Data Exclusivity: Making the Case

Aug 01, 2012
By Pharmaceutical Executive Editors

Data exclusivity (DE)—the right of inventors to prevent unauthorized disclosure of essential competitive information submitted for market authorization—is facing a strong new wave of opposition. Root causes behind the assault include the growing commercial tension between brands and generics, continued concerns about access barriers in the fight to treat the global pandemic of neglected diseases, and a newly assertive industrial policy among key emerging market countries seeking to exploit gaps in multilateral standards for DE, as evidenced in the 1994 WTO Agreement on Trade Related Intellectual Property Rights (TRIPS). At the same time, patent expiries, longer development times, and slower payer uptake of new medicines make preservation of the innovators data assets more important than ever.

Hence the key question for all Big Pharma today: How do we build a constructive case against the criticism and maintain the relevance of DE as an essential driver of new drug innovation? Most of the criticism of DE comes at a time when governments are experiencing the disconnect between a demographic of soaring healthcare costs, and a fiscal and debt crisis that makes them unable to provide patient access to the latest medicines. Since healthcare costs are projected to skyrocket by more than 70 percent over the next 10 years, there is fear that the period of data exclusivity—which varies among countries—will have a negative impact on health budgets by preventing patient access to innovative life-saving medicines or vaccines that can treat multiple chronic conditions or prevent and cure emerging diseases.

These fears seem misguided when examined in the context of a drug innovation process that is increasingly high risk. DE provides a measure of certainty to innovators that they will be provided with a period of protection for their efforts in testing a drug among many thousands of patients and complying with the higher thresholds of safety and efficacy demanded by regulatory authorities. Providing the right incentives to protect and develop future new innovative medicines can be a key ingredient to both lowering healthcare costs, and for solving some of the world's most challenging health problems. Therefore, policymakers should reassess the importance of DE—here are five reasons why.

Less innovative medicines can be costly to society. It is evident for the United States that continued investment into R&D for the development of innovative pharmaceutical/biological medicines will be indispensable in dealing with an aging population and a rising number of chronic conditions, including cancer, diabetes, obesity, and Alzheimer's disease. For example, strictly in terms of economics, if we were to look at treatment for Alzheimer's disease alone, we find that the care required for a patient with Alzheimer's in 2050 will cost Medicare and Medicaid around $800 billion a year, a figure higher than the total cost of these two programs today. When you add in other costs, it will be more like $1 trillion a year. This is a staggering amount and an exorbitant pull on public services. If there was one pill that could be invented that would delay Alzheimer's by even five years in the average patient, it would likely save the United States close to half a trillion dollars. Progress in this struggle is challenged by the elusive biology of this and other CNS diseases, which adds years to the development cycle. The only guarantee that inventors have in protecting their decade or more commitment of funds and human talent is the avoidance of a premature disclosure of their development data to an imitator. This is what DE means in practice.

The supplemental value of DE. Some critics of DE argue that DE is unnecessary due to the protection provided by a patent: it's a superfluous "double dip." Of course, patents are the most visible and perhaps most important form of intellectual property, but their application is far from universal when viewed in a global context. Historically the scope of patent protection has been quite varied—in some countries there is sometimes no patent protection at all, due to local patent eligibility criteria that exclude specific sectors like pharmaceuticals; some countries have only recently enacted patent protection for pharmaceuticals, which "grandfathers" many compounds out of the framework for coverage. As a result, in these countries, DE may be the only realistic method of protecting drugs.

Likewise, for smaller- or medium-sized companies, the high unpredictability of legal interpretations of today's patent laws makes it confusing or costly to build a strong bulwark of patent protection, in which case the more straightforward application of DE can provide the protection necessary for the investment into R&D. Further, DE can act as a back-up system for R&D, should a patent on an innovative breakthrough medicine be challenged and invalidated; or to recoup the investment cost in product liability suits, which are costly to defend and often based on unanticipated adverse side effects.

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