PhRMA calls for appropriate incentives for continued biotechnology innovation

Oct 20 2009

Pharmaceutical Research and Manufacturers of America (PhRMA) Senior Vice President Ken Johnson issued the following statement today regarding appropriate incentives for continued biotechnology innovation:

"PhRMA, along with research universities, patients, healthcare providers, and elected leaders at the state and federal levels, supports the development of a responsible, abbreviated approval pathway for biosimilars that includes a fair period of data protection that is critical for the future of medical progress.

"Legislation moving forward in the U.S. House and Senate provides for patient safety and strikes the appropriate balance between the desire for enhanced competition for biologics, and the need to provide meaningful incentives for innovation.

"Such incentives are vital for ensuring continued development of new biologics that are needed to provide future treatments and cures for such serious ailments as Alzheimer's disease, Parkinson's and cancer. Already, biologic medicines have revolutionized patient care. In fact, these cutting-edge therapies are among the reasons why American patients with life-threatening diseases, like cancer, are living longer.

"The pathway endorsed through strong bipartisan Congressional votes would allow onto the market biosimilars -- medicines that are similar to, but will never be exactly the same as, the original biologic.

"That key element -- similarity -- factors into investment decisions, because the nature of patent protection for biologics is uncertain in the context of biosimilars. Because biologics are extremely complex, patents may cover just part of the molecule or simply cover the process for its manufacture.

"In the future, should this legislation become law, a biosimilar manufacturer using its own manufacturing process to create a biosimilar that differs slightly from an innovator biologic would have the potential to circumvent patents -- while qualifying for an abbreviated application.

"Economists and the venture capitalists whose private investments shore up this vital, yet vulnerable sector agree: 12 years of data protection, at a bare minimum, are needed to help recoup the significant development costs for biologic innovators. That, however, does not constitute market exclusivity. Companies could still seek approval of competing biologics using their own data, but for those 12 years no biosimilar competitor could rely on innovators' hard-earned data, collected during development that may span a decade, or more, to seek approval.

"For many biologics on the market right now, the 12-year data protection clock began ticking long ago, when federal regulators approved the therapy. In addition to the brand-to-brand competition that already occurs for biologics, those biologic medicines could face biosimilar competitors relatively soon; multiple biosimilars are already on the market in Europe.

"Biosimilar versions of current biologics may well be approved before 12 years have elapsed after the law's enactment, but 12 years of data protection is important to provide incentives for manufacturers to create the next wave of innovative biologics.

"Giving short shrift to incentives for innovation would grind to a halt uniquely American innovation, moving critically important R&D -- and tens of thousands of U.S. jobs -- overseas. Right now, 80 percent of the world's biotech research occurs in the U.S.

"A diverse group of supporters agree with the need for adequate data protection, from patients eagerly awaiting new therapies to elected officials who understand how tenuous U.S. leadership in biologics research could become if incentives for innovation are weakened:

• 'Many of these biologics will be developed from early-stage discoveries arising from basic research conducted by universities. ... [I]t will be important to preserve sufficient incentives for innovator companies and venture capitalists to commit the substantial investments necessary to develop such discoveries into new biologic treatments...' -- Association of American Universities
• '[W]e must avoid excessive damage to the system that produces the majority of revolutionary and innovative new biologic drugs. NVCA believes a data exclusivity period of at least 12 years for innovator products is a critical fulcrum in the effort to balance cost with the preservation of biotech innovation.' -- National Venture Capital Association
• 'This critically important issue has a direct economic impact on our states, our nation's public health, our economic success, and our global leadership in biomedical research. ... 12 years of data exclusivity for biologics represents a critical element needed to ensure appropriate incentives for continued biomedical innovation.' -- Joint letter signed by the Governors of Massachusetts, Connecticut, Colorado, Delaware, Maryland, North Carolina, Oregon, Rhode Island, Puerto Rico and Washington
• '[I]t would be neither fair nor sound public policy to demand that one company spend millions of dollars to generate expensive data, and then allow another company to use that data for free before the first company has had the chance to recoup its investment. This would mean fewer new biologics for patients and fewer future competitive opportunities for both innovative and biosimilar companies.' -- Dr. Henry Grabowski, Duke University
• 'Saving money is a hollow victory if it costs lives, and elderly Americans are at the greatest risk. ... 12-year data exclusivity [is] needed to incentivize the development of new medical breakthroughs that our seniors are counting on.' -- RetireSafe
• 'We strongly believe that the treatments developed through biotechnology will enable better care for a host of debilitating age-associated infirmities ... [A] well-defined process for approving biosimilars will help sustain investment in this vital area of therapy development and allow for these treatments to one day be made widely available to patients who otherwise could not have access to them.' -- Alliance for Aging Research

"Creating a new biologic medicine is a complex, long-term endeavor that is costly, takes years of research, and has an uncertain chance of success. Development costs for innovative biologics alone can exceed $1.2 billion, plus up to an additional $450 million to build specialized manufacturing facilities.

"Already, many biotechnology companies that are the birthplace for many cutting-edge therapies face a bleak outlook. The recent financial crisis, for some, represented a deadly blow. Twenty-two biotechs have already been delisted from NASDAQ. This week, NVCA and Thomson Reuters reported that venture capital funds raised in the third quarter of 2009 plummeted to the lowest level in 15 years.

"R&D is the engine that drives continued medical advances that save lives and improve patients' quality of life, but few would tackle biologic medicines without a fighting chance to recoup their significant investments.

"Importantly, if we're going to cure cancer in our lifetime, as President Obama has challenged America to do, new innovative biologics, undoubtedly, will play an instrumental role."

SOURCE Pharmaceutical Research and Manufacturers of America