After adding in hundreds of amendments that never seem thoughtfully considered as to how they all fit together, the House of Representatives’ Energy and Commerce Committee voted 47-11 in favor of allowing 12 years of data exclusivity for biotech drugs. The change on data exclusivity follows the similar amendments by the Senate Health, Education, Labor and Pensions Committee.

Data exclusivity for biotech drugs is separate from patent protection and is the amount of time before other drug makers could receive market approval for generic versions of the drugs or drugs that are improvements that need to rely on the data of the original drug (see an overview at Patent Docs).

Biotechnology Industry Organization President and CEO Jim Greenwood issued a press release saying:

The strong bipartisan support in the Energy and Commerce Committee for a fair and balanced pathway for the approval of biosimilars is a decisive win for the patients of today and tomorrow. The approved amendment, introduced by Representatives Anna Eshoo (D, CA), Jay Inslee (D, WA) and Joe Barton (R, TX), strikes the appropriate balance among ensuring patient safety, expanding competition, reducing costs and providing necessary and fair incentives that will provide for continued biomedical innovation.

The Generic Pharmaceutical Association (GPhA) released a statement from GPhA President and CEO Kathleen Jaeger stating:

We are sincerely disappointed that some members of the House Energy and Commerce Committee have decided to put brand pharmaceutical profits before patient needs. The amendment passed tosses patient needs out the window.

Rep. Anna Eshoo (D-CA), sponsored the amendment that would provide a pathway for approval of generic biologics (biosimilars or follow-on biologics).  In total, the amendment to H.R. 3200 could provide for up to 12.5 years of exclusivity through an initial 12-year exclusivity period that may be extended with 6 months of pediatric exclusivity.

Meanwhile, Rep. Bobby Rush (D-IL) got an amendment approved, in a voice vote, which would ban “pay-for-delay” settlements between branded and generic drugmakers that are used to keep generic competitors out of the market. This got a high-five from Jon Leibowitz, chairman of the Federal Trade Commission (FTC), who is set against these deals.

The bill would amend Section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) by adding at the end the following:

“(A) conduct prohibited.—It shall be unlawful for any person to directly or indirectly be a party to any agreement resolving or settling a patent infringement claim in which—
“(i) an ANDA filer receives anything of value; and
“(ii) the ANDA filer agrees to limit or forego research, development, manufacturing, marketing, or sales, for any period of time, of the drug that is to be manufactured under the AND A involved and is the subject of the patent infringement claim.”

Look for more tweaks when Congress gets back from its vacation.

Related posts:

1. Senate Committee: 12 Years of Data Exclusivity is Cool
2. Economist Argues That 7 Years Ought to be Enough for Biologic Data Exclusivity
3. Three-Year Market Exclusivity Extension for a New Indication of a Drug

The U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee voted Monday in favor of a proposal by Sens. Kay Hagan (D-NC), Michael Enzi (R-WY), and Orrin Hatch (R-UT) to create a follow-on biologics (FOB) pathway that provides 12 years of data exclusivity for brand-name biologic drugs.

The measure passed 16 to 7, despite an earlier decree by the Obama administration that a seven-year exclusivity limit sounded good.

The committee considered several other proposals including voting down one by Sen. Sherrod Brown (D-OH), which would have provided only 7 years of exclusivity for brand name biologics.  Sen. Edward M. Kennedy (D-MA), chairman of the HELP committee, voted by proxy to support the 12-year limit.

The vote was a small victory for major biotech drugmakers, which have been pushing for a period of 12 to 14 years before generic equivalents could be approved.  Biotech companies have been pushing for a longer period of data exclusivity saying that it can take 15 years and a $1 billion to develop and market a biotech drug so they need the longer period to make back their investment.  Generic drugmakers, not surprising, would like the exclusivity period limited to five or seven years.

This is just as small step since the Senate plan could change when the healthcare bill goes to the floor for a vote. It also must be approved by the House.

So, what will the final number be for exclusivity?  Try Follow-On Blackjack.

Related posts:

1. Economist Argues That 7 Years Ought to be Enough for Biologic Data Exclusivity
2. Administration’s First Volley on Biosimilars: 7 Years of Exclusivity is Long Enough
3. Senate Committee Approves Follow-On Biologics Bill: Fear and Trepidation Follow

In looking for a way to create an abbreviated pathway for the FDA to approve generic biologic therapies (a/k/a biogenerics or follow-on biologics), there are lots of questions about how to achieve the proper balance between innovation and competition. The sticking point (in general) has been that the brand name drugmakers and generics can’t agree on how long a biotech drug should be on the market before a generic drugmaker can market a generic.

The Biotech Industry Organization has called for 14 years of market exclusivity, while generic makers want the period limited to no more than five years of protection. Not to be confused with patents, data exclusivity is the period after the FDA approves a product during which an imitator can’t rely on the innovator’s clinical data for safety and effectiveness. It can run during and longer than the period of patent protection.

All this is not a surprise given that the U.S. government is the largest consumer of medical care via medicare and medicaid and the fact that sales of biotech drugs were $40.3 billion last year. With creating a governmental health care system at the top of the priority list, ways to cut costs will be key.

BIO President and CEO Jim Greenwood issued a statement regarding biosimilars:

The Biotechnology Industry Organization continues to support strongly the development of a pathway for the review and approval of biosimilars.

We are extremely concerned that the seven years of data exclusivity called for by the administration in the letter points to a risky short cut to biosimilars. We believe this abbreviated period will undermine the incentives necessary for continued biotech research into breakthrough medicines and cures for diseases such as cancer, multiple sclerosis, Alzheimer’s and HIV/AIDS as well as unmet medical needs.

As we have consistently said, any pathway to biosimilars should provide a fair period of time for innovators to protect their proprietary data from competitors in order to promote the continued development of breakthrough medicines, therapies and cures. We continue to believe that fourteen years of data exclusivity will strike the appropriate, reasonable and fair balance between our common desire to expand access to breakthrough biotech medicines and the need to preserve the protections necessary to promote further biomedical advances.

It seems that the administration based its policy on the Federal Trade Commission (FTC) report released earlier. The report, released June 11 said generic versions of expensive biotechnology drugs would reduce the amount of money spent on healthcare in the United States; however, brand-name manufacturers push for “the 12- to 14-year regulatory exclusivity period is too long to promote innovation,” particularly since brand-name companies “likely will retain substantial market share” after generic competitors are approved.  The report also found that competitors would likely enter the market only for drugs that had more than $250 million in annual sales, and only two to three generic entrants would be expected.

From the Report:

A Twelve- to Fourteen-Year Exclusivity Period is Unnecessary to Promote Innovation by Pioneer Biologic Drug Manufacturers

[P]ioneer biologic drug manufacturers are very likely to continue to earn substantial revenues even after the entry of FOBs. FOBs are unlikely to introduce their products at price discounts beyond 10 to 30 percent. Moreover, FOBs are likely to have difficulty rapidly growing their market shares as compared to generic small-molecule drug products. Indeed, projections are that branded biologic drugs are likely to maintain their first- mover advantages by retaining 70 to 90 percent of their market share years after FOB entry.

In addition, there is very little data to suggest that biologic drugs under development are likely to be unpatentable. Pioneer biologic drugs are covered by more and varied patents, including manufacturing and technology platform patents, than small-molecule branded products. Moreover, there is no evidence that patents claiming a biologic drug product have been designed around more frequently than those claiming small-molecule products.

Pioneer biologic manufacturers nevertheless have suggested that Congress institute a period of 12 to14 years of branded exclusivity that would begin once a pioneer biologic was approved by the FDA. During this period, the FDA would be prohibited from approving an FOB product that would compete with the pioneer biologic drug. This branded exclusivity would be in addition to, and would run concurrent with, a biologic drug’s existing patent protection. The economic model put forth by pioneer drug manufacturers to justify this period is based on the average time required to recoup the investment to develop and commercialize a typical biologic drug (referred to as the “Nature model”).

Central to each of these exclusivities is a public policy trade-off: a restriction on competition is provided in return for the development of a new drug product or new use of an existing product. A 12- to 14-year exclusivity period departs sharply from this basic trade-off, because it does not spur the creation of a new biologic drug or indication. The drug has already been incentivized through patent protection and market-based pricing.

The potential harm posed by such a period is that firms will direct scarce R&D dollars toward developing low-risk clinical and safety data for drug products with proven mechanisms of action rather than toward new inventions to address unmet medical needs. Thus, a new 12- to 14-year exclusivity period imperils the efficiency benefits of a FOB approval process in the first place, and it risks over-investment in well-tilled areas.

Moreover, to the extent that there are new biologic molecules that cannot obtain patent protection, an exclusivity period may be warranted. Because there is no evidence about the lack of patentability of new biologic products, nor that market forces have been insufficient to incentivize their development, the Commission has not recommended a specific length for an exclusivity period.

Related posts:

1. Economist Argues That 7 Years Ought to be Enough for Biologic Data Exclusivity
2. Red or Blue: We’ll Likely to See Biosimilars Either Way
3. Why A Pediatric Exclusivity Add-On?

The study notes that basic differences between the pharma industry in 1984 and the biotech industry in 2009 make it difficult to apply Hatch-Waxman as a model for FOBs legislation. According to the study, after 1984, patents protected innovators’ intellectual property and the data exclusivity period rarely came into effect.

At the heart of this debate
is one key issue: How
similar are the two
underlying industries?

In 1984, when the Hatch-Waxman generic drug legislation was enacted, the pharma industry was stable and mature.  Today the biotech industry is relatively young and complex and is highly reliant on risk capital. With follow-on biologics, Congress may need to consider a different set of rules to balance cost savings, patient safety, and economic incentives for future innovation.

Still, the essential debate has two main issues — patient safety and industry economics:

Patient Safety: What will constitute threshold “biosimilarity”? Specifically, what type and length of clinical trials will be required to establish that a new FOB is sufficiently similar to a currently approved and marketed “branded” biological drug, and thus permit the FOB a relatively quick path to market? Under what circumstances would a new FOB be considered “interchangeable” with a currently approved drug?

Industry Economics: How can new regulations most appropriately encourage competition while also maintaining sufficient economic incentives to foster scientific innovation? Specifically, what should be the appropriate period of time granted to a branded biological drug for protection of its underlying intellectual property prior to the approval and entry of an FOB?

Unintended Consequences

The  study outlines three of these unintended effects, and explores how this experience should be considered in current legislation:

• “Make Hay” effect: Once a drug is introduced to the market, an innovator has a short time to recoup its development costs — upwards of $1 billion over 12 years — before a competitor enters the market. Faced with patent protection of limited duration, innovator companies must maximize their revenues in the short period before generics are introduced. To do this, they generally raise prices and invest more in marketing the drug, tactics that run counter to Hatch-Waxman, the intent of which was to lower prices.
• “Blockbuster” effect: Facing increased drug development costs and a limited period of time before generics can compete, innovators typically focus only on those drugs that promise huge returns on investment. To recoup the amount of time and money an innovator spends on a new drug, experts have shown that to break even, a drug would have to achieve annual revenue of roughly $150 million, which is impossible unless a drug targets a large population, or charges a high price per treatment. This blockbuster effect has led pharma companies generally to focus development efforts on only the largest potential indications.
• “No Man’s Land” effect: As soon as a company receives a patent for a compound, the clock for commercialization begins ticking. Each year a patented drug spends in development is another year of lost revenue. If enough time elapses, there comes a point where the compound will never be able to earn sufficient return on investment. This could lead to promising compounds being dropped from development, including those for critical diseases like cancer, Parkinson’s, Alzheimer’s and others, because there is no way to fund the research once the compound has crossed into this “no man’s land.” Deloitte estimates this can occur within as little as one year of achieving a patent.

According to the study, the most serious of these unintended consequences may be the ‘no man’s land effect,’ which could substantially reduce the biotech industry’s ability to continue to develop innovative treatments for our most pressing diseases and medical conditions.

The blockbuster effect runs exactly
counter to the direction and
promise of the science of biotech.

According to the study, the economics of drug development essentially forces innovators to focus on drugs with the largest possible market potential – in this way, again, what was true for pharma innovators will be true for biotech innovators. But, this effect runs  counter to the promise of biotech, which has the potential to create  highly targeted therapies. In order for personalized medicine to become a reality, drug innovators will need a regulatory environment that allows a return on their investments in research and development.

Because of the structural differences between the pharmaceutical industry of 1984 and today’s biotech industry, Congress will need to act with care as it looks to create a regulatory path for FOBs.

Get the entire paper here.

To see if patenting DNA still has a place, see the Non-obviousness of DNA at Patent Docs.

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2. Drug Recall Hits Biotech Sector: Swim at your own risk?
3. Ohio Ranked No. 11 in Biotech Funding

The Act provides for the following:

EXCLUSIVITY FOR FIRST INTERCHANGEABLE BIOLOGICAL PRODUCT

The Secretary shall not make a determination under paragraph (4) that a second or subsequent biological product is interchangeable with the same reference product for which a prior biological product has received a determination of interchangeability until 24 months after the later of–

(A) the date of the first commercial marketing of the first biosimilar biological product determined to be interchangeable for that reference product; or

(B) with respect to a product marketed before the date the product is determined to be interchangeable, the date that the product is determined to be interchangeable.

…approval…may not be made until the date that is 12 years after the reference product was first licensed…

EXCLUSIVITY FOR REFERENCE PRODUCT

(A) EFFECTIVE DATE OF BIOSIMILAR APPLICATION LICENSURE- Subject to subparagraph (D) and paragraph (8), approval of an application under this subsection may not be made effective by the Secretary until the date that is 12 years after the date on which the reference product was first licensed under subsection (a).

(B) FILING PERIOD- An application under this subsection may not be submitted to the Secretary until the later of–

(i) the date of commencement of a proceeding for issuance of guidance pursuant to paragraph (9) with respect to the product class within which the product that is the subject of such application falls; or

(ii) the date that is 4 years after the date on which the reference product was first licensed under subsection (a).

(C) FIRST LICENSURE- For purposes of this paragraph, the date on which the reference product was first licensed under subsection (a) does not include the date of approval of a supplement or of a subsequent application for a new indication, route of administration, dosage form, or strength for the previously licensed reference product.

(D) MEDICALLY SIGNIFICANT NEW INDICATION- If, during the 8-year period following licensure of the reference product, the Secretary approves a supplement to the application for the reference product that seeks approval to market the reference product for a new indication that, if approved, would be a significant improvement, compared to marketed products, in the treatment, diagnosis, or prevention of disease, approval of an application submitted under this subsection may not be made effective by the Secretary until the date that is 14 years after the date on which the reference product was first licensed under subsection (a).

PEDIATRIC STUDIES.

(A) EXCLUSIVITY- If, before or after licensure of the reference product under subsection (a) of this section, the Secretary determines that information relating to the use of such product in the pediatric population may produce health benefits in that population, the Secretary makes a written request for pediatric studies (which shall include a timeframe for completing such studies), the applicant or holder of the approved application agrees to the request, such studies are completed using appropriate formulations for each age group for which the study is requested within any such timeframe, and the reports thereof are submitted and accepted in accordance with section 505A(d)(3) of the Federal Food, Drug, and Cosmetic Act–

(i) the period referred to in paragraph (7)(A) of this subsection is deemed to be 12 years and 6 months rather than 12 years; and

(ii) if paragraph (7)(D) of this subsection applies, the period referred to in such paragraph is deemed to be 14 years and 6 months rather than 14 years.

(B) EXCEPTION- The Secretary shall not extend the period referred to in subparagraph (A)(i) or (A)(ii) of this paragraph if the determination under section 505A(d)(3) of the Federal Food, Drug, and Cosmetic Act is made later than 9 months prior to the expiration of such period.

(C) APPLICATION OF CERTAIN PROVISIONS- The provisions of subsections (a), (d), (e), (f), (h), (j), (k), and (l) of section 505A of the Federal Food, Drug, and Cosmetic Act shall apply with respect to the extension of a period under subparagraph (A) of this paragraph to the same extent and in the same manner as such provisions apply with respect to the extension of a period under subsection (b) or (c) of section 505A of the Federal Food, Drug, and Cosmetic Act.

Related posts:

1. New Pathway for Biosimilars Introduced
2. Red or Blue: We’ll Likely to See Biosimilars Either Way
3. Can a Known Drug Infringe a Later Issued Patent on the Pathway of Action? A Jury Says Yes.