Policy Spotlight: Follow-On Biologics

Policy makers in Washington, D.C. are currently working on developing a pathway for follow-on biologics (also known as “FOB’s” or “biosimilars”) in the United States. Biologic drugs are more complex than small molecule pharmaceutical products; as such, the regulatory process for approving a follow-on product (what is referred to as a “generic” for small molecule drugs) is necessarily more stringent as a follow-on producer would not have access to the pioneer product company’s molecular cell bank, nor their fermentation and purification processes. Thus, unlike generic versions of traditional drugs, the follow-on product will be “similar,” but never an exact replica of the pioneer product.

This has serious policy implications for implementing a pathway for biosimilars. Regulation of FOB’s needs to be mindful that the variations from the pioneer product can have serious health implications in patients; therefore follow-on products need to be subject to scientific scrutiny before entering the marketplace to ensure patient safety. Additionally, while patent protections are sufficient to protect the intellectual property of pioneer product manufacturers for small molecule drugs under a generics regime, pioneer biologics products would enjoy less patent protections under a follow-on regime where such products are similar to, but not the same as, the innovator product.

Let’s look at the rules for small molecule drugs. Generic small molecule products can enter the marketplace after the patent on the pioneer product has expired. This was established in the 1984 Hatch Waxman Act, which, through a combination of patent extensions and data exclusivity granted pioneer manufacturers at least five and up to 14 years of protections on their innovator products. Generic manufacturers, after the five years of data exclusivity expires, can use patented drug information to prepare their own Food and Drug Administration (FDA) applications prior to the expiration of the pioneer product’s patent rights.

In the current debate over a regulatory pathway for biosimilars, the issue of data exclusivity has taken center stage. As mentioned above, follow-on biologics would likely not be subject to the patent protections afforded a pioneer product due to the fact that they are by definition similar products, but not exact replicas. For pioneer product manufacturers to protect their investment in research and development, it is important that sufficient data exclusivity is provided to ensure that they will enjoy the same effective protection on their therapies as exist in the small molecule market.

The European Union has had a pathway for biosimilars since 2005. Under the EU’s rules, biologic drugs enjoy 10 years of data exclusivity and may gain an additional year at the end of that period for new indications for a treatment, for a total of 11 years of data exclusivity. In the 111th Congress, two major pieces of legislation have emerged addressing the issue: H.R. 1427 by Rep. Henry Waxman (D – Calif.) and H.R. 1548, also known as the “Pathway for Biosimilars Act,” by Rep. Anna Eshoo (D – Calif.), Jay Inslee (D-WA) and Joe Barton (R-TX).

Chairman Waxman’s bill provides only three years of data exclusivity, with an additional two years available for a product that is a substantially new molecule (although “substantially new” is not defined in the bill.) The Eshoo/Inslee/Barton bill offers 12 years of data exclusivity, with an additional two years available for new indications. The life sciences industry has argued that the longer data exclusivity period is necessary if companies are to remain viable targets for venture capital investment.

Deloitte released a paper, “Avoiding no man's land: Potential unintended consequences of follow-on biologics,” discussing the importance of data exclusivity periods in any pathway for biosimilars in the United States in April. Several governors, including California Governor Arnold Schwarzennegger (R–Calif.), have issued letters of support for Eshoo’s bill. Within the Congress, Eshoo has amassed 101 co-sponsors for her legislation, versus 12 co-sponsors for the Waxman approach.

Yet, there are still substantial push back against the longer data exclusivity window. The Federal Trade Commission (FTC) issued a report last week that questions the need for extensive data exclusivity periods for follow-on biologics. The report stated that, “a 12 to 14-year exclusivity period is unnecessary to promote innovation by pioneer biologic drug manufacturers,” which is the period of time allowed for data exclusivity in Eshoo’s bill. However, FTC Commissioner Pamela Jones Harbour was subjected to critical bi-partisan questioning during a hearing on the report held by the House Energy and Commerce Health Subcommittee, chaired by Rep. Frank Pallone (D-NJ). Pallone, interestingly, is a co-sponsor of the rival bill authored by Waxman that affords only five years of data exclusivity.

The bottom line remains that the life sciences industry will only be able to attract venture capital if investors are confident that the intellectual property attached to the investment is protected. Without appropriate and sufficient data exclusivity for follow-on biologics, the effective intellectual property protections for pioneer products will be curtailed dramatically. Congress should follow Europe’s lead and create a pathway for biosimilars that protects patient health and safety, promotes cost competition, and maintains the United States’ competitive edge for biotechnology research and development.

CHI-Advancing California biomedical research and innovation