Misplaced Fears in the Legislative Battle over Biotech Drugs

In a new article, available here , Professor David Adelman (University of Texas) and I weigh in on the controversial subject of the inclusion of an extended period of data exclusivity in proposed follow-on biologic (FOB) legislation. Both healthcare bills passed by the House and Senate, H.R. 3962 and H.R. 3590 (that is not a typo, the Senate healthcare reform bill was passed as an amendment to House Bill H.R. 3590), include provisions creating an abbreviated approval process for follow on biologics, and both incorporate a 12 year period of data exclusivity for biologic innovators. Some, including the FTC, have argued for a much shorter period of data exclusivity for biologic innovators, and some of the proposed follow-on biologic bills introduced in Congress earlier last year included shorter periods. For example, H.R. 1427 would have provided innovators with only five years of data exclusivity. In an earlier article and post, I challenged the FTC’s conclusion, pointing out what I perceive to be flaws in its arguments purportedly justifying a short-term of data exclusivity for biologic innovators.

One of the primary arguments raised by opponents of an extended 12 year data exclusivity period is that patent protection will be sufficient to provide the necessary incentive for robust investment in innovation on new biologics, rendering data exclusivity unnecessary. Prof. Adelman and I argue that there is substantial uncertainty as to whether patents will be as effective for protecting innovative biologic as they have been for conventional drugs. For example, composition of matter patents claiming the drug active ingredient have generally proven very effective in protecting conventional drugs. Other more attenuated patents covering methods of production or use, specific formulations, etc., have proven much more susceptible to circumvention and/or invalidation. Historically, composition of matter patents on the active ingredient do not have a strong track record of success in the context of biologics, where innovators have more often needed to resort to patents claiming processes and reagents used in production of the biologic, with mixed success. Biologic drugs are fundamentally different than conventional drugs, and the scope of available patent protection for biologics is unclear, particularly in view of uncertainty surrounding the scope of protection available under the enablement and written description requirement (the pending en banc Federal Circuit decision in Ariad v. Eli Lilly for example). All things considered, it would be a mistake to assume patents will be as effective in protecting biologics, and thereby incentivizing innovation, as they have historically been for conventional drugs. And in any event, the 12 year period of data exclusivity would run concurrent with the patent term, and thus should have little impact if strong and robust patent protection is in fact available for biologic.

In our article, Prof. Adelman and I consider the legal, technical and economic context of follow-on biologics and conclude that a shortened period of data exclusivity as endorsed by the FTC would provide at best nominal savings in overall healthcare expenditures in the US. It could, however, substantially impair the likelihood of a biologic innovator recouping a sufficient return on investment to justify the enormous expenditure and high risk associated with bringing a novel biologic to market. In our view, an extended period of data exclusivity, such as the 12 year period included in the current healthcare reform bills, is appropriate. More importantly, the emphasis by the FTC and others on reducing the data exclusivity period is misplaced. Society would be much better served by focusing on the development of technology and regulatory processes that facilitate marketing approval for follow-on biologics subsequent to the expiration of an appropriate period of exclusivity afforded by patents and data exclusivity.

BIO Podcast: The Role of Patents in a Pathway for the Approval of Biosimilars

I was recently interviewed by Hans Sauer, Associate General Counsel for Intellectual Property at the Biotechnology Industry Organization (BIO), on the role of patents in proposed follow-on biologic legislation currently being considered by Congress. The interview is posted as a podcast here.

Other BIO podcasts can be found at BIOtech NOW.

My Amicus Brief Has Been Filed in Ariad v. Lilly

I have filed an amicus brief in Ariad v. Lilly in support of neither party but arguing against the Lilly Written Description Requirement (LWD), available here.

My brief essentially argues that LWD has been applied by the courts and PTO in an arbitrary and inconsistent manner that lacks any rational basis in law, science, or policy, and in a manner that can effectively preclude some biotechnological inventors from obtaining adequate patent protection for their inventions, particularly inventions relating to proteins and DNA. My arguments dovetail in large part with those made by Novozymes in the brief they filed a couple days ago.

My colleagues Mark Janis (Indiana University) and Tim Holbrook (Emory University) have filed their own amici brief, arguing that there is no independent written description requirement, and that enablement is the proper and only doctrinal tool for policing claim scope and for determining whether a disclosure supports later added claims.

Law Professor's Debate Impact of Supreme Court's Quanta Decison on Patent Exhaustion and Licensing

Richard Epstein (Univ of Chicago), Scott Kieff (George Washington Univ, Mark Lemley (Stanford) and Fred von Lohmann (Electronic Frontier Foundation) vigorously debate Quanta. Available here.

Novozymes Files Amicus Brief in Ariad v. Lilly Arguing Against Lilly Written Description

The brief is attached here. I'll have some commentary and hopefully some more briefs in the next few days.

Ariad v. Lilly Appellant's Brief and Follow-On Biologics

Ariad's brief in this important Federal Circuit en banc rehearing of Araid v. Lilly, which asks the court to consider revising or perhaps completely eliminating written description as a separate requirement of patentability is available here. I have not had a chance to read it yet, but will post some commentary once I do.

Also, for those interested in the follow-on biologics legislation currently being considered by Congress, here is a short version of the article I posted last week which focuses specifically on the patent provisions of the bills.

A Response to the FTC's Report on Follow-On Biologics

Congress is considering legislation that would create an abbreviated FDA approval process for follow-on biologics (FOBs), which proponents anticipate will promote competition and lower prices in the market for biologic drugs. In June of 2009 the FTC published a report on FOBs (“the FTC Report”), which attempts to forecast the nature of competition between innovator biologics and FOBs, and offers a number of substantive recommendations regarding specific provisions of the various FOB bills. In particular, the FTC Report concludes that there is essentially no justification for the inclusion of a substantial data exclusivity period (“DEP”) for innovators in pending FOB legislation, and that Congress should not include a pre-approval patent (dispute) resolution process (“PPRP”). The FTC Report bases its conclusion that a substantial DEP is unnecessary to adequately incentivize innovation in biologics in part on a misapplication of the results of a study I conducted in 2007 on the written description doctrine of patent law.

I have written a manuscript that responds to some of the conclusions and recommendations set forth in the FTC Report. In particular, I think it is important to clarify the scope and implications of my study on the written description doctrine, and explain why I believe that the FTC over-interpreted the results of the study to arrive at a conclusion that is unsupported by the data. In my view an extended DEP for innovators is justified and should be included in FOB legislation enacted by Congress.

I also disagree with the FTC's conclusion that a PPRP is unnecessary and unwarranted for biologic drugs; such a process is appropriate and would be important to maintain adequate incentives for innovation. Some of the proposed FOB legislation would discriminate against the developers of innovative biologic drugs, not only with respect to FOB producers, but also in comparison to the treatment currently afforded conventional drug innovators. These discriminatory provisions should be removed or rectified to provide a more balanced approach to promoting competition while maintaining adequate incentives for investment in biotechnology.

The full length manuscript is available as a Working Paper on SSRN (click here for link)

[Added Oct. 6 2009] A short version of the manuscript focusing on the patent provisions is available here.