Data & Market Exclusivity As Incentives in Drug Development

Dec 20

Introduction

Pharmaceutical research and development is costly, lengthy and risky. It takes years and significant financial investment to get a drug from concept to approval. However, even with such enormous effort and expense, most drugs never make it to the market. The generation of nonclinical and clinical trial data takes considerable time, effort and expense, and begins when a compound is identified as a potential medicinal product. Regulatory authorities use these data to assess the product’s quality, safety and efficacy before a medicinal product is approved for use in patients. Even after marketing, clinical studies and pharmacovigilance continue. Because of the vast resources required and the elevated risk of failure, there are certain protections to make these investments viable over the long term, such as patents, data and market exclusivity.

Patents in the European Union (EU) and the United States (US) last for 20 years. For pharmaceuticals, these patents can be extended via a supplementary protection certificate (SPC) in the EU and either through patent term adjustment (PTA) or through patent term extension (PTE) in the US. Due to the lengthy development process, pharmaceutical innovators file for patent protection far before the drugs’ marketing, which leave the innovators around 6-10 years of effective patent protection at the time of approval.

Patents are an important form of intellectual property protection, but are not often sufficient in isolation to promote pharmaceutical development in a competitive landscape. Data and market exclusivity were therefore introduced as incentives to compensate the innovator for the investment in developing a new medicinal product and generating the data required to obtain a marketing authorisation.

Data exclusivity is defined as the period of time during which only the owner or generator of nonclinical and clinical trial data can use it for purposes of marketing authorisation; during this period, other applicants cannot rely on such data in support of their own applications for marketing authorisation. Data exclusivity is not an extension of patent rights, and it does not prevent the introduction of generic versions of the innovative drug during the data exclusivity period as long as the marketing approval of the generic version does not use or rely upon the innovator’s test data.

Market exclusivity refers to the period of time that a product has protection from market entry of generic, hybrid or biosimilar medicinal products that have been authorised on the basis of the innovator’s data package.

Data and market exclusivity are incentives to compensate the innovator for the investment in developing a new medicinal product and generating the data required to obtain a marketing authorisation. These are different concepts than patents and have different legal effects over different time periods. Here, we focus on data and market exclusivity for drugs marketed in the EU and the US.

EU

In the EU, medicinal products cannot be placed on the market without a marketing authorisation (MA). This MA may be issued either by the European Commission through the centralised procedure or by national competent authorities through a decentralised, mutual recognition or national procedure. The requirements and procedures for MA are laid down in Directive 2001/83/EC and in Regulation (EC) No 726/2004.

SPCs are an intellectual property right that serve as an extension to a patent right. SPCs aim to offset the loss of patent protection for pharmaceutical products that occurs due to the compulsory lengthy testing and clinical trials these products require prior to obtaining regulatory marketing approval. An SPC can extend a patent right for a maximum of five years.

Non-patent data and market protection are defined in Regulation (EC) No 726/2004:

“Medicinal products for human use which have been authorised in accordance with the provisions of this Regulation shall benefit from an eight-year period of data protection and a ten-year period of marketing protection, in which connection the latter period shall be extended to a maximum of 11 years if, during the first eight years of those ten years, the marketing authorisation holder obtains an authorisation for one or more new therapeutic indications which, during the scientific evaluation prior to their authorisation, are held to bring a significant clinical benefit in comparison with existing therapies.”

Thus, for products authorised under the legal basis of Article 8(3) of Directive 2001/83/EC (a “full” application), the applicant is entitled to data/market protection following the “8+2+1” formula:

8 years of data protection: other applicants are not allowed to use the originator’s data if they submit a marketing authorisation application (MAA).
10 years of market protection: during the years 9 and 10, the originator maintains market exclusivity, but other applicants can use their data when submitting an MAA for a generic, hybrid or biosimilar.
1 year extension of market protection if, during the first 8 years, the originator obtains an authorisation for a new therapeutic indication for the relevant medicinal product, which brings a significant clinical benefit in comparison with existing therapies.

This data and market protection applies to medicinal products containing new or known active substances registered under Article 8(3) of Directive 2001/83/EC. Once the data and market protection have expired, competitors can use the originator product as a reference product. The legal basis for the authorisation of generic, hybrid and biosimilar medicinal products are laid down in Article 10 of Directive 2001/83/EC. Products authorised under Article 10 are not entitled to data or market protection, unless an application is made for a new indication for a well-established substance. In that case, a non-cumulative period of one year of data exclusivity shall be granted, provided that significant nonclinical or clinical studies were carried out in relation to the new indication (Article 10(5) of Directive 2001/83/EC).

Where a change of classification of a medicinal product (prescription to non-prescription) has been authorised on the basis of significant nonclinical or clinical studies, the competent authority shall not refer to the results of those tests or trials when examining an application by another applicant for or holder of MA for a change of classification of the same substance for one year after the initial change was authorised (Article 74a of Directive 2001/83/EC).

In addition, there are special types of marketing exclusivity available for drugs intended to treat rare diseases (so-called orphan medicinal products), and for drugs for children.

Orphan Medicinal Products: Market Exclusivity

In the EU, under Regulation (EC) No 141/2000, a medicine qualifies for orphan designation if it meets the following criteria: 1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; 2) the prevalence of the condition in the EU must not be more than 5 in 10,000 or it must be unlikely that marketing of the medicine would generate sufficient returns to justify the investment needed for its development; and 3) no satisfactory method of diagnosis, prevention or treatment of the condition in question has been authorised in the Community or, if such a method exists, the medicinal product will be of significant benefit to those affected by the condition.

Products designated as orphan medicinal products benefit from ten years of market exclusivity once the MA is granted. This measure is intended to encourage the development of medicines for rare diseases, by protecting them from competition from similar medicines for the same indication, which cannot be marketed during the exclusivity period. Thus, orphan drug designation allows the obtention of ten years of market exclusivity having a broader scope as it precludes authorisation of not only generics but also products which are not identical but have the same principal molecular structural features and act via the same mechanism. This is a key incentive to develop drugs for rare diseases that would be financially non-viable due to the lack in return of investment. However, orphan exclusivity can be overcome, if the new applicant can demonstrate a significant benefit (i.e., clinically relevant advantage and/or major contribution to patient care) relative to the orphan medicinal product

Market exclusivity is an orphan incentive awarded by the European Commission to a specific clinical indication with an orphan designation.

Each indication with an orphan designation confers ten years’ market exclusivity for the particular indication.

A medicine that has multiple orphan designations for different conditions will benefit from separate market exclusivity periods pertaining to its different orphan designations (although it is important to note that orphan and non-orphan indications cannot be registered under the same MA).

The market exclusivity period is extended by two additional years for an orphan-designated condition when the results of specific studies are reflected in the summary of product characteristics (SmPC) addressing the paediatric population and completed in accordance with a fully compliant paediatric investigation plan (PIP). The European Commission grants the extension based on a positive compliance check from the Paediatric Committee and opinion from the Committee for Medicinal Products for Human Use (CHMP). This extension is dependent only on completion of the agreed-upon studies and not on their outcomes.

The ten years period may be reduced to six years if, at the end of the fifth year, it is established, in respect of the medicinal product concerned, that the criteria for orphan designation are no longer met.

Paediatric Exclusivity

The European Paediatric Regulation (EC) No 1901/2006 made consideration of paediatric development requirements mandatory, with the aim of assuring that children from birth to less than 18 years have safe access to medicinal products. A PIP is a development plan aimed at ensuring that the necessary data are obtained through studies in children, to support the authorisation of a medicine for children. All MAAs for new medicines, except generic, hybrid, or biosimilar products, have to include the results of studies as described in an agreed PIP, unless the medicine is exempt because of an agreed deferral or waiver.

Medicines authorised across the EU with the results of studies from a PIP included in the product information are eligible for an extension of their SPC by six months. This is the case even when the studies’ results are negative and do not lead to the authorisation of a paediatric indication. The extension is intended to reward Sponsors for the additional development effort that PIPs require.

The marketing authorisation holder (MAH) can apply for a one-year extension of the period of marketing protection on the grounds that a new paediatric indication brings a significant clinical benefit in comparison with existing therapies. However, it is not possible to combine 1-year of extra marketing protection and a 6-month SPC extension for the same product.

For orphan medicines, as stated above, the incentive is an additional two years of market exclusivity. As these products are frequently not patent-protected, the reward of SPC extension cannot be applied; and when they are patent-protected, such an extension would provide a double incentive. Therefore, for orphan medicinal products, instead of an extension of the SPC, the ten-year period of orphan market exclusivity should be extended to twelve years if the requirement for data on use in the paediatric population is fully met.

In addition, medicines developed specifically for children that are already authorised but are not protected by a patent or SPC are eligible for a paediatric-use marketing authorisation (PUMA). If a PUMA is granted, the product will benefit from eight plus two years of data and market protection as incentives.

US

In the US, innovator companies can benefit from several sources of exclusivity to delay market entry of a competitor’s product.

The patent term can be extended either through PTA or through PTE. PTA is intended to compensate for administrative delays caused by the US Patent and Trademark Office (USPTO) during patent prosecution whereas PTE is intended to compensate for regulatory delays in obtaining FDA approval. PTE is capped at

5 years and the remaining patent life after PTE may not extend beyond 14 years after approval of the drug. Furthermore, only the first approval of a new active ingredient qualifies for a PTE, and only one patent may be extended per new active ingredient.

Regulatory exclusivities provide data and market protection for an approved drug, which can extend exclusivity beyond the patent term or in the absence of patent coverage.

Laws and regulations supporting exclusivities are different for drugs (small molecules) and biologics. Drug approval is regulated by the Federal Food, Drug and Cosmetic (FD&C) Act, whereas biologics approval is regulated by the Public Health Service (PHS) Act.

There are three main routes of approval of a drug; for a new chemical entity (NCE) or a drug containing an active moiety that has never been approved by the US Food and Drug Administration (FDA), a 505(b)(1) new drug application (NDA) is submitted, which includes results of human clinical trials to prove safety and efficacy. For follow-on products including new dosage forms, new strengths, routes of administration, dosing regimens or indications, a 505(b)(2) application is submitted that relies, at least partly, on published information or FDA’s past findings of safety and efficacy for which the applicant has no right of reference. Generic products, which contain the same active ingredient, in the same dosage form, same strength and route of administration as an approved drug (the ‘reference drug’), are approved through an abbreviated new drug application (ANDA) or 505(j) application.

For biologics, a biologics license application (BLA) is required for marketing. 351(a) is the traditional pathway for approval of biologics under the PHS act, and it must contain all the information regarding the safety and efficacy of a biological product. A 351(k) application is an abbreviated licensure pathway for biological products shown to be biosimilar to or interchangeable with an FDA-licensed biological reference product.

Regulatory exclusivities associated with each are summarised below.

Five-Year Exclusivity

Under the FD&C Act (as amended by the Hatch-Waxman Act Title I), five-year exclusivity is available to the sponsor of an application (505(b)(1) or 505(b)(2) NDA) for a drug product that does not contain an active moiety previously approved under Section 505(b) of the FD&C Act (i.e., NDA for a NCE). This five-year exclusivity, also known as NCE exclusivity, prevents the submission of a generic application for the approved active ingredient or any salt or ester of the approved active ingredient. However, five-year exclusivity does not prevent FDA from approving, or a company from submitting, a full Section 505(b)(1) NDA for the same drug.

Three-Year Exclusivity

For drugs (505(b)(1), 505(b)(2) or supplement application) that do not qualify as a NCE, if new clinical studies are required for approval, then the product might still qualify for three-year clinical investigation exclusivity (CIE). Three criteria must be met: 1) reports of new clinical investigations (other than bioavailability studies), 2) that were essential to approval of the application and 3) were conducted or sponsored by the applicant. CIE blocks approval of a competitor’s 505(b)(2) or ANDA for the same product modification, but not their submission (no data exclusivity applies).

A generic drug product’s labelling approved under an ANDA must have the same labelling as the reference listed drug (RLD). This is to prevent NDA holders from continually supplementing their labels with new data that could repeatedly extend the three-year exclusivity period, and thereby indefinitely bar FDA from approving the ANDA. FDA regulations permit the ANDA labelling to omit an indication or other aspect of labelling protected by patent or accorded exclusivity under 505(j)(5)(F) of the FD&C Act. FDA can approve an ANDA with labelling “carve outs” if a particular use of the innovator drug is protected by a patent or period of exclusivity, and other uses are not protected.

This type of exclusivity, often referred to as “new clinical investigation” or “new use” exclusivity, is the most common type for 505(b)(2) and supplemental applications.

180-Day Exclusivity

The Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act) amended the FD&C Act to create the ANDA generic drug approval pathway under Section 505(j), as well as a hybrid approval pathway under Section 505(b)(2). These sponsors may be eligible for a 180-day marketing exclusivity period for challenging patents for the RLD listed in the FDA’s Orange Book.

During this period, the sponsor is protected from competition from other generic versions of the same drug product.

In addition, the FDA Reauthorization Act of 2017 (FDARA) created a new type of 180-day exclusivity, different from the 180-day patent challenge exclusivity, for the first approved applicant of a drug with a competitive generic therapy (CGT) designation for which there were no unexpired patents or exclusivities listed in the Orange Book at the time of original submission of the ANDA. This 180-day exclusivity is intended to incentivize competition for drugs that are not protected by patents or exclusivities and for which there is inadequate generic competition.

While this exclusivity period pales in comparison to the longer exclusivities enjoyed by branded drugs, the 180 days of exclusivity is significant for generic drugs. One of the main advantages is that this period allows for the establishment of that first generic drug as the primary low-cost alternative to the branded drug and facilitates early adoption by hospitals and retail pharmacies.

Biologics Exclusivity

Biologics have a considerably longer exclusivity period than small-molecule drugs. Biologic exclusivity conveys 12 years of total market protection, of which the first 4 years provide data exclusivity (no biosimilar application accepted by the FDA during that period relying on data obtained by the reference drug manufacturer). The purpose of the extended exclusivity for biologics is to promote innovation and continued development of these novel therapies, some of which can take years longer to develop than traditional small molecule drugs.

Special Types of Marketing Exclusivity

In addition to the market exclusivities described above for drugs and biologics, there are a few special cases that apply to therapies intended for rare diseases, paediatrics, or serious or life-threatening infections.

Orphan Drug Exclusivity

Under the Orphan Drug Act of 1983, as amended, a manufacturer or sponsor may submit a written request for FDA to designate a drug for a rare disease or condition (an orphan drug). A rare disease or condition affects fewer than 200,000 people in the US, or affects more people but the sponsor can show it will be unable to recover its development and marketing costs from sales of the product in the US.

Once FDA approves a marketing application for a drug designated as an orphan drug, the agency may not approve another company’s version of the same drug for the same disease or condition for seven years, unless the subsequent drug is different (i.e., chemically or structurally distinct) from the approved orphan drug.

However, a drug that is structurally the same as an approved orphan drug may be approved for the same condition if it is clinically superior (i.e., safer, more effective, or significantly more convenient) to the approved orphan drug.

Paediatric Exclusivity

The Best Pharmaceuticals for Children Act (BPCA) amended the FD&C Act to provide an additional six months of exclusivity to pharmaceutical manufacturers that conduct acceptable paediatric studies. This exclusivity applies to new and currently marketed drug products identified by FDA in a paediatric written request (WR) for which paediatric information would be beneficial.

To qualify for paediatric exclusivity, the applicant must meet three conditions: 1) be in receipt of a WR from FDA; 2) submit study reports after receipt of the WR; and 3) meet the conditions of the WR.

Paediatric exclusivity is an add-on to existing marketing exclusivity or patent protection. In general, products with no patent life or exclusivity remaining cannot qualify.

Paediatric exclusivity is not tied to approval of labelling containing information on paediatric use based on the studies conducted. It may be granted upon acceptance of the study reports.

Paediatric exclusivity does not accrue only to the product that was studied in the paediatric population. It attaches to all the applicant’s formulations, dosage forms, and indications for products with existing marketing exclusivity or patent life that contain the same active moiety. Thus, a grant of paediatric exclusivity extends all Orange Book-listed patents and non-patent market exclusivity periods granted on an application holder under the FD&C Act. The exclusivity does not extend the term of a patent, but it does extend by six months the date on which FDA is permitted to approve an ANDA.

Paediatric exclusivity attaches to the end of all existing marketing exclusivity and patent periods. Waxman-Hatch exclusivity, orphan exclusivity, and patent periods run concurrently.

Exclusivity for Antibiotic Drugs

The Generating Antibiotic Incentives Now (GAIN) Act amended the FD&C Act to grant an additional five years of market protection at the end of any existing exclusivity for qualified infectious disease products (QIDPs). QIDP exclusivity is granted to products intended to treat serious or life-threatening bacterial and fungal infections. This protection is added to any applicable Hatch-Waxman five-year NCE, Hatch-Waxman three-year CIE or seven-year orphan drug exclusivity. The five-year extension also is in addition to any six-month paediatric exclusivity.

Summary

Marketing exclusivity is a key incentive for drug developers. Exclusivity is designed to promote a balance between new drug innovation and generic drug competition. Brand-name drug sponsors may qualify for patent and non-patent exclusivities for various durations, which could delay the submission or final approval of a marketing application for a generic or hybrid version of the brand-name drug. Each type of exclusivity is different in scope and subject to different rules and interpretations. The table below summarises the types of exclusivities in the EU and the US.

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2022

Tom Allport