Patents and Data Exclusivity: It Ain't Necessarily So

    By Kevin E. Noonan --

The most troublesome point of contention in the follow-in biologics (FOBs) debate has undoubtedly revolved around the term for data exclusivity.  In a subject so complex, it may be understandable that there are differing views about the importance of data exclusivity, and whether this is "much ado about nothing" or a vitally-important part of any follow-on biologics regime.

Whether the data exclusivity provisions are of almost supreme importance depends, in part, on the significance of patent protection in biologics and the extent of protection patenting can be expected to give biologic drugs.  The Federal Trade Commission thinks patents in this area (as well as other factors) are sufficiently robust that its recent report concluded that no data exclusivity period is needed (see "No One Seems Happy with Follow-on Biologics According to the FTC").  In its report, the FTC asserts that patent protection may be sufficient protection, particularly because biologic drugs "are covered by more and varied patents compared with conventional small molecule drugs."  The report opines that data exclusivity would be in addition to the incentives provided by patent protection and market-based pricing, and thus data exclusivity would provide no additional incentives to developing biologics drugs.  The report concedes that data exclusivity might be necessary "to the extent that there are new biologic molecules that cannot obtain patent protection," but sees no evidence for such an eventuality.  The FTC report also declined to foresee any need for an ANDA-like mechanism to resolve patent disputes between pioneer biologic drug manufacturers and FOB producers prior to FDA approval of FOBs.  The report contends that patent infringement litigation, or the threat thereof, will be a sufficient disincentive to inhibit FOB companies from entering the market prior to patent expiry, even if they have obtained FDA approval.  Paradoxically, the reasoning behind this conclusion seems to reside in the Commission's belief that the Hatch-Waxman ANDA scheme has resulted in "extensive litigation, unintended consequences and delayed generic entry," which could with equal force suggest that there will be a need for a mechanism in FOB legislation to address patent issues (albeit with the benefit of 25 years of ANDA litigation experience).  The report also bases its conclusions on the lack of need for ANDA provisions in FOB legislation (particularly the 30-month stay of FDA approval) on the grounds that these provisions in the Hatch-Waxman regime were required to protect innovator drug companies from "judgment-proof" generics companies, because the market share (and revenues) lost by the innovator would be impossible to recover from a generic infringer even if the innovator prevailed in litigation.  The report's conclusion, that only established biologics drug manufacturers will be able to enter the FOB space, renders these considerations less important if not entirely moot for FOBs, and hence the report concludes there is no need for protection over and above the threat of patent infringement liability.

Other writers, such as Karl Thiel writing last month in BioWorld Today, have based their argument that the White House proposal of seven years of data exclusivity is sufficient on the grounds that "we require less exclusivity here [than in Europe, which has 8-10 years of data exclusivity] because our patent system is stronger and fills the gap more effectively" (see "Follow-on Biologics News Briefs - No. 6").  He further contends that data exclusivity is "an issue that's frankly been blown out of proportion," because "[e]xclusivity runs concurrent to patent life after all . . . [I]in most cases, it's not going to matter whether it's five or seven or 12 years, because the patent protection will supersede the exclusivity period, at least if you have good lawyers."

These sentiments are in stark contrast to other analyses based on what appear to be a more analytic approach to the problem weighed down by fewer unproven assumptions.  As reported earlier on Patent Docs, Dr. Gregory Glover of the Pharmaceutical Law Group spoke at a Super Session on patent reform entitled "Biotechnology Intellectual Property at the Crossroads" at BIO's International Meeting in Atlanta this year (see "Docs at BIO: Patent Reform Super Session").  Dr. Glover's presentation focused on the interaction between patent protection and regulatory (almost exclusively FDA) requirements, and how the differing "exclusivities" can interact in ways that protect innovation sufficiently or not.  The Hatch-Waxman regime is the paradigm, including the abbreviated approval pathway, permitting a generic company to use the innovator's safety and efficacy data, the data exclusivity period, and patent litigation provisions (specifically, the 30-month stay) that extend innovator protection.

In making this comparison, Dr. Glover discussed what he termed the RS/PS anomaly, i.e., the difference between the scope of regulatory protection (such as data exclusivity) and the scope of patent protection available for small molecule drugs as compared with biologics drugs.  In short, RS and PS "align" for small molecule drugs but do not for FOBs.

He illustrated this situation by comparing the protection periods for the two types of drugs.  For small molecule drugs, new chemical entities (NCEs) have a 5-year period in which the FDA will not accept an application for generic version of an approved drug, coupled with the 30-month stay in approving a generic drug that is imposed when an innovator files suit in response to a Paragraph IV certification from the generic drugmaker that an Orange Book-listed patent on the innovator's approved drug is invalid or unenforceable.  These timelines line up well with the timeline for a new drug according to Dr. Glover's hypothetical.  An innovator company files a provisional patent application followed by a utility application that issues within 3 years.  The company also filed an IND followed by a NDA, which is approved by the FDA within 5 years of the IND filing date.  For an NCE, the Hatch-Waxman Act provides 5 years of data protection, independent of patent protection.  In addition, the innovator has up to 5 years of patent term extension.  This results in the regulatory scope being restricted to about the same extent as the patent scope for traditional small molecule drugs:  the innovator's safety and efficacy data available to the generic drugmaker is restricted to molecules that are substantially identical; similarly, the innovator's patent protection is limited to substantially identical molecules.  Thus, Dr. Glover showed that the extent of regulatory protection (RS) was about equal to the extent of patent protection (PS) for small molecule drugs.

These periods of patent protection and data exclusivity thus provide sufficient protection for conventional drugs, since the periods overlap and there is rarely a situation where the innovator's drug is not protected during the term of patents listed in the Orange Book.

For follow-on biologics, however, the situation is very different.  First, the regulatory standard is much more loosely applied for FOBs, since they are not required to be identical to the innovator biologic drug.  (The regulatory standard for small molecules is "identity" whereas the standard for FOBs is "similarity," as a result of complexities in the molecules themselves and methods -- chemical versus biological -- for making them.)  For biologics, the regulatory scope is much broader, according to Dr. Glover, because it includes not only substantially identical molecules but also bio-"similars."  Thus, generic competition can be faced by the innovator for molecules other than identical copies of the biologic drug; one example of such an occurrence under the current regulatory scheme is Hoffman-LaRoche's Mircera® drug, which is a pegylated version of erythropoietin (EPO).  While Mircera® has been the subject of continuing litigation between Roche and the EPO innovator, Amgen, the FDA approved Mircera® in November, 2008 (see "Amgen v. Hoffmann-LaRoche: Remaining Issues").

In contrast to this broader scope of generic competition to be faced by biologic drugs, patents on such drugs remain restricted to molecules that are substantially identical to the innovators biologic drug itself.  Thus, the scope of patent protection is substantially narrower than the scope of generic competition for biologic drugs, a situation very different from traditional generic drug competition for small molecule drugs.

Because all pending FOB legislation will permit the FDA to grant regulatory approval to biosimilar as well as bioidentical compounds, the possibility exists for a generic competitor to use the innovator's safety and efficacy data to obtain approval of a biosimilar drug that does not infringe the innovator's patent protection.  This eventuality elevates the importance of data exclusivity for biologic drugs, which may not have sufficient patent protection to prevent marketing of a biosimilar drug that is different enough to satisfy regulatory requirements while falling outside the scope of patent protection.  This is not a case of whether or not the innovator biologic drug companies have clever-enough lawyers; considering how the U.S. Patent and Trademark Office, and the courts, have interpreted the written description requirement, protein-based biologic drugs having even conservative substitutions are likely not within the literal scope of most patent claims.

These considerations remain relevant even in the face of recent approval by Congressional committees of follow-on biologics legislation having 12-year data exclusivity provisions.  As reported on Patent Docs, on Friday the House Committee on Energy and Commerce approved a health care reform bill entitled "America's Affordable Health Choices Act" (H.R. 3200) by a narrow margin (31-28) (see "House Committee Approves Health Care Reform Bill Calling for 12-Year Exclusivity Period").  This bill included an amendment offered by Representatives Anna Eshoo (D-CA), Jay Inslee (D-WA), and Joe Barton (R-TX) that prevents 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 was passed by the Committee by a comfortable 41-11 margin.  However, ten of the committee's Democratic members voted against the amendment, including Committee Chairman Henry Waxman (D-CA), whose bill on a follow-on biologics regulatory pathway (H.R. 1427) provides only up to 5.5 years of data exclusivity.  A Senate bill, S. 726, was earlier amended to include a 12-year data exclusivity provision and passed by a 16-7 vote from the Senate Health, Education, Labor and Pensions (HELP) Committee on July 14th (see "Senators Hatch and Enzi Champion 12-Year Data Exclusivity in Senate").  While these bills are in agreement on the data exclusivity term, many groups have an interest in reducing the length of the term.  Since these groups include the AARP, Consumers Union, the Coalition for a Competitive Pharmaceutical Market (CCPM; "an organization of large national employers, health plans, PBM's, chain pharmacies, generic drug manufacturers, biopharmaceutical companies and others representing more than 200 million beneficiaries"), the National Coalition on Health Care (NCHC), their influence cannot be ignored.  Moreover, there is sufficient disparity among commentators on the "right" term length for data exclusivity to give members of Congress "factual cover" for following public perceptions on the benefits of biosimilars to support a lower data exclusivity term.  The decisions by the key Congressional committees in recent weeks have been encouraging to innovator biopharmaceutical and biotechnology companies; it remains to be seen whether these victories can be maintained in the final bill sent to President Obama for his signature.

Comments

[Keep It Real]

"the possibility exists for a generic competitor to use the innovator's safety and efficacy data to obtain approval of a biosimilar drug that does not infringe the innovator's patent protection."

Okay. Next question: so what? Three possibilities:

1) Generic biosimilar does not infringe and it is not as effective or has unwanted side effects. Less people use it. Maybe some people buy it instead of the trademarked drug because it's cheaper. Where Does the public benefit overall? Yes. Is there any unfairness to the "innovator" drug company? I don't see it.

2) Generic biosimilar does not infringe and it's equally effective (how long would it take to prove this?). Innovator drug company loses sales. Does the public benefit? Yes. Is there any unfairness to the "innovator" drug company? It still has the patent on its drug and should still be able to compete, assuming it knows how to advertise.

3) Generic similar does not infringe and it's more effective than the patented drug or has less side effects. Does the public benefit? Yes. Is there any unfairness to the "innovator" drug company? No, it claimed the wrong drug.

On balance, shorter data exclusivity periods are better for the public and are not unfair to "innovator" companies. The only argument for extending data exclusivity is the tired old argument about these companies refusing to innovate because they can't make big profits for their shareholders. These companies have plenty of protection already. They have the Hatch-Waxman provisions and they have the patent system. If we want to encourage innovation, why would we want to give companies the opportunity to milk excessive profits from narrow discoveries when there are so many more discoveries to be made?

[Kevin E. Noonan]

Dear Keep:

Well, the point is that the follow-on biologics bills will be for drugs that don't fall under the Hatch-Waxman regime, so I'm not sure I would chalk H-W as something on the "advantage" side of the ledger.

Here's another way of looking at it. Right now, the data exclusivity period is infinity - there is no way for a biogeneric to get or use the innovator's data. The biotech industry has said that it needs 12 years of data exclusivity, a number supported by (actually lower than) the only peer-reviewed study in the mix. Maybe they are right about the 12 year number, maybe they are wrong. But 12 is much less than infinity, and if it turns out that 12 years is too long, Congress will be able to adjust it downward.

Seems to me we should stop worrying about this issue, and focus on the criteria the FDA will use to decide whether the biogeneric is similar enough to warrant using the safety and efficacy data in the first place.

Thanks for the comment.

[Kevin E. Noonan]

Dear Keep:

Sorry I missed this last night.

Here's another way to look at it. Right now, the data exclusivity period is infinity, since there is no pathway for a follow-on biologic to be approved. The biotech industry has asserted that 12 years is the right term for data exclusivity, and this number is supported by (actually, it is significantly less than) the only peer-reviewed study on data exclusivity that is part of the debate.

So why doesn't Congress pass a bill with a 12-year data exclusivity term, which is vastly better than what we have now, and then see how that works out? After all, while there may be an initial 5-year delay in when a particular biogeneric comes to market, once it is there it will be there for good. And if the term is too long, Congress can amend the law once we have some actual data to consider.

This approach has the advantage that it will encourage lawmakers to begin focusing on the other important aspect of the data exclusivity issue that has gotten lost in the debate over term: how similar does a biosimilar have to be in order to be entitled to rely upon an innovator's data for evidence of safety and efficacy in the first place?

Thanks for the comment.

[Roger Burman]

There are some websites (e.g., http://www.lifescienceleader.com/index.php?option=com_jambozine&layout=article&view=page&aid=3886) claim that if 12-year data exclusivity gets implemented in the US legislation, the first biosimilar in the US will not appear until 2020. They don't explain how they arrived at this number. Aren't several drugs (Epo, GCSF, Insulin, Interferon, HGH) losing patent protection in a few years and will also have been well beyond 12 years since first approval at that time? So why would it take until 2020 for them to come to the market?

Also, do you know if FDA is prevented from reviewing an application before data exclusivity or approving it before data exclusivity?

Your help is appreciated.

Best,
RDB