Investment analyst predicts explosive biotech growth

In a recent interview with The Life Sciences Report, a Casey Research analyst likened genetics to other twentieth-century technologies which remained in development for many years but eventually yielded consumer products that are now all but everywhere.

Just as the plasma TV (invented in the 1930s), the LED light (1960s), the industrial robot (also a child of the '60s), the touch-screen interface for computers (early 1980s) and other inventions we think of as thoroughly modern took decades to go from the lab into our everyday lives, it will take considerable time for genetic medicine to fully develop.

When it was first invented in the 1990s, he noted, genetic sequencing was prohibitively expensive and time-consuming, requiring billions of dollars and years to decode a single genome. Today, the same task can be completed in a day and for a few thousand dollars. This, he said, now makes possible the large-scale development and marketing of genetic medicine.

Appeals court upholds California law requiring arrestees to give DNA sample

Last month, the Ninth Circuit Court of Appeals upheld a California law requiring individuals arrested on  suspicion of having committed felonies to provide a DNA sample to the government. Proponents of the law point out that it helps identify criminals by allowing the government to compare the DNA samples it collects from arrestees to other DNA profiles found in criminal databases. Because DNA is unique to every individual, matching DNA profiles can lead to the perpetrators of unsolved crimes.

Critics, however, worry that the law represents an undue intrusion on our privacy. In effect, the law requires individuals to provide a DNA sample even though they may not be convicted of any crime ultimately. The DNA thus obtained is stored in databases accessible to local, state, national, and international law enforcement agencies.

In 2009, the ACLU challenged the law arguing that it was unconstitutional under the Fourth Amendment’s prohibition on unreasonable searches and seizures.

In a 2-1 decision, the Ninth Circuit balanced the government’s interests against those of the individual affected by the law and held that the law did not violate the Fourth Amendment. It explained:

Given the arrestee’s diminished privacy interests; the de minimis nature of the physical intrusion entailed in the taking of a buccal swab; the carefully circumscribed scope of the DNA information being extracted; the stringent limits on the manner in which that information may be used; and the well-established law enforcement interest in obtaining arrestee’s identifying information, and further, to deter future criminal acts and to exculpate innocent arrestees—the balance of interests tilts strongly in favor of upholding the constitutionality of [the law].

The case is significant because it provides an indication on whether similar laws enacted in other states will survive constitutional scrutiny. Last year, New Jersey became the 25th state to have passed a DNA arrestee law. 

Michael Risher, an attorney working for the ACLU said his clients would seek review of the decision by the full Ninth Circuit. 

BIO testifies in support of reauthorization of the Prescription Drug User Fee Act

Testifying before the House Subcommittee on Health on behalf of the Biotechnology Industry Organization, Richard Pops, CEO of Alkermes, called on Congress to reauthorize the Prescription Drug User Fee Act (PDUFA).The PDUFA allows the FDA to collect fees from entities seeking the approval of a new drug or biologic product. It also authorizes fees based on manufacturing facilities and covered products currently on the market. The FDA uses the revenue to fund and expedite the application review process. First enacted in 1992, the PDUFA was reauthorized in 1997, 2002, and 2007. Congress is considering its fifth reauthorization this year.

Pops indicated that since 1992, the user fees prescribed under the PDUFA have reduced the review time for new drugs by more than year. Still, he pointed out that the average time it takes for a treatment to become available to patients from the time of its discovery is 10 to 15 years.

He stated:

In short, BIO supports quick enactment of the PDUFA V recommendations as we believe they can enhance the drug development and review process through increased transparency and scientific dialogue, advance regulatory science, and strengthen post-market surveillance. Most importantly, from the standpoint of young, innovative companies, our hope is that PDUFA V will provide patients and doctors with earlier access to breakthrough therapies.

Pops said that the PDUFA V will make possible the following:

- greater scientific dialogue and transparency between FDA and Sponsors under the proposed review program for novel drugs and biologics;
- enhanced communication during drug development between FDA and Sponsors;
- modernization of regulatory science;
- robust drug safety and post-market surveillance capacity.

In addition, Pops discussed the Best Pharmaceuticals for Children Act (BPCA) and Pediatric Research Equity Act (PREA) which he said "have generated a wealth of pediatric drug information for physicians and parents, contributing to improved health outcomes for pediatric patients." He called on Congress to "(1) reauthorize the existing framework and incentive for ongoing pediatric research and (2) make the programs permanent by eliminating their sunset provisions."

As reported in Genetic Engineering & Biotechnology News, FDA Commissioner Margaret A. Hamburg has also called on Congress to approve the fifth authorization of the PDUFA.

FDA drug safety decision may have been influenced by big pharma

The Project on Government Oversight (POGO) reports that big pharmaceutical companies may be having an undue influence over the Federal Drug Administration (FDA), raising doubts over the agency's drug safety determinations.

On December 8, 2011, an FDA panel of medical experts held a vote on the relative safety of two best-selling contraceptive pills manufactured by Bayer. Asked whether a panelist's ties to Bayer had "affected her judgment in any way regarding her vote," a spokesman replied "no comment."

Two other panelists had prior ties to Bayer but claimed that their vote was unbiased.

Under consideration were two contraceptives named Yaz and Yasmin containing the synthetic hormone drospirenone. The panel concluded that the risks of taking the contraceptives did not outweigh their benefits in a 15 to 11 vote.

The FDA panel did not take into account, however, an internal Bayer document revealed in litigation against the company showing that one of the contraceptives had a rate of serious "adverse events" that was "10 fold higher than other contraceptives."

Overall, POGO found that four out of twenty-six voting panelists had prior relationships with Bayer or a generic company that markets a generic equivalent of the Bayer contraceptives. All four voted in favor of Bayer contraceptives.

The four panelists disclosed their links but the FDA did not object to their participation on the panel. Based on the panel's deliberations, POGO concluded that there was "no indication that fellow panelists were ever aware of these links as the group spent hours deciding how to deal with the well-documented risks associated with Yaz, Yasmin, and related drugs."

Legal, social, and ethical issues raised by whole genome sequencing

Using whole genome sequencing (WGS), scientists are able to describe an individual's entire genome on a molecular level.  In 1-4 years, it is expected that WGS will cost as little as $1,000, an impressive advancement given that it cost $100 million to complete the sequencing of the first human genome in 2000.

In last fall's briefing of the ABA Biotechnology Law Committee, Gary Merchant and Rachel Lindor of the Sandra Day O'Connor College of Law, discuss the legal, social, and ethical issues that WGS implicates.

The authors believe that WGS will soon bring about a genomic revolution that will have a significant impact on how we treat human disease.

The issues they identify are the following:

- whether the patents currently covering 4000 human genes will impede WGS (for an argument that this is unlikely, see this post);
- the difficulty of obtaining informed consent from research participants because of the complexity of genetic information and the potential scope of findings;
- whether findings incidental to the original purpose of a WGS should be revealed to the patient;
- how to maintain the confidentiality of the genetic information revealed and protect the patient's privacy;
- whether WGS should be conducted in non-CLIA certified labs;
- whether the FDA should pass regulations permitting only physicians to request WGS;
- liability issues in product liability and toxic tort cases and in cases against physicians;
- social and ethical issues related to predicting an individual's predispositions and predilections.

White House launches initiatives to spur biotech innovation, receives input from stakeholders on National Bioeconomy Blueprint

On September 16, 2011, the same day that President Obama signed the America Invents Act, the White House released the following inititatives which it hopes will "move ideas from the lab to market":

Launch of new National Institutes of Health (NIH) center to assist biotech entrepreneurs: To help industry shorten the time needed and reduce costs for the development of new drugs and diagnostics, the NIH plans to establish a new National Center for Advancing Translational Sciences (NCATS). NCATS aims to help biomedical entrepreneurs by identifying barriers to progress and providing science-based solutions to reduce costs and the time required to develop new drugs and diagnostics. For example, as one of its initial activities, NCATS will partner with DARPA to support development of a chip to screen for safe and effective drugs far more swiftly and efficiently than current methods.

Development of a National Bioeconomy Blueprint: By January 2012, the Administration will develop a Bioeconomy Blueprint detailing Administration-wide steps to harness biological research innovations to address national challenges in health, food, energy, and the environment. Biological research lays the foundation of a significant portion of our economy. By better leveraging our national investments in biological research and development the Administration will grow the jobs of the future and improve the lives of all Americans. The Blueprint will focus on reforms to speed up commercialization and open new markets, strategic R&D investments to accelerate innovation, regulatory reforms to reduce unnecessary burdens on innovators, enhanced workforce training to develop the next generation of scientists and engineers, and the development of public-private partnerships. 

University Presidents Commit to Commercialization Initiative: In coordination with the Administration, the Association of American Universities, and the Association of Public and Land-grant Universities, 135 university leaders committed to working more closely with industry, investors, and agencies to bolster entrepreneurship, encourage university-industry collaboration, and enhance economic development. Today, over 40 universities are answering the President’s call to expand their commercialization programs and goals. These institutions include The Georgia Institute of Technology, which has outlined its expanded initiatives, as well as universities like the University of Virginia and Carnegie Mellon University, which are announcing plans today. 

Coulter Foundation and NSF Launch a University Commercialization Prize with AAAS: This prize competition will be used to identify and promote incentives to adopt best practices that improve university commercialization efforts. Supported by $400,000 in funding from the Wallace H. Coulter Foundation and NSF, the American Association for the Advancement of Science (AAAS) will lead the design and implementation of the prize in coordination with a diverse array of partner agencies, foundations, and organizations. 

Developing University Endowments Focused on Lab to Market Innovations: Today, the Coulter Foundation is announcing that they have selected four new universities to participate in their Translational Research Partnership program -- Johns Hopkins University, University of Louisville, University of Missouri and University of Pittsburgh. As part of the program, each university will create a $20 million endowment to foster research collaboration between biomedical engineers and clinicians, with the goal of developing new technologies to improve patient care and human health. Translational research moves new ideas and discoveries from university laboratories to new products and services that directly impact human health, often by creating startups or by partnering with established businesses. 

New Tools and License Agreements for Start-Ups and Small Businesses: The National Institutes of Health (NIH) Office of Technology Transfer has developed new agreements for start-up companies obtain licenses for early-stage biomedical inventions developed by intramural researchers at NIH or FDA. Companies that are less than 5 years old and have fewer than 50 employees will be eligible to use the new, short-term exclusive Start-Up Evaluation License Agreement and the new Start-Up Commercial License Agreement. These agreements allow a start-up company to take ideas sitting on the shelf, and attract additional investments to develop these NIH and FDA inventions into life-saving products. 

New Help for Small Businesses: In addition, the USPTO, in collaboration with NSF and SBA, will pilot a program to assist SBIR grant recipients in taking advantage of the USPTO’s small business programs and resources. The USPTO pilot will provide comprehensive IP support to, initially, 100 NSF SBIR grant recipients to take advantage of accelerated examination and benefits stemming from the America Invents Act and will engage external stakeholders to provide pro bono or low cost IP services to awardees.

BIO applauded the effort, saying it will support biotech research and development.

The Office of Science and Technology Policy (OSTP) at the White House issued a Request for Information soliciting input from interested parties on ways to develop the National Bioeconomy Blueprint. Between October 7 and December 6 of this year, OSTP received 134 submissions in response to the RFI.

Ninth Circuit okays sale of some blood stem cells despite National Organ Transplant Act

In an opinion filed on December 1, 2011, the Ninth Circuit held that the National Organ Transplant Act (NOTA) does not prohibit compensation for blood stem cells obtained through a procedure known as peripheral apheresis because it does not involve actually taking bone marrow from the donor.

The plaintiffs in this case include parents of sick children who have diseases such as leukemia, a physician and medical school professor, a parent of mixed race children for whom it is very rare to find matching donors, an African-American man suffering from leukemia, and a California non-profit organization seeking to operate a program incentivizing bone marrow donations through its website called MoreMarrowDonors.org. They challenged the constitutionality of NOTA's ban on compensation for bone marrow donations. Specifically, they argued that cells extracted through "peripheral blood stem cell apheresis," a relatively new method that avoids the need to invade the donor's bone for marrow, should not be prohibited.


Blood stem cells, also known as hematopoeitic stem cells, are non-pulripotent stem cells which can differentiate into white blood cells, red blood cells, and platelets. 


The older method consisted of extracting bone marrow from the donor by inserting long needles into the donor's hip bones. This transplantation by "aspiration" is painful, involves risks, and requires the hopitalization of the donor. 


The complaint explained that peripheral blood stem cell apheresis, which was developed after the enactment of NOTA, avoids the difficulty, pain, and potential risks associated with transplantation by aspiration.

While most blood stem cells mature into blood cells in the bone marrow, some circulate in the bloodstream before they mature, in which case they are referred to as "peripheral" blood stem cells. The new transplantation technique injects the donor with a medication to increase blood stream cell production and then extracts blood from the donor's veins without sedatives or anesthesia. Next, blood is filtered in an apheresis machine to separate stem cells from mature blood cells which are returned to the donor's blood stream. Complications are exceedingly rare and the extracted stem cells are replaced by the donor's bone marrow in three to six weeks. To a large extent, peripeheral stem cell apheresis is very similar to an ordinary blood donation.

Unlike mature blood cells which exist in just four types, there are millions of blood stem cell types, making it very difficult to find matching donors.

The plaintiff nonprofit would like to mitigate the matching problem by providing financial incentives to donors in the form of scholarships, housing allowances, or gifts to charities of the donor's choice. It plans to focus initially on minorities and mixed race donors because their blood stem cells are rarer.

However, the government's position has been that NOTA prohibits compensation for all blood stem cell donations.

NOTA makes it a crime punishable by up to five years in prison "for any person to knowingly acquire, receive, or otherwise transfer any human organ for valuable consideration for use in human transplantation if the transfer affects interstate commerce." 42 U.S.C section 274e(a).  It defines a human organ as "the human kidney, liver, heart, pancreas, bone marrow, cornea, eye, bone, and skin, and any other human organ specified by the Secretary of Health and Human Services by regulation." 42 U.S.C. section 274e(c).

The plaintiffs argued that NOTA, as applied to MoreMarrowDonors.org, violates the Equal Protection Clause because there is no rational basis supporting the differential treatment of blood stem cells on the one hand, and blood, sperm, and eggs, on the other. (NOTA does not prohibit compensation blood, sperm, or egg donations.) They pointed out that, like blood, sperm, and egg donors, blood stem cells donors undergoing peripheral apheresis suffer no permanent harm, experience no significant risks, and quickly regenerate what is donated.

The district court dismissed for failure to state a claim upon which relief may be granted.

On appeal, the government reiterated that compensation for blood stem cell donations is prohibited because NOTA classifies "bone marrow" as an organ under 42 U.S.C. section 274e(c)(1).

The court first discussed bone marrow transplants by aspiration because the plaintiffs' complaint appeared to argue that all prohibitions on compensation for bone marrow transplants are unconstitutional. It held that the plaintiffs' challenge must fail with respect to the old aspiration method.

The court rejected a distinction based on the human tissue's capacity to regenerate. The distinction, it explained, cannot be sustained because Congress chose to include liver in NOTA's definition for "human organ" even though it must have known that human livers are capable of regenerating.  

As to the question of whether there was a rational basis for prohibting compensation for the transplantation of certain human tissues and not others, the court identified two considerations. First, Congress could have been concerned about the policy implications in so far as compensation could produce a situation where poor people are pressured into selling their organs to rich patients. Compensation could also lead, the court said, to a degradation in the quality of organ supply if donors lied about their medical histories in order to make their organs more marketable.

Second, Congress also could have been swayed by philosophical reasons such as the widespread revulsion against the commodification of human flesh.

In sum, Congress had a rational basis for making only certain human tissue donations compensable.

The court then turned to bone marrow transplants through apheresis. Here, the court sidestepped the constitutional issue by focusing instead on statutory interpretation. (Under the doctrine of constitutional avoidance, courts try to resolve cases on non-constitutional grounds whenever possible.) It explained that NOTA did not prohibit blood stem cell donations through the apheresis method because "none of the soft, fatty marrow is donated, just cells found outside the marrow, outside the bones, flowing through the veins."

On this point, the government's argument was that NOTA's prohibition applies because blood stem cells should be treated as a subpart of "bone marrow" and because NOTA not only prohibits compensation for trasnplant of an organ, but aslo "any subpart thereof." The court rejected this argument because if accepted it would have also prohibited compensation for ordinary blood donations since mature blood cells are also "subparts" of bone marrow.

The court added that the government's argument went against the ordinary meaning of "bone marrow." Blood stem cells are subparts of blood, not bone marrow because "the word 'subpart' refers to the organ from which the material is taken, not the organ in which it was created."

Thus, because it does not prohibit compensation for blood donations and the substances in it, NOTA does not prohibit compensation for blood stem cell aphoresis.

Writing for the New England Journal of Medicine, Harvard University assistant law professor Glenn Cohen says the Ninth Circuit's decision represents both a win and a loss for advocates of organ markets. Although patients will now be able to buy and sell peripheral-blood stem cells derived through aphoresis, Congress may at any time amend NOTA and put an end to the practice because the Ninth Circuit's ruling was based on statutory interpretation.

Gene patents won't impede whole genome sequencing, law professor says

In a working draft titled "Will Gene Patents Impede Whole Genome Sequencing?: Deconstructing the Myth that 20% of the Human Genome Is Patented," University of Missouri associate professor of law Christopher Holman argues that the fear that gene patents will have a substantial negative effect on genetic testing is unfounded.

Holman takes as a backdrop to his discussion the case of Association for Molecular Pathology v. PTO where, during oral arguments at the Federal Circuit, Judge Bryson asked the patentee's attorney whether the patent would be infringed by the sequencing of an individual's genome. Underlying that concern was the widespread belief that 20% of the human genome is patented, which Holman traces to a study by Jensen and Murray published in 2005. Holman deconstructs that study and explains that there is no evidence supporting its conclusion.

The Jensen and Murrary study, Holman points out, was not based on patents claiming human genes. Rather, it considered issued US patent in which a human gene sequence, or the protein enoded by a human gene sequence, was merely mentioned.

Upon reviewing a random group of the gene patents used in the Jensen and Murray study (533 out of 4270), Jensen found that many would not be infringed by DNA sequencing and few, if any, include "claims that a court would necessarily find valid and infringed by all forms of DNA sequencing."

Holman explains that patent claims covering isolated forms of DNA molecules are unlikely to be construed broadly because if they were, they would facilitate invalidity attacks based on the novelty, written description, or enablement requirement.

In addition, sequencing may avoid infringement based on the differences between cDNA and genomic DNA. Most gene patents are based on the isolation and sequencing of cDNA. Genomic DNA, however, contains introns which would be present when a genome is sequenced thereby avoiding infringement.

DNA sequencing technology also usually avoids infringement because it does not involve isolating the full-length gene. Rather, only fragments of the full-length gene are physically sequenced and then pieced together.

Holman concludes that the Jensen and Murray study provides no basis to infer that 20%, or any defined percent of human genes, are covered by patents that would be infringed in the course of gene sequencing.

CRS report discusses role of trade secret law in innovation policy

Primarily a creature of state law, a trade secret refers to commercially valuable information the owner of which has taken reasonable efforts to keep secret. The misappriopriation of trade secrets is a tort and may result in compensatory and punitive damages. Common examples of trade secrets include, chemical formulae, manufacturing techniques, customer lists, marketing strategies, and sales techniques.

The value of trade secrets owned by publicly traded US companies has been estimated at five trillion dollars.

A Congressional Research Service (CRS) report from last year notes that the rise of computer technology has made it more difficult for owners to maintain the confidentiality of their proprietary information. Today, the United States is the main target of foreign economic and industrial espionage. In fact, the Office of the National Counterintelligence Executive, in a report titled Foreign Spies Stealing US Economic Secrets in Cyberspace, accuses China and Russia of engaging in online espionage against the United States for economic advantage.

Trade secrets and patents form alternative types of intellectual property. As the report points out, an inventor must decide whether to keep the invention as trade secret, obtain a patent, or disclose and allow it to enter the public domain. One factor influencing this decision is whether the technology can be copied easily in which case it cannot be kept secret, and hence not the proper subject of a trade secret. Other factors include the costs associated with obtaining and maintaining a patent, the time required to obtain a patent, and the limited duration of patent rights.

More generally, trade secret protection implicates competing policy considerations. The report explains,

The availability of legal protection for trade secrets potentially promotes innovation, encourages firms to invest in employee development, and confirms standards of commercial ethics and morality. On the other hand, trade secret protection involves the suppression of information, which may hinder competition and the proper functioning of the marketplace. An overly robust trade secret law also could restrain employee mobility and promote investment in costly, but socially inefficient security measures.

Congress has legislated on trade secrets to a limited extent only. A federal statute enacted in 1996, the Economic Espionage Act, makes it a crime to misappropriate a trade secret under certain circumstances.

On the question of the federalization of trade secret law, the report cites arguments in favor for and against. Arguing in favor, some commentators point out that some state trade secrets laws place the United States in violation of its obligations under the NAFTA and TRIPS agreements which call on their member states to provide certain levels of trade secret protection. Those against the enactment of a federal trade secret law contend that it raises federalism concerns and might create additional, unnecessary burdens and costs on the federal judiciary.

Obama proposes plan to ban pay-for-delay agreements, cut exclusivity period for biologics to 7 years

Noting the spiraling costs of health care ($2.6 trillion in 2010, or 17.6 percent of US GDP) and the pressing need to reduce the national deficit, the Obama Administration recently submitted a Plan for Economic Growth and Deficit Reduction (the Plan) that seeks to cut federal spending on health care.

The Plan mainly takes aim at the Medicare and Medicaid programs but also calls for significant regulatory changes in the pharmaceutical and biotech industries. It proposes a prohibition on "pay-for-delay" agreements and a reduction of the exclusivity period for generic biologics from 12 to 7 years.

Prohibition on "pay-for-delay" agreements

The Plan seeks to increase the availability of generic drugs and biologics by granting the Federal Trade Commission (FTC) the power to prevent companies from entering into so-called "pay-for-delay" agreements. "Pay-for-delay" agreements refer to deals in which brand-name pharmaceutical and biotech companies pay generic competitors to delay the entry of their products onto the market for a certain period of time.

In support, the Administration cites a 2010 FTC study finding that "pay-for-delay" agreements delayed entry of a generic by 17 months on average and cost American consumers as much as $3.5 billion per year.

Under the Hatch-Waxman Act, a generic competitor can obtain FDA approval to market its generic drug before the expiration of a brand-name company's patents provided that the generic competitor can show that its product does not infringe the relevant patents or that the relevant patents are invalid. In patent litigation lawsuits brought against generic competitors, brand-name companies attempt to prevent FDA approval of the generic by arguing that it would infringe their patents. A 2002 FTC study, however, showed that in 73 percent of such cases, courts ruled in favor of generics. Given the costs and uncertainty of litigation, brand-name companies often prefer to settle with the competitor in exchange for delaying entry of the generic onto the market.

In light of the antitrust issues presented, Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) requiring pharmaceutical companies to file certain agreements with the FTC and the Department of Justice within ten days of their execution.

The FTC's 2010 study is based on the agreements filed between 2004 and 2009. During that period, 66 agreements involved some form of compensation from the brand to the generic company combined with a delay in generic entry. Out of these, 51 (77 percent) were between the brand pharmaceutical company and the generic company that was the first to seek entry prior to patent expiration for the relevant brand-name drug. Settlements with first-filers delays the entry of all generics because other generic competitors cannot enter until the first-filer's product has been marketed for 180 days.

The 2010 study also points out that in 2003, the Sixth Circuit held such agreements to be per se illegal in Cardizem CD Antitrust Litigation, 332 F.3d 896, but the Second, Sixth, and Federal Circuits subsequently have upheld them.

Many of these agreements are still in effect. Together they protect at least $20 billion in sales of brand-name pharmaceuticals from generic competition.

The study concluded:

Given the magnitude of consumer harm from pay-for-delay settlements - an estimated $35 billion over the next ten years - a legislative solution offers the quickest and clearest way to deter these agreements and obtain the benefits of generic competition for consumers. 

It should be noted that the study was based only on pharmaceuticals because prior to the Biologics Price Competition Act (BPCA) that was passed as part of the Affordable Care Act of 2010, there was no mechanism for biologics to obtain FDA approval as generic-type products based on brand-name reference biologics. (Under the BPCA, a generic-type biologic is called a "follow-on" biologic.) Modeled after the Hatch-Waxman Act, the BPCA provides such a mechanism by creating an abbreviated approval pathway for a follow-on biologic provided that it can be shown to be "biosimilar" to or "interchangeable" with an FDA-licensed reference biologic.

Presumably, the Administration's position is that a prohibition of "pay-for-delay" agreements would also benefit consumers by promoting competition in the biologics market.

Exclusivity period

Like the Hatch-Waxman Act, the BPCA defines an exclusivity period during which a brand-name biologic is protected from competition. During that period, a competitor may not seek approval of its product based on the clinical and non-clinical data generated by the brand-name manufacturer. Faced with the high costs of producing original data, competitors are dissuaded from entering the market altogether. The BPCA sets the exclusivity period at twelve years. This period is significantly longer than the one provided to pharmaceuticals, which the Hatch-Waxman Act sets at 5 years.

In the Plan, the Administration seeks to reduce the exclusivity period to seven years believing that it "will encourage faster development of generic biologics while retaining appropriate incentives for research and development." In addition, the Plan would prohibit "evergreening"; the process through which brand-name manufacturers are awarded additional exclusivity periods based on minor changes in product formulation. The Administration says that the proposal will result in $3.5 billion in savings over 10 years.

Prior to the enactment of the BPCA, a lively debate took place as to the appropriate duration of the FDA period of data exclusivity for biologics. The Obama Administration argued that 7 years was sufficient but Congress ultimately went with 12. The reason for providing biologics with a significantly longer period of data exclusivity than pharmacauticals was based on the assumption that the patent system was not sufficiently protective of biotechnology innovations and, as a result, did not provide time for innovators to recoup their substantial expenditures in research and development.

Industry response

Unsurprisingly, the pharma and biotech industries have voiced their strong opposition to the measures proposed in the Plan.

Seeking Alpha reported that Jim Greenwood, CEO of the Biotechnology Industry Organization, the world's largest biotech organization, said, "A reduction of the exclusivity period will jeopardize the careful balance established in the biosimilars pathway to reduce costs, ensure patient safety, and encourage continued biotechnology innovation."

PhRMA, which represents leading US pharmaceutical research and biotech companies, also criticized the President's Plan stating that "reducing the 12 years of data protection that was approved in strong, bipartisan votes by Congress ... would seriously jeopardize innovative companies' ability to fund research on future treatments and cures. If the proposal were successful, the U.S. would then provide less data protection for new, innovative biologics that is currently bestowed in Europe."