When Congress rushes to pass a healthcare reform bill of 2,000 pages or so, you have to worry about what will be slipped in, pulled out, or just changed in a few details. One inside-the-Beltway item is constructing a regulatory pathway for the approval of “biosimilars” or “follow-on biologics” (FOBs for short). Biologics are different from traditional drugs because instead of being relatively simple chemicals, they are hideously complex proteins that are essentially grown in high-tech vats, often after undergoing sophisticated biotechnology procedures that may involve changes in DNA, the use of bacteria to express humanized proteins, and so on and so forth. For old-fashioned drugs, the 1984 Hatch-Waxman Act makes it easy for generic manufacturers to enter the market after pioneer patents expire. They can do that because they do not have to re-run the clinical trials that supported original FDA approval of the pioneer drug, but instead can make use of the data from those trials even though the data are the intellectual property of the pioneer firms.
There is no Hatch-Waxman-like regulatory pathway for most biologics, and thus no easy way to foster competition after patents expire. Both the House and Senate healthcare bills include an FOB provision. Of special importance is “data exclusivity.” This refers to how long a generic manufacturer must wait until it can piggyback on pioneer drug data—in case the patents expire unusually soon after the pioneer obtains FDA approval. For chemical-based drugs, this is about five years, but it does not often come into play because most drugs are approved with more than five years of patent life left. For biologics, the situation is murkier, for two reasons. One is that for the foreseeable future, exact generics—which are essentially interchangeable with the original, like a generic version of amoxicillin—will not be created by anyone. The manufacturing process is just too complex and unpredictable. That means that the FDA will require at least some clinical trials for the FOB, although probably nowhere nearly as long or intense as were required for pioneer drug approval.
The other difference is about patents. The generic business model in recent years focuses on challenging patents well before scheduled expiration, partly because the first firm to challenge a patent can in certain circumstances obtain the right to market the only generic for the first six months, and partly because patents sometimes fail to hold up in court. Biologics patents tend to be very different from those protecting chemical-based drugs. They may prove to be far more susceptible to challenge, although we won’t know for sure until the new FOBs world is launched through legislation. Hence the threat of dismantling a patent for a biologic relatively soon after FDA approval is very real and almost certainly greater than for traditional drugs. This means that the period of data exclusivity may comprise the primary foundation for the pioneer manufacturer’s ability to sell its biologic without competition for a reasonable number of years after FDA approval. The period of unopposed sales is essential to recouping R&D expenses. Biotech biologics drugs require a lot of research. Moreover, research continues long after FDA approval as the manufacturer explores the drug’s therapeutic potential. For example, the biotech cancer drug Avastin has gone through scores of trials, and five years after approval, scores more trials are underway.
Clearly, an assured period of data exclusivity is essential for the continued growth of the biologics industry. The European Union, which is ahead of us on this regulatory front, provides for ten years plus a one-year extension in certain circumstances. Their commonsense reasoning is that the mammoth research funding necessary for biotechnology drug development is largely dependent on having an assured period of sales exclusivity after marketing approval. Both the House and Senate healthcare reform bills provide for 12 years. This eminently reasonable number is under attack, however, as some Senators want to amend the Senate bill to cut the period to seven years or less. Although no one can know for sure, there is a real risk that such a short data exclusivity period could seriously impede progress in one of the most important industries of all. We should hope that Congress sticks with 12 years, whatever happens to the rest of healthcare reform.
I have written about this topic twice: here and here. Recently, Henry Grabowski also wrote a Health Policy Outlook on data exclusivity. His piece drew upon his own research, which was published in Nature Reviews Drug Discovery.