The proposed FY 2012 budget seeks to reduce the period of patent exclusivity for biologic drugs from 12 years to a measly seven years. According to proposed budget, this could potentially save $2.34 billion over the next 10 years.
The 12-year period of reference product exclusivity was created by the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”). The current FY 2012 Obama budget recommends the following:
Under current law, innovator brand biologics have 12 years of exclusivity and broad "evergreening" authority, whereby innovator manufacturers are able to make relatively minor changes to the "potency, purity, and safety" of their products to receive an additional 12 years of exclusivity.
Under the Administration proposal, beginning in 2012, innovator brand biologic manufacturers would have 7 years of exclusivity and would be prohibited from receiving additional exclusivity by "evergreening" their products. According to the Federal Trade Commission, 12-year exclusivity is unnecessary to promote innovation by brand biologic drug manufacturers and can potentially harm consumers by directing scarce research and development funding toward developing low-risk clinical data for drug products with proven mechanisms of action rather than toward new products to address unmet medical needs. The Administration policy strikes a balance between promoting affordable access to medication while at the same time encouraging innovation to develop needed therapies.
Regardless of the Administration’s rhetoric on the subject, a reduction of exclusivity from 12 years to seven years would discourage innovation and contribute to a worsening of our domestic life sciences industry. Further, the term “evergreening” is a thinly veiled attempt to criticize innovator companies from protecting patents on improved versions of products.
The framers of the BPCIA clearly state in a letter dated 12/21/10 that "no product, under any circumstances, can be granted ‘bonus’ years of data exclusivity for mere improvements on a product.” The letter goes on to note, however, that “if a ‘next generation’ product is approved by the FDA as a new product (significant changes in safety, purity, or potency) then that new biologic will receive its own 12-year period of data exclusivity.”
Thankfully these ill-conceived components to the proposed FY 2012 budget will require extensive committee and legislative reviews. In the mean time, we hope that thought leaders inside and outside of the life sciences industry will speak out against these recommended budget provisions.
What is your opinion?