Follow-on Biologics News Briefs - No. 7

    By Donald Zuhn --

California Healthcare Institute Applauds Eshoo-Inslee-Barton Amendment

Last Friday, the House Committee on Energy and Commerce passed a health care reform bill by a close 31-28 vote (see "House Committee Approves Health Care Reform Bill Calling for 12-Year Exclusivity Period").  One of the mark-ups to the bill was an amendment offered by Representatives Anna Eshoo (D-CA), Jay Inslee (D-WA), and Joe Barton (R-TX), which provides a licensure pathway for biosimilar biological products that includes a provision preventing the FDA from approving a biosimilar application until 12 years after the date on which the reference product (i.e., the innovator biologic) was first licensed.  The amendment, in contrast with the bill as a whole, was passed by a comfortable 41-11 margin.

In a statement issued on the day the House bill passed out of Committee, the California Healthcare Institute (CHI), an independent organization comprising more than 250 biomedical companies and academic and research institutions involved in researching and advocating policy to forward the interests of California's biomedical community, applauded the approval of the Eshoo-Inslee-Barton amendment.  In particular, the organization said it "supported the development of a science-based biosimilars approval pathway that employs the best science to make sure that products are safe for patients, that encourages price competition among manufacturers, and provides ample incentives to encourage continued private-sector investment in the next generation of breakthroughs," and that the Eshoo-Inslee-Barton amendment met these objectives.  Noting that the Senate Health, Education, Labor and Pensions (HELP) Committee had also recently approved an amendment providing a 12-year exclusivity period for biologic drug makers (see "Senators Hatch and Enzi Champion 12-Year Data Exclusivity in Senate"), the CHI stated that it was "pleased the amendment approved today similarly provides for 12 years of data exclusivity as well as the identical FDA regulatory pathway framework from the HELP measure."  The CHI was "also pleased that the amendment includes important patent dispute resolution provisions from HR 1548 that would establish an equitable framework for exchanging information among innovator manufacturers, biosimilar manufacturers and third-party patent holders, such as universities and private research institutes whose scientific breakthroughs are often licensed to the private sector for commercial development."

New York Times Says Data Exclusivity Period May Not Matter Much 

In an article published last month, New York Times reporter Andrew Pollack contends that the data exclusivity period being debated in Congress "may ultimately not matter as much as the most vitriolic debaters insist."  On one side of the debate, innovator drug companies argue that if the exclusivity period is too short, innovation will be harmed.  On the other side of the debate, generic drug companies and consumers (as well as employers and insurers) argue that if the exclusivity period is too long, potential cost savings will be wiped out.  Mr. Pollack, however, suggests that "neither the threats to innovation nor the potential savings from generic competition are as great as claimed."

In support of this assertion, Mr. Pollack points first to the patent system, since "whatever the exclusivity period, biologic drugs would also continue to be protected from copycats by patents," adding that "in many cases, the patent protection would last longer than the exclusivity period, making the Congressionally mandated exclusivity a moot point."  He lists Genentech's Avastin and Heceptin as two good examples, since according to Mr. Pollack, both drugs are patent protected until 2019, which is 15 years after Avastin's 2004 FDA approval date and 21 years after Heceptin's 1998 FDA approval date.  Mr. Pollack contends that "[w]here the exclusivity period might matter most would be in the cases of drugs whose patents were nearing expiration by the time the developer succeeded in winning F.D.A. approval," but he argues that this "seldom happens."

As for cost savings, Mr. Pollack notes that based on Congressional Budget Office (CBA) estimates, generic biologics might save the government "only about $10 billion in the next 10 years," which he argues is "a relative drop in the bucket when it comes to paying for health care reform, which is expected to cost about $1 trillion over 10 years."  This smaller-than-expected impact is due in part to the amount of health care spending that is dedicated to drugs, with biologics accounting for only 16% of total prescription drug spending and pharmaceuticals representing only 10% of overall health care spending.  Mr. Pollack predicts that biologic cost savings will also be impacted by greater regulatory scrutiny, stating that "[b]ecause even small changes might affect the drug's safety or activity, it is likely that makers of biosimilars will have to conduct at least some clinical trials to win F.D.A. approval of their drugs."

Washington Post Backs Shorter Exclusivity Period

An editorial in last week's Washington Post said the Senate HELP Committee's passage of a 12-year data exclusivity period "would drive costs to consumers above even current levels, making the title [of the bill -- the Affordable Health Choices Act --] little more than a mockery."  The Post remarked that one would have thought that a bill so named "would have made an effort to provide affordable health choices."  The Post also noted that last year, sales of biologic drugs "comprise[d] approximately 25 percent of new drugs."  (While this number seems to be at odds with the N.Y. Times figure of 16%, the Post refers to "new" drugs, albeit without defining what it means by "new" drugs.)

The Post editorial also questions the claim by "[b]ig pharmaceutical companies" that a "lengthy" exclusivity period is needed to encourage continued innovation, citing the Federal Trade Commission report which "suggested the opposite -- that the biotech industry's patents on its biologic innovations are so strong that no added exclusivity period is necessary" (see "No One Seems Happy with Follow-on Biologics According to the FTC").  The Post argues that while biologic drugs involve a more complicated manufacturing process, "the flip side is that many stages of the process can be patented -- from the drug products themselves to the genes that produce them to the cells in which they are made."  According to the editorial, "[t]his makes entry into the market by follow-on-biologics, or 'biosimilars,' more difficult because multiple patents are harder to design around."

Instead of a 12-year exclusivity period, the Post finds favor with the Obama Administration's "generous compromise" of a 7-year period (see "Follow-on Biologics News Briefs - No. 4").  Calling any additional protection "not only unnecessary but harmful," the Post asserts that a longer period would create "[a]n extended monopoly [that] would delay the entry of biogenerics and drive costs even higher."  In fact, the Post goes even further by supporting Rep. Waxman's 5-year exclusivity period, which the editorial argues better "balances incentives for innovation against the need for price competition."

Comments

[aullman]

One way to reduce cost on prescription drug prices is to offer a modified patent arrangement to prescription drug vendors in exchange for a negotiated lower price for the prescriptions.

Drug manufacturers charge exorbitant prices because patents only last 7 years and they need to make as much as possible during the patent period in order to cover the cost of R&D. The federal government should offer a modified arrangement to the prescription drug companies.

Drug manufactures should be offered the option to retain patents for longer periods if they agree to reduce pricing during the length of the patent.

This option will result in lower cost and a better business model for prescription drug companies. It is a win-win for the manufacturers, insurance companies and the patient.