BIO's statement regarding reform of Hatch-Waxman Law

Executive Summary
The Biotechnology Industry Organization (BIO) supports reforms of the Hatch Waxman Act that will provide full day-for-day restoration of lost patent term for drugs which require extended reviews and/or clinical trials for FDA approval. Current law does not provide day-for-day restoration of lost patent term due to these delays, leading to the erosion of patent term for products that require extended review and trails. The explosion of human genomic information is providing new targets for therapeutics to treat and prevent degenerative diseases, the types of therapeutics that tend to require extended review and trials. The current Hatch Waxman law serves as a disincentive for the development of these therapeutics. Companies and their investors need to know that if these products are developed, a full patent term will be available to permit the recoupment of the development expenses. The Hatch Waxman law should provide the same incentive for the development of all therapeutics, not just those which do not — due to the nature of the disease and therapeutic — require extended reviews and trial clinical trails. Patients with these diseases should not be disadvantaged by the discriminatory effect of the terms of the law. This is unsound policy that raises severe ethics issues.

Introduction
The Biotechnology Industry Organization (BIO) represents over 840 companies, state and affiliated organizations engaged in biotechnology research on medicines, diagnostics, agriculture, pollution control and industrial applications. BIO appreciates the leadership of the Subcommittee in providing strong support for intellectual property and appreciates the opportunity to participate in this hearing.

We very much appreciate the understanding this committee has demonstrated regarding the critical role of intellectual property in enabling our industry to fund biomedical research. Your leadership on the patent reform bill, H.R. 1907, which focuses effectively on restoration of lost patent term for inventions which require extended reviews at the Patent and Trademark Office, is enthusiastically supported by BIO and the industry we represent. We believe that this legislation is on its way to enactment and we offer again to do anything we can to expedite this result.

We are just as enthusiastic about launching a debate regarding fairness protections for patent term lost due to FDA delays. In the case of patent issuance and FDA approval, delays at the PTO or FDA can erode the term of the patent, and diminished intellectual property protections undermine biomedical research funding. We see amending the Hatch-Waxman Act as a logical complement to the patent reform legislation.

Over the last 50 years, the only constant in medical innovation has been scientist’s indefatigable efforts to treat human diseases through new improved approaches. These new approaches include using data from the human genome project and using pluripotent stem cells (early human cells) to treat degenerative cell based diseases. Genetic information can provide information about disease pathology and the biochemical mechanisms that underlie those processes instead of focusing on disease symptoms. This new information, therefore, provides the opportunity to prevent disease instead of just treating the ravages of the diseases (the symptoms). Further, new research into stem cell research is intended to find treatments that do not depend on chemical compounds, rather they use living cells as the treatment or cure.

Looking forward to the next frontiers of biomedical research it becomes evident that changes in the legal infrastructure — particularly the patchwork incentives provided by the Hatch-Waxman Act — are needed to harvest the fruits of these advances. Research like the human genome project and that on pluripotent stem cell is a very exciting, cutting-edge area of scientific research whose promise has captured the imagination of the research community, patient advocates, and the American public, but may not be fully developed without changes to the Hatch-Waxman law. We urge this Subcommittee to lead the way in supporting this research and the policies that will speed it to market for the benefit of patients.

BIO welcomes the discussion of how best to capture the fruits of biomedical research at the same time we see a debate regarding the feasibility and terms of an outpatient prescription drug benefit for seniors. We believe that these two issues, which some people view as distinct, are related. They both focus on what policies will foster the ability of Americans to have access to innovative, life enhancing drugs both now and in the future. As America’s biotechnology companies seek to usher in the next generation of therapeutics, the question of how these policies affect the ability of biotechnology companies to secure funding for the development of life-saving and live-enhancing medicines is critical. We are confident that when this impact is understood, the Congress will take action that fosters innovation and drug development by amending the Hatch Waxman law and in fashioning new policies regarding outpatient drugs for seniors..

There is no industry that is more capital intensive or research intensive, takes greater risks, and produces more hope for mankind than the biotechnology industry. These are the facts that we will present in any Medicare debate and any debate regarding Hatch-Waxman amendments. We are confident that we can demonstrate that the current patent term restoration provisions in the Hatch Waxman Act skew research away from some of the most promising research, specifically research on progressive degenerative diseases. This disincentive is simply unwise. We do not believe anyone can provide a justification for shortening the term of a patent for the products of this research simply because the FDA approval is delayed.

Current Hatch-Waxman Act Incentive and Disincentives
The "Drug Price Competition and Patent Term Restoration Act of 1984," commonly known as the Hatch-Waxman Act, embodies the classic "legislative compromise" balancing the competing interests of the pioneer pharmaceutical and allied research-based products industries with those of the generic drug industry. On the one hand, the law responded to the needs of ethical research-based pharmaceutical, biologics and related industries to restore patent life lost during the product marketing approval processes of the FDA and other federal agencies. On the other hand, provisions of Hatch-Waxman responded to the needs of the generic drug manufacturers by providing relief from FDA compliance with the full requirements for conducting clinical studies associated with New Drug Applications (NDAs) as a condition of pre-market approvals for generic copies of "post-1962" drugs. [See Appendix: Outline of Hatch-Waxman Act.]

The original statutory prescribed periods of patent term restoration enacted by Congress in 1984 are no longer relevant to biotechnology and pharmaceutical innovation today. The cost of drug and biological product development has skyrocketed. Emerging biotechnology companies and biotechnology-based product divisions of larger pharmaceutical and chemical companies face the same higher start-up costs, long lead times, and incur substantial costs before they can commercialize a product and recoup their investments. The emerging biotechnology company faces the added challenge and risks to timely attract sufficient investment capital for extended periods of time to sustain operations until (and if) its products can be commercialized or other arrangements can be to provide for its long-term continuity. These factors have rendered obsolete and arbitrary the caps on patent restoration under Hatch-Waxman.

There is a need to reform current restrictions that arbitrarily limit the availability of patent restoration for innovative products and important new indications and which require substantial new investment for commercialization. The current arbitrary limits on multiple patent extensions for products or indications requiring extended review and/or clinical trials — e.g. separate clinical studies, multi-year clinical trials, special review requirements — result in a financial disincentive to the development of important new therapies for patients.

Specifically, under current Hatch Waxman law, a formula is established to compensate patent holders for time lost during the regulatory approval process. Basically, this recoupment equals only half the time in clinical trials and the period of time under review at the FDA. Further, this recoupment of time is limited by several caps that bars the full recoupment of lost time at the FDA and time spent in clinical trials. BIO believes that the removal of these caps and the half time reduction for clinical trials will restore balance sought in the original Hatch Waxman law and unleash new incentives for the creation of new generations of ethical pharmaceuticals.

Unmet Medical Needs
There are many diseases and conditions for which good medicines are not currently available. An examination of the laws providing marketplace exclusivities and the ability to enforce those rights must include a consideration of the development of those medicines. These disincentives are profound for diseases where developing new medicines would require very lengthy clinical testing, – 5-10 years. With these medicines the total development time for these medicines could stretch out until there is very little patent term remaining – even with the 5 years of Hatch-Waxman restoration.

Specific examples of diseases or treatments approaches where the development of new medicines is discouraged by current patent law include:

  • Cancer prevention – Medicines could be developed to prevent cancer in individuals with genetic predisposition. However, testing these medicines would take many years, and follow-up would have to continue for the individual’s entire life.

     

  • Early treatment and prevention of Alzheimer’s & Parkinson’s—Available compounds, (such as NMDA antagonists), could be evaluated for the prevention of neurological disease in individuals with a high likelihood of developing these conditions. However, testing these medications would take many years, and follow-up would have to continue for the individual’s entire life.

     

  • Early treatment of arthritis—The long-term disabilities from joint destruction progress very slowly, so clinical testing of medicines to prevent the progression of arthritis from its early stages would require many years.

     

The costs associated with these diseases is immense.

The next generation of new medicines: Stem cells, Genetic medicines, and other therapeutics on the horizon
Arthritis, Cancer, Alzheimer’s, Parkinson’s and Diabetis are diseases that may be able to treated through the use of stem cells, with new information from the human genome project, and new generations of therapeutics might be able to treat.

Stem cells
There are 200 different kinds of cells that make up most of the human body. These cells are differentiated, which mean that they have a distinct morphology (shape and size), and have achieved a specialized function such as carrying oxygen or transmitting "nerve" signals. For years scientists have known about "blood stem cells" (cells that can become one of several different blood cells such as white blood cells or red blood cells) and the potential uses of umbilical cord blood.

Exciting developments have recently occurred in this field that have allowed the cloning of stem cells. The excitement in the research and patient community is understandable. There are two ways that ES cells are an advancement: first, as a research tool to study developmental biology which in turn might lead to a better understanding of age related diseases; and second, as the starting point for therapies to create cures to some of the most deadly diseases such as developing new treatments for muscular dystrophy.

Genomic Medicines
Equally exciting is the promise of advancements made with information supplied by the human genome project. The human genome project is set to determine the exact nucleotide sequence of a human being. As little as fifteen years ago, most scientist did not think that a complete genetic sequence of the human genome could be completed in their lifetime, now seeming each month the projected date for completion is revised towards completion around the turn of the century.

Genomic data is identifying new genes that are associated with diseases. This information provides targets for therapeutics prior to the onset of the symptoms associated with the disease. For instance, genetic data from the human genome project, may identify a gene associated with the predisposition of persons to develop certain types of arthritis. The identification of the gene may in turn shed light on the underlying processes that lead to arthritis prior, by identifying the gene product associated with that gene. This in turn will lead to new therapeutic targets which might be used to identify compounds that would compensate for the genetic defect that is associated with arthritis. If such drugs could be developed, they would have the additioanal benefit of not being used after the pain and disability of joint degradation has already occurred.

New Frontiers in Medicine
In addition to stem cells and genomics, the new frontiers of medicine include gene therapy, DNA vaccines, ribozymes and hundreds of other novel strategies to address. Although these strategies provide novel vantage points and opportunities to conquor disease, each strategy is taking years from conception to the precinical lab to human testing and then to marketable therapeutics.

Patents and drug development
Intellectual property protection is critical to the ability of the biotechnology industry to secure funding for research because it assures investors in the technology that they will have the first opportunity to profit from their investment. Without adequate protection for biotechnology inventions, investors will not provide capital to fund research. There is substantial risk and expense associated with biotechnology research and investors need to know that the inventions of our companies cannot be pirated by their competitors.

There may be no industry which is more sensitive to patent protection than the biotechnology industry. The rate of investment in research and development in this industry is higher than in any other industry. Any law which undermines the ability of biotechnology companies to secure patent protection undermines funding for research on deadly, disabling and costly diseases. Capital will not be invested in biotechnology companies if they are not able to secure intellectual property protection to recoup the substantial investments they must make in developing a product for market.

Our industry's position on patents follows from one simple fact about the biotechnology industry; most of our firms fund research on deadly and disabling diseases from equity capital, not revenue from product sales. Without investors taking the risk of buying the stock of our companies, much of our vital research would end. Almost without exception our industry cannot borrow capital. Our principal, and for most of us, our only source of capital, is equity capital.

We advocate revision of Hatch Waxman to provide day for day compensation for lost time at the Food and Drug Administration. We emphasize that we are not proposing here to lengthen any patent beyond the term that exists when the patent is issued by the PTO, only to ensure that the term of this patent is not eroded when delays occur at the FDA. When the Hatch Waxman Act was enacted, the sponsors of the legislation sought to strike a balance between the public's access to older drugs (by increasing competition after patent expiration) and the public's access to new drugs (by providing protections against the loss of patent term to incentivize drug creation). But, the biotechnology industry did not exist at the time, the economics of drug development have changed radically since then, and the hopes for new and more effective medicines have grown exponentially. The science, the regulatory environment and the biopharmaceutical marketplace have changed. The law is obviously out-of-date and needs to be amended.

The power of the biotechnology industry is that our companies can now use genetic data to determine the root causes of the disease and, thereby, treat the disease pathology as opposed to the disease symptoms. Looking to disease pathology is different from the previous model of drug discovery, when the Hatch Waxman law was written, which sought to develop therapeutics to treat symptoms associated with disease. New scientific information holds the promise of treating life diminishing illnesses that are not well treated by medications currently on the market including neuro-degenerative diseases such as Lou Gehrig's disease, Parkinson's and Alzheimer's diseases. Our industry is willing to tackle the scientific medical problems that now face the aging U.S. population.

Conclusion
We salute your willingness to proceed with hearings regarding specific Hatch Waxman Act amendments. As the biotechnology industry has emerged and the pharmaceutical marketplace has changed, it is important to look again at this act. We will work with you to explain the relationship between restored patent terms for research and the reduction in human suffering. This Subcommittee has proven to be an effective champions for biomedical research. BIO appreciates the opportunity to present these views on this important issue. We look forward to working with the Subcommittee to support policies that will speed the development of biomedical research into products for the benefit of patients.

Appendix

Major Highlights of "Hatch-Waxman Act"

 

Title I-Amendments to the Federal Food, Drug and Cosmetics Act (FFDCA)

Abbreviated New Drug Applications (ANDAs)

 
Generic drug "ANDA" applicants must-
  • demonstrate to FDA the therapeutic or bioequivalence to the pioneer product,
  • show the FDA that manufacturing, processing and packing facilities and controls meet FFDCA requirements,
  • provide information to FDA on the patent status of the pioneer product (based on information filed earlier by the pioneer) or certify invalidity, non-infringement or inapplicability of the pioneer patent with regard to the ANDA product, and
  • provide notice to the pioneer NDA holder and patent holder of ANDA applicant’s grounds for challenging the validity of the pioneer’s patent or the patent’s applicability to the pioneer product upon which the ANDA is based.
Generic drug "ANDA" applicants no longer need to-
  • conduct well-controlled clinical safety and efficacy studies to support its application for approval of a drug which is identical to the pioneer product,
  • demonstrate that the generic product is safe if it is identical to the pioneer product (although FDA has authority to deny or withdraw approval of the generic on safety grounds not related to the pioneer product), and
  • that the generic drug is identical to the pioneer product, but only if FDA approves a petition allowing this difference.

Marketing Exclusivity Periods for Innovators of New Drugs

 
Provides exclusive marketing rights outlined below for "new drugs" , also referred to as "new chemical entities" ("NCEs"), however does not provide such rights for "new biologicals"
Prohibits FDA from approving generic copies of NCEs before the expiration of the following periods-
  • 5 years + the ANDA review period for post-1984 "new chemical entities" ("NCEs")
  • up to 2 ½ years may be added to the 5 year + exclusivity period for post-1984 NCEs to pursue litigation if the patentee promptly files an infringement action
  • 3 years for new indications for post-1984 non-NCEs, if supported by new clinical investigations (other than bioavailability studies) essential to approval
  • special transitional 10-year exclusivity for NCEs approved during 1982-84
  • special transitional 2-year exclusivity for non-NCEs and new indications for NCEs approved during 1982-84 and for "changes" in pre-1982 drugs
  • up to 2 ½ years may be added to any other specified period for all other drugs and indications to pursue litigation after generic gives notice of ANDA filing (regardless of whether exclusivity period has expired) if the patentee promptly files an infringement action

Drug and Patent Listing Requirements

 
The drug and patent listing provisions in the Act-
  • require all NDA holders and NDA applicants to file with FDA-
    • the patent number and expiration date of any effective patents which "claim the drug or a method of using such drug" (but not patents claiming a method of manufacturing)
    • notification of claimed periods of market exclusivity for drug products under Title I of the Act
  • require all ANDA applicants to file with the FDA-
    • an acceptable bioavailability or bioequivalence study or protocol (where in vivo studies are required) and
    • a certification for all relevant patents on the approved drug upon which the ANDA filed one of the following
      • no patent information has been filed by the NDA holder,
      • the patent has expired,
      • the date on which the patent will expire, or
      • the patent filed is invalid or will not be infringed by the manufacture, use or sale of the new drug for which the application is submitted
  • require FDA to-
    • publish and update monthly a list of all marketed drugs approved for safety and effectiveness along with their approval dates. [This publication, "The Approved Prescription Drug Product List", is also referred to as the "Orange Book".]
    • specify in the "List" whether in vitro and/or in vivo bioequivalence studies are required for approval of ANDA of each listed drug
    • publish patent information and information on periods of market exclusivity for submission or approval of ANDAs for specific products which is required to be supplied by pioneer companies under the Act
    • publicly release the safety & efficacy data of approved NDA products after the first ANDA approval

Title II- Amendments to the Patent and Trademark Act

Patent Term Restoration

Special Patent Infringement Rules
The making or testing of a patented drug by a third person which is reasonably related to obtaining marketing approval of a drug [biological, medical device or other product] no longer constitutes patent infringement (over-ruled Roche v. Bolar case).

Filing of ANDA [NDA, PMA, etc.] by a third party with intent to market prior to expiration of patent constitutes infringement and injunctions against commercial marketing authorized on showing of infringement.