Biologics, How Long Exclusive? What Cost?
Expression of Fabp7 protein in mouse brains at embryonic day 16 (left) and postnatal day 0 (right). At both stages, Fabp7 is strongly expressed in the ventricular zone and radial glia, where neurogenesis is prominent. From, A Candidate Gene for a Biological Marker of Schizophrenia in Mice Gross L PLoS Biology Vol. 5, No. 11.
Biologics — products such as vaccines, gene therapy, tissues, and recombinant therapeutic proteins that are isolated from natural sources and may be produced by biotechnology methods and other technologies — are at the center of a national debate regarding access to cutting-edge therapies and protection of biotech’s ability to create products that may require millions of dollars to develop. As always, Mintz Levin, Health Law Washington Beat (link also in the “Resources” section of this blog) has offered great coverage of the issue– articles here and here.
For months now, the federal government has been considering legislation to balance the competing need for scientific and medical innovation with the costs to patients for biosimilars (generic versions of innovator pioneer biologics, also referred to as follow-on biologics). Unlike its approval pathway for generic small-molecule, chemically synthesized drugs, the FDA currently has no process for the approval of biosimilars. All regulatory proposals by both the Senate and the House have included an exclusivity period for pioneer biologics before a generic biologic may be introduced in the market, as well as patent protections for the pioneer biologic.
As part of its July 15, 2009 health reform bill, the Senate Health, Education, Labor, and Pensions (HELP) Committee adopted an amendment proposed by Senators Kay Hagan (D-NC), Michael Enzi (R-WY), and Orrin Hatch (R-UT) that provides for a 12-year exclusivity period for pioneer biologics. Among the Senate’s other biosimilar proposals, all introduced in June 2009, Senator Sherrod Brown (D-OH)’s bill allows for seven years of exclusivity, Senator Charles Schumer (D-NY)’s bill provides for a 5 year exclusivity period, and the proposal by Senator Edward Kennedy (D-MA) calls for a nine-year exclusivity period. In the House, Reps. Henry A. Waxman (D-CA)’s proposed bill limits the exclusion period to five years, while Anna Eshoo (D-CA)’s bill proposes an initial exclusivity period of 12 years, with a possible additional two-and-a-half years for new indications and pediatric populations.
In June 2009, the FTC released a report that determined that innovation and investment will be sustained even without the exclusivity recommended by even the least restrictive of the proposed bills. The report states that the competition between pioneer and follow-on biologics will more closely resemble the competition between different brands of drugs — with the pioneer biologic retaining 70-90% of the market share — rather than the competition between small-molecule branded pharmaceuticals and their comparable generics — where entry of the generic drug on the market leads to loss of market share and drop in the price of the drug. The FTC found that due to the complexities in the development and use of biologics and the absence of therapeutic equivalence between pioneer and follow–on biologics, biosimilars are unlikely to be direct substitutes for the pioneer biologics on which they were based.
Relying on the FTC’s conclusion that the introduction of follow-on biologics will lower prices and increase access, the Obama Administration’s 2010 Budget proposes the establishment of a new regulatory pathway for FDA approval of biosimilars, providing for seven years of exclusivity for pioneer biologics. The Administration stated that “generic biologics are a key element to reducing both our federal health care spending and national health care expenditures,” and has called its policy a “generous compromise between what the FTC research has concluded and what the pharmaceutical industry has advocated.”
The parties to this debate are not surprising. The biologics industry, represented by BIO, emphasizes the distinctions between biologics and small-molecule drug products and has lobbied for a 12-to-14 year exclusivity period, arguing that the time and resources necessary to develop cutting-edge treatments far exceed those that are normally needed for chemical drugs. On the other hand, a number of organizations have decried the length of the proposed exclusivity period. The Generic Pharmaceutical Association has called for a shorter exclusivity period, and the AARP has called the proposed 12-year exclusivity “unreasonable.”
Many also reason that patent protection, either alone or in conjunction with an exclusivity period, will insulate pioneer biologics from competition. In particular, the FTC found that patent protection and market-based pricing, as they exist now, are likely to be sufficient to support biosimilar competition and biologic innovation without any exclusivity period. Thus, combined with an extended exclusivity period for biotech companies, valuable research may be hindered and costs to patients will be driven even higher. However, some argue that due to the inherent and - at this point - unavoidable differences between pioneer and follow-on biologics, competitors could most effectively demonstrate the novelty, and therefore noninfringement, of their products than they could for small-molecule drugs. On the other hand, patent protection generally would extend beyond even the longest exclusivity period currently on the table, rendering the issue of a mandated exclusivity period moot.
Of additional concern is the fact that numerous steps on the pathway to developing biologics can be patented — from the genes themselves, to the cells in which the final product is created, to the final biologic product, thereby hindering innovation and competition. This may be true not just for those attempting to design around multiple patents to create follow-on biologics (these patents are often held by multiple owners — adding a further level of complexity, expense, and difficulty to the research enterprise), but also for those attempting to do potentially beneficial (and not directly competitive) research. If the current patent protections for baseline genetic information continue to exist, much-needed research may continue to be thwarted. The FDA promotes biologics as at the forefront of biomedical research, since often they may be used to treat medical conditions for which no other treatments are available. This scarcity of treatments for certain illnesses should be a sign that any regulation should err on the side of encouraging more research, rather than hampering it.
