BioPharm Executive: From Bad to Worse: Biotech's Next Political Headache?

Published: Oct 29, 2015

From Bad To Worse: Biotech's Next Political Headache?
October 28, 2015
By Karl Thiel for

It seems like biotech can't catch a break recently, particularly on the political front. In September, the industry was blindsided by a tweet from Hillary Clinton that was quickly followed by a plan to control prescription drug prices. Now the Trans Pacific Partnership (TPP) has been finalized, and to listen to some industry pundits, it's another shot across the bow for a beleaguered industry.

Certainly the stakes are high. This deal has been in negotiation for eight years and involves some 40 percent of global GDP. Anything so vast involves a lot of moving parts, but in the end getting to an agreement among 12 nations came down to just one thing: data exclusivity on biologics. And the biotech industry is not happy with the compromise.

Under the Biologics Price Competition and Innovation Act of 2009, companies get 12 years of exclusivity on biologics, starting from the approval date. Only after a fixed period can another manufacturer use data from the innovator's original biologics license application to support their own biosimilar. But under the draft version of the Trans Pacific Partnership, that data exclusivity goes to a hybrid system that guarantees a minimum of just five years (with some rumors there might be a provision to add three more years in some circumstances). It's a compromise the U.S. didn't want to make but that some countries—Australia in particular—were adamant about.

Biotechnology Industry Organization (BIO) has predictably been sounding the alarm about this deal. "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 Chief Executive Officer Jim Greenwood on behalf of the trade group. "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."

Greenwood's concerns—echoed by some others in industry and the media—are way, way overstated. The negative impact of the TPP on biotech will be minimal, and the deal may actually be good for the industry on balance.

10 Reasons Why the TPP Isn't Such a Big Deal for Biotech—and Might Even Help

1. It might not happen.
To be enacted, this deal has to pass through Congress. If this were just about any other piece of legislation that'd probably be enough said right there. But since trade deals tend to find favor among Republicans (at least those of the more traditional bent), there's some chance this could win through. Yet political opposition on both sides of the aisle is considerable. Democratic presidential candidate Bernie Sanders has vowed to "do all that I can to defeat this agreement” in Congress. Hillary Clinton recently flip-flopped on the deal, saying she opposes it despite her former support as Secretary of State. Republican Orrin Hatch has said he'll oppose the deal if it doesn't include 12 years of exclusivity, and he's backed by a number of conservatives. (And, for whatever it's worth, Donald Trump thinks it's a "terrible deal.")

2. It doesn't affect the U.S.
The 12 years of exclusivity continues to hold here, the biggest pharmaceutical market in the world. For that matter, it doesn't impact Europe, the second biggest pharmaceutical market in the world.

3. Data exclusivity has nothing to do with patent protection.
Countries still can't approve biosimilars to drugs while existing patents are in force. Only to the extent that patent protection falls short of additional data exclusivity does this even come into play. And most companies are adept at playing out patents as long as possible.

4. This isn't exactly overturning long-standing precedent.
Sure, the Biologics Price Competition and Innovation Act (BPCIA) is a hoary six years old, but the FDA only accepted the first biosimilar application under the BPCIA in July 2014—just over a year ago. Europe has already been approving biosimilars, and even though data exclusivity there runs just eight years, the world hasn't come to an end.

5. The U.S. actually doesn't allow 12 years of data exclusivity either!
The BPCIA, Federal Circuit Court Judge Alan Lourie once said, deserves "the Pulitzer Prize for complexity or uncertainty," so it's understandable that many of its provisions are widely misunderstood. But the BPCIA actually only allows four years of data exclusivity followed by eight years of market exclusivity. That's an important difference: If it was 12 years of actual data exclusivity, rival manufacturers couldn't get their hands on innovator data before the end of the term to start putting together a submission, which would make it 13 or 14 years before a biosimilar could be approved. To the extent that other countries offer up five to eight years of true data exclusivity, they're offering up more than the U.S. That may not be followed by any market exclusivity, but it means a drug couldn't be approved before, say, seven to ten years have passed. That narrows the gap considerably.

6. Biotech isn't losing anything in most markets, and it is gaining in some.
So, biotech continues to enjoy 12 years of data exclusivity (we'll call it that for shorthand) in the U.S. In Japan, it appears it will keep the current eight years. In Peru, Vietnam, Malaysia, Brunei, and Mexico, there was 0 years of data exclusivity. Now that number is rising to at least five years. Indeed, this is why Doctors With Borders has said "The TPP will still go down in history as the worst trade agreement for access to medicines in developing countries." The nations who are going to see new restrictions on biosimilars tend to be the poorest.

7. The TPP may contain balancing provisions.
We won't really know until the final agreement is made available in the coming weeks, but proposals have been discussed that would require countries to recognize more rules allowing the "evergreening" of patents—extensions granted for relatively minor changes.

8. So far, innovator products have held up pretty well against biosimilars.
Sure, that's cold comfort to companies that don't want to see copycats steal market share, and this market is very young—biosimilars may ultimately undermine sales of innovator products more significantly than they so far have. But it's certainly not clear from what we've seen so far.

9. This is pushing on a balloon.
Hey, what do you think companies already under fire about pricing might do with this latest development? I see a new justification for high prices here. Companies now have less time to recoup their R&D expense! Prices must go up, not down!

10. This helps cement the current 12 year exclusivity period in the U.S.
This deal is being sold in part on the grounds that it doesn't change U.S. rules. But those weren't necessarily on firm ground to begin with: Every year since 2009, President Obama's budget has had a provision that would drop U.S. data exclusivity from 12 years down to seven. Why? Because after the BPCIA was passed, the Federal Trade Commission, among others, quickly came to the conclusion that 12 years of exclusivity wasn't necessary to foster innovation. Biotech may not need it, but they sure like it. And now losing it may be less likely to happen.

Of course, none of this means that industry won't grumble about not getting everything it wanted out of a major international trade deal. But if anything, the highlight on the data exclusivity should remind industry, investors, and observers of one thing: Biotech got a pretty sweet deal back in 2009 and the Trans Pacific Partnership, whichever way it goes, will do nothing to derail it.

-Karl Thiel

Read the BioPharm Executive online newsletter October 28, 2015.
Sign-up for the free monthly subscription to the BioPharm Executive.

Back to news