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Potential Impact on Data Exclusivity: A Necessary Form of IP in a FOB World

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

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Potential Impact on Data Exclusivity: A Necessary Form of IP in a FOB World

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  1. 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

  2. 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

  3. 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 Ben-Maimon, 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.

  4. 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

  5. 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

  6. 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?)

  7. 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

  8. 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)

  9. More Para IV Certifications Data Source:http://www.fda.gov/cder/ogd/ppiv.htm

  10. 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-to-file 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

  11. 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

  12. 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

  13. 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

  14. 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.

  15. 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

  16. Conclusions (2) • Innovators and Follow-On Producers gain from predictability, standardization for FOB FDA science-based 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

  17. 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 Hatch-Waxman wheel re Para IV Certifications • Need to enable an “Innovation Culture;” NOT to perpetuate a “Litigation Culture”

  18. 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

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