    Mr. Deal. How long?
    Mr. Kingham. Of 14 years and the reason for that is that I 
believe that with all the various problems I identified, we 
cannot be sure that patents will provide a certain period of 
market EE. I would propose that that be provided with data EE.
    Mr. Deal. If we are talking about market exclusivity being 
different than patent protection which I understood you to 
advocate, why would you also need data EE?
    Mr. Kingham. You need it because the patents may not 
protect the products under a system of----
    Mr. Deal. But if you got a statutory market EE, that gives 
you the protection, does it not?
    Mr. Kingham. Yes, sir, if the provision of the law were 
similar, for example, to what is in the orphan drug amendments 
of 1983 which provides a period of time during which a 
competitive product cannot be approved without regard to 
patents, without regard to data and so forth. That would 
achieve the same purpose.
    Mr. Deal. OK. The data exclusivity to me comes under my big 
category of the safety issue as to how much can you use in 
determining the safety of the follow-on product. In that 
regard, I have been intrigued by some indications of people who 
suggested that we look at the FRFRA provisions of the EPA as it 
relates to the regulation of pesticides. They have some unique 
statutory provisions there. Have you had any occasion to ever 
look at those?
    Mr. Kingham. Well, I have. Of course, the pesticide law led 
to some very serious constitutional problems back in the 1970's 
when the Environmental Protection Agency under instructions 
from Congress sought to use the data that had been submitted by 
innovators in order to approve follow-on pesticide products, 
but they had actually assured people who filed data under the 
previous application system that the data would not be used in 
that manner. That led to a significant constitutional issue and 
very complicated questions concerning how and if to compensate 
people for the use of their data which brought down the whole 
registration system for a number of years.
    Mr. Deal. My reading of the Ruckelshaus case in 1984 that 
was supplemented by the Thomas v. Union Carbide case of 1985 
seems to have approved at the Supreme Court level those 
statutory schemes, and in that regard I need to ask you this 
question before time runs out.
    Mr. Kingham. OK.
    Mr. Deal. Part of that was all based on I think what the 
language was, reasonable investment backed expectation that the 
information submitted to a Government agency would not be 
violated or remain invalid.
    Mr. Kingham. That is correct.
    Mr. Deal. Is there anything as you see it under current law 
that gives to current innovators of biologics a reasonable 
investment-backed expectation that the information would not be 
shared? If so, is it stated or is it simply implied?
    Mr. Kingham. Well, in 1974, the Food and Drug 
Administration said in the Federal Register that they would not 
use the safety and effectiveness data filed under an 
application under section 351 of the Public Health Service Act 
to approve competitive products. It was very clearly stated 
that they would not approve generic products on the basis of 
data that were submitted by innovators.
    Mr. Deal. Other than that, is there anything that you think 
is there?
    Mr. Kingham. Well, that has been the continuous course of 
conduct since then. The agency has never taken that back, and 
the regulation that it promulgated on the basis of that legal 
approach remains in effect today. It is a bit complicated 
because it has to do with the implementation of the Freedom of 
Information Act, but the representation has existed since 1974 
that data will not be used to approve other people's products.
    Mr. Deal. Thank you.
    Mr. Pallone. Mr. Waxman?
    Mr. Waxman. Mr. Chairman, with all due respect, Mr. Kingham 
is a lawyer and he is presenting to us his understanding of the 
law, but perhaps we ought to have lawyers from the generic 
industry as well. I certainly can't substitute for them, but I 
can tell you I wrote these laws. And I think that the gentleman 
has made some statements that are incorrect.
    There is a patent, and the patent is for 20 years. When you 
go into FDA, there is a period of time in which FDA takes to 
review it. Sometimes there is a delay at FDA because of FDA, 
sometimes there is a delay at FDA because of the manufacturers. 
The argument in the mid-1980's was in addition to the patent, 
there ought to be exclusivity for some of the time lost at FDA 
for approval. So the bill is the restoration of some of that 
time. The law didn't guarantee 14 years, it said up to 14 
years. That was the maximum. Now, what we have presented to us 
from the industry, the bio industries, they ought to have a 
minimum of 14 years.
    Now, we also provided some other exclusivities. We provided 
exclusivity of only 5 years for the most innovative new 
molecular entity, because we wanted to encourage the companies 
to look for new uses for some of the drugs that were out there, 
and we said we will give you 5 years of exclusivity. Well, that 
was 5 years for something really worthwhile. If it weren't so 
dramatic, we gave them 3 years.
    I also wrote the Orphan Drug Act. The Orphan Drug Act was 
to give an incentive to develop drugs that weren't profitable, 
so we provided a term of exclusivity in the Orphan Drug Act. 
Now we have the testimony from Mr. Kingham that we ought to 
give them what was given under the Orphan Drug Act, but these 
are companies that are making biological drugs that are 
profitable. Nobody is going to want to make, by the way, a 
generic version of a non-profitable biologic drug. So the 
question then should be should they have the same kind of 
exclusivity that was given to the orphan drug act which was to 
make up for the fact that they probably weren't going to get a 
big windfall. By the way, many of them did. You can never take 
back exclusivity. You can never take back some of that period 
of time.
    So if I were looking for the wish list of the biotech 
industry, since they now take the position, well, we ought to 
have a pathway, my wish list would be as follows. Let us give 
the companies that are already on the market and may be on the 
market with new products as much exclusivity as possible, and 
that is certainly what they are arguing. It is in their 
economic interest to argue for that position. I would also 
argue, Mr. Schwieterman, if I were in the biotech industry that 
argues that any legislation should rule out the possibility of 
establishing interchangeability because ``it is not possible in 
the present state of science and technology to treat them as 
interchangeable.'' Do you agree that it is impossible given the 
current state of science to devise studies necessary to 
determine whether two biologics are interchangeable?
    Mr. Schwieterman. No, I don't agree. I don't agree that it 
is impossible. The use of the term interchangeability is a term 
that connotes confidence in data and the science and the use of 
a product in a particular patient that provides a particular 
effect. It is to me a term that actually is science-driven and 
data-driven, and I think it fully possible in certain settings 
where the data exists and in the context of the application an 
indication that you could, in fact, in those----
    Mr. Waxman. In fact, the terms in my bill is lack of 
significant clinical difference in the safety of effectiveness. 
So in effect, you can have an interchangeable provision. Well, 
if I were I guess from the bio industry, I would say, well, I 
certainly don't want this to be considered equivalent in this 
way because it will be substituted. That is how we get our big 
savings is we substitute a generic drug.
    Mr. Downey, a number of proposals would require FDA issue 
guidance to classic cases of biologics before the agency may 
approve a generic biologic. You have experience with the agency 
both as a generic manufacturer and as a company that sells some 
brand-name products. Would requiring a guidance for a class of 
generic biologics be consistent with current FDA policy and 
would it make sense?
    Mr. Downey. Well, no, it is not consistent with FDA policy 
today. Even the innovative biologic products are not subject to 
a guidance. They propose their own product and their own 
guidelines, and the FDA comments. That is precisely what 
happens in BLA's, new drug applications, abbreviated drug 
applications, and that is what we think should happen here.
    Mr. Waxman. Well, if I were from BIO and I was trying to 
figure out how do I extend my exclusivity period, I would also 
want to complicate things by several years making me have to go 
through this rigmarole.
    Mr. Downey. I believe if we had that process the first 
generic biological would extend beyond the career horizon of 
the current executives in the bio industry.
    Mr. Waxman. Then you make them do more clinical trials. 
That also would postpone the competition. So you want more 
exclusivity and if that doesn't protect you to make maximum 
profits, then you want more obstacles before you get the 
competitor out there.
    All of the wish list is in the other bill that is before 
this committee. I think we all agree there ought to be a 
pathway and there needs to be a balance. But we need incentives 
not only for new products, we need incentives for generic 
products as well; and before the Hatch-Waxman Act was adopted 
over 20 years ago, there was no generic industry. In fact, the 
only thing the generic guys did was reproduce the drugs for the 
brand-name companies. The brand-name companies said, well, they 
don't know how to do this sort of thing. Well, they were 
actually making the drugs but the brand-name companies were 
selling them for whatever the monopoly would allow.
    We want that balance for both sides, and I would submit 
that the bill that Mr. Inslee introduced is one that I would 
want us to walk through very carefully and make sure that that 
balance is achieved.
    Thank you for that.
    Mr. Pallone. Thank you. Dr. Burgess.
    Mr. Burgess. Thank you, and thank you all for being with 
us. It really has been an informative panel.
    Dr. Schenkein, if I could ask you, you heard the line of 
questioning that Mr. Waxman was just following. Is that period 
of EE, is that something that you feel is important to the 
continued development of breakthrough and innovative products?
    Dr. Schenkein. I do. I believe it is critically important. 
As we look at the development of biologics, particularly as 
they have a better efficacy-to-safety ratio, they are safer, 
they appear to be more effective, we move them into the agavent 
setting. By doing so, we need to wait for the pivotal studies 
to first be done in the metastatic setting. So the timing by 
which we can move these medicines up to the agavent setting 
where we believe they will have the biggest impact and 
potential possible cures, particularly in malignancies, and 
transform other illnesses, takes a long period of time. It can 
be as long as a decade after the original approval to complete 
or design those studies.
    Mr. Burgess. Let me see if I understand that concept 
correctly. You are developing these products that are used in 
individuals with fairly advanced disease, stage IV metastatic 
cancer, and as you develop the expertise of the comfort level 
with those products, they are then possibly going to be 
investigated as agavent therapy for someone with early stage 
disease to prevent recurrents and extend life at an earlier 
stage of a similar cancer, is that----
    Dr. Schenkein. That is absolutely correct, and that period 
takes a long period of time.
    Mr. Burgess. Is it possible to make some of these difficult 
compounds, is it possible to make them so that they are just 
absolutely identical? We heard the testimony from the gentleman 
from Express Scripts about the symptostatin story and no doubt 
that someone can make an exact replica of that molecule, with 
some of the things that you work with, is it going to be 
possible to make an exact replica of the molecule?
    Dr. Schenkein. At this point the science that we have 
available today, it is not possible for us to say that these 
are the same.
    Mr. Burgess. How do you even then extrapolate that to the 
individuals where we are going to treat their lymphocytes and 
give them back those? I mean, how do you do a study when your 
population is one and it is either effective or it is not?
    Dr. Schenkein. That raises the complexity even to the next 
level above the standard proteins or antibodies that are being 
processed now. So it will become even more complicated than 
that setting.
    Mr. Burgess. But as we get into the realm of personalized 
medicine of individuals, that is going to be critical, is it 
not?
    Dr. Schenkein. I believe so.
    Mr. Burgess. And it will be expensive, will it not?
    Dr. Schenkein. It is too early yet. We don't know. We know 
that these innovative----
    Mr. Burgess. Let me rephrase that. Even if it is expensive, 
it is very likely to be worth it, is that a fair statement?
    Dr. Schenkein. After careful testing, if it determines 
safety and efficacy, then that will be a therapy that will be 
useful.
    Mr. Burgess. What about the doctor who writes a 
prescription for someone to go to the drug store and fill it 
with recombinant DNA--in your experience would it be OK for 
someone just to substitute something different from what the 
doctor has established as the product that he wants his patient 
to receive?
    Dr. Schenkein. As a physician, I think it is critically 
important that I have that relationship with my patients so I 
know exactly what that patient is receiving when I prescribe 
it. I am making challenging decisions at every point about a 
variety of different medicines I can use. And unless the 
product is exactly the same, which we are not talking about in 
the case of follow-on biologics, I need to have the ability to 
make a decision with that patient on which medicine I want to 
give them.
    Mr. Burgess. Is that a big enough difference to be a 
difference? Could that affect the critical outcome of a 
patient?
    Dr. Schenkein. It is certainly possible. When I make a 
decision to use a therapy, I base that decision on clinical 
evidence, large-scale clinical trials that have been published 
and presented. If that is not available for another molecule, I 
factor that in the decision. It is a totally different level of 
evidence to be able to base an important decision with a 
patient.
    Mr. Burgess. If I could, I would like to ask a question. I 
would like both you and Mr. Kingham to respond and anyone else 
if you feel so moved. When I first heard of this issue of 
generic biologics or follow-on biologics, I thought that has to 
be a pretty small universe. We talk of savings, again the 
gentleman from Express Scripts talked about with statins. That 
is a huge universe. But when we talk about follow-on biologics, 
and maybe it is just an era that is just beginning, but 
realistically, what kind of savings can we expect, should we 
expect if we were to pass say the Waxman bill through Congress 
this year?
    Dr. Schenkein. So again, as a physician and an oncologist 
designing clinical trials, I don't think that is my best area 
of expertise to comment on cost savings.
    Mr. Burgess. Well, then Mr. Kingham, do you have an opinion 
about----
    Mr. Kingham. Well, I can't give you a precise number but I 
think there are a number of reasons why the number will be 
smaller than many advocates of the legislation suggested. 
Studies that I have seen assume that there aren't any effective 
patents for any major products where as there are. They assume 
that the legislation and regime would be in place immediately 
and drugs would be improved within months or a very short 
period of time after the law was passed. The European 
experience doesn't support that. They have had a system in 
place for 3\1/2\ years and they have approved two products.
    It assumes that a number of products that present very 
complex issues for approval, like monoclonal antibodies and so 
forth, would be in the groups of products that will get 
approved and will compete. I think it is going to be a long 
time before the science is there, much less the patent 
situation. It assumes tradition or something very similar to 
traditional substitution patterns for generic drugs.
    Quite apart from the scientific issues of interchange, 
these drugs aren't administered and dispensed in the same way 
so that the patterns of substitution that apply with 
prescriptions taken to the drugs store won't be relevant. And 
it assumes price differentials that I think may be greater than 
the price differentials that will actually occur based on 
experience in markets outside the United States. There are a 
lot of assumptions that have been set into these projections. I 
suspect we are talking about savings, and there would be some 
for sure that are a small fraction of the savings that have 
been suggested.
    Mr. Burgess. Thank you, Mr. Chairman.
    Mr. Pallone. Thank you, Dr. Burgess.
    Mr. Downey. I would like to respond to----
    Mr. Pallone. OK. But let me just tell everybody what we are 
going to do here. We have to vote on the Iraq supplemental, and 
we only have 13 minutes. So we will ask Mr. Downey to respond, 
and then we are going to have Ms. DeGette and then we will go 
and vote.
    Mr. Downey. There is only one aspect to Mr. Kingham's 
response that I agree with and that is there will be very few 
approvals in the first 5 years because it takes a longer time 
to bring the generic versions to market than a generic 
pharmaceutical. But today, the Taxpayers Against Government 
Waste issued a report where they said after the first 5-year 
period, the next 10 years will result in $43 billion in savings 
and I don't think that is an unreasonable estimate. And I do 
strongly disagree we won't achieve the same substitution rates. 
I know that we believe that we achieve those rates in the 
hospital setting for other pharmaceutical products, we will 
achieve them here. I know that the drug benefit managers like 
Express Scripts do an excellent job of educating patients and 
physicians about the benefits of generic products, and I am 
sure they will carry that expertise into the biologic areas and 
we will achieve those substitution rates and we will achieve 
that level of savings.
    Mr. Pallone. Thank you. The gentlewoman from----
    Dr. Weisbart. May I?
    Mr. Pallone. Well, I just don't want to run out of time. If 
you want to be quick, go ahead.
    Dr. Weisbart. I will be very brief. A couple quick points. 
Your decisions will determine how much the savings is. Your 
decisions will determine that. If you decide to follow some of 
those recommendations, you will have very little savings. If 
you decide to pay attention to the wisdom of Mr. Waxman and 
yourself just a minute ago, your savings are potentially 
enormous. Clients are pressing us to do this. They are not that 
many prescriptions, they are all handled through specialized 
pharmacists with a few physicians we know how to reach them. If 
you think of the savings I just talked about for Simvastatin 
for a $40 or $80 change of prescription, these are hundreds of 
dollars. Our clients are very motivated to have us do 
everything we are doing today and way more to make these 
savings happen. In terms of the timing of this, that is up to 
the courts. As we know, there are lots of drugs that come off 
patent protection for which generic drugs reach market years in 
advance of when the brand manufacturers--but the 10K filing 
would make you think that is the not case.
    And last, a large part of the savings early on are due to 
erythroproteins which a large percentage of it comes to the 
Federal Government. So the savings that are potential here are 
savings for the Federal Government in large part. It is a huge 
opportunity. That is soon if you introduce legislation.
    Mr. Pallone. All right. Thank you. I recognize the 
gentlewoman from Colorado for 5 minutes.
    Ms. DeGette. Thank you, Mr. Chairman. I am a little nervous 
because I do want to vote on the supplemental.
    Mr. Pallone. You have 11 minutes left. If you take 5 we 
will still get there.
    Ms. DeGette. I want to ask you, Dr. Shenkein, as we have 
been hearing this testimony, the view of all of the 
representatives at BIO who are here is that because biologics 
are so complex, it would be very difficult to create a generic 
version; and what we have heard from several of the witnesses 
is BIO seems to be supportive, employing a biosimilar pathway 
similar to the one in the EU which relies heavily on clinical 
trials. So if that is the case, do you think we will ever have 
a situation where biosimilar will not have to go through pretty 
much full clinical trials before approval?
    Dr. Schenkein. I can't obviously predict what will happen 
in the future. All I know is right now, the science in the 
foreseeable future, we don't have the ability to be able to 
determine that these molecules are the same.
    Ms. DeGette. So your answer would be in all probability 
these follow-on biologics would need to go through a full 
clinical trial, correct?
    Dr. Schenkein. Yes.
    Ms. DeGette. Well, then my next question, and I am going to 
also ask Mr. Downey that question, too, is we have several 
proposals in front of us to create these pathways to approve 
follow-on biologics, and I haven't signed on to any of these 
approaches because like most of us, I am still trying to figure 
out the right balance. But all of the approaches are predicated 
on the belief that the FDA is going to handle increased 
responsibilities for the process. So my question is given the 
fact the FDA is continuing to struggle to meet its current 
obligations with fewer and fewer resources, what would that 
agency need to be able to oversee a whole new pathway for 
biosimilars? I want to start with Dr. Schenkein, and then I 
want you to answer.
    Dr. Schenkein. So we do believe it is critically important 
that with any policy that moves forward that it doesn't 
distract the FDA from the ability to review and approve 
innovative drugs that are advancing the field forward. That has 
to be the primary focus. I can't comment on what the FDA would 
require to be able to----
    Ms. DeGette. Do you think they would need substantial 
additional resources to do this job adequately?
    Dr. Schenkein. I can't really comment.
    Ms. DeGette. OK. What about you then Mr. Downey?
    Mr. Downey. House bill 1038 provides user fees to support 
the generic biologic program at FDA and----
    Ms. DeGette. Some of us have real concerns about user fees, 
too.
    Mr. Downey. Well, you asked how it would be funded.
    Ms. DeGette. OK.
    Mr. Downey. At least in 1038 it contemplates user fees, and 
I would support that because I think the FDA does need 
additional resources and that is a place from which they can 
come and there will be great savings achieved by it. On the 
clinical trials, I disagree with the comments that were made. 
In terms of mandating clinical trials in the statute, that is 
not required for an original innovator BLA. Those requirements 
are all imposed by FDA on a product-by-product basis with 
product relevant clinical testing. That is handled in the drug 
area, it is handled in the innovator biologic area, and what we 
believe is appropriate for generic biologics. And I think also 
if you recall Dr. Woodcock's testimony, she said they have 
approved products with limited clinical studies and those that 
have required more clinical studies.
    Ms. DeGette. But all of them needed clinical studies.
    Mr. Downey. For today.
    Ms. DeGette. So I think for today we have to go on that 
assumption.
    Mr. Downey. I would disagree. I think you need to think as 
I talked about it earlier, it is 20-year cycles. This is the 
bill that I think will last 20 years, and as you all know it is 
very difficult to reopen these very contentious and difficult 
issues; so I believe we should provide FDA the flexibility and 
the resources to handle this issue for a long period of time. 
And if you look at the products, I do disagree with some of the 
testimony here today. I think simple proteins, like insulin, 
can be fully characterized and they don't really require the 
clinical trials. Now, I realize that FDA is probably going to 
disagree with me on that, but I do believe that science is 
advancing so fast and it is so clear that in a very short time 
we will be able to have very minor clinical trials, if any.
    Ms. DeGette. I will say, I don't disagree with what you are 
saying, but I do think it is probably a little naive to say we 
will just do user fees and that will cover the cost. I am 
really going to look forward to working with Mr. Waxman and Mr. 
Pallone to make sure that whatever we do here, we give the FDA 
adequate resources to do this. I myself have a 13-year-old 
daughter who is insulin-dependent. I am not going to use a 
generic insulin with her unless I am pretty darn well sure. Ms. 
Hoffman, mother of eight, is sitting here nodding, too. We are 
just not going to do that unless we are sure.
    Mr. Pallone. I am going to have to stop you. I appreciate 
it because we want Mr. Inslee to have a little time, but there 
is only 5 minutes left on the vote. You are at your own peril 
here. You might have missed the vote.
    Mr. Inslee. Regarding data exclusivity we have a couple of 
numbers that have been suggested so far, one is zero and one is 
14 years. And the previous incarnation which I appreciate Mr. 
Downey, he called it the Waxman-Hatch bill. That is 
appropriately honoring the House.
    Mr. Downey. I try to remember which house I am in.
    Mr. Inslee. I appreciate that. It had between a 5- and 14-
year data exclusivity as opposed to paying--is there any reason 
that any of you could articulate to go backwards to zero on 
that if indeed there was a societal purpose to protect data 
exclusivity for the reasons Mrs. Hoffman has talked about, to 
have an incentive for innovation. Is there any reason to have 
gone backwards? For instance, is it easier to do a follow-on 
biologic for instance and some of the other chemical or is the 
FDA much faster than it used to be so that you don't need that 
much protection? Is there any reason to go backwards to zero? 
Can anyone articulate any reason?
    Mr. Pallone. Let me just indicate we are going to have 
about a minute to answer the question and then we got to go 
because otherwise we are going to miss the vote.
    Mr. Kingham. Well, I would just say quite simply no, I 
can't conceive of any reason for a zero.
    Mr. Inslee. That is the right answer. I have to go vote. 
Thank you very much.
    Mr. Pallone. Thank you. Thank you, gentlemen and lady. We 
appreciate your input. This was a very good hearing I feel, and 
I got a lot of insight. It is a very difficult and complex 
problem, so we thank you very much. You may get additional 
questions in writing from us within the next 10 days which we 
would like you to respond to, and without further ado, this 
hearing is adjourned.
    [Whereupon, at 2:30 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

  Statement of Priya Mathur, California Public Employees' Retirement 
                                 System

     On behalf of the California Public Employees' Retirement 
System (CalPERS), I appreciate the opportunity to provide 
testimony for the hearing record on the high cost of 
biopharmaceuticals and the need to establish a safe pathway for 
the approval of biogenerics. As vice-chair of Health Benefits 
for the Board of Administration of CalPERS, I was elected by 
400 thousand public sector members to serve on the board of 
CalPERS to invest their $230 billion of retirement assets and 
to manage their multi-billion dollar health benefit program.
     The high cost of biopharmaceutical products presents an 
unsustainable challenge to CalPERS and to our entire health 
care system. 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, we cannot afford the status quo. I commend 
Chairman Pallone for his leadership in this area. In addition, 
I would like to thank the sponsors of the bipartisan Access to 
Life-Saving Medicines Act, introduced by Representatives 
Waxman, Emerson, Pallone and others.

                           CalPERS Background

     CalPERS was established by state law in 1932 to provide 
retirement benefits for California public sector employees. In 
1962, state law authorized CalPERS to provide health benefits 
to their members. Our mission is to advance the financial and 
health security for all who participate in the System.
     CalPERS' health program covers 1.2 million active and 
retired state and local government public employees and their 
family members. Of that total, approximately two-thirds are 
active members and one-third are retirees. Notably, CalPERS is 
the third largest purchaser of employee health benefits in the 
Nation--behind the Federal Government and General Motors 
Corporation--and is the largest purchaser of health benefits in 
California.
     This year, CalPERS will spend almost $5 billion on health 
benefits--or $13.4 million per day. Of that amount, CalPERS--
for the first time--will spend over $1 billion on our members' 
prescription drugs.

               Slowing the Rate of Growth in Health Care

     Recognizing that we have a fiduciary responsibility to 
constrain cost growth and ensure healthcare value, CalPERS has 
long been a leader in implementing cost-effective programs. 
These initiatives include consumer-friendly managed care, 
aggressively negotiating favorable contracts with insurers by 
leveraging our pool of enrollees, state of the art hospital 
purchasing and quality assurance arrangements. In addition, we 
have instituted innovative prescription drug benefit cost-
sharing designs to maximize the use of generics and 
therapeutically appropriate brand drugs. We have also provided 
incentives for the use of over-the-counter and mail-order 
medications and mail-order, particularly for the treatment of 
chronic diseases.
     CalPERS has enjoyed tremendous success in controlling 
prescription drug costs through the use of generics. This has 
been possible thanks to the efforts of this Committee, and 
particularly Mr. Waxman, whose efforts two decades ago led to 
the enactment of the ``Drug Price Competition and Patent Term 
Restoration Act of 1984,'' better known as Hatch-Waxman.
     As members of this committee well know, Hatch-Waxman gave 
the Food and Drug Administration (FDA) the authority to provide 
an abbreviated approval process for those products deemed 
equivalent to an innovator product once a product's patent had 
expired. For multi-source drugs in our self-funded PPO, which 
covers about a quarter of our members, our generic substitution 
rate is approximately 96 percent. Without generic substitution, 
we estimate that our costs would be about 60 percent higher--
saving our enrollees and our state taxpayers hundreds of 
million of dollars annually.
     In spite of all of our cost-containment efforts, we are 
experiencing double-digit increases in health care spending 
over time. Since 2002, CalPERS has seen an average annual 
increase of about 13.5 percent for our HMOs and PPOs, and a 12 
percent average annual increase in our association member 
plans.

                 Increasing Cost of Biopharmaceuticals

     Because of the complex delivery requirements of many 
biopharmaceuticals, it is exceedingly difficult to break out a 
stand-alone spending line for these products. 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 this category. CalPERS spending for these 
products is distressingly substantial and rising at a rate that 
is significantly higher than traditional pharmaceuticals.
     Total spending for specialty drugs was $83.7 million in 
2006, up from $67.4 million in 2004. Spending on these 
prescriptions increased by 16.9 percent in 2005--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.

           Promise of Biogenerics--Competition and Lower Cost

     CalPERS supports a competitive health care marketplace 
that leads to innovation and further development life-saving 
medicines. Today, biopharmaceutical manufacturers enjoy 
monopoly positions. Today, unlike traditional pharmaceuticals, 
no competition is created in the marketplace once a patent has 
expired on a brand name biopharmaceutical. Competition does not 
exist because the FDA has held that it does not have the 
authority to approve biogeneric products. CalPERS supports 
giving the FDA explicit authority to approve biogeneric 
products that are safe.
     It is imperative that Congress take action this year to 
enact bipartisan legislation to give FDA the authority to 
approve safe biogenerics. Today's biotech companies are 
benefiting long after patents expire and are profiting at the 
expense of all Americans. No employer, labor organization or 
health plan can continue to offer affordable coverage without 
competition in the biopharmaceutical industry. Without the 
ability to access less expensive, comparable, and 
interchangeable biopharmaceuticals, CalPERS ultimately will be 
forced to increase prescription drug co-pays or increase 
premiums, shifting the increasingly unaffordable costs onto the 
individuals who can least afford them.
     Finally, I would like to address the issue of safety. 
Opponents of this legislation--primarily the biotech industry--
are claiming that those who support the Access to Life-Saving 
Medicines Act are ignoring the safety threat of bringing 
biogenerics to the marketplace. I want to be clear--the safety 
and health of our members comes first in any decision we make 
about any policy. That is why we strongly support providing FDA 
with full discretion to make the ultimate decision about 
whether and when any prescription drug product, whether it be 
brand or generic, comes to market. The Access to Life-Saving 
Medicines Act does provide the FDA with that discretion.
     CalPERS is proud and honored to add our support to the 
growing list of workers, seniors, patient groups, businesses, 
health plans, health care providers, pharmacy benefit managers 
and countless others who support the Access to Life-Saving 
Medicines Act to open the door to biogeneric competition. We 
stand ready to work with the Committee to pass legislation to 
give FDA the authority to approve safe and effective 
biogenerics as a means to providing consumers with affordable 
alternatives to high-cost biopharmaceuticals. Thank you for the 
opportunity to provide testimony for the hearing record.
                              ----------                              


     Statement of Coalition for a Competitive Pharmaceutical Market

     Thank you Chairman Pallone, Congressman Deal, and members 
of the Subcommittee on Health. The Coalition for a Competitive 
Pharmaceutical Market (CCPM) appreciates the opportunity to 
submit this statement to the hearing record. We commend you for 
holding this important hearing on the need to establish a 
workable, safe and science-based regulatory pathway within the 
Food and Drug Administration (FDA) for the approval of 
biogeneric products.

                               Background

     CCPM is an organization of employers, health plans, 
pharmacy benefit managers, chain drug stores, generic drug 
manufacturers, and others committed to a competitive 
pharmaceutical market that expands access to affordable 
prescription medications. To achieve this outcome, we believe 
we must remove barriers to competition and choice that generic 
drugs bring to the market. We also need to develop new pathways 
to bring that same competition to the marketplace as it relates 
to biopharmaceuticals. Monopolies, such as what currently exist 
in this arena, are not only detrimental from a consumer and 
business perspective, they actually remove incentives for 
innovation. This helps explain our commitment to the 
establishment of a workable pathway for biogenerics.
     As employers, including some of the Nation's largest 
manufacturers, it is imperative that our employees have access 
to safe and affordable prescription medications for two 
reasons. First, a healthy and productive workforce is critical 
to our ability to compete in a global economy. Second, the high 
cost of health care is limiting our ability to compete with 
other nations, and pharmaceuticals are the single fastest 
growing segment of overall health care costs. As health plans 
and pharmacy benefit managers, access to safe and affordable 
prescription medications is critical to our ability to slow the 
rate of growth in health insurance premiums for businesses and 
consumer out-of-pocket costs. As chain drug stores, we are on 
the front line as witnesses to the impact of high-cost 
prescription drugs on consumers. Finally, as generic drug 
manufacturers, we are committed to producing safe and 
affordable generic alternates to employers and consumers. Our 
membership is diverse, but we are united in our belief that a 
definitive regulatory pathway for the approval of biogenerics 
is critical to improving our Nation's health and controlling 
prescription drug costs.

                 View on Prescription Drug Marketplace

     CCPM strongly supports a vigorous and competitive 
prescription drug market, one in which innovation leads to new 
life-saving medicines. Currently competition is limited in the 
biopharmaceutical market because the FDA does not have the 
clear authority to approve biogeneric products. As a result, 
even when a patent has expired on a brand biopharmaceutical, 
the lack of a pathway thwarts competition, and keeps 
biopharmaceutical prices artificially high. CCPM urges Congress 
to find a bipartisan solution to create an appropriate 
regulatory route for FDA review of biogenerics. We believe the 
solution should grant the FDA the authority to use its 
discretion and scientific expertise to evaluate interchangeable 
and comparable biogeneric products while ensuring patient 
safety.

                            Hatch-Waxman Law

    One of the most important health care laws enacted over the 
past 30 years was the Drug Price Competition and Patent Term 
Restoration Act of 1984--commonly known as the Hatch-Waxman 
law. This landmark legislation broke important new ground in 
granting FDA the authority to approve generic versions of 
prescription products. Hatch-Waxman also gave FDA express 
authority to provide an abbreviated approval process for those 
products deemed equivalent to the prior approved product. It is 
estimated that this law saves patients and payers billions of 
dollars each year. We believe that bipartisan legislation 
introduced this year by Representatives Waxman and Emerson, 
H.R. 1038, the Access to Life-Saving Medicine Act, is an 
important next step in ensuring that biologic prescription 
drugs are more affordable and accessible. CCPM supports this 
important legislation, which will provide the clear authority 
that the FDA needs to approve biogenerics and bring much-needed 
competition to the biopharmaceutical market.

   Consumers and Purchasers Will Benefit With Greater Innovation and 
                          Greater Competition

     Total spending on prescription drugs in 2006 is estimated 
at $213.7 billion and is expected to rise to $497.5 billion by 
2016. \1\
---------------------------------------------------------------------------
    1 Poisal, J.A., et al, ``Health Spending Projections Through 2016: 
Modest Changes Obscure Part D's Impact'', Health Affairs 26, no. 2 
(2007) Exhibit 6.
---------------------------------------------------------------------------
     The use of biopharmaceuticals is increasing at almost 
twice the rate of traditional medicines accounting for 
approximately $30 billion in U.S. sales and 12 percent of total 
pharmaceutical usage last year. \2\
---------------------------------------------------------------------------
    2 MedAdNews, November 2006 .
---------------------------------------------------------------------------
     The reason for the dramatic increase becomes clear when 
one examines the cost biopharmaceuticals compared to synthetic 
drugs. The average cost of a biopharmaceutical is $45 per 
patient per day, versus $1.66 per patient per day for a 
synthetic drug. These medicines can and do improve the lives of 
millions of patients--but without generic versions, the costs 
may keep needed treatments out of the hands of many consumers.
     Providers of prescription drug coverage, both in the 
private sector as well as the Federal Government through 
programs such as Medicare and Medicaid, depend heavily on the 
role of generic products to help control costs. The lack of 
certainty in the prescription drug marketplace, particularly in 
the biopharmaceutical sector, poses great challenges to payers. 
Forecasting future health care expenditures remains difficult 
because there is no clear timeline for when or even if there 
will be lower cost alternatives for biopharmaceuticals. Many of 
the biopharmaceuticals on the market today are ``off-patent'' 
and more than $10 billion worth of biopharmaceuticals are 
expected to come off patent by 2010, \3\
---------------------------------------------------------------------------
    3 Engel & Novitt, LLP, ``Potential Savings That Might Be Realized 
by the Medicare Program From Enactment of Legislation Such as The 
Access to Life-Savings Medicine Act (H.R. 6257/S. 4016) That 
Establishes A New cBLA Pathway For Follow-On Biologics. Table 4a. , 
January 2, 2007 so the sooner these lower cost biogenerics can enter 
into the marketplace, the better. Additionally, when exploring avenues 
to introduce competition into the marketplace, CCPM urges Congress to 
clearly outline a reasonable process for early resolution of patent 
disputes to avoid any unintended loopholes and ensure certainty for the 
biogeneric marketplace.
---------------------------------------------------------------------------

              Guiding Principles for Bipartisan Legislation

     When considering legislation to provide a clear regulatory 
pathway for the approval of biogenerics, CCPM encourages 
Congress to consider five key principles:

      1. Protect and promote fair and open competition. CCPM 
members are leaders within their industries, and highly 
competitive. Several Coalition members are patent holders, and 
as such, respect and understand the development of innovation 
and need for patent protections. However, we strongly believe 
that once a patent expires or is successfully challenged, 
biogeneric competition should be able to enter the market.
     2.  Provide a definitive pathway for the approval of 
biogenerics. We believe there must be certainty in both timing 
and method of the biogeneric approval process. FDA needs the 
authority to approve both comparable and interchangeable 
biogeneric products. Congressional deference to the FDA's 
expert scientific judgment is appropriate. In addition, any 
action should permit prescribers and pharmacists to substitute 
one biologic for another when appropriate.
     3.  Encourage consistent and uniform terminology. Whether 
the terms are ``comparable,'' ``interchangeable,'' 
``therapeutic equivalent,'' or ``generic''--we want an 
abbreviated process that results in a ``biogeneric,'' meaning a 
lower cost alternative to biologic pharmaceuticals.
     4.  Increase resources for the Food and Drug 
Administration.In order to adequately assume these new 
responsibilities, the FDA will need adequate resources. We 
support additional resources for FDA to secure more staff to 
ensure the timely review of biogeneric applications and the 
safety of biogenerics for consumers.
     5.  Include the new legal authority for a biogeneric 
pathway in must-pass legislation this year.

     We encourage Congress to move quickly to establish a 
regulatory pathway for the approval of biogenerics. We are 
confident this hearing will affirm the science for comparable 
and interchangeable products has arrived. Once the FDA has the 
discretionary authority to begin this process, it will drive 
innovation that will assist in the identification of similar 
and substitutable methods for these off-patent products. Each 
day that passes without biogenerics is another day of limited 
options. No payer, whether individual or employer, public or 
private, can afford unlimited monopoly pricing. CCPM is 
encouraged to hear reports that members are committed to 
including a workable pathway in FDA Revitalization efforts, 
including the prescription drug reauthorization legislation 
(PDUFA) and strongly support you in this endeavor.
     CCPM is pleased that the Energy and Commerce Health 
Subcommittee is considering issues like biogenerics that can 
make a positive impact on our health care system. We believe a 
bipartisan bill that empowers the FDA to use the best science 
to encourage innovation and biogeneric competition should be 
passed this year. The Waxman-Emerson-Pallone bill certainly 
meets this standard and, as such, CCPM has called for--and is 
urging--its passage. However, like the sponsors of this 
legislation, we well understand that there will be compromises 
to make before any bill is signed into law. What must not be 
compromised is safety as well as a workable, science-based 
pathway to provide competition and choice to consumers, 
employers, health plans and Federal, state, and local 
purchasers of pharmaceuticals. The very act of holding this 
hearing represents an important step to achieving this outcome 
and ending the unsustainable monopoly that currently exists. We 
commend you, Chairman Pallone, for taking this step and we look 
forward to working with you and all the other members of the 
Subcommittee and full Committee on this important issue.

 Coalition for Competitive Pharmaceutical Marketplace (CCPM) Membership

    April 2007

    Aetna Inc, America's Health Insurance Plans, Apotex, Barr 
Laboratories, Ben Venue Laboratories, Blue Cross Blue Shield 
Association, Caremark, Caterpillar, Inc., DaimlerChrysler 
Corporation, Eastman Kodak Company, Express Scripts, Ford Motor 
Company, General Motors Corporation, Generic Pharmaceutical 
Association, Hospira, Humana, Kaiser Permanente, Medco, Mylan 
Labs, National Association of Chain Drug Stores, National 
Association of Health Underwriters, Pharmaceutical Care 
Management Association, Ranbaxy Pharmaceuticals, Teva 
Pharmaceuticals USA, Wallgreens Company , Watson 
Pharmaceuticals, Wellpoint
                              ----------                              

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    May 23, 2007

    David Schenkein, M.D.
    Vice President
    Clinical Hematology/Oncology
    Genentech
    1 DNA Way
    South San Francisco, CA 94080

    Dear Dr. Schenkein:

     Thank you for appearing before the Subcommittee on Health 
on Wednesday, May 2, 2007, at the hearing entitled ``Assessing 
the Impact of a Safe and Equitable Biosimilar Policy in the 
United States.'' We appreciate the time and effort you gave as 
a witness before the Subcommittee on Health.
     Under the Rules of the Committee on Energy and Commerce, 
the hearing record remains open to permit Members to submit 
additional questions to the witnesses. Attached are questions 
directed to you from certain Members of the Committee. In 
preparing your answers to these questions, please address your 
response to the Members who have submitted the questions and 
include the text of the Member(s question along with your 
response. In the event you have been asked questions from more 
than one Member of the Committee, please begin the responses to 
each Member on a new page.
     To facilitate the printing of the hearing record, your 
responses to these questions should be received no later than 
the close of business Friday, June 1, 2007. Your written 
responses should be delivered to 316 Ford House Office Building 
and faxed to 202-225-5288 to the attention of Melissa Sidman, 
Legislative Clerk/Public Health. An electronic version of your 
response should also be sent by e-mail to Ms. Melissa Sidman at 
melissa.sidman@mail.house.gov in a single Word formatted 
document.
     Thank you for your prompt attention to this request. If 
you need additional information or have other questions, please 
contact Melissa Sidman at (202) 226-2424.

    Sincerely,

    John D. Dingell
    Chairman
                              ----------                              


   Responses to Questions from May 2, 2007, House Energy & Commerce, 
   Health Subcommittee Hearing, Dr. David Schenkein, Genentech, Inc.

                      The Honorable Edolphus Towns

     A protein that was recently approved under the 505(b) 2 
pathway, Omnitrope, contains a rating indicating that FDA has 
not evaluated sufficient data to justify a finding of 
interchangeability. In addition, you have recently testified it 
will take at least another ten years to establish standards of 
interchangeability for biological products. Since it appears 
that there is a huge gap in our understanding of how to 
demonstrate interchangeability of follow-on protein products, 
it might be advisable to allow physicians to make decisions 
based on their patients' specific clinical situations. Would 
you agree?

    Yes. Given that follow-on versions of biological products 
cannot be identical to or the same as the innovator product 
they seek to emulate, only treating physicians should be 
allowed to make decisions regarding the interchangeability of 
products. They should not substitutable at the pharmacy level.

     Given the greater complexities of biologics compared to 
smaller molecules, it seems logical that we establish a pre-
approval requirement for clinical data with follow-on protein 
products.-- Would you agree that, based on state-of-the-art 
science, FDA could not approve a follow-on protein product 
without clinical data?

    Yes, I agree. Again, given the fact that follow-on 
biological products cannot be scientifically the same as the 
innovator product, it is necessary to test them independently 
in clinical trials to assure their safety and efficacy.

                        The Honorable Anna Eshoo

     Representative Waxman's legislation provides no market 
exclusivity to innovator products--zero years. Representative 
Inslee's bill provides 14 years of market exclusivity. In the 
Senate, one of Senator Kennedy's draft proposals affords 10 
years of market exclusivity to innovator products. For 
comparison, the European Union allows a total of 11 years of 
innovator exclusivity. In the U.S., pharmaceutical drugs 
(pills) are allowed 5 years of exclusivity plus 3 years for new 
uses of approved drugs under Hatch-Waxman.
    What factors (e.g. expense, risk, length of Research and 
Development period, patent protections) must Congress take into 
account in arriving at the ``right'' number?

     All of these factors need to be taken into consideration 
for Congress to arrive at the ``right number.'' As you are 
aware, the research and development cycle of biological 
products is lengthy, costly and risky. In addition, given that 
the approval standard for a follow-on biologic will necessarily 
be based on ``similarity'' or ``comparability'' and not 
``sameness,'' we are concerned that the patent protections 
afforded innovators may not be sufficiently protective to 
ensure an adequate return on our investment. Specifically, 
follow on manufacturers may engineer around our patents, yet 
still gain FDA approval for a product that is ``similar'' or 
``close'' to the innovator product. If this is the case, then 
follow on companies could theoretically piggy back on an 
innovator's investment once the innovator product goes to 
market. To ensure that companies such as Genentech are able to 
continue to invest in researching and developing life-saving 
therapies, Congress should construct a system that guarantees a 
sufficient amount of time during which our invention and data 
are protected. The legislative history of Hatch-Waxman 
indicates that Congress contemplated that 14 years is the 
intended period of effective patent life for a small molecule, 
whether achieved through patent protection, data exclusivity, 
patent term restoration, or a combination of all 3. As such, we 
believe that the same 14 years should be applicable to 
innovator biologics; however, the only true way to guarantee 
such time is through data exclusivity.

     Genentech has 14 products on the market today. How 
important is market exclusivity for the average biotech 
company, which typically has only a few, if any, approved 
products in its portfolio?

    Extremely important. Every company needs the assurance of 
an appropriate amount of time during which to recoup the 
investment made in R&D.

     How does this system affect academic and medical research 
centers, such as Stanford University and the University of 
California, who are also patent holders? Any final bill must 
assure appropriate patent notification provisions to ensure 
that academic and medical research centers have sufficient 
notice in order to protect their own intellectual property 
rights. Without notification procedures, these institutions 
could unwittingly be denied the opportunity to protect their 
inventions, either through entering into licensing agreements 
or through litigation.

     Assuring the safety and efficacy of all drugs is my #1 
priority in this debate.

      Why is it important for a follow-on manufacturer to 
conduct post-market studies to ensure the safety of their 
products?

     Given that follow-on biologic products are, by definition, 
different than the innovator product, it is extremely important 
that the FDA have the authority to require post-marketing 
studies of the follow-on applicant in order to ensure the on-
going safety of the product once it is marketed and available 
for use.

      In constructing a follow-on biologics pathway, should 
Congress limit FDA's ability to impose post-market studies on 
follow-on biologics manufacturers?

     No. The FDA should have the authority to require post-
marketing studies of both follow-on and innovator companies.

     If a generic drug manufacturer were to submit an 
application for a follow-on version of a breakthrough cancer 
biologic, and that follow-on was not clinically tested:
     As a physician, would you be comfortable having your 
patients switched from a biological product that you have 
prescribed, to a follow-on product? Would you want your mother 
or child to receive a follow-on biologic?

     No, I would not. Again, given that follow-on products are 
by definition different than the innovator they seek to 
replicate, it is critical that the follow-on product be 
independently tested to assure its safety and efficacy. As a 
physician, I would not prescribe a follow on product that had 
not been independently tested, as I could not be certain it was 
safe to do so.

      What types of risks to patient safety does mandatory 
interchangeability present with respect to biologics? Do 
generic drugs (pills) possess these same risks?

     There are significant risks to the patient in the context 
of mandatory interchangeability between follow-on and innovator 
products. Since the products are not identical, unlike small 
molecule generics, they should not be treated as such. Rather, 
only treating physicians should be empowered to make decisions 
about which drugs to prescribe his or her patients, whether a 
follow-on or innovator product. Generic pills (small molecules) 
are shown to be identical to their innovator counterpart. As 
such, the FDA is able to allow the safe interchangeability of 
generics in this context because the innovator counterpart has 
been proven to be safe and effective. In this case, the follow-
on and innovator product cannot be the same and should be not 
deemed to be interchangeable by the FDA or a pharmacist. Only a 
treating physician should make such a determination.