The Future of Biotechnology for Medical Applications in 2005, Governmental Issues

==Biotechnology for Medical Application and Policy in 2015 – Governmental and regulation issues (Daniel)==

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Trends in drug approval: Authorities are getting more strict

According to Earnest and Young (2005) it is key to biotechnology to bring innovative products to the market. Product approvals in Europe were up in 2004. However, safety issues especially in the US, have gained more and more visibility and this could represent a challenge in the years ahead. In November 2004 Merck withdrew Vioxx from the market, Biogenidec had to withdraw its MS drug. These withdrawals led to concerns about the safety of drugs, prompting even more thorough reviews especially by FDA but possibly – in the future – also by EMEA. Regulatory authorities have come under attack for having an insufficient focus on safety. Relevant parties were dismayed that and were claiming insufficient monitoring of drugs once they are marketed. All this could lead to even more restrictive approval processes and an increased development and opproval time period for new drugs.

Impact of Healthcare cost on Biotech research

Healthcare and Healthcare cost is a current issue in both public, i.e. governmental households as well as in private households. According to the WHO, healthcare costs have developed as follows:

Overall total Healthcare spending has increased significantly in several markets, especially in the US, but also in Japan.

Source (Data): WHO, 2005

Even more, especially in the US, governmental spending on Healthcare has increased significantly. The same is true for UK and Japan.

Source (Data): WHO, 2005

Finally, Governments have hardly managed to increase the percentage of healthcare costs beared by private persons.

Source (Data): WHO, 2005

To conclude we can say, that healthcare costs are becoming a huge issue in public spending and that their percentage of GDP is increasing in many markets. At the same time, governments have not managed to increase the privately borne part of healthcare cost. This will biring governments into a dilemma. Pressure on healthcare cost will increase and hidden subsidies on local drug development (like e.g. in the US but also in Switzerland – both countries, where durg prices often significantly higher than in the rest of the world) will continue. At the same time, governments’ capabilities to fund research will be limited due to tight budgets. All this will make funding of biotech research a major problem. It will have a significant impact on research spending if no other sources of finance can be made accessible. Private sponsoring of drug research might thus be more and more an issue.

==Government Strategies in biotechnology: ==

Budgetary issues will foster globalization: As countries like India and China are likely to improve their intellectual property laws and other emerging economies are forcefully pushing into the biotechnology market, outsourcing even of R&D development to less cost expensive places is getting more and more an issue. Consumers and governments are enforcing this trends, due to uncontrollably increasing healthcare costs. Geographical boarders for biotechnology are getting lower. At the same time ethics in the lawmaking process comes into the field. Countries are imposing laws on what research is allowed to be conducted in their borders and they are imposing laws on what research may be publicly founded. Fact is however, that biotechnology is about to go beyond any boarders.

So, overall countries have less control over the development of their biotech industry and some are running the risk of loosing highly qualified research labour and know-how. What cannot be done in one part of the world – for financial reasons or for legal reasons – could possibly be done in another. Research that is illegal in one place might be legal in another and research that is not publicly founded in one part of the world might get public founding in another.

There is one more thing to be said. A great amount of basic research has been conducted already. The time new companies in emerging markets need to develop a biotech drug will potentially be shortened as the basic research and the base on which these companies can be built is already set.

Trends in funding of biotechnological research

Fact is that the US biotechnology has been built upon venture capital to a large degree (Ernst & Young 2005). Currently, as approval regulations are likely to get stricter and development times thus might get longer, potential venture investors might search for other fields for investment which offer more foreseeable return. Government funding thus becomes an issue also in the US. However governments’ flexibility is limited from a financial point of view and at the same time governments are limiting themselves in the degree by which they can sponsor biotechnology by legal limitations.

In emerging economies, governments are indeed actively helping biotech industry to build up and grow. They are taking the role of venture capitalists.

==Legal environment and the next big thing ==

The next big thing in biotechnology will is stem-cell research and countries’ competitiveness in biotechnology especially for medical applications might depend on their respective legislation.

Some countries forbid stem cell research or forbid to use embryonic material to conduct it and only allow to apply existing stem-cell lines, others allow to use embryonic stem cell material and a small number of countries – especially Britain and South Korea are pretty permissive and even allow therapeutic cloning to create stem-cell material. The map under the following link below provides the respective overview: http://mbbnet.umn.edu/scmap.html

We can see that certain countries have restrictive laws on stem-cell research and generally prohibit research with stem cells taken from embryos. Others have “flexible” laws and permit and at least stem cell research with stem-cells derived form remaining and “unused” embryos from in vitro-fertilization
Finally there are countries which have permissive laws and even allow therapeutic cloning

A special case is California, where – contradictory to the rest of the US, therapeutic cloning is being conducted – but where no public funding is allowed for research involving therapeutic cloning. A law legalizing it in the US has been surpassed by presidential veto.

Conclusion and answers to the research questions

5. What political developments occur that try to reduce the significant growth of healthcare cost?

Gowernments are less and less willing to allow significantly higher drug prices in their countries, than in the rest of the world (This is especially true for the US and has to do with increasing healthcare costs). Also, e.g. in western European countries and in Japan government’s budgets are under pressure due to increasing social security costs because of an aging population. All this will lead to pressure to allow parallel import of drugs and to pressure to outsource even biotech research and production of biotechnology drugs to other, parts of the world, where it can be conducted for lower costs.

8. How will the FDA and EMEA authorities respond to the exponential growth of the biotech industry and how will their guidelines develop?

On one hand, short track approval processes have been developed, on the other hand security concerns are increasing. At the moment it regulations, especially those of FDA seem to get more strict. Time needed to develop and especially to market new drugs could therefore increase and costs to get approval could do so too. In addition, guidelines regarding monitoring and control of drugs, after they have been introduced in the market are likely to get more strict too.



18. What is the legal situation in those parts of the world which are relevant for biotech research?

The hottest and most debated issue in correspondence with biotech for medical application is stem cell research. Many countries are restrictive in this context, not allowing stem cell research with cells taken from existing embryos. Others allow using cell material from “left over” embryos from in vitro fertilization and others are permissive and allow even therapeutic cloning. UK and South Correa are the leading and most permissive countries. In the US, attempts to allow federal- or state governmental funding of research on therapeutic cloning are currently blocked by presidential Veto.

19. To what degree can governments control on whether laws on biotech research are being respected?

Governments have 3 levers to control biotech research: (1) Public funding of biotech research, (2) prohibition of certain research and (3) approval respectively non-approval of certain drugs or therapies.

However it will be hardly possible to control that people of a certain country do not get a cure which involves biotechnological research or production processes or even drugs which are illegal within the borders of their country. People will go to other countries where the respective drug, cure or therapy is legal, if they can be cured from their diseases. The protagonist in the respective interview (Fortune, 2005) said, that, if he is a criminal, when he cures goes to another country with his son where he can be cured with something that is illegal in his country, so he is willing to become a criminal. Thus governments can limit research, they can limit access to certain future cures for the broad mass of people but they cannot limit it entirely: What cannot be done in one place can be done in another. And those who demand it and can afford it will get it.

32. Can the biotech development be stopped by imposing (general and international) laws?

Borders do less and less matter. What cannot be done in one country can be done in another. What cannot be done by one company can be done by another. What cannot or will not be sponsored in one place of the world might get public support and sponsorship in another. Consolidation in the industry will lead to the fact that companies are big enough to conduct their research in any place in the world they like. Also increased venture capital – from any place in the world – will flow to those places in the world where governmental conditions for research on biotechnology are most favorable. It is therefore virtually impossible to stop biotechnology research by imposing laws in specific countries.

International laws might slow biotechnology. However, we have seen that many countries, developed ones and emerging ones, consider biotechnology as one key focus of their economic strategy and that certain countries have gained an edge in biotech research which could not be conducted in other countries. It is therefore hardly imaginable, that international laws that ban certain research or techniques in biotechnology can be imposed on a worldwide basis.

It is thus hard to stop biotechnology.

References

UK Medicines Information (UKMi); 2003; The Licencing of Medicines; August

EMEA,European Medicines Agency, 2005, http://www.emea.eu.int; October

FDA, Food and Drug Administration; 2005 The new drug development process http://www.fda.gov/cder/handbook/develop.htm; October 10

WHO, World Health Organization; 2005; Country Information, http://www.who.int/countries/en/; October 10

University of Minnesota Medical Scholl; 2005; World Stem Cell Map, http://mbbnet.umn.edu/scmap.html; October 09

European Commission (Kommission der Europäischen Gemeinschaften); 2001; Eine Strategische Vision für Biowissenschaften und Biotechnologie; Brussels, September 4

Ernst & Young; 2005; Beyond Borders, Global Biotechnology Report 2005

Fortune Magazine, Betsy Morris, 2005; The Stem Cell War, September 5

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