David E. Adelman of the University of Texas School of Law and Christopher M. Holman of the University of Missouri – Kansas City School of Law recently published analysis on the “sideshow” of the data exclusivity debate in Washington.
Adelman and Holman use a cost-benefit analysis that incorporates the most important legal precedents and case law today in concluding that “policymakers should focus on mitigating the systematic barriers to entry that pose much greater and longer-term obstacles to lower-cost biotech drugs.” Specifically, the draft paper provides solid analysis of the need for 12-year data exclusivity, which the authors describe as a right balance between providing access to important medicines to patients, and creating the incentives needed for investors and companies to prepare (and survive) the regulatory approval process for follow-on biologics.
Much like tort reform, the debate over pending legislation on biotech drugs—and particularly regulatory supplements to patent protection—has taken on a significance that dwarfs its impact on overall health care expenditures. Under the pending Health Care Reform legislation, Congress would enact two major reforms: First, creation of an abbreviated Food and Drug Administration (FDA) approval process for follow-on biologics, which are the analogues of generics for conventional drugs. Second, establishment of a twelve-year “data exclusivity” period during which clinical testing data collected by brand-name producers could not be used by competitors to satisfy FDA testing requirements. While the abbreviated FDA approval process enjoys broad support, the data-exclusivity provision has been hotly contested, including strong opposition from the Federal Trade Commission. (Paper Abstract)
The paper flies through data that’s been collected for over 20 years on intellectual property and biotechnology in a clear way as to make the longer data-exclusivity proposal an obvious non-issue for Congress in the health care debate. That is to say:
The economic studies used by critics of supplemental patent protection conclude that a twelve-year period of data exclusivity is essential to the profitability [and thus investment and research likelihood] of biotech drugs… data exclusivity could encourage development of clinically important biologics that would otherwise be abandoned because robust patents on the active ingredient are unavailable… the health care savings would be nominal, as drugs account for only about ten percent of total health care expenditures in the United States.
It’s important to understand the connection between health care and biotechnology, without “killing the goose” that lays the golden (innovation) egg. The authors note that “the successes of biomedical innovation are paradoxically at the root of the health care crisis… limiting the term of data exclusivity could also be counterproductive for everyone…. safeguarding high short-term profits through a twelve-year data exclusivity term stands to mitigate the difficulties of balancing innovation and patient access.”
You can visit Chris Holman’s blog at http://holmansbiotechipblog.blogspot.com.