Patent & Regulatory Exclusivity in Pharma R&D

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When one thinks about the role of the patent attorneys, it may not be obvious how paramount are they for the life science industry. Do we perceive them as the pharma’s secret agents on an ongoing, critical mission? If not, we should. They work behind the research and development scene, making sure the company can maximize the value of the drug candidates and related inventions. This article, in the form of Q&A, covers the patent and regulatory exclusivity topics in biopharmaceutical R&D.

Q: What is IP?

A: Intellectual property (IP) is comprised of patents, trademarks, and copyrights, protected by law. In biopharmaceutical industry, it pertains protection of molecules, technologies, formulations, etc.

When the drug is covered under patent protection, it means that pharmaceutical company holding the patent is exclusively allowed to manufacture, commercialize and sell the drug. That pharmaceutical company also owns the right to sue others for patent infringement.

Q: What is the patent protection duration?

A: The lifetime of the patent varies between countries and also between drugs. In the USA the term of a new patent is 20 years from the date on which the application for the patent was filed. Major ICH countries and regions like the USA, EU, Japan respect the patents. Some countries do not, and it has to be considered from the marketing standpoint. The companies apply for the patent very early, thus without fully knowing how the IP will be used and with uncertainty on the claims. The application happens much before any of the clinical studies start. Since drug development takes at average ~10 years or longer, the effective patent protection in the USA, after the drug candidate is approved by FDA, may be far less than 10 years.

Q: Why does IP protection matter?

A: Drug development is very costly (average $2.87 bln in 2016) and comes with many risks and uncertainties. Thus patents and regulatory exclusivity are critical to giving the companies the ability to exploit the full product value and maximize the return on investment.

Q: What happens when the patent expires?

A: Once the patent has expired, the drug can be manufactured as a generic and sold by other companies. According to FDA regulations, generic drugs have to be identical to the branded drug regarding efficacy, safety, usage, route of drug administration, pharmacokinetics, and pharmacodynamics. Increased competition with generic medicines presence on the market often result in significant decrease in drug costs and can be advantageous to the healthcare system.

A drug can be manufactured as a generic drug when the following apply:

  • There has never been any patent on the drug before.
  • If the patent expired.
  • The company that would make the generic drug certifies that the patents held on the drug are either unenforceable are invalid or would not be infringed upon.

The pharmaceutical company holding the original patent may, however, fight the loss of exclusivity (LOE) in several ways on R&D and commercial side.  LOE topic is covered here.

Q: What are the time periods of new drug product exclusivity?

A: In USA, innovator biologics (NBEs) have a 12-year period of data protection. A 5-year period of exclusivity is granted to new drug applications (NCEs) for products containing chemical entities never previously approved by FDA either alone or in combination. No 505(b)(2) application or ANDA may be submitted during the 5-year exclusivity period except that such applications may be submitted after 4 years if they contain a certification of patent invalidity or noninfringement. A 3-year period of exclusivity is granted for a drug product that contains an active moiety that has been previously approved when the application contains reports of new clinical investigations (other than bioavailability studies) conducted or sponsored by the sponsor that were essential to the approval of the application. For example, the changes in an approved drug product that affect its active ingredient(s), strength, dosage form, route of administration or conditions of use may be granted exclusivity if clinical investigations were essential to the approval of the application containing those changes.

Q: What pharmaceutical company can do to extend the asset IP?

A: The R&D asset level value-extending strategy may include:

  • Obtaining Pediatric Exclusivity (PED): in the USA, 6 months added to existing patent.
  • The new patent, an extension of existing patent.
  • Improving dosing schedule and reformulation (extended release tablets, oral formulation instead IV, etc.).
  • Improved dose presentation or ease of use.
  • Improvement of safety or tolerability.
  • Application in new indication(s).
  • Additional application in a new therapeutic area.
  • Obtaining orphan drug status in the USA with the exclusivity of 7 years.
  • Approval in a new geography, region, or country.

Q: How IP is used and how patent strength is evaluated?

A: The life science sector uses IP & patent valuation in a variety of situations. It includes fundraising, M&A, licensing, litigation and accounting. Since some of the patents do not offer sufficient protection if not linked to other patents. The basket of patents protecting the invention should be preferably in same hands. Yet, when IP vulnerability is discovered, it is often possible to diminish or even eliminate a risk through contractual language.

The strength of an invention protection is determined by following factors:

  • Remaining patent life.
  • Potential to obtain regulatory exclusivity.
  • Freedom to sell a product without interference from third parties that may own relevant patents.

Q: What is the difference between patents and exclusivity?

A: According to FDA: “Patents and regulatory exclusivity work in a similar fashion but are distinct from one another and governed by different statutes. Patents are a property right granted by the United States Patent and Trademark Office anytime during the development of a drug and can encompass a broad range of claims.  Exclusivity refers to certain delays and prohibitions on approval of competitor drugs available under the statute that attach upon approval of a drug or certain supplements.  A new drug application (NDA) or abbreviated new drug application (ANDA) holder is eligible for exclusivity if statutory requirements are met.  See 21 C.F.R. 314.108, 316.31, 316.34 and sections 505A, 505E, and 505(j)(5)(B)(iv) of the FD&C Act.  Periods of exclusivity and patent terms may or may not run concurrently. Exclusivity was designed to promote a balance between new drug innovation and greater public access to drugs that result from generic drug competition.”

[…] “Patents and exclusivity apply to drugs in different ways.  Patents can be issued or expire at any time regardless of the drug’s approval status.  Exclusivity attaches upon approval of a drug product if the statutory requirements are met.  Some drugs have both patent and exclusivity protection while others have just one or neither.  Patents and exclusivity may or may not run concurrently and may or may not cover the same aspects of the drug product.”

Q: What are the main take-away points from this article?

A: The primary goal of IP protection is to maximize the value of the products for R&D pipeline and portfolio. Only patent attorneys with a comprehensive understanding of local and regional financial and regulatory systems can provide strategic advice on protection, management, and exploitation of intellectual property. The original patent holder may fight the loss of exclusivity (LOE) on R&D and commercial side, applying various strategies.

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