Jim Greenwood is president and CEO of the Biotechnology Innovation Organization (BIO). He represented Pennsylvania’s 8thÂ district in the US House of Representatives from 1993 to 2005.

James C. Greenwood

Over the past year, there has been considerable coverage in the national media about rising healthcare costs and increased out-of-pocket charges for patients. In response to these concerns, some policymakers have focused on ways to restrict or regulate prices on prescription drugs. This approach is misguided and will not solve the underlying issue.

	There is a perception that prescription drug spending is the primary driver of rising healthcare costs in America. The facts don’t bear this out. Several new reports highlight that drug prices are slowing compared to other healthcare costs.

	The Centers for Medicare & Medicaid Services (CMS) recently found that prescription drug spending not only experienced the largest slowdown of all healthcare categories in 2016, it actually slowed down the overall rate of growth in healthcare spending (1). In separately report data, CMS projects 1.6% pricing growth for 2017, which would be the lowest inflation rate for drugs since 2007 (2).

	These findings are consistent with recent reports from pharmacy benefit managers (PBM) that comprise a majority of the employer market for prescription drugs. Express Scripts reports that spending on medicines increased by just 3.8% in 2016, while prices for brand-name medicines increased by a mere 2.5% after discounts and rebates (3). Prime Therapeutics found spending on medicines increased by just 2.5% in 2016 (4).

	But are rising drug costs driving growth in insurance premiums? The short answer is no. Avalere used data reported by the insurance companies themselves to determine what really drove premium increases in 2017. Avalere found that more than 75% of health-related claims costs in the Affordable Care Act’s individual and small-group markets were attributed to hospitals and doctors in 2015 (5). Drug spending accounted for just 17.7% of allowed claims.

	Medicine isn’t what’s causing health care costs to rise. Medicine keeps people out of hospitals and doctors’ offices, which are the top cost drivers. For example, a report by Milliman (6) on hepatitis C projects that the cost of hepatitis C to the U.S. health care system could be $115 billion over the next decade. Greater insurance coverage of Hep C cures could lower these costs substantially by reducing liver cancer, long hospital stays and costly surgeries.

	There is a role for Congress to play to keep drug prices in check. It can modernize FDA and clear the backlog of generic drugs waiting for approval. It can reduce unnecessary regulations that hinder innovation and competition. It can remove legal and regulatory barriers so insurers and drug innovators can make arrangements to “pay for performance.” And it can quickly implement the bipartisan 21st Century Cures Act, using real-world evidence and innovative clinical trial design to get new medicines to market faster.

	In the end, our leaders should study the data and be careful not to adopt a solution that harms biomedical innovation while failing to address the root cause of rising healthcare spending.

	1. S. Keehan, et al. “National Health Expenditure Projections, 2016-25: Price Increases, Aging Push Sector to 20 Percent of Economy,” 

, February 2017.
	2. L. Helbing and M. McCaughan, “Rx Spending Stands Out in CMS Projections-As Slowing Down,” 

, February 2017.
	4. Prime Therapeutics, 

, April 2017.
	5. Avalere, “Outpatient Services Are the Largest Driver of 2017 Premium Increases,” Press Release, August 2016.
	6. B. Pyenson, et al. 

An Actuarial Approach to the Incremental Cost of Hepatitis C in the Absence of Curative Treatments

	When referring to this article, please cite it as J. Greenwood, “Drug Spending Not Driving Rising Health Care Costs," 

Articles

New reports indicate that drug prices are slowing compared to other healthcare costs.

Drug Spending Not Driving Rising Health Care Costs

	Our nation is in the midst of an important debate regarding medical innovation and how we should be paying for these advances. The irony is that much of this discussion is being sparked by breakthrough cures and therapies that have been developed for diseases that affect large patient populations-exactly the kind of medicine that society needs.

	While these are exciting and important developments, particularly for the patients whose lives will be transformed by these therapies, the reality is that access to our healthcare system is failing to keep pace with the work occurring in labs across the country.

	In recent years, we have seen incredible advances in medical innovation and science, such as:

. In the past few years, new treatments for Hepatitis C came onto the market with clinically demonstrated cure rates above 90%, up from a mere 6% in the 1990s (1,2). These incredible innovations have the potential to help millions of people lead healthier and more productive lives, and to save potentially billions of dollars in healthcare costs related to liver transplants and other costly and difficult medical procedures.

. Since the early 1990s, the death rate for cancer has fallen by over 20%, and cancer patients have enjoyed 50 million additional years of life collectively, thanks in large part to new medicines (3-5).

. A near-certain death sentence not long ago, HIV/AIDS is now a manageable chronic condition for many patients thanks to the development of highly active antiretroviral therapies.

	In 2015, FDA approved 48 new drugs, including many new cancer treatments as well as treatments for cystic fibrosis, heart failure, high cholesterol, and many other conditions. For the second year in a row, FDA approved more drugs to treat rare diseases than ever before.

	New drugs are the result of decades of hard work in labs and billions of dollars in investments. These vast sums must be raised from investors-ranging from retirement funds to individual purchasers of stocks-who are willing to take significant risks. They will only do so if there is an expectation of reasonable returns. Only one in 10,000 potential medicines researched goes on to become an approved treatment.

	Yet the ecosystem that makes the United States the leader in medical innovation is under attack. We are seeing more calls for innovation-crushing price controls and increased government intervention. Some critics have even suggested that insurance companies and federal and state programs restrict which medicines patients may access, with cancer treatments frequently coming under attack. This approach is extremely short-sighted and would be devastating for patients, who rightly expect their physician to recommend, and their insurance provider to cover, the medicine that is best for their particular situation.

	We need to look at the outdated, cumbersome, and inefficient framework for accessing life-saving and enhancing treatments and cures. Insurance companies and policymakers must keep pace with biomedical innovation by ensuring access to the latest medical breakthroughs for patients today and encouraging sustained medical innovation for those who will need it tomorrow. Patients deserve no less.

, 383 (9916) 515-523 (Nov. 5, 2013).
	2. R.T. Marinho and D.P. Barreira, 

 19 (40) 6703-6709 (Oct. 28, 2013).
	3. E.C. Sun et al., “An Economic Evaluation of the War on Cancer,” National Bureau of Economic Research (November 2009).
	4. F.R. Lichtenberg, “Has Medical Innovation Reduced Cancer Mortality?” National Bureau of Economic Research (Revised October 2013).
	5. T. Philipson, et al., 


	James C. Greenwood is president and CEO of the Biotechnology Innovation Organization (BIO).

	Citation: When referring to this article, please cite as J. Greenwood, "The Value of Saving Lives," 

Policies for patient access to life-saving therapies must keep pace with biomedical innovation.

The Value of Saving Lives

There is a clear link between a country’s rate of economic development and the strength of its intellectual property laws. This is particularly true in knowledge-intensive sectors such as biopharmaceuticals.

The good news is that some mature and emerging economies are making growing use of patent systems to facilitate biotechnology research and commercialization. The bad news is that a number of countries have established bureaucratic and burdensome hurdles to patentability. This reality stands to harm innovation everywhere.


The Biotechnology Industry Organization (BIO) is concerned over a series of patent revocations including a decision by India’s Supreme Court to deny patent protection for a novel therapy on the grounds it did not demonstrate enhanced efficacy. Furthermore, Brazil’s unprecedented review of patents by the health regulatory authority, China’s increased data requirements, and Canada’s increased utility requirements all ultimately undermine the drug development and patenting process and may impede the delivery of novel medicines to market.

Despite the 2010 declaration by the then-President of India that the next 10 years will be a “Decade of Innovation,” the use of a compulsory license, a series of patent revocations, and weak enforcement efforts raise serious concerns about India’s commitment to promote innovation.

The tragedy underlying this anti-intellectual property position is not simply that it diverts attention away from the real problems of access to health-care that millions of Indians face, but that it undermines the nation’s goal of becoming a healthcare and science innovator. There are companies around the world interested in collaborating in research, science, and the development of medicines in India. India’s anti-intellectual property position makes it difficult, and often impossible, for such deals to happen. 

It is imperative for governments that want to foster a robust biotech innovation environment to create a set of strong intellectual property standards--particularly those governing data protection, patents, and trade secret protection--that are relevant to biological products.


The biotechnology industry is a dynamic, job-creating industry and presents opportunities for every country. Indeed, the vast majority of biotechnology companies are small- and medium-sized enterprises. What these companies share is a philosophy that is crucial to the task of developing biotechnology products--a willingness to take huge risks and invest private capital in development of new technologies that will lead to new products and services that will improve people’s lives. 

With no source of product revenue and long development times before market launch, biopharmaceutical companies must leverage the strength of their global patent portfolio to raise the large amounts of capital required to get their innovations to the market.

Upholding the system of intellectual property rights is essential to guaranteeing future innovation and future jobs not just for US biopharmaceutical companies, but also for other countries and other industries around the world. 
  BIO believes that strong intellectual property laws create an environment that promotes collaboration and innovation across borders. We will continueto work around the world to champion intellectual property rights as a vital 
  means of creating jobs, saving lives, advancing global economic growth, and generating breakthrough solutions to global challenges.

The 2014 BIO International Convention, taking place June 23-26 in San Diego, will host an Emerging Opportunities in Global Markets Forum specifically designed to highlight biotech initiatives in global markets, looking at both emerging economies and global initiatives and trends that affect the industry’s landscape. The Forum will overview developments in key markets, cross-cutting policy trends, unique collaborations, and cross border initiatives to further innovation. To learn more, visit 


Jim Greenwood is president and CEO of the Biotechnology Industry Organization (BIO).

Protecting intellectual property rights is vital to biopharmaceutical innovation.

Bureaucratic Roadblocks Threaten Biopharma Growth

 James C. GreenwoodIn statehouses around the country, lawmakers are beginning to address the complexities of cutting-edge biotech drugs and the regulatory issues related to the interchangeability of biosimilar medicines. These legislative efforts represent a significant step in recognizing the important and complex role biologic medicines play in the future of healthcare and chronic disease management. They are also a necessary measure to ensure that patients and their physicians remain in control of their medical treatment decision-making as the market for complex biologics evolves over the next several years

Biosimilars are manufactured with the goal of closely mirroring the composition and treatment profile of an innovator biologic product, but are produced without access to the innovator’s proprietary manufacturing processes.

Two biologics made using different cell lines and manufacturing processes will rarely, if ever, be exactly the same, hence the name “biosimilar.” Simply put, biosimilars are not generics, and those suggesting otherwise are incorrect. Thus, current state laws governing the substitution of generics are not, and should not be, automatically applicable to biosimilars.

Patients and physicians managing chronic conditions are generally aware of which treatments work best in their unique circumstances. Therefore, the decision to change to a biosimilar treatment is best made by doctor and patient. However, at a minimum, providing notice to the prescribing doctor and patient ensures everyone in the treatment continuum is informed of decisions to switch to a different biologic drug, either at the pharmacy level or due to insurance coverage guideline

Until recently, there was no pathway for the development and approval of biosimilar products in the United States. The US Food and Drug Administration is currently developing such a pathway. Even after it is enacted, the policy on whether one biologic product may be substituted by dispensers when a different biologic product was prescribed will continue to be governed by state law.

At present, most state laws need to be updated to address the commercialization and distribution of new biologic products and their biosimilar competitors, which are set to enter the marketplace over the next few years. Sound policy in each state outlining the parameters for safe substitution of interchangeable biologics is the best option to ensure patients have access to the most effective and appropriate treatments possible.

Recognizing the authority US states have over biosimilar and interchangeable biologic medicines, Biotechnology Industry Organization (BIO) developed five principles on biologic substitution that we believe should be considered by all states when evaluating biosimilar legislation. Briefly stated, these principals are: 

Substitution should occur only when FDA has designated a biologic product as interchangeable

The prescribing physician should be able to designate a prescription as not substitutable

The prescribing physician should be notified of the substitution if one occurs after the prescription is ordered

The patient, or the patient’s authorized representative, should, at a minimum, be notified of the substitution

The pharmacist and the physician should keep records of the substitution.

These principles strike the appropriate balance of preserving the physician-patient relationship, protecting patients, and promoting a competitive market for biologic therapies. We welcome the opportunity to further discuss this issue with lawmakers as they seek to address vital drug safety measures that accompany this cutting-edge technology.

Sound policies are needed to govern the substitution of interchangeable biologics.

Prescribing Caution for Biosimilars

What would you think of a system that consumed billions of taxpayer dollars annually in life-science research, disdained the incentives of the patent system, never turned any invention it owned into a new drug, and discouraged private sector collaboration while stockpiling 28,000 patents that sat on the shelf? That was the reality of federally sponsored research in the United States 30 years ago.  

Two senators from opposite ends of the political spectrum—Birch Bayh and Bob Dole—did not agree on much, but they did agree that such foolishness simply had to end. Their breaking point was learning that potentially life-saving inventions discovered by universities and small companies under federal grants and contracts were routinely taken away by federal agencies. Non-exclusive licenses were then offered by the US government. There was no incentive for inventing organizations to remain engaged in subsequent development. Not surprisingly, this generated little interest from industry. In fact, the Senators learned that not a single drug had been commercialized under this policy. 

Even in a contentious election year, conservatives and liberals alike recognized that such practices undermined American competitiveness, wasted precious public dollars, and most importantly, denied those suffering from the ravages of disease hope for alleviating that suffering. Congress overwhelmingly passed the Bayh

Dole Act allows universities and small companies to own inventions made with federal support, provides incentives for licensing to small companies and those manufacturing in the US, rewards academic inventors, and allows the government to use technologies that it funds to meet mission needs. The law costs no additional dollars and creates no bureaucracy.  

Dole Act to revive American innovation just when critics were pronouncing that our time had passed. In 1980, the US Supreme Court held in 

 that "everything under the sun made by man" (including Dr. Chakrabarty's oil-eating bacterium) was eligible for patenting. Then in 1982, Congress created the Court of Appeals for the Federal Circuit to restore confidence in the US patent system.   

An immediate result of these actions was the development of the US biotechnology industry, spawned from patented university research commercialized by small company entrepreneurs.  

After much talk about the importance of technology transfer from academia to industry, the Biotechnology Industry Organization (BIO) commissioned a report to document its contribution to the US economy. The report examined university and nonprofit organization patent licensing between 1996 to 2010 and documented (1): 					

The impact on US gross industry output is as much as $836 billion

The impact on US gross domestic product is as much as $388 billion

University and nonprofit licensing supported over three million jobs.

In fiscal year 2010 alone, academic research spun out 651 new companies, the vast majority of which were located in the institution's home state. Forming so many technology companies is a remarkable achievement, particularly in tough economic times. There are now more than 3600 such startups in operation across the US. 

The ties between biotechnology and university research are critical. Most biotech companies license technologies from universities and many of the most prominent companies spun off campus. The continuation of this relationship—buttressed by a strong, dependable patent system—is essential to the biotech industry's success in an increasingly competitive world market. 

However, the federal government's funding of basic research coupled with the incentives of the Bayh

Dole Act creates only the potential for success. This potential is actually realized when private sector entrepreneurs take embryonic ideas and then invest years of their lives and billions of dollars in risk capital to transform academic concepts into commercially available therapies. Even then, the odds of success are daunting.   

The pipeline of promising academic research continues to flow. BIO's Technology Transfer Symposium, to be held in San Francisco on Oct. 8, 2012, will highlight recent and successful early stage technology transfer deals from a variety of perspectives. University and government panelists will analyze how value was determined in early stage discoveries by discussing specific successful licensing deals and the parameters that were taken into consideration. Venture capitalists will provide insights into how they evaluate which early stage discoveries to fund.   

While deals and economic impact are certainly important, there's a better metric of how far we have come. Before Bayh

Dole, not one drug was developed when the government owned the patent rights. Since then, at least 153 new drugs, vaccines, or 

 devices have been commercialized from university or federal laboratory research. Cisplatin, Hepatitis B vaccine, human growth hormones, Taxol, Citracal, Cervavix, Gardasil, and the platform technologies that formed the basis of many early biotech products all came from federally funded research. 

In 2010, Senator Bayh was honored at a celebration of the 30

  anniversary of the Act. There were many speeches lauding the success of the Bayh-Dole Act. However, when a cancer survivor looked him in the eye and said: "Senator, because of your law, I'm alive today" she captured the most important measure of  its success.   

We work in a world where relieving human suffering is the ultimate goal. By recognizing and protecting the foundations of technology transfer, millions around the globe will be able to say: "Thank you for my life—or for the life of my child."   

That's reason enough to keep pushing on against the odds. 

is President & CEO of the Biotechnology Industry Organization (BIO), Washington, DC. 

The Economic Contribution of University/Nonprofit Inventions in the United States: 1996

Ties between the biotechnology industry and university research are crucial.

Technology Transfer: Protecting the True Public Interest

Leadership, partnerships, and breakthroughs will converge at the Biotechnology Industry Organization's (BIO) International Convention this month in Washington, DC. Leaders from 65 countries across the globe, representing all fields of biotechnology, will come together to share their insights and forge new partnerships. 

It is significant that the convention will be in Washington, DC, this year because the time has come to take our advocacy in the nation's capital to a higher and more aggressive level. Biotechnology is crucial for developing new medical therapies, but at the same time, the industry is facing increasing uncertainty in rewards, thus reducing its appeal for sustained investments. The public and policymakers need to better understand and appreciate these challenges.  

Our industry is facing struggles that cannot be modified by any single approach. Instead, we must find ways to reduce regulatory risk and uncertainly, enhance reward, and reinforce the position of the industry as a major contributor to resolving society's most pressing needs. 

Thankfully, policymakers who recognize the value of biotechnology also srecognize that the right policy environment can help the industry thrive. The ability of members of BIO to heal, fuel, and feed the world requires an economic and public-policy environment that supports their work. For instance, a balanced pathway to biosimilars will give biotech investors greater confidence in taking the financial risks of funding the research of biotech startups. 

Other BIO policy priorities include ensuring that the National Institutes of Health has sufficient funding to sustain the public-private collaboration that is transforming biomedical discoveries into innovative treatments for patients. Congress must also provide FDA with the resources it needs to keep pace with rapidly evolving biomedical science and fulfill its vital health and safety mission. Strengthening FDA's review process is a focus of our ongoing discussions with policymakers about the next renewal of the Prescription Drug User-Fee Act. Working closely with our members, BIO also will remain engaged as the US Department of Health and Human Services moves to implement the Patient Protection and Affordable Care Act. 

The Therapeutic Discovery Project (TDP) program, enacted in 2010, is an example of the type of policies necessary to spur continued medical innovation, while at the same time protecting and growing high-paying US jobs. The TDP program provided $1 billion in research grants and credits for small biotech companies pursuing new therapies for diseases, such as Alzheimer's, HIV/AIDs, Parkinson's, and Multiple Schlerosis. BIO is calling on Congress and the Obama administration to work together to extend and expand TDP to support continued American innovation and further accelerate the development of life-saving cures. 

Meanwhile, along with our state affiliates, we will continue to work with state governments seeking to grow their biotech sectors as part of their economic development and job-creation strategies. BIO looks forward to engaging with leaders in Washington to ensure that policies support an economic environment that encourages innovation. BIO will continue to champion the policies that enable our members to saves lives and transform our world. 

 is president and CEO of the Biotechnology Industry Organization (BIO).

This month's BIO Convention will encourage needed conversations.