Can Data Exclusivity Lead to Immortality?

Despite all the hullabaloo over the healthcare reform bill, there are still some aspects that have not entered public discussion. Or, at least one aspect: data exclusivity for biologics. It’s a lot more interesting than it sounds.

Here is the deal: under the Patient Protection and Affordable Care Act (here and here), pharmaceutical companies are granted 12 years of data exclusivity for new biologics. “Data exclusivity” is patent terminology and refers to protection of not only the drug but also the data. Under data exclusivity, manufacturers of generic drugs are prevented from using the original clinical trial data to support approval of their “biosimilar” (the term for a generic version of a biologic drug).

This provision, occupying its tiny corner of healthcare reform, benefits producers of biologics. Currently, data exclusivity lasts for five years, with an additional three years possible if a new application for the drug is submitted to the FDA (same drug, different indication), and another six months if the drug is approved for the care of children. So the new law gives new biologics at minimum 2.5 years and at most 7 years of additional solo time on the market.

Apparently, the extension puts the U.S. more in line with Europe, where biologics are granted data exclusivity for 10 or 11 years. Makers of generic drugs are not prevented from running their own clinical trials, of course, and submitting their newly generated data to the FDA. And the FDA is free to review whatever new data are submitted – a clinical trial with 10 people could serve as grounds for approval of a generic, as long as no one is secretly taking into account any data from the brand-name drug’s clinical trial. But that’s unlikely to happen. Clinical trials are expensive (in case you hadn’t heard) and finding participants is difficult enough as it is.

Companies that make biologics assert that the additional time is needed in order to guarantee a solid return on their investment. Competition among new compounds is fierce and this provision will, they say, help manufacturers continue to innovate. Generic manufacturers favor a shorter period of data exclusivity, as do many patient advocate groups, who assert that 12 years will keep drug prices too high for too long.

But a new study, published in the January issue of Health Affairs, says that longer data exclusivity will actually benefit patients in the long run. The study, conducted at the University of Southern California, Los Angeles, found that changing the data exclusivity period for biologics from 5 years to 12 years will rake in an additional 5%, on average, of revenue. Taking a somewhat strange leap, the authors assert that because profits drive innovation, that additional 5% of cash will lead to an additional 228 drug approvals over the next 50 years. And – get ready to leap again! – that increased productivity will extend life expectancy by 1.7 months.

You read correctly: extending data exclusivity from 5 years to 12 years will add an additional 1.7 months to human life over the next 50 years. (Which raises the obvious question: if extending data exclusivity for biologics can increase life expectancy, then shouldn’t it just be extended … indefinitely? Which raises the next obvious question: who are they kidding?) (The study authors have ties to industry lobby groups, by the way.)

Seriously: There is another question raised by this issue. Who owns the data? Many clinical trials for biologics are run, in part, by government (ie, taxpayer; ie, you, me, and everyone we know)-funded cooperative groups. And the people participating in those clinical trials are, well, people. This is certainly the case for cancer drug development, fertile ground for biologics. Does human participation and the funding source play a role in considerations of data exclusivity and profit? Informed consent will let trial participants know that the data obtained in a study does not “belong” to them, but can data exclusivity be extended without taking the original participants into account? And how does the data obtained in a clinical trial sponsored, or co-sponsored, by a clinical trial cooperative group end up with super-protected, under-lock-and-key ownership by a pharmaceutical company? I’m not saying it should or shouldn’t, but, well, should it?

Strictly in terms of economics, the extension might benefit the creators of new biologics, and so could be considered one more in a long line of legislative provisions to spur drug development. But it’s a raw deal for generic drug manufacturers. Plus, eliminating that competition might balance out whatever boon that additional 5% might bring. In other words, if a brand-name biologic manufacturer knows that exclusivity is expiring any day now, wouldn’t that spur their drive to create new compounds? It might even go further toward enhancing innovation than that 5% of extra profits.

The topic of legislative measures intended to drive drug innovation is one that we will definitely be returning to – the Orphan Drug Act, the Bayh-Dole Act, and more. There is so much to talk about. But if you can’t wait, read more about it all right now here.

Further Reading:
This provision is P.L. 111-148 in the healthcare bill. You can read the provision and a series of letters between the FDA and Congress about it here.

For a more in-depth discussion (there are other issues here, including the distinction between drugs and biologics), this page is useful.

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