WSJ about BMY trying to push a little more stuffing into that turkey. Too bad they don't have research labs as profitable as those lawyers and lobbyists:
November 21, 2001
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Politics & Policy
Industry Splits Over Bristol-Myers's Bid
To Protect Top Drug From Generic Sales
By GARDINER HARRIS and LAURIE MCGINLEY
Staff Reporters of THE WALL STREET JOURNAL
WASHINGTON -- In a move that has split the politically powerful drug industry, Bristol-Myers Squibb Co. is bankrolling an intensive behind-the-scenes lobbying effort to protect its biggest-selling drug from generic competition.
At stake is a legal loophole that Bristol-Myers claims gives it exclusive marketing rights until 2004 for the diabetes medicine Glucophage. A bill currently making its way through Congress would close that loophole and allow generic versions of Glucophage to be sold almost as soon as the bill becomes law.
The company's efforts to save its lucrative advantage are complicating the passage of a bill, favored by the rest of the drug industry, that gives companies an additional six months of patent protection when they test their drugs' effects on children. As a result, the clubby world of the pharmaceuticals industry has erupted in internecine warfare. A newly emboldened generics industry also is fiercely fighting the Bristol-Myers effort.
Bristol-Myers says it believes the company simply is exercising its legal rights as the law is written.
The lobbying battle illustrates the degree to which drug-company profits depend on government protections. With their labs failing to come up with as many new medicines as hoped, drug makers increasingly are looking for novel ways to extend their monopolies on profitable old medications.
Drug makers say such monopolies are necessary because of the high cost of developing new medicines. But industry critics point to Glucophage as an example of the holes in that argument. Glucophage is the company's name for a drug that was discovered in Europe in 1929 and has been sold in generic form there for decades. Bristol-Myers won five years of exclusive U.S. selling rights in 1995 simply for shepherding the drug through federal approvals. The drug has turned into a blockbuster, with nearly $3 billion of annual sales, and is vital to the New York company's bottom line.
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The Glucophage Saga
Bristol-Myers Squibb conducts tests of Glucophage on 68 children.
Under an existing law, the pediatrics tests entitle the company to six more months of exclusive sales.
Another law allows Bristol-Myers to be the exclusive marketer of Glucophage to children for three years after Feb. 8, 2001, the day the FDA approved putting the pediatric test results on the drug's label.
An FDA rule implies that no drugs can be sold without proper pediatric labeling. But generic versions of Glucophage can't copy Bristol-Myers' pediatric labeling because of its three-year exclusivity.
So Bristol-Myers claims it has exclusive rights to market Glucophageto both adults and children until February 2004.
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Bristol-Myers's lobbying is now focused on getting relief from a House-Senate conference due to take up the pediatric-testing legislation after Thanksgiving -- a difficult chore, since both versions are very similar. Still, some Republicans are searching for a compromise that would be acceptable both to Bristol-Myers and to its generic and brand-name competitors. But aides say finding such a compromise is difficult. "We have confidence in the ultimate fairness and correctness of what Congress will do," said John McGoldrick, executive vice president of Bristol-Myers.
The Glucophage battle began in early September as Congress worked on a bill to renew a 1997 law that delays generics competition for six months if drug makers undertake tests of a drug's effects on children. Democrats such as Reps. Henry Waxman of California and Sherrod Brown of Ohio argue that the bill is a giveaway to drug companies, because a six-month monopoly can yield profits that are 100 times greater than the cost of the pediatrics trials.
As the debate got under way, congressional staffers noticed an article in The Wall Street Journal about how Bristol-Myers had found a legal loophole that allowed it to extend its monopoly to 3 1/2 years from six months.
The loophole is partly based on a seldom-used provision of a 1984 law giving drug makers three years of exclusive marketing rights to any new indication they add to a drug's label. For instance, if a company discovers its hypertension medicine also prevents heart failure, it gets the exclusive right to promote the drug to heart-failure patients for three years while, perhaps, losing that exclusivity for hypertension. The Food and Drug Administration approved Bristol-Myers's pediatrics labeling for Glucophage in February, a move that would give it sole rights to market the medicine to children until February 2004.
But that law alone doesn't give Bristol-Myers exclusive hold over all marketing of Glucophage; that derives from its intersection with a 1994 FDA rule that requires drug companies to put information on all labels about whether a medicine is safe for children. Bristol-Myers argued that the 1994 rule prohibits the FDA from approving generic versions of Glucophage without such information on their labels. In other words, the 1994 rule said generics needed pediatrics information to be safe, but the 1984 law prevents them from getting it because the law gives companies control of such data for three years.
Bristol-Myers's bottom-line argument: No generic version of Glucophage can be sold until at least 2004 -- even though fewer than 0.3% of the drug's users are under the age of 18. The FDA still is considering the company's argument, while a dozen Glucophage generics have been waiting since May for final agency approval.
Irate Lawmakers
This outraged both Republican and Democratic lawmakers who vowed to stop Bristol-Myers and close the loophole.
"The one thing Bristol-Myers did was solidify the Democrats and Republicans against them," says Rep. Waxman. Other brand-name companies were upset, too. They believed Bristol-Myers was overreaching, making the entire industry look bad and possibly endangering passage of the lucrative pediatric-exclusivity bill they worked to get passed for nearly a year. And Bill Nixon, president of the Generic Pharmaceutical Association, accused the company of "a greedy grasp to extend a monopoly at the expense of consumers."
At an Oct. 4 hearing before a subcommittee of the House Energy and Commerce Committee, Rep. Brown called Bristol-Myers's Glucophage gambit "an outrage."
House staffers trooped over to the Senate a few days later to craft a law both chambers could agree on. On Oct. 11, Republican leaders introduced a revised pediatrics bill that closed the loophole, and it was approved by the House Energy and Commerce Committee without a single amendment or word of protest about the Glucophage aspect. Days later, the Senate passed a bill with similar language.
In response, Bristol-Myers put its lobbying machine into high gear. Accompanied by Tommy Boggs, a well-known Washington lobbyist, Bristol-Myers Chief Executive Peter Dolan paid visits to high-ranking lawmakers to try to save the loophole.
Unusual Event
With questions swirling about the Glucophage fix, the House committee staff arranged an unusual event. They asked Bristol-Myers and generic-industry lobbyists to argue their cases behind closed doors, in a kind of moot court.
Sitting at an enormous conference table in the Commerce Committee's hearing room with several Republican and Democratic staffers gathered around, Bristol-Myers's lawyer, Dan Kiser, argued the company's case. He was followed by Kathleen Jaeger, a generics attorney. At the end of the debate, some committee staffers say, they were more convinced than ever that Bristol-Myers's loophole needed to be closed.
But Bristol-Myers wouldn't quit. The company had contributed more than $2.3 million of campaign contributions in the 2000 election cycle, most of which went to Republicans. But in a highly unusual gambit, company lobbyists approached a group of liberal Democrats long known as the drug industry's toughest critics. An intriguing compromise then came to the table. The Democrats knew Bristol-Myers had exposed a loophole that other drug makers could use to extend their monopolies on scores of other drugs. So Bristol-Myers offered to draft and support legislation closing all of these loopholes if the Democrats would agree to extend Glucophage's exclusive sales another six to nine months. At the end of those months, Bristol-Myers would agree to license its drug to generics makers for $1 per producer.
Negotiations dragged on for days as staffers, driven from their offices by the anthrax scare, worked out of their homes, phone booths and other federal buildings. Meanwhile, lobbyists for other drug-makers got wind of the unusual proposal. A conference call among the industry's top lobbyists started with a testy question: "Who wrote this language?"
Dick Thompson, the top Washington lobbyist for Bristol-Myers, said someone on the staff of Michigan Rep. John Dingell, the ranking Democrat on Energy and Commerce, had written the change but that Bristol-Myers was considering it seriously, according to three people on the call. Mr. Thompson didn't return phone calls seeking comment. Several lobbyists on the call, however, said they had received copies of an e-mail that appeared to show Bristol-Myers was the source of the proposal, if not the author of the exact language. "Oh, come on," scoffed one of the lobbyists during the call.
The Democratic legislators eventually abandoned the compromise backed by Bristol-Myers because they were worried it wouldn't really close the loophole. Now the company has returned to lobbying Republican legislators, this time arguing that the Glucophage fix is an unconstitutional "taking" of Bristol-Myers's rights by the government.
"If Congress wants to change the law going forward that's their right, but it would be unfair to take away that right retroactively," said Mr. McGoldrick. "We played by the rules of the game fair and square, and we're entitled to our right."
The company has continued to battle for its loophole.
In the meantime, Bristol-Myers continues to pursue other ways to extend its Glucophage profits. Last year, it launched two newer versions of twice-a-day Glucophage -- a once-daily version called Glucophage XR and another one called Glucovance that combines Glucophage with glyburide, another generic diabetes drug.
The company has been trying feverishly to convert patients to the newer pills because pharmacists can't automatically switch patients taking the newer pills to generic versions of Glucophage, once they become available.
If generics are approved, Bristol-Myers's Glucophage sales are expected to drop sharply -- and drug buyers can expect to see big savings. Kaiser Permanente, the health-maintenance organization, says it expects to save $5 million a month when Glucophage generics launch.
Write to Gardiner Harris at gardiner.harris@wsj.com and Laurie McGinley at laurie.mcginley@wsj.com |
