Biologics Exclusivity and Trade
The Trans-Pacific Partnership (TPP) agreement has engendered debate with the pharmaceutical industry as the industry weighs in on data exclusivity provisions for biologics, an important consideration in US-based policy on biologics and biosimilar development and commercialization. DCAT Value Chain Insights (VCI) takes an inside look.
Both the Pharmaceutical Research and Manufacturers of America and the Biotechnology Industry Organization have voiced criticism over the negotiation process for TPP for not including 12 years of data protection for innovator biologics. The Generic Pharmaceutical Association has supported TPP. So how will TPP impact the pharmaceutical industry?
A review: TPP
On October 5, 2015, the United States joined 11 nations (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) that make up the Trans-Pacific Partnership (TPP) and completed negotiations on a trade agreement. The agreement covers more than 40% of global gross domestic product (GDP). The TPP includes 30 chapters covering trade and trade-related issues, beginning with trade in goods and continuing through customs and trade facilitation; sanitary and phytosanitary measures; technical barriers to trade; trade remedies; investment; services; electronic commerce; government procurement; intellectual property; labor; environment; ‘horizontal’ chapters meant to ensure that TPP fulfils its potential for development, competitiveness, and inclusiveness; dispute settlement, exceptions, and institutional provisions, according to information from the Office of the US Trade Representative. In addition to updating traditional approaches to issues covered by previous free trade agreements (FTAs), the TPP incorporates new and emerging trade issues and cross-cutting issues. These include issues related to the Internet and the digital economy, the participation of state-owned enterprises in international trade and investment, the ability of small businesses to take advantage of trade agreements, and other topics.
According to the Office of the US Trade Representative, TPP has five defining features make the TPP a key trade agreement: comprehensive market access, a regional approach to commitments, addressing new trade challenges, inclusive trade, and a platform for regional integration. The TPP eliminates or reduces tariff and non-tariff barriers across substantially all trade in goods and services and covers the full spectrum of trade, including goods and services trade and investment. The TPP facilitates the development of production and supply chains, and seamless trade, enhancing efficiency and supporting a goal of creating and supporting jobs, raising living standards, enhancing conservation efforts, and facilitating cross-border integration, as well as opening domestic markets. The TPP also addresses new trade issues, including the development of the digital economy and the role of state-owned enterprises in the global economy. The TPP includes commitments to help small- and medium-sized businesses understand the agreement, take advantage of its opportunities, and bring their unique challenges to the attention of the TPP governments. It also includes specific commitments on development and trade capacity building, to ensure that all parties are able to meet the commitments in the agreement and take full advantage of its benefits. The TPP is intended as a platform for regional economic integration and designed to include additional economies across the Asia-Pacific region.
A pharmaceutical industry review
One of the contested issues in TPP for the pharmaceutical industry relates to the provisions protecting intellectual property (IP). TPP’s IP chapter covers patents, trademarks, copyrights, industrial designs, geographical indications, trade secrets, other forms of intellectual property, and enforcement of intellectual property rights, as well as areas in which parties agree to cooperate, according to information from the the Office of the US Trade Representative. The IP chapter is intended to make it easier for businesses to search, register, and protect IP rights in new markets. The chapter establishes standards for patents, based on the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) and international best practices. On trademarks, it provides protections of brand names and other signs that businesses and individuals use to distinguish their products in the marketplace. The chapter also requires certain transparency and due process safeguards with respect to the protection of new geographical indications, including for geographical indications recognized or protected through international agreements. These include confirmation of understandings on the relationship between trademarks and geographical indications, as well as safeguards regarding the use of commonly used terms.
In addition, the chapter contains pharmaceutical-related provisions that address the development of innovator drugs and the availability of generic medicines, taking into account the time that various parties may need to meet these standards. The chapter includes commitments relating to the protection of undisclosed test and other data submitted to obtain marketing approval of a new pharmaceutical or agricultural chemicals product. It also reaffirms the parties’ commitment to the WTO’s 2001 Declaration on the TRIPS Agreement and Public Health, and in particular confirms that parties are not prevented from taking measures to protect public health, including in the case of epidemics such as HIV/AIDS.
The specific provisions in TPP that have engendered the greatest debate relate to the length of time covered for data exclusivity for innovator drugs. Although the official text of TPP is not available, published reports indicate that TPP specifies between five to eight years of data exclusivity compared to US policy of having 12 years of data exclusivity.
Both the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Industry Organization (BIO) have expressed concern over this change. “PhRMA believes that strong intellectual property protection is necessary for the discovery and development of new treatments and therapies for the world’s patients, said PhRMA President and CEO John Castellani in a statement issued October 5, 2015. “We are disappointed that the Ministers failed to secure 12 years of data protection for biologic medicines, which represent the next wave of innovation in our industry. This term was not a random number, but the result of a long debate in Congress, which determined that this period of time captured the appropriate balance that stimulated research but gave access to biosimilars in a timely manner. While we await the final details, it appears that the Ministers missed the opportunity to encourage innovation that will lead to more important, life-saving medicines that would improve patients’ lives.”
BIO voiced a similar concern. “We are very disappointed in reports from Atlanta that suggest Trade Ministers have failed to include 12 years of data exclusivity for biologics in the Trans-Pacific Partnership (TPP) agreement,” said BIO President and CEO Jim Greenwood in an October 4, 2015 statement. “BIO strongly believes that 12 years of data exclusivity is a prerequisite to attract the investment required to continue medical innovation and develop new biological cures and therapies. The current 12-year period of exclusivity in the United States was carefully crafted by a bi-partisan majority of the Congress after a thorough and thoughtful debate and deliberation. The Congress set 12 years as the appropriate period to both foster innovation and provide access to biosimilars in a reasonable timeframe. While the TPP agreement will not impact the US data protection period, we believe the failure of our Asian-Pacific partners to agree to a similar length of protection is remarkably short-sighted and has the potential to chill global investment and slow development of new breakthrough treatments for suffering patients. We will carefully review the entire TPP agreement once the final text is released by the Ministers, and will consult closely with the administration and leaders in Congress as the process moves forward.”
While the innovator drug industry has voiced disappointment with the TPP agreement, the generic drug industry has been supportive of the agreement. “The Generic Pharmaceutical Association (GPhA) and its Biosimilars Council strongly support efforts to improve worldwide patient access to affordable medicines. We are optimistic that the agreement announced today [October 5, 2015] on the Trans-Pacific Partnership (TPP) brings us closer to achieving that goal by embracing competition from safe, effective biosimilar therapies,” said GPhA President and CEO in an October 5, 2015 statement in commenting on the TPP agreement. “Trade provisions that facilitate both the development of innovative, life-saving medicines and the availability of affordable generic medicines are a win for patients. We applaud the United States Trade Representative (USTR) and negotiating countries for working diligently in an effort to strike this balance. GPhA and its members will continue to work with the USTR on the technical details of the final TPP to ensure that it promotes patient health and economic growth. The TPP presents an unprecedented opportunity to usher in a new era of global trade, patient access and health savings. We look forward to working with Congress and the Administration to make this historic agreement a reality.”
A recent analysis of TPP by the Brookings Institute points out that for the 11 countries besides the United States that are involved in the TPP, current data exclusivity protections range from zero (Brunei) to eight years (Japan). The 12-year data exclusivity provisions under US regulation were established as part of an abbreviated regulatory approval process for biosimilar products. This regulatory pathway, established in the Biologics Price Competition and Innovation Act (BPCIA), authorizes the FDA to approve a biosimilar product that references an earlier approved innovative biological product after a set period of time post innovator approval 12 years.
In a white paper, BIO outlined the value of retaining the 12-year data exclusivity provisions as part of TPP, particularly in reference to the unique position for biologics. For small molecule products, the period of data protection, five years in the United States, is less important than for biologics because the regulatory approval standard for generics requires a generic to have the identical active ingredient. “This requirement allows for patents to predictably provide effective market exclusivity – that is, patents on the innovator’s product will cover the generic product as well,” said BIO in its white paper. “In addition, the US HatchWaxman Act provides patent term restoration to compensate new drug and biologic developers for periods of lost effective patent life consumed by the regulatory approval process. Through term restoration, a patent covering the product or its use or manufacture may be extended up to 14 years post-FDA approval. Thus, studies show that the interplay of these extended patent rights and the stringent regulatory standard for approval of generics combine to provide innovator products protection against premature generic competition for, on average, 12 years.”
In its white paper, however, BIO noted that the regulatory approval standard for a biosimilar product does not require identity with the innovator product it references, which creates a potential “patent protection gap” that without an extended period of data protection could create a situation in which it is possible to rely on the innovator’s regulatory approval while eluding an innovator’s patents. Data protection refers to a period of time during which a follow-on manufacturer referencing an innovator product cannot rely on the earlier approval of an innovator biological product to obtain regulatory approval. “Data protection essentially serves as a temporary ban on free-riding on the efforts of the first company that undertook the task of discovering, developing and clinically testing the new biologic product,” outlined BIO in its white paper. “Importantly, data protection does not confer market exclusivity for the innovative biological product – it simply prevents reliance by another company on the earlier approval of the innovator’s product for a defined period of time.Other entities may conduct their own, independent clinical testing of their products, and gain market entry (subject to patent rights) for those products, at any time.”