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Why a Bipartisan Bill Is Pitting the Biopharma Industry Against Itself

Sen. John McCain (R) is one of the PRICED Act's sponsors in the Senate.Sen. John McCain (R) is one of the PRICED Act's sponsors in the Senate.
Sen. John McCain (R) is one of the PRICED Act's sponsors in the Senate.

A bipartisan trio of Congress members—including Sen. John McCain and potential Hillary Clinton running mate Sen. Sherrod Brown—are proposing intellectual property legislation which is already pitting industry players against each other.

Pointing to skyrocketing medication prices, including for old treatments like the Novartis (NVS) cancer drug Gleevec, Rep. Jan Schakowsky (D-Illinois), McCain, and Brown introduced the Price Relief, Innovation, and Competition for Essential Drugs (PRICED) Act in the House of Representatives and the Senate on Friday. If passed, the bill would reduce the so-called data exclusivity period for biologic drugs—increasingly popular therapies derived from biologic material that tends to be far pricier than other types of treatments—from 12 years to seven.

And that would mean significantly more competition for branded biologic manufacturers from their counterpart “biosimilar” drugmakers. It’s a clash which threatens to set up a battle between biophama industry cousins, some of which even produce both types of treatments, in an election year when drug prices are under fire from both political parties.

Data exclusivity isn’t the same as market exclusivity. It’s an intellectual property mechanism that focuses on the “intellectual” in order to protect the “property.” Companies that create original, branded biologic products get to keep their clinical data to themselves until the exclusivity period sunsets. After that, though, competitors that want to make cheaper biosimilars can use that safety and efficacy data as a part of their own drug approval applications, significantly cutting the upfront cost of making a copycat.

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The U.S. 12-year data exclusivity threshold for biologic products was set under a compromise in the Affordable Care Act, aka Obamacare. President Obama has since proposed reducing that period to seven years through budget proposals in an effort to cut healthcare spending (biosimilars have been sold at major discounts over branded originals in other countries, but only two have been very recently approved in the U.S.).

These efforts have been met by intense opposition from major trade groups like the Biotechnology Innovation Organization (BIO), which argues that anything less than a dozen years of exclusivity would stifle innovation, reduce drug access, and increase prices in the long run. It’s been a major sticking point in the struggle to pass the global Trans-Pacific Partnership (TPP) trade agreement, which proposes a five-to-eight year exclusivity period that’s more in line with the rest of the world than current American law.

Biotech industry groups reply that the U.S. puts up far more of the upfront work for producing novel drugs that are changing the face of medical care and should be allowed to recoup their investments. So it’s not too surprising that the new PRICED Act has caused some heartburn in the sector. BIO said in a statement that it “strongly opposes” the bill by arguing that a “majority of biotechnology companies are small, private start-ups, heavily reliant on venture capital investment” that need the bigger 12-year incentive.

The Generic Pharmaceutical Association (GPhA) takes a very different tact. The legislation would “speed patient access to more affordable versions of some of the most expensive medicines,” GPhA president and CEO said Chip Davis in a statement. “As brand and specialty drug costs rise at a concerning rate, the association looks forward to working with Congress and others to ensure timely access to biosimilar medicines.”