With protections set to lapse on advanced drugs, U.S. presses strict rules overseas

Via The Washingtion Post

By Matt Schneider

Stung by overseas patent rulings that could undercut U.S. companies, the Obama administration is trying to expand protection for the makers of the world’s most advanced medicine through trade rules that critics argue could lead to higher global drug prices.

The effort has sparked an intense debate between pharmaceutical firms looking to protect costly research investments and fund the next generation of drug development, and patient advocates and others who worry that a strict application of U.S. rules around the world could keep prices out of reach particularly for patients in developing countries.

The issue has injected a moral dimension into negotiations over the Trans-Pacific Partnership, the 12-nation pact that would apply similar rules to developing nations, such as Vietnam, which are struggling worldwide to provide access to advanced medicines, and sophisticated industrial countries such as Japan. For the U.S., the economic stakes are direct, and show how U.S. officials hope to use the TPP to shape the landscape for industries considered central to the U.S.’s economic future. Along with pharmaceuticals, U.S. negotiators are pressing hard to set standards that would give logistics and consulting firms, cloud computing and telecommunications businesses and other leading edge companies freer rein in the 11 other TPP nations — and globally if those standards take root.

In the case of biotechnology, regulations are not even clearly settled in the U.S. It was only under the recent Affordable Care Act, for example, that the U.S. agreed to allow generic alternatives for the sophisticated and costly-to-develop drugs that are considered among the most promising ways to attack cancer and other chronic diseases.

The Food and Drug Administration is still working out the details, and the first generics are still likely years away.

Given the uncertainty — and the expense of treatments that routinely run into the tens of thousands of dollars per patient — some critics argue that the U.S. shouldn’t push a regulatory scheme onto other countries that has not yet been tested out at home.

“What is optimal for the U.S. is not necessarily optimal for other countries,” said Patricia M. Danzon, the Celia Moh professor of health care management at the Wharton School. The broad tradeoff accepted in rich countries – years of patent protection that keeps prices high, in order to encourage innovation, before generic competition is allowed – becomes more of a problem in poorer nations where insurance coverage may be sparse, national health systems screen out the more expensive treatments, and patients simply do without.

U.S. Trade Representative Mike Froman said trade negotiators can square the circle — and find a way to ensure a strong research climate while also improving price and access in poorer countries.

Those goals “aren’t mutually exclusive propositions,” he said. “We can make sure that developing partners have the flexibilities that keep medicines affordable” perhaps by giving some countries more time to phase in the needed regulations.

Whatever compromise may be found within TPP, it’s clear the U.S. has been on the defensive — with other TPP countries opposed to adopting the U.S. proposals, and still other nations chipping away at pharmaceutical patent protections.

India has been a particular focus, with the government ordering companies to surrender patent rights and license their products to local companies, and taking other steps it regards as needed to lower the cost of advanced treatments for breast cancer and other diseases. Canada remains on a trade watchlist after a spate of court rulings that voided patents for major pharmaceutical companies in favor of the country’s strong generics industry.

“There is a lot of concern about whether countries at similar levels of development are held to the same intellectual property standards,” said David Talbot, head of international government affairs for Eli Lilly and Co. “Otherwise we are chasing problems from country to country, which is what we are doing now.”

The TPP has become a particular focal point as the U.S. presses to include in the treaty its approach to regulating so-called “biosimilars,” the generic versions of the most complex biotechnology products.

The research and development timeline for biotech products is so long that original patents on a promising molecule may only have a few years left by the time a drug or treatment is licensed. That is not considered enough to spur the flow of investment that makes the industry tick. To extend that period of protection, the Affordable Care Act gave companies an additional 12 years of what is known as “data exclusivity” – meaning that the results of tests used in developing the drug cannot be referenced or relied on by companies trying to develop generic substitutes for 12 years after the original drug’s approval.

In the biotech development process, use of that other research is an important issue. Unlike less complex, chemically derived pharmaceuticals, biotech products are produced from living cell lines. While “small molecule” drugs like aspirin can be precisely duplicated, generic versions of advanced biopharmaceuticals can only be “biosimilar” – with similar DNA, but not exact. The ability to rely, to some degree, on the data and tests generated in the process of approving the original substance helps lower the cost of generic development and aid in determining if a proposed substitute should be approved.

The 12 year period was a compromise in the U.S. between what drug companies said they needed, and the shorter span of time that patient advocates argued would speed approval of generics and lower health costs.

The FDA is still developing the final rulesfor licensing biosimilars in the U.S., but already the competition is lining up. Some biopharmaceuticals will begin to lose their final intellectual property protections in coming months, and other firms are lining up to try to compete.

The blockbuster rheumatoid arthritis medicine Humira, for example, loses its final protection in 2016, and at least four companies in Germany, Brazil and elsewhere have begun studying how to replicate the drug — one of a class of compounds known as monoclonal antibodies.

Michael Soldan, global head of regulatory affairs for biosimilars at Germany’s Boehringer Ingelheim, compared the process of building a monoclonal antibody to that of building a jet airplane – where simple aspirin would be akin to a bicycle and simpler biologic compounds like a car.

But the potential rewards are mammoth: Humira is one of the top selling drugs of all time, and at a retail price of around $30,000 a year generated more than $9 billion in 2012 sales for its manufacturer, Abbvie, a spinoff of medical giant Abbott Laboratories.

Developing biosimilars is “the logical next step. …The trend is for more biosimilars. You’ll see that 20 years from now. It is clear how this is going,” Soldan said.

Whether it leads to lower prices is another matter. Europe developed a system for licensing biosimilars a few years ago. A few have already come to market and, according to industry officials and studies, they have shaved 20 to 30 percent off the price of drugs – not the 80 or 90 percent savings that, for example, have helped increase access around the world to the most effective treatments for AIDS.

That may make much of the current discussion moot if other manufacturers find it too difficult and expensive to develop biosimilars, and cede the market to the original inventors.

But pharmaceutical industry advocates worry that without strong global rules, the drug development process will suffer.

“Access to medicines is critically important, but so is existence of the medicine,” said Stephen Ezell, an analyst at the Information Technology and Innovation Foundation. “It is the returns on one generation of innovation that finances the next generation of research.”

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Ainsley Shea