By
Donald Zuhn —

Over
the past twelve months, Patent Docs
has reported on a number of papers, letters, and statements that outline positions
taken by various players in the follow-on biologics data exclusivity debate.  In view of last week's Time magazine article "How
Drug-Industry Lobbyists Got Their Way on Health Care," which mentions that
Duke University Prof. Henry Grabowski's oft-cited data exclusivity study was
funded by the Pharmaceutical Research and Manufacturers of America (PhRMA) and
two partisan patient groups (see "Time Magazine on Data Exclusivity Debate"),
a review of these players and their positions on the issue seems timely.  Today, we summarize
the positions of ten individuals or groups that have participated in the
debate.  Among those who have advocated
for shorter data exclusivity periods (i.e.,
less than 8 years) are:

•
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."

Readers
are encouraged to review our prior, more detailed coverage of the paper, letters, and statements described
above.