Senators Back 12-Year Data Exclusivity Period for Biosimilars and President Obama (Once Again) Does Not

by McDonnell Boehnen Hulbert & Berghoff LLP
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Washington - Capitol #3On March 22, Senators Max Baucus (D-MT) and Orrin Hatch (R-UT), the Chairman and Ranking Member, respectively, of the Senate Committee on Finance, sent a letter to Ambassador Demetrios Marantis, the Acting United States Trade Representative, "to emphasize the importance of achieving a comprehensive, high-standard intellectual property chapter" as negotiations on the Trans-Pacific Partnership Agreement enter a "crucial phase."  The Trans-Pacific Partnership Agreement, or TPP, is a multilateral free trade agreement currently being negotiated by Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States, and Vietnam (Canada, Japan, the Philippines, South Korea, and Taiwan have also expressed interest in participating in the agreement).  The 17th round of TPP negotiations will be held in Lima, Peru on May 15-24.

While expressing their "strong[] support" for the Acting U.S. Trade Representative's "commitment to 'aggressively protect' intellectual property through international trade negotiations," Senators Baucus and Hatch specifically urged the Acting U.S. Trade Representative "to seek commitments from our trading partners that reflect the level of protection under U.S. law, for example 12 years of regulatory data protection for biologic pharmaceuticals and strong remedies, including civil and criminal penalties, for trade secret theft."  The Senators concluded their letter by noting that "[g]iven the significance of the TPP, and with countries like China and India watching closely, the United States cannot afford to get this wrong."

U.S. Trade RepresentativeIn urging the Acting U.S. Trade Representative to include a 12-year data exclusivity period in the TPP, Senator Hatch reaffirmed his support for this provision of the Biologics Price Competition and Innovation Act (BPCIA), the portion of the Patient Protection and Affordable Care Act that provides an approval pathway for biosimilar biological products.  Senator Hatch and two other members of the Senate Health, Education, Labor and Pensions Committee proposed an amendment to the Senate biosimilar bill in July 2009 that provided the 12-year data exclusivity period (see "Senators Champion 12-Year Data Exclusivity in Senate").  In the fall of 2011, 37 Senators, led by Senators Hatch and John Kerry, sent a letter to the U.S. Trade Representative Ron Kirk, stating that "[w]hile the views of individual members of Congress may differ as to the desirability of [the TPP] negotiations, we are united in urging you to propose a strong minimum term of regulatory data protection for biologics consistent with U.S. law" (see "Senators Support Inclusion of 12-Year Exclusivity Period in Free Trade Agreement").  In that letter, the Senators noted that "U.S. law provides for a 12-year term of regulatory data protection for biologics," and declared that this 12-year period "should serve as the baseline for the administration's objectives for this aspect of the negotiation."

Washington - White House #2Chances are that the Acting U.S. Trade Representative, a Cabinet member who serves as the president's principal trade advisor, negotiator, and spokesperson on trade issues, may the views of Senators Baucus and Hatch when it comes to the 12-year data exclusivity period.  That is, if the President's FY 2014 budget proposal is any indication.  The President's latest budget proposal, which was unveiled last month, looks a lot like his 2013 and 2012 proposals with respect to provisions that would impact the data exclusivity period (see "President's Latest Budget Proposal Seeks Decrease of Data Exclusivity Period and Elimination of Pay-for-Delay Agreements" and "President's Budget Proposal Increases Funding for Basic Research But Seeks to 'Trim' Data Exclusivity Period and Pay-for-Delay Agreements").  In particular, the President's budget proposal states:

Lower Drug Costs.  The Budget includes a number of policies to lower drug costs to taxpayers and consumers.   . . .  The Budget also proposes to accelerate access to affordable generic biologics by modifying the length of exclusivity on brand name biologics.  Beginning in 2014, this proposal would award brand biologic manufacturers seven years of exclusivity, rather than 12 years under current law, and prohibit additional periods of exclusivity for brand biologics due to minor changes in product formulations, a practice often referred to as "evergreening."  The proposal will result in $3 billion in savings over 10 years to Federal health programs including Medicare and Medicaid.

As in his last two budget proposals, the President's FY 2014 budget would also put an end to pay-for-delay, or reverse payment, agreements.  Specifically, the President's budget proposal states that:

[B]eginning in 2014, the Budget proposes to increase the availability of generic drugs and biologics by authorizing the Federal Trade Commission to stop companies from entering into anti-competitive deals, known also as "pay for delay" agreements, intended to block consumer access to safe and effective generics.  Such deals can cost consumers billions of dollars because generic drugs are typically priced significantly less than their branded counterparts.  The Administration's proposal will generate $11 billion over 10 years in savings to Federal health programs including Medicare and Medicaid.

 

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