Potential Impact on Data Exclusivity:
A Necessary Form of IP in a FOB World
“Biosimilars and Follow-On Biologics”
Doubletree Hotel, Crystal City
April 28 - 29, 2008
Susan Finston,
President
Key Points
• Importance of Innovation/Access balance
•
•
in Follow On Biologics (FOB) Policy
Increasingly critical role of Data
Exclusivity (DE) as incentive for
innovation
Lessons learned from increasing
uncertainty in exclusivity periods for small
molecules
The Right Balance
• Symbiosis of generics and innovators:
”The generic industry relies on the brand industry for its lifeblood. It is only through the brand
industries continued research and development that new products ultimately become available for the
generic industry to develop and market. Thus, we understand the need for strong intellectual property
rights and the importance of incentives to stimulate the costly research and development that is required
to bring new, safe and effective drugs to market.”
Testimony before the Senate Judiciary Committee, August 4, 1999, Carole S. Goldfine BenMaimon, MD, then Senior VP, Teva http://judiciary.senate.gov/oldsite/8499csgb.htm
• Who is “Us”? “Them”?
✓ Sandoz (Novartis), Ranbaxy, DRL, Teva pursue R&D;
✓ MNC innovators enter authorized generics market.
What is Data Exclusivity?
• DE provides:
– independent incentive for commercialization and launch
– via exclusivity period during which the governmental health
authorities protect the data (non-reliance and non-disclosure)
• Fixed DE period recognizes proprietary nature of data
– After time expires, reference permitted to the data on file with
the health authorities by generic producers (never disclosure)
– Along with proof of bioequivalence to the originator’s drug
• Government as Gatekeeper
– Conserves valuable judicial resources
– Again critical to small biotech firms
Role of Data Exclusivity (DE)
• Before 1984, no DE in U.S. law
– Price Competition and Patent Term Restoration Act of
1984: “Hatch-Waxman”Amendments to Federal Food,
Drug, and Cosmetic Act (FFDCA) and Patent Act
– Independent IP right, separate from patent rights
(Constitution, U.S. Patent Act, Title 35 of the U.S. Code)
• DE valued for certainty of exclusivity period
Grand Bargain of Hatch-Waxman
• Generic companies got:
– Abbreviated approval process for ANDAs
– Bolar Exemption for early working
– 180 Days Exclusivity for 1st Entrant
• Innovator companies got:
– DE for NDAs
– Patent term restoration (PTR)
– Protection of patent challenge procedures.
(one for three?)
Para IV Certification Trends
In terms of impact on exclusivity periods, at least
three variables to take into account for future impact
in FOB legislation:
1) More ANDA filers under Hatch-Waxman
2) Accelerating ANDA Para IV challenges
3) Increased product range for challenges
More ANDA Filers
ANDA filers increased
from 17 in 2001 to nearly
80 in 2007, with Para IV
activities now viewed as
routine to the generic
business model.
Data Source: Paragraph IV
Report (Jan 2008) (Chart by
FCL)
More Para IV Certifications
Annual Para IV Certifications
Chart 2
Total All Years
Total 2004 - 2007
Chart 1
90
80
70
600
500
60
400
50
300
40
200
30
100
20
0
Increased Frequency of Para IV Certifications Over
Time
10
0
2004
Data Source: http://www.fda.gov/cder/ogd/ppiv.htm
2005
2006
2007
Accelerating ANDAs, Product Range
180 Days Exclusivity for First Generic Entrant:
“[G]eneric companies have every incentive to file these
certifications as early as possible in order to achieve first-tofile status. With such a strong incentive, it can be expected
that more of these certifications will be made four to five
years after products launch.”
Is this really necessary for FOBs?
Source: www.ParagraphFour.com
Para IV Incentives Increase DE Value
• Increasing Para IV Challenges in Year 5
– Increasing number of generic companies file ANDAs
with Paragraph IV Certifications at start of year 5 after
marketing approval well before patent expiration
– No longer limited to so-called blockbusters
• Patent exclusivity erosion affects pipeline
– In-house decisions made on four year horizon to
recoup investment; is PTR “fighting the last war”?
– Para-IV challenges depress stock values, further
reducing R&D outlays
Biologics: Even more DE Reliance?
• Biopharmaceutical pipelines relies on DE:
– MNCs in-license from SMEs after proof of concept
– Start-Ups lack resources to patent broadly before trials
– MNCs’ own biologics may rely more on DE
– After patent expiration, DE period currently undefined for
BLAs, unlike NDAs due to lack of regulatory pathway
Lessons Learned
• Hatch-Waxman incentives reduce R&D value:
– MNCs face weaker pipelines, in part due to investment
decisions based on reduced certainty (fewer higher-risk
decisions to aim out of the ball-park)
– MNCs in-license from SMEs after proof of concept
– Start-Ups lack resources to patent broadly before trials
– And, PTO patent review called into question as a result of
biopharmaceutical defensive tactics; further erodes currency
of patent portfolios
Lessons Learned (2)
• Value of fixed DE period two-fold:
– Eliminate drag on stock prices from
increased litigation burdens; and,
– Reduce litigation costs for generic
entrants to challenge patents as a
business strategy.
Conclusions
• FOB legislation: Best chance for defined
exclusivity periods with greater certainty,
reduced litigation
– All biopharmaceutical companies need to
get out of the Certification/Litigation cycle
– Imperative to work towards consensus on
fixed period of 10 - 12 years of exclusivity,
equal to effective patent term for
pharmaceuticals
Conclusions (2)
• Innovators and Follow-On Producers gain from
predictability, standardization for FOB FDA sciencebased pathway (e.g. EMEA):
– Critical not to erode FDA “Gold Standard” for
credible science
– Don’t repeat mistakes made in debasing of
patent currency but avoid repetition of Para IV
experience
Striking the Right Balance
• There are exciting market incentives for FOBs that
will benefit patients, industry, and potentially bring
greater certainty to all stakeholders.
– Don’t use FOB legislation to reinvent the HatchWaxman wheel re Para IV Certifications
– Need to enable an “Innovation Culture;” NOT to
perpetuate a “Litigation Culture”
Discussion
Susan Kling Finston
1101 Pennsylvania Avenue, NW, Suite 600
Washington, DC 20004
+1-202-756-7749 (phone)
+1-202-330-5550 (fax)
Susan@finstonconsulting.com
www.finstonconsulting.com