By Kevin E. Noonan —
A debate has begun on the meaning of the term "exclusivity" in the follow-on biologics pathway provisions of the Patient Protection and Affordable Care Act (P.L. 111-148), § 351(k) of the Public Health Service Act, codified at 42 U.S.C. § 262(k)). The debate centers on the availability of innovator drug company data to be used in support of a follow-on biologic drug application. And the consequences of how the Food and Drug Administration interprets the term (or how Congress amends the law to better define it) will impact how quickly follow-on biologic drugs will be available after the twelve-year exclusivity period expires.
The scheme as set forth in the law is simple: the Agency is not empowered to accept a follow-on biologic drug application for four years after the reference drug (the law limits the follow-on biologic to a single reference biologic drug) has been approved under a Biologic License Application (BLA; § 351(k)(7)(B) of the Public Health Service Act, codified at 42 U.S.C. § 262(k)(7(B)). Then, the law specifies that a follow-on biologic drug application cannot be approved until twelve years after first approval of the reference biologic drug (§ 351(k)(7)(A) of the PHSA).
This leaves the question: is the innovator's reference drug data available to the follow-on biologic drug applicant prior to the end of the twelve-year exclusivity period? Innovator drug companies and Members of Congress (from both chambers) have taken the position that the law prescribes "data exclusivity," and that the plain meaning of that phrase is that follow-on biologic drug applicants are not to have access to an innovator's biologic drug data until the twelve year term has expired (see "Senators Let FDA Know Their Intent Regarding Data Exclusivity Provisions of PPACA" and "Representatives Send Letter to FDA to Explain Data Exclusivity Provisions of Biosimilars Legislation"). These MOCs and innovators have taken the position that this is not equivalent to market exclusivity, because the follow-on biologic drug applicant can always submit its own data (as unlikely as such a scenario may be).
The generic drug industry (because, frankly, the follow-on biologic drug industry does not yet exist) has taken the opposite position: that the law prescribes market exclusivity for the innovator, and that once the four-year exclusionary term is over the biologic drug innovator's data should be available to support their follow-on biologic drug applications (see "More on Data Exclusivity"). They are joined in their position by several Senators who disagree with their colleagues, as set forth in yet another letter to FDA Commissioner Margaret Hamburg. In this letter, sent on Monday by Senators Sherrod Brown (D-OH), John McCain (R-AZ), Charles Schumer (D-NY), and Tom Harkin (D-IA), the Senators state that they are "extremely concerned about possible misinterpretations" of the provisions of the follow-on biologics law, which misinterpretations "could further delay the availability of generic biologic drugs, restricting access for many Americans and driving up costs for the Federal government."
They note that biologic drugs are a "new frontier" in medicine and that "half of the sales from the Top 100 medicines in 2014" will be biologic drugs. Citing a Federal Trade Commission report that the annual cost for a "popular biologic [drug] treatment for breast cancer can cost $48,000," they caution that such costs "will continue to be a significant contributor to healthcare costs," both for individuals and the nation as a whole.
They do not state a particular interpretation of the exclusivity term — "data exclusivity" versus "market exclusivity" — but they do encourage the Commissioner to "disregard any interpretation that would result in further delay of the availability of generic biologic drugs." They express concern because "[i]t has recently been brought to our attention that the FDA has received suggested statutory interpretations which, if implemented . . . , could result in generic competition being delayed beyond the 12 year exclusivity period in the statute." The Senators express their version of statutory interpretation by stating that "the statute is clear that the FDA can begin reviewing biogeneric applications during the 12 year exclusivity period" — an outcome that mandates the interpretation that the period between the fourth year and the end of the twelfth year after innovator biologic drug approval is market exclusivity, not data exclusivity.
And they remind the Commissioner that they did not support the twelve-year exclusivity term in the law as it was being debated before passage:
It should be noted that we remain opposed to the 12 years of exclusivity that was granted to protect brand-name biologics from market competition — current law results in limited access for patients who cannot afford these therapies and higher costs for the federal government.
Besides the clear economic parts of this debate and positions taken in service thereof, there is also a policy argument: if the intent of the law was to speed entry into the marketplace of follow-on biologic drugs (like the Hatch-Waxman Act did for generic copies of conventional drugs), then the position taken by these Senators is consistent with that Congressional intent. However, it should be recognized that the Hatch-Waxman Act contained a quid-pro-quo (if not a tit for tat) in that innovator drug companies became entitled under the law to up to five years of patent term extension to make up for regulatory delay. Thus, permitting generic drug companies to have access to innovator data was countered by extending patent term to prevent the generic drug makers from entering the market until either the (extended) patent term expired or they were able to show that the patent(s) protecting the innovator drugs were not infringed, were invalid or were unenforceable. (The negative policy consequences of those provisions have been discussed previously; see "Maybe Hatch-Waxman Data Exclusivity Isn't So Good For Traditional Drugs After All").
There are no such provisions contained in the PPACA; even the convoluted patent enforcement provisions do not provide much solace to innovator biologic drug companies. Thus, the other side of the debate that must be acknowledged is that the exclusivity term significantly affects the likelihood for a positive return on investment for drugs that are recognized by all to be much more complex and expensive to develop and bring to market. Indeed, prior to passage peer-reviewed studies by a leading economist supported a much longer exclusivity term (see "Professor Grabowski's Economic Analysis of Data Exclusivity for Follow-on Biologic Drugs"), and recent studies indicate a longer exclusivity term may be beneficial for conventional drugs (see "Academic Study Supports Longer Data Exclusivity Term for Conventional Drugs"). It cannot be forgotten that in the drive to produce follow-on biologic drugs there must be an innovator drug for the follow-on applicant to copy, and in the absence of these drugs there is no evidence that follow-on biologic drug applicants will become innovators (at least of the experience with generic drug makers can be our guide). Thus, as the FDA considers its policies, and Congress considers whether to modify the law, both sides of the debate must strive for some equipoise. The problems of access to biologic drugs is a real one but one that has alternative (albeit expensive) solutions to diminished exclusivity periods for innovators. But if the solution to this problem is laid solely and exclusively at the doorstep of innovator biologic drug makers, we may face a different and much less easily solved problem: the biotechnology golden goose may be dead, because it may be too expensive to make biologic drugs in the first place. There are no alternative solutions to that problem, and the cost — the human cost — may make the financial costs bemoaned by the Senators pale in comparison.
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