Text of H.R. 1427
Summary

Last week, Rep. Henry Waxman and several other representatives unveiled the latest version of a bill designed to lower the price of drugs by encouraging generic competition in biological products (”biologics”). Biologics are products derived from living processes and used to prevent, treat, or cure human illness. Most drugs, in contrast, are synthesized using chemical reactions.  Biologics include products such as vaccines, blood-derived products, antibodies, and recombinant proteins (e.g. proteins that modulate the immune system, or proteins that induce the proliferation of red blood cells). Over the past 30 years, a revolution in recombinant DNA technology has propelled the sub-field of biologics from the periphery into prominence in the biopharmaceutical industry. Three of the top 10 best-selling drugs in the U.S. in 2007 were biologics (Enbrel, Aransep, and Epogen), and biological products now represent some of the most expensive drugs on the market; annual per-patient treatment costs for one expensive drug topped $300,000 last year.

The new bill, H.R. 1427, dubbed the “Promoting Innovation and Access to Life-Saving Medicines Act,” is intended to introduce price competition in biologics by granting the FDA clear authority to approve generic, or “follow-on” biologics, which are comparable in safety and efficacy to biologics already on the market. The new legislation is modeled on the Hatch-Waxman Act of 1984, which allowed generic manufacturers to gain market approval by showing that their products were interchangeable, or bio-equivalent, with previously approved products, without the need to preform additional clinical trials. Until now, the FDA has been reluctant to allow for this type of abbreviated approval for biologics, which have historically been regulated under a different legal regime from other drugs. Although, as described in this testimony by an FDA official, the story is more complicated. Some proteins that were initially purified from human and animal tissues, such as insulin and human growth hormone, were categorized as drugs when they first obtained FDA market approval. Today these substances remain regulated as drugs, even though they are now synthesized using recombinant DNA technology, like many biologics.

Previous attempts to create an abbreviated approval pathway for generic, or “follow-on” biologics, have stalled based on concerns that the new pathway will fail to ensure patient safety and protect the profits of innovator firms. A major sticking-point has been the inclusion, in some versions of the legislation, of a “data-exclusivity” provision that would prevent generic firms from gaining approval based on comparisons to an innovator product for 12-14 years after the innovator gains approval. The data exclusivity term would run concurrent with the term of any patents covering the innovator product. Data exclusivity would protect innovator firms whose patents have expired or been interpreted too narrowly to effectively block competition. The new H.R. 1427 attempts to compromise with innovators by offering shorter, 3- and 5- year periods of data exclusivity, similar to the periods currently available to other drugs under the 1984 Hatch-Waxman regime (a model suggested by Boston University Scholar Laurence Kotlikoff).

While the debate rages on over how best to protect investment by innovators under the new regime, few have raised the question of whether or not the new legislation will actually be successful in promoting generic competition. Lawmakers and lobbyists pushing for the extended period of data exclusivity appear to assume that once the pathway is open, it will be a simple matter for generic firms to reverse engineer the originator product. The success of the Hatch-Waxman regime has relied on the fact that most drugs are easy to reverse engineer — the process of characterizing and reproducing a simple chemical entity can cost as little as $100 million and take as few as 6 months. Once Hatch-Waxman removed the barrier of submitting independent clinical data, generic competition was immediate and dramatic: the share of prescriptions filled by generic drugs rose from 19% to 40% in the first decade following the act (as described in this FTC Comment).

By contrast, the process of reverse-engineering a biologic is much more complicated. As the FDA notes, biologics tend to be more complex, heterogenous, and harder to characterize than their chemical counterparts.  Unlike most chemical drugs, the particulars of the production process for biologics can have major effects on the structure of the end product.  Use of different cell-lines or small changes to the manufacturing process can lead to dangerous variations in the product that can be difficult to detect without additional clinical studies. The importance of the manufacturing process and use of particular cell lines means that a product may remain difficult to reproduce, even where elements have been disclosed in a patent application. The innovator biologics industry has argued that it would be impossible — at least in some cases — to design a follow-on products that could be safely exchanged with the innovator product. This assertion has prompted criticism that many biologics patents are actually invalid because they fail to disclose enough information to enable a person skilled in the art to make and use the invention. See 35 U.S.C. § 112

Such barriers to reverse-engineering biologics will cut into the effectiveness of the new legislation by making it difficult for generic firms to prove that their drugs are similar enough to the innovator product to gain regulatory approval without preforming additional clinical trials. Even Henry Grabowski, a Duke University economist who has argued for a 12-16 year data exclusivity period to protect innovation, admits that the new legislation will not work as well as Hatch-Waxman at promoting competition for biologics. In a 2006 paper published in Health Affairs, Grabowski estimated that even with an abbreviated approval process in place, technological and manufacturing barriers to copying would result in fewer follow-on biologics. Less generic competition means that prices are not likely to drop as dramatically for biologics as they had for simpler drugs following Hatch-Waxman.

The troubling implication is that some biologics will be able to maintain their monopolies — and resulting high prices — even after the new legislation takes effect. Even more troubling is the fact that no attempt has been made to generate new solutions to the new challenges presented by biologics. Instead, the debates have focused on which elements of the Hatch-Waxman regime, such as data exclusivity, will be incorporated into the new legislation.

Solutions do exist. One potentially simple fix to the problem could be to borrow from patent law and require the innovator firm to meet an additional disclosure requirement in return for the allotted period of data exclusivity. If innovator firms insist on an 12-14 year period of monopoly protection, it is reasonable and fair to ensure that when the period expires, generic firms will be allowed to compete. A disclosure requirement could ensure competition by giving generic firms the information and materials necessary to replicate the innovator product with a minimum of additional expense. This would mean, in many cases, requiring the innovator firm to share cell lines and disclose manufacturing processes that would otherwise be protected by trade secrets. Such a requirement would also assist with public safety by ensuring that generic biologics were as similar as possible to the innovator — reducing the danger of unexpected side-effects. Publication of the disclosure could be timed to coincide with the expiration of patent and data exclusivity terms, as a way to prevent generics firms from manipulating the system by seeking early entry.

The paradigm for generic entry developed for chemical drugs fails to address existing barriers to production of follow-on biologics.  If lawmakers do not recognize these problems and incorporate new solutions to overcome them, the new legislation will not be effective at lowering the price of biologics.

*For further discussion of biologics and data exclusivity, see the forthcoming Fall 2009 edition of the Journal of Law & Technology, featuring “A Longer Monopoly for Biologics?: Implications of Data Exclusivity as a Tool For Innovation,” a student Note by Sarah Sorscher.

File-Sharing Cases in Courts Around the World
In February, the four men behind the popular file-sharing site The Pirate Bay went to trial in Stockholm, Sweden.  They stand accused of helping millions of Internet users illegally download protected movies, music, and computer games. The defendants – Fredrik Neij, Gottfrid Svartholm Warg, Peter Sunde Kolmisoppi, and Carl Lundström – face up to two years in prison and a fine of 1.2 million kronor (US $143,529) if convicted of being accessories and conspiracy to break Swedish copyright law.  The case has made headlines not only because of the substantive legal issues, but also because Defendant Peter Sunde, co-founder of The Pirate Bay, has called for the court’s proceedings to be as open as possible. The Swedish court granted Sunde’s motion to allow coverage of the proceedings without much resistance, and SVT, a public broadcaster in Sweden, has provided streaming audio webcasts webcasts of trial.

A similar situation is unfolding in the United States in a high-profile case involving issues very similar to those of The Pirate Bay case, although here there has been significant resistance for the defendant’s calls to open the proceedings to the public.  Joel Tenenbaum is one of the tens of thousands of defendants being sued by the RIAA for allegedly violating their members’ copyrights by distributing files through P2P file sharing software. However, unlike the vast majority of the defendants in these cases, he chose to litigate rather than settle his case rather than settle, with the help of Harvard Law School Professor Charles Nesson and a team of his students. With Professor Nesson’s assistance, Tenenebaum filed a motion similar to Sunde’s, requesting his trial be broadcast live via the Internet. Tenenbaum’s motion asked the Court to exercise its discretion under the Court’s local rules to allow Internet access to the courtroom by authorizing the Courtroom View Network (”CVN“) to provide audio visual coverage of the proceedings in this case over the Internet.

Tenenbaum’s Arguments for Internet Access
In the motion, Tenenbaum argues that Internet access to the litigation will allow lawyers, professors, students, and reporters to keep abreast of the most recent legal developments in the case.  Moreover, he argues a live stream over the Internet would provide an interested – and increasingly tech-savvy – public with access that will assist in educating the public about the issues involved in the RIAA’s unprecedented litigation campaign.  This is arguably in line with the RIAA’s litigation strategy, which was at least partially designed to educate the public about the legality of file sharing. Finally, Tenenbaum argues that granting access over the Internet is valid under Local Civil Rule 83.3, which permits proceedings to be recorded, photographed and broadcast “by order” of the Court. See D. Mass. Local Rule 83.3.

The only argument the RIAA provides in opposition is that Massachusetts U.S. District Court Judge Nancy Gertner has no authority under Local Civil Rule 83.3 to permit such an order.

Ultimately, Judge Gertner allowed web casting of a legal hearing in the Tenenbaum case.  In her ruling, she emphasized the unique relation of the Tenenbaum case to the Internet:

“In many ways, this case is about the so-called Internet Generation – the generation that has grown up with computer technology in general, and the internet in particular, as commonplace. It is reportedly a generation that does not read newspapers or watch the evening news, but gets its information largely, if not almost exclusively, over the internet.”

The RIAA immediately appealed the order. In its response, the RIAA reiterated what it had argued in its original opposition: that the proposed reading and broadcasting of the district court proceedings was barred by Rule 83.3 of the Local Rules of the United States District Court for the District of Massachusetts.  The RIAA  also argued that the ban established by Local Rule 83.3 specifically tracked the Policy Statement adopted by the Judicial Conference of the United States regarding the recording and broadcasting of proceedings in the district courts.

The First Circuit has agreed to hear oral arguments on April 7^th, 2009.

The Broader Debate over Electronic Access to Courtroom Proceedings
The question of whether to allow live-broadcasts of publicly available legal proceedings via the web is just the newest question in a long-running debate within the legal community on how to provide public access to the courts.  The traditional view of open public proceedings would limit access to those members of the public that can physically attend the court proceedings.  The debate has centered on whether this view should yield to the modern media’s attempts to provide broader public access via new technologies.  The issue is hardly new, as for many years the issue of cameras in the courtroom has challenged long-standing norms of the judicial process.

Although courts vary widely – even within the same jurisdiction – in their tolerance of electronic recording and distribution of their proceedings, the trend is generally towards providing greater access.  For instance, New York courts have issued conflicting opinions on the issue, ruling that camera coverage of a criminal trial without a defendant’s consent does not automatically warrant reversing the defendant’s conviction, despite precedent requiring that cameras must be banned throughout a trial.  However, the law is clearer in other states.  For example, courts in Delaware, Ohio and New Jersey are already regularly webcasting their proceedings.  Moreover, the trend towards greater access seems to be accelerating.  In February 2009, the Minnesota Supreme Court ordered a pilot program be established to give electronic media access to court proceedings with a judge’s approval.

Still, traditionalists remain resistant to changing the way in which court proceedings are reported, and this resistance may temper the adoption of broad electronic access to the judicial system.  The infamous O.J. Simpson murder trial gave critics an example of the potential downsides of televised trials, as critics argued that the cameras cheapened the proceedings and promoted posturing by lawyers.

Additionally, the United States Supreme Court notably prohibits televised coverage of its oral arguments. Recently Supreme Court Justice Scalia was asked why cameras are not allowed in the Supreme Court even though the court hearings are open, transcripts are available, and the Court’s justices are open enough to discuss proceedings while ‘out on book tours.’  Justice Scalia said he originally favored televising Supreme Court proceedings when President Reagan appointed him in 1986.  Yet he said that over time, he has come to believe that “most people will only see 30-second takeouts” that would fail to give an accurate picture of the proceeding. Justice Scalia asked “why should I be a party to the miseducation of the American people?”

There is good reason to question Justice Scalia’s argument. The release of audio-taped oral arguments from the Supreme Court, which started only a few years ago, has not caused any well-documented detrimental effect on our judicial system.  In fact, the audio recordings have helped Americans better comprehend the law, and provide a glimpse of legal practice on the nation’s highest level.  As Ben Sheffner points out, if it’s so dangerous to allow “30-second takeouts” to be shown, why allow newspaper reporters in the courtroom? After all, reporters do not reprint entire oral arguments verbatim; rather, they pick and choose snippets for their articles that we call “quotations” — which are the print version of “takeouts.” No doubt quotations or “takeouts” can “miseducate.” As one of Scalia’s predecessors once observed: “If there be time to expose through discussion the falsehood and fallacies, to avert the evil by the process of education, the remedy to be applied is more speech, not enforced silence.” Whitney v. California, 274 U.S. 357, 377 (1927) (Brandeis, J., concurring).

Public Trials for the Twenty-First Century
In spite of the substantive legal distinctions between the Tenenbaum and The Pirate Bay cases, both involve an issue of great interest to a very large number people – the legality of file-sharing over the Internet.  The public’s profound interest in this issue is obvious, primarily due to the vast numbers of Internet users that have used file-sharing services and the high-profile litigation over the last decade against both file-sharing services and individual users.  This high level of interest is reflected by the hundreds of news stories and blogs pieces written lawyers, scholars, and others about the Tenenbaum case.  Moreover, the issue of Internet access to the Tenenbaum proceedings has garnered support even from those who otherwise oppose Tenenbaum’s alleged behavior.

The RIAA’s opposition to webcasting the trial is particularly odd, since the organization has stated its goal with the litigation campaign is to educate the public and deter against further piracy. It seems the best way to broadcast this message to the appropriate audience (Internet users) would be allowing access to the case over the Internet.  If the RIAA is serious in wanting to spread awareness about the business and legal issues facing the music industry – and copyright in general – it should welcome any increased attention that Internet access might bring to the Tenenbaum case.

The First Circuit should follow the lead of the Swedish court in The Pirate Bay case and uphold Judge Gertner’s decision allowing Internet access in the Tenenbaum case.  The fundamental right to a public trial should be brought into the digital age by making court proceedings available via the Internet.  Providing such access in the Tenenbaum case is critically important precisely because the legal issues involved are substantively about Internet use.  It is time to make “public” trials truly public by opening them up to the masses via the Internet.

*Ms. Rosenbaum is one of the students assisting Professor Charles Nesson on Joel Tenenbaum’s Defense Team.

Australia Poised to Begin Internet Filtering Program Unprecedented in Scope for Modern Democracy
By Debbie Rosenbaum
Editorial Policy 

If the presumption that democracy depends upon the widest possible access to uncensored ideas, data, and opinions is true, then there is cause for great alarm as one of our nation’s closest democratic allies moves to drastically curtail this foundational freedom within its boarders. The Australian government will likely enact legislation that will make sweeping, compulsory Internet censorship a startling reality for all Australian citizens. Spearheaded by the Minister for Broadband, Communications and Digital Economy, Senator Stephen Conroy, and backed by $44.2 million from the government’s $125.8 million Plan for Cyber-Safety budget, the planned filter (part of the NetAlert program) will render Internet access in Australia similar to that in Iran or China.

Australia’s Federal Government announced its ambitious web censorship plan in December 2007. The goal of the program is seemingly well intentioned: to shield children from violent and pornographic sites. (See the Australian government’s “Children Are Sacred” report, which discusses instances of child sexual abuse in the Northern Territories). The Family First Party, a relatively minor party with only one Member of Parliament, originally championed the filter, also known as the “clean feed” policy. The Party’s proposal has earned wider support from both Senator Conroy and the Rudd-Labor Government. Senator Conroy is expected to call for bids from Australian software makers, and reportedly wants to begin live trials by the end of the year.

A filtering system of this scale faces significant barriers that may undermine the initiative’s effectiveness. First, large numbers of citizens will potentially bypass the filter entirely using readily available software. The vocal and active communities that oppose Internet censorship will likely make anonymizer programs such as TOR readily available, which would allow users to easily bypass censorship filters. Surely, not every user will be sophisticated enough to implement such technology, but widely used peer-to-peer networks such as BitTorrent may provide another pathway for the exchange unfiltered data. In Australia, the majority of Internet traffic – and the bulk of illegal content – travels over peer-to-peer networks, which are unable to be censored by current filtering technologies. Second, the filtering program itself leads to negative externalities for all web users, including those that have no interest in the blocked content. Statistics suggest that about 1% of websites blocked by modern filters are blocked accidentally, thus creating unnecessary and unwarranted censorship, or “overblocking.” Additionally, even as Internet users demand ISPs deliver content faster than ever before, government studies indicate the filter “would result in a slowdown [ranging] from 18% through to 78% of current, unfiltered speed.”

To date, there is little detailed information available from the government about its filtering plans, but it likely will ultimately require ISPs to offer filtered Internet service to all homes, schools and public Internet points accessible by children. Experts believe the filter will impose a two-tiered censorship model. The first tier, mandatory for all covered Internet access points, would block “illegal” material; the second “optional” tier would block material deemed unsuitable for children, such as pornography, delivering only a “clean feed” service. If implemented, users would be able to opt out of only the secondary layer of the filter.

The mandatory filter targets “illegal content,” a term that the government has not yet attempted to define. Family First supports blocking all pornography that may be accessible by children, but the probable scope of the statute itself remains unclear. How exactly will the government deal with content that exists in the gray area between clearly legal and clearly illegal? For example, material rated above R 18+, which is currently legal for Australian adults to view, could potentially fall under the mandatory blacklist and thus could not be accessed through any Australian ISP. Likewise, it remains unclear whether controversial subjects such as euthanasia, pro-anorexia, and online gambling will be included in the mandatory tier. While the exact composition of the tiers remains unresolved, early indications are that in the case of gray-area material, the filtering system will err on the side of blocking content. Such a vague statutory definition has the potential to create an ever-expanding filter that would have a devastating effect upon free speech in Australia.

By enacting such far-reaching, mandatory Internet censorship, Australia joins more repressive governments including those in China, Cuba, Iran and North Korea. China is by far the biggest offender when it comes to Internet censorship – the nation’s Internet filtration policy is considered more extensive and more advanced than in any other country in the world. The Chinese government has a longstanding set of policies restricting the information to which citizens are exposed, and what they may say in public. Reporters Without Borders refers to China as the “world’s biggest prison for cyber-dissidents.”

Studies indicate that China blocks access to most websites about both Taiwan and Tibet. More than 60% of the first 100 Google search results for “Tibet” and 47% of “Tawian” are blocked. Preventing access to these sites is likely motivated by the government’s efforts to combat independence movements in Tibet and democratic reform efforts. More broadly, China blocks most content regarding “human rights” or “democracy” that specifically reference the country. Critics of censorship worry that it contributes to human rights violations, and abuses of the right to freedom of expression and information, epitomized in the suppression of political speech. The situation in China demonstrates how Internet censorship can be used – and abused – for political manipulation.

Although the Australian Constitution does not have any express provision relating to freedom of speech, the country has made efforts to defend this fundamental right. For instance, Australia is a signatory to the United Nations International Covenant on Civil and Political Rights (”ICCPR“), which seeks to guarantee everyone the right to freedom of expression. Although some parts of the treaty have been implemented into law in Australia, the government has not implemented the free speech provisions and therefore they are not technically enforceable by Australian courts.

In the United States, efforts to filter Internet content have not gotten very far. In Reno v ACLU, 521 U.S. 844 (1997),The Supreme Court found that all provisions of the Communications Decency Act (“CDA”), which made it a felony to use the Internet to display or send “indecent” material that could be seen by a minor, are unconstitutional as they apply to “indecent” or “patently offensive” speech. The Court supported the legislative goal of protecting children from exposure to adult material, but ruled that the provisions of the law unconstitutionally undermined the free-speech rights of adults and harshly refuted the government’s defense of the Internet censorship law. In a separate concurrence, Chief Justice William Rhenquist and Justice Sandra Day O’Connor agreed that the provisions of the CDA are unconstitutional except in their narrow application to communications between an adult and one or more minors. The Supreme Court noted that broad filtering systems would place an unacceptably heavy burden on protected speech, and threaten a large segment of legal Internet use. The decision was praised for recognizing what Congress did not — that speech cannot flourish under the shadow of censorship.

Digital media is a powerful platform for spreading political opinions, religious views, personal perspectives, and other core speech. Just a few years ago, the Internet was barely a part of political campaigning, yet it has become an important, low-cost tool for candidates and political activists all over the world to get their message out. For example, when the military government of Myanmar cracked down on protests by Buddhist monks in 2007, citizen journalists used blogs to share vital information — acting as a vital resource for traditional news outlets. Even when nations disagree, the Internet allows dialogue to enhance understanding. Palestinian and Israeli children exchange videos documenting their daily lives. In Iraq, American and British soldiers — as well as Iraqi citizens — share their experiences with YouTube audiences around and the world.

As a new media technology, the Internet empowers people. It has provided access to information, unprecedented in its scope, low-cost, and speed. It has revolutionized communication across the globe, providing both feasible and inexpensive access for everyday people. If we accept the argument that uncensored speech is fundamental to a thriving democracy, then more is at stake than mere Internet censorship in Australia. All nations, organizations, and individuals who believe in the promise of free speech, and its broader importance to human rights, have an ethical obligation to oppose this Internet filter. Freedom of Speech is vital to freedom of thought, the engine of democracy. It helps drive innovation and the free exchange of ideas. We Americans, with our strong Free Speech tradition, have long reaped the benefits of an open society; the United States should especially oppose Australia’s filtering proposal. Censorship of this magnitude in any democratic society is a threat to the citizens of every democratic society.

For more information, please visit:

Australian Department of Broadband, Communications
and the Digital Economy
The department responsible for implementing the two-tiered filtering program

NetAlert Program Homepage
Programs currently available, for free, to Australian homes to allow voluntary filtering

Australian Communications Media Authority
Australian regulatory body responsible for the Internet

No Clean Feed
A website organized to educate and organize opposition to the filter

Electronic Frontiers Australia
A pro-online civil liberties website featuring a useful F.A.Q. on the current state of the policy

Open Net Initiative
Organization dedicated to investigating and exposing government Internet filtering programs

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