Service on WTO and Trade Issues (Aug15/08)
Preliminary analysis of biologics exclusivity (part of May 2015 leak)
Biologics at monopoly prices are extremely expensive and are a growing share of medicines, including life-saving medicines. The latest leaked TPP IP chapter proposes a monopoly of up to 12 years for biologics, even when they are not patented.
Therefore what is defined as a ‘biologic’ that gets this exclusivity period for up to 7 years longer than chemical medicines in the leaked TPP IP chapter is very important.
Accepting these broad definitions in the TPP text would lock in an unnecessarily large number of biologic medicines at the extremely high monopoly prices for the up to 12 years proposed, even when there is no patent and without any exceptions, even in an epidemic or other crisis situation.
Any biologics definition in the TPP text also risks being outdated very quickly as the science is fast moving in this field, so it is best to leave it to be defined in national law where it can be updated more quickly and easily.
Biologics are becoming increasingly important: ‘In 2008, 28 percent of sales from the pharmaceutical industry’s top 100 products came from biologics; by 2014, that share is expected to rise to 50 percent.’ In 2010, biologics were already 25% of the new products approved by the US government’s Food and Drug Administration.
At monopoly prices, biologics are expensive (see below) and therefore if the TPP requires exclusivity periods for biologic medicines, even when they are not patented, the definition of what medicines are biologics and therefore subject to this exclusivity becomes important. This note contains preliminary analysis of the latest leaked text’s proposed definitions of biologics. Further expert analysis is required for this important area.
Based on past US free trade agreements (FTAs), the Trans-Pacific Partnership Agreement (TPP)’s intellectual property (IP) chapter will be directly enforced by one government suing another at an international tribunal for not complying with the chapter’s obligations. The winning government could impose tariffs on the losing government’s exports until it changes its law to comply with the TPP text.
Cost of biologics – some examples
According to the US government’s Federal Trade Commission in 2009, ‘annual treatment for breast cancer with the biologic drug Herceptin can cost $48,000 . . . in 2007, Americans spent $286.5 billion for prescription drugs, $40.3 billion of which was for biologic drugs.’
According to AARP (US nongovernmental organization for people over 50 years old, which has a membership of more than 37 million people), biologics ‘are eventually going to represent more than 50 percent of spending in the next few years. . . The average annual cost of a branded biologic is estimated to be roughly 35,000 dollars right now. However, annual costs can range anywhere from 25,000 to 200,000 dollars or more, with many drugs coming on with prices at the higher end. For example, 12 out of the 13 new cancer drugs approved last year were priced over 100,000 dollars annually. And some drugs are coming to market with prices closer to 400,000 dollars.’
‘People with rheumatoid arthritis or Crohn’s disease spend $50,000 a year on Humira. And those who take Cerezyme to treat Gaucher disease, a rare inherited enzyme deficiency, spend a staggering $200,000 a year.’
‘The Medicare Payment Advisory Commission found that the top six biologics — including Avastin, a chemotherapy drug, and Remicade, a treatment for plaque psoriasis and rheumatoid arthritis — already consume 43 percent of the drug budget for Medicare Part B, which covers doctor visits and outpatient services. And the rate of increase in spending for biologics under Medicare Part D, the prescription drug benefit, significantly outstrips that of other drugs.’
‘The average daily cost of a brand name biologic product is approximately 22 times greater than a traditional drug. U.S. average annual spending growth from 2002 to 2007 was 16% for biologics, compared with 3.7% for drugs. This price trend will be a significant cost driver for public health care programs including Medicare and Medicaid.’
Even at US$15,000 per patient per year (for life),for Praluent, a biologic (which is a monoclonal antibody which is a protein)to treat cholesterol, American insurance companies are saying that ‘The exorbitant price raises concerns as to whether consumers and the health system can sustain the long-term cost’.
Savings from generic biologics
In the USA, ‘Estimates from various economic impact studies pin the projected savings from $42 billion on the low end to as high as $108 billion over the first 10 years of biosimilar market formation.’
‘A recent study by Express Scripts found that in California alone, patients and payers could save $27.6 billion over the next 10 years from the introduction of biosimilars on 11 biologics whose patents expire in the near future.’
The US government’s budget stated that ‘The Budget also proposes to accelerate access to affordable generic biologics by modify-ing the length of exclusivity on brand name biologics. Beginning in 2014, this proposal would award brand biologic manufacturers seven years of exclusivity, rather than 12 years under current law, and prohibit additional periods of exclusivity for brand biologics due to minor changes in product formulations, a practice often referred to as “evergreening.” The proposal will result in $3 billion in savings over 10 years to Federal health programs including Medicare and Medicaid.’
See also estimated Australian cost savings if biosimilars are available: http://dfat.gov.au/trade/agreements/tpp/submissions/Documents/tpp_sub_gleeson_lopert_moir.pdf.
Analysis of Article QQE20
· If the definition of biologic is ‘protein’, this makes it more likely that vaccines, blood derivatives etc (and even cells, tissues, organs, insects and combination products?) that contain proteins would be found to be biologics.
· Does this mean medical devices themselves such as self-injection flex-pens for synthetic insulin (a protein) such as Novolog would get the exclusivity period under this provision?
Definition of biologic
If any biologic exclusivity is provided, from an access to affordable medicines perspective it is important that the definition of ‘biologic’ is not too broad. Eg biologics can include nucleic acids, sugars, proteins, enzymes, antibodies, cells, tissues, blood and blood components, viruses, toxins, antitoxins, mould, pollen, animal hair, insects , human cells and tissues used for transplantation (for example, tendons, ligaments and bone)  and chemically synthesised polypeptides. Chemically synthesised polypeptides can basically be machine produced by emailing a string of letters to a machine which, like a bread making machine, does all the work .
Since biologics are a fast-moving field of science, it is best to define it in national law which can be more easily updated to reflect the changing technology and science, otherwise any definition risks being out of date by the time the TPP comes into force. Trying to update it by renegotiating it with 12 TPP Parties each time the science changes would mean constant renegotiations – by the time a new definition is agreed and brought into force, it is likely to be out of date again etc.
If ‘biologics’ are defined in the TPP text, some preliminary comments on the proposals are below. (These proposed definitions should be thoroughly analysed by interdisciplinary committees including specialist doctors from all relevant disciplines, epidemiologists, organic chemists, biochemists etc who are all up to date with the latest cutting edge science to assess the impact of agreeing to these proposals).
Approach 1 in this May 2015 leak is basically the same as in the May 2014 leaked text except that:
This covers vaccines (prevention), treatment (eg cancer medicines) and presumably curative treatments, so the only thing left out is diagnosis.
Since the majority of biopharmaceuticals are of protein nature, by defining biologic to include proteins, almost all current/possible biologics would be caught and get the longer exclusivity (including most vaccines and blood derivatives, see below). Eg monoclonal antibodies such as Herceptin and Avastin for cancer are proteins. You can buy custom made monoclonal antibodies for USD$3900 or off the shelf. If they are so easy to make, should they get biologic exclusivity?
Most vaccines and blood derivatives contain protein
An example of a definition of blood derivative which could be followed by a TPP tribunal interpreting this chapter is ‘Blood derivatives are derived from human blood, plasma, or serum through a chemical fractionation manufacturing process. Examples of blood derivative products include albumin, antihemophilic factor, immune globulin, and alpha-1 anti-tripsin. As discussed in the preamble to the final rule in response to comments (64 FR 67720 at 67725 through 67727), blood derivative products are not blood or blood components intended for transfusion and therefore could not be distributed by health care entities, including full service blood centers that function as health care entities, after the final rule goes into effect.’ Of those listed above, all of them are proteins:
Therefore even if the definition of biologic did not include vaccine or blood derivatives, once it includes protein, most vaccines and blood derivatives would get biologic exclusivity, see below.
Therefore giving up to 12 years of exclusivity to the protein part of a vaccine would effectively give that exclusivity to the whole vaccine
The examples in this paragraph assume there is no patent on the protein in the vaccine or on the vaccine itself (eg because the protein is naturally occurring, eg a killed virus and there is insufficient inventive step as it is obvious how to make a vaccine). Therefore without data/marketing exclusivity (‘exclusivity’), a generic version of the vaccine could immediately get marketing approval by relying on the clinical trial etc data of the originator’s vaccine. However the wording proposed, even if it is only exclusivity on the protein in the vaccine, may effectively block the generic version for the duration of the exclusivity. If this proposal is accepted: ‘For the purposes of this [Article] [Section] [Chapter], a pharmaceutical product that is a biologic means a . . . protein. . .’, then this can still mean that vaccines (other than DNA vaccines) and blood derivatives that are p roteins (which are presumably most blood derivatives, see above) still get the up to 12 years of exclusivity. This is because if the originator makes vaccine A that has protein A in it that is the effective part of the vaccine with aluminium as an adjuvant and it is protein A that gets the up to 12 years of exclusivity, then when the generic tries to get marketing approval for its biosimilar vaccine with biosimilar protein A in it, it is unlikely to be able to rely on the clinical trial etc data for the originator’s protein A for up to 12 years and so cannot get marketing approval for the generic version of the vaccine for up to 12 years.
A similar argument could be made for blood derivatives containing proteins.
Definition of ‘technological application’ in definition of ‘biotechnology’
TPP Parties may be constrained when they define ‘technological application’ or ‘derivative thereof’ in their national law, even though it is not defined in the TPP text in these proposals. A TPP tribunal is likely to require a good faith legitimate interpretation (such as a dictionary definition or accepted scientific practice). As noted below, if it is defined broadly e.g. to boil soybeans in a cooking pot, this would result in many medicines getting biologic exclusivity.
Naturally occurring proteins may still get exclusivity
· naturally occurring plant-derived proteins with medical uses include:
· Soy: Soy protein can be used to reduce
· hot flashes from menopause and it is the soy protein that is thought to be the active component.
· The risk of coronary heart disease.
· Soy is therefore a (naturally occurring plant derived) product that is produced by a living organism and is for use in human beings for the prevention or treatment of a disease or condition and which is a protein.
If it is made into a form that can be consumed by humans by boiling
the soybeans etc, is this a technological application (heat and a
cooking pot) that uses a derivative of a living organism (the soybean)
to make a product to treat hot flashes and therefore is a biologic
and gets up to 12 years exclusivity?
· naturally occurring animal-derived proteins with medical uses include:
· Insulin (from pigs/cows)which is still needed by some patients. Some technology is used to extract this from pigs/cows, eg chromatography to purify itfor the specific use of treating diabetes, so this seems to satisfy this definition of biologic
Blood/serum/plasma from Ebola survivors, see below
If there is no exclusion for chemically synthesised peptides/polypeptides/proteins
Although ‘protein’ should exclude the easily chemically synthesised peptides/polypeptides/proteins, chemically synthesised proteins may still be caught by this definition of biologic. This is because some definitions (which may be followed by a TPP tribunal define:
It is possible to chemically synthesize more than 100 amino acids (ie a peptide, polypeptide & protein) in practice. Eg you can ask a company to synthesise up to 100 amino acids for you. So a protein made by sending the string of amino acid letters to a company to synthesise for you could get up to 12 years of exclusivity.
Eg insulin is a protein that can be chemically synthesised and since it is a synthesised version of a naturally occurring protein arguably there was not enough inventiveness/effort/research and development cost to justify it getting a 12 year monopoly.
The definition of ‘biotechnology’ may not exclude chemically synthesised peptides/polypeptides/proteins from exclusivity, eg depending on the definition of ‘derivatives thereof’.
Approach 1 ter
In addition to the analysis of the terms above where they are the same:
If the proposal for ‘biologic’ to include blood derivatives is accepted
This version explicitly proposes that blood derivatives would get exclusivity. An example of a definition of blood derivative which could be followed by a TPP tribunal interpreting this chapter is ‘Blood derivatives are derived from human blood, plasma, or serum through a chemical fractionation manufacturing process. Examples of blood derivative products include albumin, antihemophilic factor, immune globulin, and alpha-1 anti-tripsin. As discussed in the preamble to the final rule in response to comments (64 FR 67720 at 67725 through 67727), blood derivative products are not blood or blood components intended for transfusion and therefore could not be distributed by health care entities, including full service blood centers that function as health care entities, after the final rule goes into effect.’ Therefore all of these naturally occurring products could get up to 12 years of exclusivity if this proposal is accepted.
The World Health Organization stated that blood derivatives could be used to treat ebola immediately. There are attempts in the USA to set up ebola plasma banks to treat future ebola patients, however if a company gets exclusivity on the ebola survivors' plasma in Country A (by being the first to get marketing approval for using such blood derivatives), no one else in TPP Country A could use ebola survivors’ plasma to treat other patients, even in an emergency such as an epidemic and even if they collected it themselves, for the duration of the exclusivity period required by the TPP.
Who would get exclusivity on naturally occurring antihemophiliac factor? If it were a patent, it would usually be the first to file an application for a patent on the invention. Here presumably the first company to file an application for marketing approval for a naturally occurring product is the one who is allowed to privatise nature and get a monopoly in that TPP country for up to 12 years.
Of those listed in the definition of blood derivative above all of them are proteins:
So they would get exclusivity even if the definition was ‘only’ proteins.
If the proposal for ‘biologic’ to include polypeptides is accepted
As noted above, there can be an overlap between some definitions of polypeptide and protein. Therefore giving exclusivity to polypeptides can include proteins as well as smaller molecules.
If ‘contains’ is accepted
The generic version of the vaccine etc is even more likely to be blocked by the exclusivity period on the protein if the wording proposed here which has ‘contains’ is accepted, see analysis above.
If the proposal for ‘biologic’ to include vaccinesis accepted
Then in addition to protein-based vaccines, any DNA vaccines which are not caught in the definition of ‘biologic’ by being a protein would also get any longer exclusivity by vaccines being defined as biologics.
If Option 1 definition of ‘biotechnology’ is accepted
This definition of ‘biotechnology’ is the same as in Approach 1bis, so see comments above under Approach 1bis.
If Option 2 definition of ‘biotechnology’ is accepted
Unlike Option 1, Option 2 does not even require:
· raw naturally occurring soyabeans handpicked would be a biologic which could be protected by up to 12 years of exclusivity
· if cow’s milk had a human medical use, even naturally occurring milk produced by hand-milking a cow would also constitute a biologic as it is made by a biotechnology process (the cow being the living organism) under this definition.
Since the proposed definition in Option 2 is broader, more medicines would get biologic exclusivity if it is accepted in the TPP.
Sanya Reid Smith LLB, BSc (Hons), Legal Adviser, Third World Network, 20 August 2015
Since it is very difficult to create a complex biologic molecule from scratch, they are usually naturally occurring/derived from naturally occurring products/synthetic versions of naturally occurring products, so there is often no patent on them as they do not pass the patentability criteria of being new and inventive. If there is no patent, then the only obstacle to accessing cheaper generic/biosimilar versions would be this proposed biologic exclusivity.
The proposed biologics exclusivity would start from the date of marketing approval in the country approving the biologic and last for up to 12 years. This can give it an effective monopoly which is of a similar duration as a patent (which although patents last for 20 years, the 20 year period starts from the earlier date of filing a patent application).
However this biologic exclusivity would be given to all biologics which meet the biologics definition, without having to pass the patentability criteria of novelty, inventive step and industrial applicability. This means that a biologic medicine that would not be new or inventive enough to deserve a 20 year patent monopoly still can get an equivalent (for a shorter period but starting from a later date) monopoly via biologic exclusivity.
The economic norm is free competition but an exception has developed for intellectual property such as patents where monopolies are allowed in certain limited circumstances (which are based on carefully balanced criteria developed over centuries and there are exceptions to these patent monopolies) to make sure the costs of allowing a monopoly do not outweigh the gains. Agreeing to biologic exclusivity would allow recipients of biologic exclusivity to override this careful balance which has been deliberately chosen by governments in patent monopolies by circumventing the patentability criteria to get an equivalent monopoly that does not even have the exceptions available for patent monopolies. See below re lack of exceptions to biologic exclusivity compared to patents.
Which are very similar as the US government has a strong template.
from 2014 FTC workshop on biologics: http://www.ftc.gov/news-events/events-calendar/2014/02/follow-biologics-workshop-impact-recent-legislative-regulatory (has transcript)
Insects are biologics under some domestic definitions, see below
The FDA regulates some of these as biologics:
-‘demineralized bone combined with handling agents (glycerol, sodium hyaluronate, calcium sulfate, gelatin, collagen) - are regulated as devices
-Bone-suture-tendon allografts - regulated as devices
-Cultured cells (fibroblasts/keratinocytes/nerve/ligament/bone marrow) on synthetic membranes or combined with collagen may be regulated as devices or biological products (these products are currently under review and may be regulated by CBER under either the device authorities or under section 351 of the PHS Act)
pancreatic islet cells are regulated as biological products’.http://www.fda.gov/BiologicsBloodVaccines/TissueTissueProducts
The UNITAID analysis of the leaked TPP IP chapter points out that starting the exclusivity period earlier is a flexibility (that can mean not many years of the monopoly are left by the time it is given marketing approval in the country concerned), http://www.unitaid.eu/images/marketdynamics/publications/TPPA-Report_Final.pdf.
are allergenic products, http://www.fda.gov/BiologicsBloodVaccines/Allergenics/default.htm
which are included as biologics, http://www.fda.gov/Drugs/DevelopmentApprovalProcess/%20HowDrugsareDevelopedand
Unless it is a DNA vaccine
As there are no exceptions to the biologic exclusivity proposed in this leaked text, unlike for small molecule exclusivity which has exceptions proposed in QQE16.3 and QQE16.6 etc and patents which can have exceptions and compulsory licences (QQE4). There is often no patent on biologics as they are usually naturally occurring/derived from naturally occurring products and so do not pass the patentability criteria of being new and inventive. Therefore compulsory licences over patents, even if they could deal with the biologic exclusivity, do not help in the common situation when there is no patent on the biologic.