There is growing concern that not enough is being done to meet the continuing threat of bioterrorism. The cost, risk, and time involved in drug research and development is staggering and, unfortunately, the urgency of protecting the U.S. against bioterrorism does not correlate properly with current market incentives for biotechnology or pharmaceutical firms to develop relevant drugs. A recent Infectious Disease Society of America pamphlet concluded that, “An aggressive R&D program initiated today would likely require 10 or more years and an investment of $800 million to $1.7 billion to bring a new drug to the market.”
Despite much talk about defending the homeland during the years after the September 11 and anthrax attacks of 2001, the year 2003 came and went without the development of even a single new anti-bacterial agent. The existing legal and business climates for the medical field, broadly, and the biotechnology firms, in particular, simply do not maintain sufficient incentives for the costly investment in biomedical research that is the only method by which we can hope to stay ahead of the bioterror threat.
The drying up of the so-called “pharmaceutical pipeline” is of particular relevance to bioterror R & D due to the intellectual property, liability, and tax laws which affect the industry. The Biotechnology Industry Organization has specified the unique risk involved in bioterror R&D, saying that:
?because of the deadly nature of bio-weapons, human efficacy data cannot ordinarily be obtained in advance of an attack. Thus, preclinical and clinical testing data for biomedical countermeasures will necessarily be less complete than for drugs and vaccines targeting other diseases.
In a statement to the October 6 joint hearing of the Senate Committee on Health, Education, Labor, and Pensions and Committee on the Judiciary, tax attorney James Rafferty summarized the impasse, saying that:
A serious deficiency in existing tax incentives for commercial biomedical research is that often they fail to convey immediate benefit to the many biomedical research companies without current income and tax liability?Since the biotechnology business is characterized by substantial risk in the form of long lead times to product development, a continued need to raise new capital, and the real possibility that a research project will fail somewhere along the line, the cost of capital for the biotechnology industry is very high.
Additionally, the economic underpinnings of bioterror R&D dictate that it is simply unprofitable to invest in R&D for drugs that may (hopefully) never be used, and if they are, for a very limited time period. Dr. John Bartlett, Chief of the Infectious Disease Division at Johns Hopkins and President of the Infectious Disease Society of America, explained that anti-bacterial drugs are one-time-use drugs, whereas many other drugs are used to treat patients over a lifetime. Clearly, something is needed to facilitate the costly, risky, but necessary R&D for bioterror countermeasures. Albeit belatedly, it appears that Congress and the President are now aware of this, and moving to correct the problem.
On July 21, 2004, President Bush signed Project Bioshield, the bill establishing a 10-year, $5.6 billion program to speed the development of drugs and vaccines to combat the effects of biological, chemical, nuclear, and radiological agents. Project Bioshield guarantees that the government will buy promising drugs and vaccines for agents such as smallpox and anthrax, which probably would not be profitable otherwise. It also empowers the government to authorize emergency use of medical measures that have not won normal Food and Drug Administration (FDA) approval.
The October 6 joint hearing, mentioned above, was gathered to review Senate Bill 666, the “Biological, Chemical and Radiological Countermeasures Research Act,” or “Bioshield II, which seeks “To provide incentive to increase research by private sector entities to develop antivirals, antibiotics and other drugs, vaccines, microbicides, detection, and diagnostic technologies to prevent and treat illnesses associated with a biological, chemical, or radiological weapons attack.” A broad range of relevant experts, including representatives from large and small biotech firms, the Infectious Disease Society of America, the Service Employees International Union, several tax attorneys, and the Generic Pharmaceutical Foundation testified on the potential benefits and drawbacks of the Bioshield II.
Senator Charles Schumer (D-NY) stood out among the hearing participants for his sharp criticism of Bioshield II, and specified that the bill “deeply disturbed” him. He angrily claimed that the legislation is yet another means of fattening the pharmaceutical industry with no guaranteed return for the consumers. Senator Schumer was particularly aroused over the bill’s provision for a so-called wildcard patent extension, which would allow biotech firms to extend the patent of any of their drugs by about two years, in return for certain developments on bioterror countermeasures. The logic of the provision assumes that the financial reward of this patent extension will help spur the scientific and financial risk-taking necessary for firms to create products that will be genuinely useful. Schumer and other opponents assert that the patent extension is too broad a power to give away, and will penalize the generic industry without a significant impact on bioterror R&D.
But this claim does not hold sufficient merit to block Bioshield II, and reflects a poor understanding of the legal and financial climate in which the pharmaceutical and biotechnology firms operate. They are in an extremely uncomfortable position. As the subject of high public and governmental expectations that they create sufficient bioterror countermeasures, these firms must constantly invest massive amounts of money in R&D that may not pan out into viable products, constantly face daunting liabilities, and finally, lose property rights relatively quickly for the products they’ve invested so heavily in.
Legislation such as Bioshield II is overdue, and should provide a valuable first step toward adequate support for an industry that is too-frequently overlooked as a part of our national security strategy.