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July 28, 2009


Don and Kevin,

Given that you have published extensively on the issue of data exclusivity, I would like to know your opinion on the recent USA Today post (http://www.usatoday.com/money/industries/health/drugs/2009-07-28-biologics_N.htm). I get the impression that you prefer the longer of the proposed exclusivity periods but I can’t get from your writings the reason(s) for this. I have problems understanding how one study could conclude that 5 or 7 yrs exclusivity is ok while another study concludes that 14 yrs is ok. Why such a wide range? Are people looking at the right data and making the correct interpretations? Or are we dealing with some level of disingenuous assertions from both sides. Given that you support longer exclusivity periods, it would be nice to educate people how you come to that conclusion.


Discounting the FTC report, which contended that no exclusivity period was needed (and therefore seems to be an outlier), the study calling for the shortest exclusivity period was Alex Brill's white paper, which concluded that a 7-year period provided the right balance between innovation and cost savings (http://www.patentdocs.org/2008/11/white-paper-from-former-house-ways-and-means-economist-finds-7year-data-exclusivity-period-to-be-suf.html). The Grabowski paper comes down on the other side of the issue, concluding that it takes between 12.9 and 16.2 years for an innovator to generate profits for a given biologic. Because I am a patent attorney and not an economist, it's hard to tell which study is right (or at least closer to the mark). However, I can appreciate the argument that since one cannot unring the bell, it would be better to go with a longer period (Amgen Vice President and Law & Intellectual Property Officer Stuart Watt made such an argument last March at the BIO IPCC conference; http://www.patentdocs.org/2009/04/amgen-vp-makes-case-for-longer-exclusivity-period-in-followon-biologics-legislation.html). Thus, if there's any chance that a 7 to 10-year period might seriously affect biologic innovation (and proponents of shorter exclusivity periods can only predict - not guarantee - that there will be no such impact), a 12-year period would be the safest course of action to take. If it subsequently turns out to be too long, Congress can go back and shorten it.

Thanks for the question.


P.S., The link to the USA Today op-ed doesn't appear to be functional.

Don, if Congress can go back and shorten a long exclusivity period, it can surely also go back and lengthen a short exclusivity period. Would an initial short exclusivity period cause irreversible damage to innovation? It seems to me that people are picking sides based on passion rather than cool analytical and objective decisions. People are selecting facts to support an outcome rather than supporting the outcome from the entirety of the facts.

P.S., link is http://www.usatoday.com/money/industries/health/drugs/2009-07-28-biologics_N.htm


If we assume that Grawbowski's calculations are correct*, then implementation of a 7-year exclusivity period will harm innovation. Also, by the time that Congress gets around to changing things (and I agree with Mr. Watt that it will be almost impossible to increase the period), the damage to U.S. innovation will have already been done.


*As far as I am aware, only Grawbowski's study has been published in a peer reviewed journal, so that would (in my opinion) give it an edge in terms of credibility.

"Thus, if there's any chance that a 7 to 10-year period might seriously affect biologic innovation (and proponents of shorter exclusivity periods can only predict - not guarantee - that there will be no such impact), a 12-year period would be the safest course of action to take."

This is a very silly argument and you should be embarassed for making it, Don.

To what other policy decisions should we apply this "logic"? It strikes me as the worst sort of Republican wanking out there, the same sort of shallow result-oriented thinking that led the country into a pointless wasteful war with Iraq because it was the only way to "guarantee" that Saddam Hussein would drop a nuclear bomb on Kansas.

The bottom line is nobody knows what effect a 7 year data exclusivity period will have on "innovation" (whatever that is) but we all know that it would eat into the profits of non-generics. If you think those profits are "important" (in the "what's good for Chrysler is good for America" sense) then you are probably old, white, stubborn and invested.


I am not supporting a short or a long exclusivity period. I just can't judge what is the right period because I don't believe any of these studies present an objective analysis unburden by who is behind the study. As such, I don't believe anyone can state that 7-yrs will harm innovation, or that 16 yrs will not cause harm. Such a statement is a personal preference. In other words, if Congress wants to really pass a good law, it needs to look else where for guidance.

Dear Baltazar and Keep:

As Don mentioned, the only peer-reviewed estimate actually has almost 17 years as the outside marker for "break-even" on biologic drugs, so 12 years is as much a compromise from that position as 7 years would be for the 12-year proposal.

All this is crystal-ball gazing, but in view of the importance of the topic it seems prudent to go with the longer period and then revisit. After all, right now there is no biogeneric pathway, so even the longer period of data exclusivity will promote the goal of reducing costs.

Finally, keep in mind that what we are talking about here is permitting the biogeneric manufacturer to use the innnovator's data. If the market is so lucrative and the incentives so great, then the generic can repeat the studies herself and not need the innovator's data. Yes that would be more expensive, but not as expensive as bringing the biologic drug to market in the place.

Thanks for the comments.

Does anyone find it the least bit odd that HIV/AIDS groups, who have cried out to break patent monopolies on drugs suddenly are OK with long terms of exclusivity?

Also, how many approved HIV/AIDS drugs are biologics? Last I checked, antiretrovirals are small molecules. If you said Growth Hormone, you would be wrong - it is approved as a drug. I guess we can anticipate the pharma guys screaming out for justice that they current regulations are unfair to them and will stifle innovation.

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