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Wednesday, June 9, 2010

P.L. 111-148: Intellectual Property Provisions for Follow-On Biologics

Wendy H. Schacht
Specialist in Science and Technology Policy

John R. Thomas
Visiting Scholar

Congressional interest in the biotechnology industry parallels congressional attention to the availability of lower-cost pharmaceuticals. The market for biologic drugs is expanding by a number of measures including the quantity of approved products, the size of the market, and the importance of these pharmaceuticals to the health of U.S. citizens. Concurrently, patents on many biologics are expected to expire in the next few years. Some commentators have expressed concerns that patent expirations may not be accompanied by the introduction of competing, lower-cost follow-on drugs (also known as biosimilars) in the marketplace.

Biologics differ from traditional pharmaceuticals in their complexity and mode of manufacture. Typical pharmaceutical products consist of small molecules, on the order of dozens of atoms, that may be readily characterized and reproduced through well-understood chemical processes. In contrast, biologics are often made up of millions of atoms, feature a more intricate structure than traditional pharmaceuticals, and are manufactured from living cells through biological processes.

An expedited approval process and a patent dispute resolution procedure for traditional, small molecule pharmaceuticals was created by the Drug Price Competition and Patent Term Restoration Act of 1984, a statute commonly known as the "Hatch-Waxman Act." This law, which amended the Federal Food, Drug, and Cosmetic Act, is widely believed to have encouraged the availability of generic substitutes for many brand-name pharmaceuticals upon patent expiration. However, because biologics are typically approved under the Public Health Service Act, these mechanisms were not available for most follow-on biotechnology products.

The Patient Protection and Affordable Care Act, P.L. 111-148, offers several provisions designed to encourage innovation in biotechnology while creating an accelerated approval process for a biosimilar drug. The legislation also permits limited market exclusivity for the first follow-on biologic to be designated "interchangeable" with the reference product. At the same time, the innovator biologic is afforded a 12-year data exclusivity period during which time the Food and Drug Administration will not approve a follow-on biopharmaceutical. In addition, the legislation establishes a specialized patent dispute resolution proceeding for biologic drugs.

Some experts maintain that the intellectual property provisions of P.L. 111-148 will foster both the development of new biotechnology products and the availability of lower-cost follow-on biologics. Other commentators argue that the need for additional safety and efficacy trials to test these products, and the fact that these drugs may be similar, but not identical, may add to the prices charged for the follow-on product. High manufacturing costs associated with biopharmaceuticals also may reduce significant cost savings from biosimilars.

Date of Report:: May 25, 2010
Number of Pages: 9
Order Number: R41270
Price: $29.95

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