At the end of July 2015, media worldwide reported yet another stutter in the Trans-Pacific Partnership (TPP) trade negotiations.  Especially prominent were the seemingly intractable positions of the negotiating countries on intellectual property issues.  In particular, the publicity of the TPP negotiations (ironically held in secret) has raised the profile of the unfamiliar IP protection known as ‘data exclusivity’ periods, particularly regarding biologic medicines. 

Here, we try to shed a little more light on data exclusivity periods, and the proposed protections for biologic pharmaceuticals.

What is a data exclusivity period?

Before a new drug can be introduced into a country’s health system, the drug’s developer is required to provide the government with data from clinical trials which establish the quality, safety and efficacy of the drug for the purposes for which it is to be used.  This information is kept confidential by the government.

However, in some situations, competing drug suppliers can seek government approval for a generic* version of the drug on the basis that it is the same as the original (i.e. is ‘bioequivalent’), without having to run their own clinical trials.  This allows the generics providers to piggy back on the original developer’s trial data.  This is considered by many to be a form of unfair competition – the original innovator must bear the cost and risk of trials, while the generic suppliers benefit from a free ride to market approval. 

To balance the interests of the original developer and the generics provider, many countries define periods in which the data provided to the government cannot be relied on by generics providers.  This is the period of “data exclusivity”. 

New Zealand and Australia currently provide a data exclusivity period of 5 years for confidential information about new active ingredients. 

Unlike patents, data exclusivity periods do not give a drug developer a true market monopoly.  Other suppliers could, if they wanted, conduct their own trials and make separate applications for approval for the same drug.  In practice, however, the cost and time of doing so provides the original drug developer with a temporary de facto monopoly, even in the absence of patent protection.  Clearly then, data exclusivity periods become especially valuable where patent protection is found to be invalid or not enforceable against a generic provider, or where patent protection is simply not sought or is not available. 

What are biologics and why are they special?

Leaked proposals from the TPP negotiations show that the United States (among others) is pushing to introduce a special protection period of 12 years exclusivity for a class of active ingredients called ‘biologics’. 

Biologics are medicines obtained from biological material, and include proteins, antibodies and other blood-derived products.  As biologics tend to be derived from living cells, they differ from conventional “small molecule” drugs in important ways.  In particular, their composition is less perfectly defined.  Conventional small molecule drugs are produced according to exacting standards and have a precise chemical makeup which can be protected by patent.  Biologics, on the other hand, do not require an exact composition in order to be effective at treating a disease; small modifications to the biologic (known as ‘biosimilars’) may not make any difference to their efficacy. 

The potential for ‘biosimilars’ being introduced to compete with the original biologic makes biologics more difficult to protect with patents.  Pharmaceutical companies that invest heavily in research and development are concerned that other manufacturers will be able to create biosimilars which are sufficiently different to the original to avoid patent infringement, but which are close enough to the original (i.e. sufficiently bioequivalent) that they can piggy back on the original clinical trial data. 

Innovators of new biologics want to plug this so-called ‘patent protection gap’ by extending data exclusivity to 12 years.

What’s likely to happen if data exclusivity is extended for biologics by the TPP?

The TPP won’t change the fact that data exclusivity periods for drugs are already law in Australia and New Zealand.  Although any exclusivity or monopoly tends to maintain higher prices, most medicines that would be affected by the proposed extensions to data exclusivity periods will already be protected by patents.  Therefore, it is at least arguable that acceding to extended data exclusivity periods may be a worthwhile concession in the grand scheme of TPP negotiations if it assists New Zealand’s demands in other areas.

In the absence of any further leaks or a final agreement, it all remains to be seen whether there will be any change to the length of the exclusivity period.