Brand companies' quest to ward off market-entry of follow-on biologics through data-exclusivity is undermined by the Federal Trade Commission ¹ report on FOBs and competition, released June 10.

The panel rejects outright the 12- to 14-year exclusivity period sought by the brand industry.

Data exclusivity could be warranted if new biologic molecules cannot obtain patent protection, the commission concedes in "Emerging Health Care Issues: Follow-on Biologic Drug Competition," which was approved by all four current FTC commissioners.

But the panel continues, "Because there is no evidence about the lack of patentability of new biologic products, nor that market forces have been insufficient to incentivize their development, the commission has not recommended a length of an exclusivity period."

Brands aren't the only ones to have their exclusivity put down, however. FTC also says no to a 180-day marketing exclusivity for the first interchangeable FOB to enter the market. Entry of subsequent products is unlikely to cause a substantial price drop, so the first interchangeable biologic will continue to earn sufficient profits, the commission concludes.

FTC's concerns about perceived abuses of exclusivity for small-molecule generics informed its recommendation about FOB exclusivity (² Also see "Follow-On Biologics Study By FTC Aims “To Strike The Right Balance”" - Pink Sheet, 27 August, 2008.). And FTC's report also discourages the creation new procedures to resolve patent disputes before FOB approval, citing the potential for abuse (see ³ Also see "Patent Challenge Mechanism For FOBs Should Be Scrapped, FTC Says" - Pink Sheet, 10 June, 2009.).

The commission's concern about "pay for delay" settlements on the small molecule side is so great that they were mentioned twice in the ⁴ press release about FOB report. While FTC has been stymied in its efforts to block them on its own, a House subcommittee recently marked up legislation to ban such settlements (⁵ Also see "Reverse Settlement Bill Clears House Subcommittee With GAO Report Attached" - Pink Sheet, 8 June, 2009., p. 29). Linking that bill with the FOB legislation seems unlikely, but FTC seems to want to tie them together. One possible outcome would be for the generics industry to support the settlement ban in exchange for FTC down playing its concerns about FOB exclusivity.

FOB Report Now Becomes Political Talking Point

In the FOB report, FTC's failure to identify a needed time period for brand data exclusivity strengthens the negotiating hand of House Energy and Commerce Committee Chairman Henry Waxman, D-Calif., who originally proposed zero data exclusivity but then allowed as much as six years in his latest bill (⁶ Also see "Follow-On Biologics Debate Creates Strange Bedfellows As Bills Emerge" - Pink Sheet, 16 March, 2009., p. 3).

Rep. Anna Eshoo, D-Calif., and committee ranking Republican Joe Barton, R-Texas, have more than 60 co-sponsors for their legislation, which allows as much as 14.5 years of exclusivity. A bill reported out by the Senate Health, Education, Labor and Pensions Committee last year but not yet introduced this year would permit 12 years.

How the FTC report will affect legislation should become more apparent June 11, when the Commerce Health Subcommittee holds a hearing with FTC Commissioner Pamela Jones Harbour to discuss the report.

Waxman already has indicated he sees it as a vindication of his position. "The report completely disposes of the drug industry's argument that they need 12 to 14 years of exclusive marketing, indeed, that they need any additional exclusivity, to sustain innovation," he commented.

Amgen, however, points out that the FTC conclusions about data exclusivity conflict with those reached by "countries around the globe, including those in Europe (which grants 11 years for biologics) and Canada," as well as by economists who have calculated 12 to 16 years as the time needed by innovator companies "to recoup aggregate development costs."

Comments from the Biotechnology Industry Organization were more caustic. "The report appears to minimize greatly the impact on innovation that would occur under a new paradigm in which biosimilar competitors would be able to take a free ride off the massive R&D investment made by the initial innovators."

-Cathy Dombrowski (c.dombrowski@elsevier.com)

FTC’s Low Blow On FOBs

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