By
Donald Zuhn --
•
Alex Brill (at right), a principal at Matrix Global Advisors, LLC and former chief
economist to the House Ways and Means Committee, who released a white paper entitled
"Proper Duration of Data Exclusivity for Generic Biologics: A Critique," which asserts that a
follow-on biologics regulatory pathway providing a data exclusivity period of
seven years would be "sufficient for maintaining strong incentives to
innovate while fostering a competitive marketplace" (see "Former
House Ways and Means Economist Claims 7-Year Data Exclusivity Period Is
Sufficient"). The paper, which was
funded by Teva Pharmaceuticals, finds fault with some aspects of an economic
model described by Duke University economist Henry Grabowski in a paper
published in Nature Reviews Drug
Discovery, and specifically determines that a biologic's
"break-even" point (i.e.,
"the number of years required for an average portfolio of biologic drug
investments to recoup all development and fixed production costs and to also
reward the investors their expected (double-digit) rate of return") is
just under 9 years -- as opposed to Prof. Grawbowski's calculation of between
12.9 and 16.2 years.
•
Dr. Laurence J. Kotlikoff (at right), a professor of economics at Boston University, who authored
a report entitled "Stimulating Innovation in the Biologics Industry: A Balanced Approach to Marketing
Exclusivity," which contends that Congress should look to the Hatch-Waxman
model (which generally provides four years of data exclusivity and one year of
approval exclusivity) when determining an appropriate exclusivity period (see "BU Economics Professor
Releases Report on the Impact of Marketing Exclusivity on Biologics Innovation"). The report, which was funded by Teva
Pharmaceuticals USA, concludes that "[t]here are, quite simply, no
compelling differences between the chemical-based and protein-based medication
industries to justify deviating from a policy [embodied in the Hatch-Waxman
Act] that has succeeded for over a quarter of a century in both dramatically
reducing drug prices and stimulating innovation."
• The National Coalition on Health Care (NCHC),
which describes itself as a non-profit and "rigorously non-partisan"
coalition comprised of more than 70 organizations, and which wrote a letter to the Senate
Health Committee urging it "to oppose generic biologics legislation that
contains excessive periods of exclusivity or that contains other unnecessary
and significant barriers to generic, biologic competition." The group concluded that "[t]he
five year period of exclusivity provided in [Rep. Waxman's biosimilar bill]
follows the Hatch-Waxman model and is the appropriate period of
exclusivity," and suggested that "[a]n unnecessarily long period of
exclusivity would . . . diminish the incentives for other companies to continue
innovating, actually resulting in less innovation over time." (see "NCHC Sends Letter on
Biosimilars to Senate Health Committee").
Among
those who have advocated for longer data exclusivity periods (i.e., 10 or more years) are:
•
Amgen Inc. Vice President and Law & Intellectual Property Officer Stuart
Watt, who told attendees of the Biotechnology Industry Organization (BIO)
Intellectual Property Counsels' Committee (IPCC) conference in March 2009 that
an exclusivity period of at least 12 years is needed to provide incentives to
innovator drug companies to continue developing new biologic drugs (see "Amgen VP Makes Case for Longer
Exclusivity Period in Follow-on Biologics Legislation"). In support of a 12-year
exclusivity period, Mr. Watt pointed to three factors: the research and development costs for
bringing a biologic drug to market ($1 billion), the average product
development time (12-15 years), and the product development risk (1 out of 100
candidates).
•
Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood (at right), who stated
that BIO supports a 14-year exclusivity period, noting that while "[l]ots
of folks in the generic industry think it should be less," BIO was
concerned that "if the industry does not have enough time to recover its
investments, those investments will never be made" (see "BIO CEO Outlines Challenges for Obama Administration").
•
Eli Lilly and
Company Senior Vice President and General Counsel Robert Armitage (at right), who stated In an interview with the Washington Legal Foundation (WLF) that "Lilly
has been adamant that a period of data exclusivity of 15-20 years for
innovative products would represent the best policy choice for overall patient
welfare," and further, that a 5-year or 10-year period of data exclusivity did not
"make sense" in view of the safety hurdles and small number of new
medicines coming to market (see
"Washington Legal Foundation 'Conversations With' Series
Examines IP Issues").
•
In a paper primarily concerned with patent reform (as evidenced by its
title: "Promoting Innovation
with Patent Reform: A Memo to President-elect Obama"), Senior Legal Policy
Analyst Andrew Grossman (at right) of The Heritage Foundation also touched on the issue of
data exclusivity under a follow-on biologics regulatory pathway (see "Heritage Foundation Offers
Patent Reform Proposals to the New President"). Stating that "[w]ithout adequate
data exclusivity, innovation in the biotech sector will dry up, leading to
fewer lifesaving treatments and eroding America's leadership in this
field," Mr. Grossman advised against "[i]mposing a short exclusivity
period or otherwise limiting enforcement of biologic patents." While exclusivity periods of between
0-14 years had been proposed in various follow-on biologics bills introduced in
the House and Senate at the time of the publication, the Heritage Foundation paper only mentions the 14-year
period.
•
The Intellectual Property Owners Association (IPO) Board, which passed a resolution
during its 2008 Annual Meeting supporting biosimilar legislation that would "promote[]
continued innovation by providing at least 14 years of data exclusivity for an
innovator’s biological product with additional periods of exclusivity available
for new indications and/or for approval for use in the pediatric population (see "Follow-on Biologics News
Briefs - No. 1").
•
Johnson & Johnson executive director for biotechnology policy Audrey
Philips, who contended that follow-on biologics legislation should strike "the
right balance between saving money and still having medicines to advance in the
future," and concluded that a 5-year exclusivity period would
"certainly have a chilling effect on [biotech] investment" (see
"Follow-on Biologics News Briefs - No. 3"). Instead, Ms. Philips argued for a 14-year
exclusivity period.
•
The National Venture Capital Association (NVCA), which released the results of a
study conducted by Iain Cockburn, Professor of Finance and Economics at
the Boston University School of Management, and Josh Lerner, Professor of
Investment Banking at the Harvard University School of Business, suggesting
that "a data exclusivity period of at least 12 years for innovator
products is a critical fulcrum in the effort to balance cost with the preservation
of biotech innovation" (see
"NVCA Study Supports 12-Year Data Exclusivity Period"). In particular, the NVCA concludes that
"the exclusivity period should be at least 12 years so that investors in
innovation can exceed the [cost of capital] hurdle rate," and states that
a 7-year data exclusivity period "would not be long enough to clear the
20% hurdle rate for investing in early stage companies," and would
"drastically reduce such investments and thwart future innovation in a
meaningful way."
Why is anyone surprised at the Henry Grabowski's subsidized comments? He played the same role when we fought for Hatch-Waxman. He was wrong then and he is wrong today. He is entitled to his opinion that should be respected but he is not entitled to play the usual Pharma game of using his credentials as a screen for Pharma arguments. Now biotech products enjoy virtual perpetual patents...that is correct, perpetual patents. For those who are not keeping track of events, Pharma and Bio are now fully engaged, mostly secretly, in a worldwide anti-generic campaign. In European ports legal transshipments of generic drugs are being seized as "counterfeits" most held in storage for a time and then apologically sent back to the generic company as a "mistake." Why would a counterfeiter use generics that sell, for example, for a dollar when the counterfeiter can exert the same illegal activity to counterfeit a brand name product(which should be and is illegal)? Two-thirds of the people in poor countries are currently and systematically being denied access to generic drugs due to the "Indian Ordinance" supported and promoted by Pharma. Remember,too, that the multinationals kept the price of AIDS drugs at $12-15,000 in the poor nations of the world where 35-plus millions were on the pathway to dying while Pharma block the use of generic clones created in a much simplier combination and regime that would sell for a dollar a day (today: under $100 a year) when the brands could not sell their products in the poor nations? President Bush in his 2003 State of the Union cited that example as the rationale for the world's largest contribution to AIDS treatment in poor nations...yes President Bush. The generic triple remains WHO's first line treatment for AIDS? Now upwards of three million patients are now alive and on affordable generic AIDS medicines.The answer is simple: Pharma companies did not want the western nations where their product from three different companies sold for $15,000 a year, to learn that a simplfied version, one table twice a day, was affordable? A large portion of the high price for AIDS medicines in the United States is financed by the governments, federal and States and in some States is being restrained due to the high cost. It appears that what I used to call the cadre of "academic whores" are back in business.
(FYI: As head of the generic trade association, I initiated and negotiated Hatch-Waxman that opened the market to generics after thirty-five years of failed attempts with the long time opposition supported by these so-called neutral and "fair minded" academics who also failed to disclose that their reserach was not peer-reviewed and paid for by an interested party. It is up to their Universities to put a stop to this nonsense). Bill Haddad
Posted by: Willliam (Bill) Haddad | October 29, 2009 at 02:53 PM
Dear Bill:
Here's another peer-reviewed article you probably won't like:
www.patentdocs.org/2009/10/maybe-hatchwaxman-data-exclusivity-isnt-so-good-for-traditional-drugs-after-all.html
Thanks for the comment.
Posted by: Kevin E. Noonan | October 29, 2009 at 04:02 PM
Dear Bill:
Sorry, I forgot to include the fact that, if everyone agreed on the current 12-year data exclusivity period, it would be a vast improvement on infinity, the current term.
And Congress could always revisit if 12 years turns out to be too much.
Thanks for the comment.
P.S. We don't really do the ad hominem stuff here. It doesn't advance the debate, it is emotional rather than intellectual, and it just annoys people rather than making them think.
Posted by: Kevin E. Noonan | October 29, 2009 at 04:06 PM