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Falling out on policy points
Cetus Corporation and Genetics Institute, Inc., resign from the Industrial Biotechnology Association (IBA). Both were founding members of the organization in 1981; both are represented on the board of directors; both are led by CEOs who have served as President of the IBA. The rift arises when the Association elects to support two pieces of legislation, one enacted, one proposed. According to Cetus and Genetics Institute, both threaten to stifle healthy market competition and unfairly benefit Amgen and Genentech to the detriment of rival firms.
The Orphan Drug Act (ODA) is one of the controversial acts fueling the split. The ODA specifies that companies developing drugs for rare diseases be granted seven years of market exclusivity. Cetus and Genetics Institute argue that although the Act provides incentives to attend to underserved markets, it also creates monopolies for companies with highly lucrative drugs already on the market. Amgen has been granted orphan-drug protection for EPO (erythropoietin), and Genentech for HGH (human growth hormone). Cetus and Genetics Institute maintain that the markets for both products are sufficiently large that grants of market exclusivity are unnecessary and inappropriate, but the IBA has elected not to lobby for changes in the law.
Cetus and Genetics Institute also disagree with the IBA’s decision to support new legislation introduced to the U.S. House of Representatives by Democratic Congressman Rick Boucher of Virginia. Boucher’s bill seeks to amend federal patent law and to extend intellectual property rights to a range of processes that utilize bioengineered organisms. It specifies that production processes shall not be considered obvious (and ineligible for patent protection) if an essential material used in the process is novel and nonobvious. In support of the bill, the IBA emphasizes the protection of U. S. innovation from foreign competition, but the dissenting firms say the proposed reforms will unnecessarily complicate patent law and interfere with international trade. At the heart of the disagreement is the crucial issue of how fairly to reward first-to-market/first-to-the-finish-line biomedical products.