President Barack Obama is looking to change a key healthcare reform
provision passed by both the House and Senate, triggering a dispute
with some lawmakers in his own party.

The White House is considering jettisoning bipartisan language championed by the late Sen. Edward Kennedy (D-Mass.) that would allow developers of complex biological drugs to sell their products without generic competition for 12 years. The provisions are part of both the House- and Senate-passed healthcare reform bills.

{mosads}By doing so, Obama would be ignoring one of the few substantive bipartisan amendments approved during committee consideration of healthcare reform. In addition, such a move would run afoul of an agreement he struck with drug makers on the reform effort.

Lawmakers from states that are home to biotechnology interests, such as California, Massachusetts and Maryland, are waging a campaign against Obama’s maneuver. Governors are also weighing in. Massachusetts Gov. Deval Patrick (D) reached out to Obama last week and Maryland Gov. Martin O’Malley (D) is gathering signatures for a letter to the White House, according to a source.

The governors are making the case that the Eshoo/Kennedy language would protect investments and jobs in their states.

The White House, however, is eager to curry favor with liberal lawmakers, such as powerful House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.), who have made major concessions to advance healthcare reform.

The unresolved dispute also creates a headache for House Speaker Nancy Pelosi (D-Calif.), who is close with the California Democrats leading the fight on both sides: Waxman and Rep. Anna Eshoo (Calif.).

Eshoo, who like Pelosi represents a San Francisco Bay Area district, is the chief author of the 12-year bill, while Waxman, an Angeleno, originally wanted to give the biotechnology companies five years of market exclusivity.

Obama’s move to change the Eshoo language has sparked a lobbying frenzy. Lobbyists who back her bill have said they believed this legislative battle was over when the House and Senate embraced a 12-year waiting period.

The White House had been in consultation with Waxman and other lawmakers about shortening the duration to 10 years, according to a pharmaceutical lobbyist. The White House’s legislative liaison, Phil Schiliro, was a close aide to Waxman for years.

Eshoo raised her objections directly to Obama last Thursday. During a closed-door question-and-answer period between the entire House Democratic Caucus and the president, Eshoo spoke up to object to the possibility the 12-year provision would be stricken, reminding Obama that the House and Senate both approved that language. Obama rebuffed her, though he did not state directly that he would push to change the bill.

{mosads}“Nothing is sacrosanct,” Obama said, according to a House Democratic aide who attended the session. “I have a great deal of respect for the House and the Senate, but my job is to do what I think is good policy.”

The centrist New Democrat Coalition backs the Kennedy-Eshoo language, while leaders of the Congressional Progressive Caucus support speedier access to cheaper versions of the drugs.

Obama’s arrangement with the pharmaceutical industry apparently is not sacrosanct, either. The Pharmaceutical Research and Manufacturers of America (PhRMA) agreed this summer to support healthcare reform so long as their 10-year hit did not exceed $80 billion.

Under current law, the Food and Drug Administration has no process in place to permit the sale of generic versions, known in the industry as biosimilars or follow-on biologics, of complex biological pharmaceuticals. Unlike traditional chemical drugs, these medicines are composed of living proteins and are much harder to duplicate.

Opening up the lucrative biologics market to generic competition would cost the brand-name manufacturers considerably more than $80 billion. PhRMA, the Biotechnology Industry Organization and their member companies have leapt into action to fight against changes to the biologics language.

Generic drug manufacturers, pharmacy benefit managers and the seniors’ group AARP have led the charge in favor of faster access to follow-on biologics.

A bipartisan majority led by Eshoo and Energy and Commerce Committee ranking member Joe Barton (R-Texas) snubbed Waxman when the panel marked up the healthcare reform bill in July. The Eshoo-Barton amendment passed against Waxman’s wishes on a 47-11 tally. Every “no” vote came from a Democrat except that of GOP Rep. Nathan Deal (Ga.), a co-sponsor of Waxman’s bill and the ranking member of the panel’s Health subcommittee.

Kennedy, then chairman of the Health, Education, Labor and Pensions (HELP) Committee, also backed the 12-year bill, passing it through his committee in 2008 and again last June as part of healthcare reform. Though absent from Washington undergoing cancer treatment, Kennedy was part of a bipartisan voting bloc that defeated Sen. Sherrod Brown’s (D-Ohio) bid to shorten the exclusivity period to seven years, the duration the White House supported at one point as a potential compromise. Brown’s gambit failed on 17-5 vote.

But while the 12-year bill has bipartisan support, so do the original five-year bills Waxman and Sen. Charles Schumer (D-N.Y.) introduced last year. In 2007, Schumer backed Kennedy’s version, but he nonetheless introduced a five-year bill with Brown last year.

In addition to Deal, Republican Reps. Jo Ann Emerson (Mo.), Jack Kingston (Ga.), John Linder (Ga.), Ron Paul (Texas), Mac Thornberry (Texas), Frank Wolf (Va.) and Don Young (Alaska) co-sponsored Waxman’s bill. Schumer’s measure had three GOP co-sponsors: Sens. Susan Collins (Maine) and David Vitter (La.) and then-Sen. Mel Martinez (Fla.).