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7-Business: Biotechs' lobbying begins to pay off in the U.S.

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                                  PART I
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TITLE:  Biotechs' Lobbying Begins to Pay Off
        Victories Pile Up as Spending On Political Causes Soars
SOURCE: The Washington Post, USA, by Michael Barbaro
DATE:   Jul 22, 2003

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Biotechs' Lobbying Begins to Pay Off Victories Pile Up as Spending On
Political Causes Soars

In August 1999, when the Biotechnology Industry Organization decided to
lobby the White House for stronger Medicare drug coverage, the trade
group took to the airwaves with an aggressive tactic: a 60-second radio
spot, broadcast seven times a day for seven days. Featuring a retired
schoolteacher pleading for broader benefits, the radio blitz had all the
trappings of a pricey lobbying campaign.

But it wasn't.

The ad cost just $7,000 and ran on one radio station, WMVY-FM, in one
town, Martha's Vineyard, Mass., where then president Bill Clinton was
vacationing. "I have no idea whether the president heard it," said the
trade group's president, Carl Feldbaum. "But that's all we could afford."

Fast-forward almost four years to June, when the industry trade group did
not have to seek out small-market radio stations to reach the president.
It simply delivered its agenda to President Bush when he spoke at the
group's annual convention.

Today, the industry's spending power in Washington is considerably
stronger and the relatively young business of biotechnology, just two
decades old, is beginning to score significant legislative victories,
from reform at the Food and Drug Administration to the proposed expansion
of outpatient Medicare coverage.

Between 1998 and 2002, annual spending on lobbying by biotechnology
companies, their parent firms and their industry trade group jumped 50
percent, to $33 million, according to an analysis by the Washington-based
Center for Responsive Politics. Top companies have established Washington
offices to raise their profile among regulators and lawmakers. And dozens
of mid-size companies have hired lobbyists here to press their agendas.

During the same four-year period, the biotech industry more than doubled
its campaign contributions to federal candidates, from $3.2 million in
1998 to $7.7 million in 2002, the Center for Responsive Politics found.
The organization counted individual, political action committee and soft
money donations from a wide range of businesses, including chemical
companies with in-house biotechnology units, such as Dow Chemical Co. and
BASF Corp.

Biotechnology executives say higher spending on political causes reflects
the sector's shift away from early-stage drug development, conducted
without much federal oversight at company laboratories, toward the highly
regulated universe of clinical testing and product manufacturing, when
patients come into the picture.

"This is an industry coming into its own," said Vaughn Kailian, vice
chairman at Millennium Pharmaceuticals Inc., a Cambridge, Mass.,
biotechnology company. "The thing that will kill you in the start-up
stage is money, not regulatory issues. But the closer companies come to
product approval, the more access they need in Washington."

Despite its gains, biotechnology is hardly a political power broker. The
vast majority of biotechs, still struggling to become profitable, cannot
afford to hire more scientists, let alone find the salary for a lobbyist.
And the industry's campaign donations remain relatively lean. In the 2002
election cycle, for example, the industry gave $7.7 million to federal
candidates; its bigger and older brother, the pharmaceutical industry,
gave $20.7 million. The biotech industry is still small potatoes compared
with the biggest campaign-contributors, lawyers and law firms, who gave
$94.8 million in the 2002 election cycle.

Analysts say the industry is simply growing up. For much of the past
decade, few biotechnology companies actually delivered drugs to the
public. A small club of firms -- Amgen Inc., Genentech Inc., Gilead
Sciences Inc. and MedImmune Inc., all profitable and flush with cash --
largely dominated the industry. But the number of companies with more
than one drug on the market has grown steadily in recent years, forcing a
new generation of executives to navigate thorny issues such as
competition from generic drugmakers and liability protection for drugs
used after a bioterror attack.

Take Millennium Pharmaceuticals. After its first drug was approved, the
10-year-old company opened a one-man government relations office in
Washington to press for broader reimbursement coverage for expensive
biotech drugs and to educate lawmakers about gene-based medicine. To pull
it off, the company boosted its lobbying expenditures from next to
nothing to $1.1 million the same year.

The timing proved fortuitous: Millennium's second commercial drug was
approved earlier this year, and the company has built a strong profile
among lawmakers, company officials say. But few biotechs can afford that
kind of access. Fewer than a dozen of them have offices in Washington.

Most companies rely on the Biotechnology Industry Organization to do
their bidding in Washington. The 10-year-old trade group, which has about
1,000 members, has largely succeeded in its goal of raising
biotechnology's standing on Capitol Hill. In the past four years, its
lobbying expenses have nearly doubled, to $3.5 million, and its campaign
contributions have vaulted from $4,500 to more than $166,000.

Regulations -- and the agencies and congressional committees that shape
them -- are the major focus of the industry's lobbying efforts, documents
filed with Congress show.

"If you are a tech company with an idea, you build it, get a patent on it
and you sell it. But if you are a biotechnology company, you are
regulated almost every step of the way," said Walter Moore, vice
president of government affairs at Genentech, which spent $1.5 million on
lobbying last year.

Genentech pressed for the appointment of a new FDA commissioner after the
agency had been headless for nearly two years. Celgene Corp. pushed for
stronger Medicare reimbursements for cancer drugs, its main business. And
Applera Corp., whose subsidiaries decode genetic information and develop
drugs based on the data, supported certain forms of gene patenting.

Executives say their efforts have produced important victories for the
industry. When Congress reauthorized the Prescription Drug User Fee Act
last year, biotechnology companies, led by the Biotechnology Industry
Organization, secured a major increase in the amount they would pay for
the agency to review drug applications in return for a bigger FDA
workforce and a quicker approval process.

This year, the industry is taking partial credit for the proposed
expansion of outpatient drug payments in the House and Senate Medicare
bills now pending in Congress. The reform would offer biotechs greater
incentives to develop the kind of expensive but potentially life-saving
therapies Medicare has often failed to cover.

Because biotechnology is rooted in complex laboratory science, much of
the lobbying is educational. Monsanto Co. of St. Louis., a developer of
genetically modified seeds, spends tens of thousands of dollars each year
arranging to bring congressional staff members to its farms. "There's
only so much education you can do without seeing some of agriculture and
biotechnology firsthand by walking through the fields," said company
spokesman Brian Hurley.

Monsanto's federal filings reveal another reality about biotechnology's
spending in Washington: It strongly favors lobbying over campaign
contributions. The company spent $2.2 million on lobbying in 2002, but
only $226,000 on campaign contributions, a gap mirrored across much of
the industry.

Only 12 companies contributed more than $100,000 during the 2002 election
cycle, according to the Center for Responsive Politics. The vast majority
gave $1,000 or less, with Republicans receiving more of the total than

Despite its shallow pockets, biotech executives have their favorite
candidates, who tend to sit on congressional committees that either
regulate the industry or fund the agencies that do, according to the
Center for Responsive Politics.

In 2002, Nancy L. Johnson (R-Conn.), a member of the House Ways and Means
Committee and chairman of the subcommittee regulating health care,
received $88,992 from the industry; Charles E. Grassley (R-Iowa),
chairman of the Senate Finance Committee, which regulates Medicare,
received $61,799; and Mary Landrieu, (D-La.), a member of the Senate
Appropriations Committee and the subcommittee regulating the FDA,
received $47,000.

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TITLE:  Biotech's political clout grows
SOURCE: The Boston Globe, USA, by Christopher Rowland
DATE:   Jul 18, 2003

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Biotech's political clout grows

The biotechnology industry's trade group leaned heaviest toward
Republicans when it backed candidates for Congress last year, especially
Representative Nancy Johnson of Connecticut, key sponsor of a Medicare
prescription benefit plan. It contributed $9,993 to her campaign, the
most it gave to any candidate.

When Cambridge-based Millennium Pharmaceuticals Inc. wanted a stronger
voice on Capitol Hill, it opened a Washington office and immediately
spent $1.12 million lobbying government officials. Two other
Massachusetts companies spending millions on lobbying, Biogen Inc. and
Genzyme Corp., sought out well-connected lobbyist Nick Littlefield, a
former aide to Senator Edward M. Kennedy, Massachusetts Democrat, to
carry their message to lawmakers.

Larger lobbying expenditures and more campaign contributions illustrate
the growing clout of the nation's biotech industry, which is seeking to
influence this summer's debate on a Medicare prescription drug benefit,
deliberations on generic competition for biotech products, and the pace
of new drug approvals at the Food and Drug Administration.

"We have moved beyond infancy and adolescence, and we are in our young
adult stage," said Carl B. Feldbaum, president of the Biotech Industry
Organization, which also gave $60,493 to federal candidates through its
BIO PAC political action committee last year. "We're gaining size and muscle."

The nonprofit Center for Responsive Politics has issued a report on
biotech's increasing clout, tracking lobbying efforts and campaign
contributions. Examining Federal Election Commission and congressional
disclosures, the center tallied $33 million in biotech lobbying
expenditures in 2002 and $7.7 million in campaign contributions during
the last election cycle. Overall, the lion's share of biotech's
contributions flowed to Republicans, who received 71 percent compared to
29 percent for Democrats, according to the center's data.

Critics of the effects that campaign donations and lobbying have on
politics say drug interests have blocked price controls on the proposed
Medicare prescription drug benefit bills working its way through Congress.

"What's bad is that members of Congress see many issues through the prism
of special interests," said Celia Wexler, research director at Common
Cause. "It isn't that members are corrupt. The system is corrupt in that
all the advantage is given to people with lots of resources that can
afford the presence in Washington."

But the industry maintains it must lobby government to protect its
interests and ensure it can develop and market new drugs. Biotech's
political spending pales when compared to pharmaceutical companies and
their industry group, the Pharmaceutical Research and Manufacturers of
America, which spent $91 million on lobbying in 2002, according to a
separate study this year by the consumer group Public Citizen. Biotech
executives are trying to catch up as they bring genetically engineered
drugs to market and encounter a Washington environment far removed from
the orderly world of the laboratory.

"Each one of these companies was established by a scientist who had a
fabulous idea. They thought they would just get it through the FDA and
they would be set, but that turns out not to be the case," said
Littlefield. "They needed to get involved in the public policy debates
that affected their ability to succeed. They realized they needed a place
at the table."

Littlefield, a lawyer at Foley Hoag LLP and a former chief of staff for
the Senate Health Education and Welfare Committee under Kennedy, cited
hot-button issues that have a direct effect on biotech business:
exclusivity protections for orphan-drug development, coverage by
Medicare, reimbursement by Medicare, National Institutes of Health
funding for research, and freedom to conduct stem-cell research.

One of Littlefield's clients, Biogen, slowly ratcheted up its spending on
lobbying in increments of $100,000 or more over the last five years. By
2002, it had spent a total of $2 million. Millennium Pharmaceuticals in
Cambridge took a different approach. While the company was developing
biologic medicines, including Velcade, its novel cancer-fighting drug, it
spent nothing on lobbying in 1998, 1999, and 2000. Then in 2001 and 2002,
as it began to bring its products to market, it jumped into the
Washington fray, opening an office and hiring two staff lobbyists.
Millennium vice chairman Vaughn Kailian said it was a reaction to
political realities.

"The best seat at the table is when you own your own chair," said
Kailian. "We walked up and decided we would purchase a chair to be at the
table ourselves."

The Washington presence allowed Millennium to weigh in on a critical
issue: the pace of drug approvals at the FDA, particularly for cancer
drugs granted "accelerated approval." Velcade won coveted accelerated
approval status and was awarded a marketing license this year based on
results of a phase 2 clinical trial that showed positive changes in 28
percent of 202 patients studied. The FDA's review from application
submission to market approval was just four months, instead of the usual
10 months. Phase 3 studies to test safety and efficacy are still underway.

Kailian said any doubt about the growing influence of biotech
manufacturers in Washington was dispelled in June, at the 10th
anniversary convention of the Biotechnology Industry Organization.
President Bush, Health and Human Services Secretary Tommy G. Thompson,
Senate Majority Leader Bill Frist, and FDA Commissioner Mark McClellan
all addressed the group over the three-day meeting.

"When you get that amount of attention from the administration to an
industry meeting," he said, "you pretty much know that the the industry
is playing a critical role."


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