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