Innovation, Not Spending Cuts, Improves Health Care

Though they don’t see eye to eye on much these days, Democrats and Republicans agree about one thing: The U.S. has a massive health care spending problem. Spending continues to outpace GDP growth and wages, creating massive budget problems for states and the federal government, a problem that will only grow as the U.S. population ages.

But what few people in Washington seem to recognize is that we won’t be able to address the spending problem without addressing the innovation challenge.

Controlling spending, as important as it is, won’t cure Alzheimer’s or cancer, keep seniors healthier and out of expensive nursing homes, or improve the lives of the 133 million Americans living with chronic illnesses or disabilities.

By all means, let’s spend our dollars wisely. Let’s also recognize that disease is the real enemy � an enemy that doesn’t pay any heed to better accounting.

Instead, we need new ways of spurring innovations like personalized medicine and diagnostics that help us direct the right treatment, to the right patient, at the right time.

Companies must do the painstaking and time-consuming scientific research to develop drugs that can cure Alzheimer’s without worrying about whether the patents on promising treatments will expire before they can recoup their investment costs.

America has met this challenge before. In the 1970s and 1980s, U.S. policymakers helped create a powerful ecosystem for medical innovation through smart public policies such as:

• The Bayh-Dole Act, which let universities patent discoveries made with federal dollars.
• Hatch-Waxman, which created a pathway for generic drugs to come to market while giving companies patent extensions for the time their drugs spent in testing.
• R&D tax credits to help companies underwrite the massive cost and risk of developing new medicine.

This mix of smart public policies and market rewards for innovators let the U.S. become the world’s leader in drug and medical-device innovation, creating millions of jobs and leading to powerful treatment for AIDS, some cancers and heart disease.

The world has changed in the meantime. Companies find it more expensive than ever to translate good science into better treatment. Failure rates in clinical trials testing new medicine can be as high as 95%. Bringing a single new drug from discovery to FDA approval can take 13 years and cost over $1 billion.

And many drugs are only effective in a fraction of patients who use them, exposing them to the risk of treatment without any hope of benefit, and driving up overall health care costs. For many devastating ailments like Alzheimer’s and Lou Gehrig’s disease, no good treatment options exist. For far too many patients, a slow, agonizing death is the only outcome they can expect.

Creating a new innovation ecosystem that reduces the cost, time and risk required to bring personalized medicine to market won’t be accomplished in a single year or with a single piece of legislation. It will require real reform of the U.S. Food and Drug Administration, along with closer collaboration among industry, academic researchers and the National Institutes of Health.

We can start by creating a new framework for the 21st century. It’s time for a sequel to Hatch-Waxman. This would reward companies based on the quality of their science and not the length of their patents, and for developing new treatment and medicine that target diseases for which few good options are currently available.

This is the approach outlined in the Moddern Cures Act, developed by the National Health Council (an umbrella organization of patient groups) and made into bipartisan legislation co-sponsored by Reps. Leonard Lance, R-N.J., and Rep. Jay Inslee, D-Wash.

The bill addresses several key challenges facing innovators today. If a drug company partners with a diagnostics company to develop a tool that can help predict which patients are likeliest to benefit from treatment, the drug company would receive six or 12 months of additional patent protection from generic competition.

This would encourage drug companies to work closely with personalized diagnostics companies, spurring research in that vital area. It would also make more companies willing to compete in smaller, targeted-therapies markets.

For drugs that have lost patent protection or have too little patent protection left to justify the massive investment in FDA-required clinical trials, the legislation would create a new category of medicine called dormant therapies.

These therapies, for unmet medical needs � i.e., when no other therapies are available, or the dormant therapy is better or safer than current alternatives � would receive data protection for 15 years after FDA approval, essentially matching the maximum allowed under current patent law.

(Few drugs today, however, enjoy protection for that long, as development times have cut effective patent life down to 10 years or less.)

Going forward, the U.S. must close the gap between the last century’s policies and the new challenges facing innovative companies and researchers today.

New policies like the Moddern Cures Act should be driven by the same sense of urgency and commitment to innovation that led America to conquer polio in the 1950s, and which later gave birth to the world’s most successful biotech industry.

Innovation was the way forward then; it remains the solution to our most pressing challenges today.

This piece originally appeared in Investor's Business Daily

This piece originally appeared in Investor's Business Daily