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April 18, 2016


High drug prices in the US and low prices elsewhere mean that US citizens are shouldering a disproportionate amount of the burden of drug development for the world.

According to the group discussed here, the TPP would put mechanisms in place that might help shift some of that burden to Asia, by allowing for IP protections that more accurately follow the real-world development of medicines. (There's no guarantee of such burden-shifting actually coming to pass, of course: those signatories that do not presently treat drug registration information as confidential and proprietary, for example, are already in violation of their obligations under TRIPs, so why assume that they'll change their practices under the TPP? And price caps on drugs, or poor economies, might simply ensure low or no profits for the drug companies in certain countries.)

But this group's response is not, It's good that the TPP countries are trying to find a way to share the cost of drug development so that more medicines are developed more quickly. Instead, its response is, Let's make sure that the cost of drug development continues to be borne disproportionately by the USA.

Couple that thinking with the recent Sanders/Leahy/Franken et al. letter to the NIH about march-in rights (reported in Patentdocs last week) and you've got a recipe for less drug development, as you encourage capital to flow away from drug development and into other areas.

But hey, at least medicines that were developed 30 years ago or more will be cheap and available to everyone...just like they already are.

The article and the comment would be more useful if they provided some metric for assessing whether the provisions of the TPP were too rich or too poor for the pharmaceutical companies. We already know both stories -- too poor a deal for pharmaceutical companies is bad for drug development and too rich a deal is bad for consumers or their insurers. Is there anything in either this post or the comment that suggests how to test the proposition that the TPP is too rich for pharmaceutical companies?

The only data point, Sidford, is a peer-reviewed study from Duke that estimated the break-even point for ROI occurs at about 17 years after product approval for biologic drugs. In the US, the BPCIA provides 12 years as a compromise; despite this the Obama administration has advocated for 7 years, based (in part) on a think tank sponsored (but not peer reviewed) study.

The FTC's argument for no regulatory exclusivity is based on a series of specific assumptions that may be true in the US but are untested in the other signatories.

We discussed all three of these reports prior to passage of the ACA; "biosimilar" in the search engine should find them for you.

Thanks for the comment

Dr. Noonan,

Are each of these terms (17, 12, and 7) AFTER the twenty year term that a patent provides....?

Dear Skeptical:

Totally unrelated to patenting - these are regulatory exclusivities that are given to biologic innovators upon approval. The Hatch-Waxman regime, for example, gives you 5 years exclusivity and a generic competitor can apply for ANDA approval only by agreeing to wait until patent expiry or alleging non-infringement, invalidity or unenforceability. But those are special provisions for patents; the 5 year exclusivity is absolute.

Similarly for biologics - only here the exclusivity term is longer, to increase the likelihood of sufficient ROI for anyone to invest.

Thanks for the comment.

Thanks Dr. Noonan. So if indeed separate (and one has gone the patent route), are these time frames after the patent term or concurrent?

Hey Skeptical,

As Kevin would surely tell you they are concurrent and unrelated to each other. For example, you don't even have to have a patent on the drug to get this data exclusivity.

Thanks EG - I was interested in those cases in which patents are in play, and the possible interactions (in time) of the various protections.

For small molecule drugs the patent exclusivity frequently extends after the regulatory exclusivity - hence the prevalence of ANDA litigation.

It is a mixed bag with biologics due to the delay in even having a biosimilars route - many of the patents on these drugs have expired or will expire, and the regulatory exclusivity is long past. That, and the fact that the Europeans have been permitting biosimilars to be marketed for some time, means that many of the first biosimilars will be drugs like Neulasta and Neupogen and others of that vintage.

In other words, lots of competing interests at play here.

Thanks for the comment, and thanks, EG, for providing clarity.

Generic competition lowers prices, but where do the original drugs come from without a profit motive?
Currently, US consumers are effectively subsidizing drug development for the rest of the world, through high drug prices and research infrastructure. TPP aims to equalize that.

A fundamental problem is that trade deals focus on more obvious trade barriers and inequalities like tariffs. But e.g. a Canadian law that harms US pharma is just as much favoring local interests as a US tariff on Canadian maple syrup.

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