BIO Calls For 14 Years of Data Exclusivity in Any Follow-On Biologics Legislation

Data Exclusivity Is Necessary to Support Future Biotech Medical Breakthroughs

WASHINGTON, D.C. (May 3, 2007) -- Any legislation creating a regulatory pathway for follow-on biologics should provide 14 years of data exclusivity for the pioneering product, the Biotechnology Industry Organization (BIO) said in a paper released today. BIO defines data exclusivity as the time period after approval of the innovator’s product during which the Food and Drug Administration may not approve a follow-on biologic (FOB) product relying to any degree on the safety and effectiveness of the innovator product.

“Biotechnology companies must have some certainty that they can protect their investment in the development of new breakthrough therapies for a sufficient period of time in order to secure the necessary resources from venture capitalists and other funding sources. Such certainty can most predictably be provided through lengthy data exclusivity,” said BIO President and CEO Jim Greenwood. “This is because, due to the very nature of an FOBs regime, the patent system may not provide innovator biologics with effective protection against follow-on manufacturers prematurely entering the market.

“For biologics to receive the same length of effective market protection that small molecule drugs receive under the Hatch-Waxman Act, the period of data exclusivity in any FOBs framework must be no less than 14 years,” emphasized Greenwood. “Anything less could skew investment away from biologics research and development, jeopardizing the development of future pioneering biomedical advances.”

BIO’s paper details how a FOBs regime will create a “patent protection gap” that may allow a follow-on manufacturer to elude an innovator’s patents while still relying on the innovator’s product to bypass the full regulatory process. That likelihood exists because of the confluence of two critical factors not present in the Hatch-Waxman Act construct for generic small molecule drugs. First, unlike a generic drug, which must be the same as an innovator product, a follow-on biologic may be only “similar’ to the corresponding innovator product, and thus the innovator’s patents may not be infringed. Second, because of the nature of biologic products – large molecules produced by living cells and organisms – patent protection is often narrower and easier to “design around” than that of small molecule drugs, and the trend in the law is toward increasingly narrow patents.

Greenwood noted that 14 years of exclusivity is consistent with previous action by Congress to stimulate innovation in the pharmaceutical industry by extending patent terms for such products up to a maximum of 14 years after regulatory approval.

“With passage of the Hatch-Waxman Amendments in 1984, Congress recognized that normal patent protection alone is insufficient to provide small molecule pharmaceutical innovators with sufficient market exclusivity to allow them to recoup clinical research and development costs and incentivize future medical breakthroughs,” Greenwood noted. “Given that Congress has previously concluded that up to 14 years of patent protection is appropriate for drugs and biologic products, any statutory formula that allows for follow-on biologics should allow for at least the same degree of effective market protection. Indeed, due to the unique aspects of the biotechnology industry, Congress should err on the side of promoting biomedical innovation, not undermining it.”

In the paper, BIO describes how data exclusivity is particularly important in the biotech industry, which is largely comprised of small, start-up companies that lack viable revenue streams. These companies bear enormous costs, risks and a high degree of uncertainty in raising the capital necessary to fund innovative research. Thus the biotech industry is extremely vulnerable to the types of changes in investment incentives that could result from poorly crafted follow-on biologics legislation.

“Small biotech companies, all but the top ten, account for two-thirds of the industry’s clinical pipeline,” Greenwood noted. “Failure to provide the necessary protections and incentives could fundamentally jeopardize the ability of small biotech companies to bring this pipeline of innovation to market.”

BIO goes on to state that, in addition to previous congressional action, empirical data specifically supports a 14 year period of data exclusivity. The Congressional Budget Office has found that the average period of marketing of a new drug product with patent protection is 11.5 years while new pharmaceuticals are marketed, on average, for 13.5 years before the entry of generic competition. But, as BIO details in its paper, biologics research and development is a more high-risk endeavor, with higher capital costs, higher material costs, greater manufacturing costs and uncertainties, longer development times, and lower late-stage success rates than compared to small molecule drugs. As a result, it is essential that the period of maximum market protection for drugs – 14 years – be extended to biologics.

“Continued U.S. leadership in biotechnology innovation will enable further progress toward breakthrough therapies to improve the health and lives of patients around the globe,” stated Greenwood. “We need sound public policy to help us reach this goal. As Congress debates legislation to establish an approval pathway for follow-on biologics, it is critical that data exclusivity of 14 years be included as part of that framework to provide the protections necessary for continued investment in biomedical innovation.”

BIO’s data exclusivity justification paper can be found here.