Although the 12-year exclusivity period for original biologic products was a heavily negotiated provision of the Biologics Price Competition and Innovation Act (BPCIA), increased spending on biologic drugs has led to calls to shorten that exclusivity period to expedite biosimilar market entry. Most recently, on June 23, 2016, Illinois Congresswoman Jan Schakowsky and Senators John McCain (R-AZ) and Sherrod Brown (D-OH) introduced the “Price Relief, Innovation, and Competition for Essential Drugs” (PRICED) Act in the U.S. House of Representatives and Senate. The bills would amend the “first licensure” provisions of the BPCIA to shorten the market exclusivity period for new biologics from 12 to 7 years. Similarly, the President’s budget for fiscal year 2017 recommended “prohibiting additional periods of exclusivity for brand biologics due to minor changes in product formulations.”

A. Curtailing Spending On Biologic Drugs

Since the BPCIA took effect in 2010, only two biosimilar products (Zarxio and Inflectra) have been approved, while spending on biologic drug products has nearly doubled to more than $128 million. The PRICED Act is intended to speed lower-cost biosimilar products to market. According to Office of Management and Budget estimates, the PRICED Act would save the Federal government $21 billion over 10 years.  The House version, H.R. 5573, has been referred to the House Energy & Commerce Committee.

B. Upsetting A Delicate Balance

Trade organizations representing originator drug and biotechnology companies “strongly oppose” shortening the data exclusivity and/or market exclusivity periods for original biologic products. Doing so, they say, “would reduce research and development investment in the US,” stifle industry innovation, and ultimately “deprive patients of many new treatments and cures in the future.”

Underlying these complaints is the belief that the PRICED Act would undercut the delicate balance struck by the BPCIA, which established an abbreviated approval pathway for biosimilar products similar to the Abbreviated New Drug Application (ANDA) process for generic drugs. The 12-year market exclusivity period of the BPCIA was designed to take into account the generally longer, riskier, and costlier process of developing a biologic product, and the potential inadequacy of patent protection in the face of a long product development timeline. New efforts to significantly shorten the long-debated and heavily-negotiated exclusivity period may be viewed as attempts to break promises to originator companies just as they are facing biosimilar competition.

C. Complicating International Agreements

The PRICED Act also could complicate or hinder the development of biologics under the Trans-Pacific Partnership (“TPP”) trade agreement, pursuant to which innovator biologics are entitled to 8 years of exclusivity. While consumer advocacy and medical aid organizations have criticized TPP’s supposed capitulation to “Big Pharma,” industry groups and the Obama Administration have agreed that an exclusivity period for original biologic products is necessary to avoid the trade-distorting effects of weak intellectual property laws in many countries.

That rationale reflects longstanding U.S. trade policy, exemplified by the Agreement on Technical Barriers to Trade and Agreement on Trade-Related Aspects of Intellectual Property Rights, and recognizes that pharmaceutical research and development and the protection of intellectual property are areas in which the U.S. has a clear competitive advantage and trade surplus.

D. Other Efforts To Make Drugs More Affordable

The PRICED Act follows on the heels of the “Creating and Restoring Equal Access to Equivalent Samples” (CREATES) Act, which the Senate Judiciary Committee introduced to confront “behavior that blocks competition and delays the creation of affordable generic drugs.”  (Please see here for more information on the CREATES Act.) The PRICED Act, like the CREATES Act, reflects the long-running tension between promoting innovation and making drugs more affordable.