The White House recently wrote a letter to Henry Waxman recommending seven years exclusivity for brand name biologic drugs. The recommendation followed an FTC report from earlier this month that suggested the 12-14 year period the industry seeks is not necessary.
The letter is significant to the discussion of how to create a regulatory pathway for the introduction of follow-on biologics, or biosimilars, which are drugs similar to a brand name biologic and are introduced when the brand name patent expires. Some key issues include protection of brand name product data and the exclusivity period for a brand name product.
The Hatch-Waxman Act of 1984 created a pathway for generic drug entry in the traditional pharmaceutical market. Hatch-Waxman allows up to fourteen years of market exclusivity (five years data exclusivity for new chemical entities) for pharmaceuticals to recover development costs, which average around $1 billion these days (recent estimates range from $500 million to more than $2 billion).
The White House recommendation of only seven years (data exclusivity) for biologics would undercut innovation by making it even less likely that a biologic would recover research and development costs. The BIO organization, which represents many biotechnology companies, issued this statement in response to the White House letter and this rebuttal of the FTC report.
Last week, the FTC also issued a report on authorized generic drugs, which are generics authorized by brand name manufacturers when a patent expires. The report painted authorized generics in a bad light, and was particularly critical of the use of pay-for-delay patent settlements, in which a generic may delay market entry in return for the brand name manufacturer not authorizing a generic or for financial compensation. Courts have thus far upheld the legality of such settlements.
Legislation that would ban manufacturers from releasing authorized generics has already been introduced (House and Senate versions). The FTC report shows that competition from authorized generics lowers overall drug costs during the 180-day exclusivity period for generics. PhRMA issued a statement in response to the FTC report, defending authorized generics and patent settlements.
Lawmakers need to be careful in how they interpret data from these reports. The goal should be to maximize access to the best products at the best prices, but undermining patent settlements and limiting exclusivity for products that are very expensive to develop will undermine innovation and threaten the development of new life saving medicine.
DISCLOSURE: My employer is a drug and device manufacturer who is a member of both BIO and PhRMA.
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