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Exclusivity Strategies in the United States and European Union by Carolyne Hathaway, John Manthei and Cassie Scherer

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Exclusivity Strategies in the United States and European Union by Carolyne Hathaway, John Manthei and Cassie Scherer Exclusivity Strategies in the United States and European Union by Carolyne Hathaway, John Manthei and Cassie Scherer harmaceutical development is an expensive, time company to obtain market approval, there is oft en little, if any, consuming and uncertain process that takes years patent protection left on the product at the time of marketing. Pto complete. Oft en, patent protection expires before To provide pharmaceutical companies with an opportunity a new drug is approved for marketing. As a result, most to recoup their investment in drug research and development pharmaceutical companies in the United States and European and to incentivize continuing innovation, the Food and Drug Union (EU) depend on the exclusivity rights granted under Administration (FDA) and the European Medicines Agency the U.S. Federal Food, Drug and Cosmetic Act (FDCA),1 and (EMEA) have implemented numerous provisions to extend the the corresponding EU authorities to recoup their considerable period during which companies can market their drugs free of investment in the drug development and approval process. generic competition. Th ese non-patent exclusivity provisions Th erefore, pharmaceutical companies must understand and allow pharmaceutical companies to market products without employ the diff erent forms of nonpatent exclusivity in both the competition from incoming generics, resulting in signifi cant U.S. and EU in order to succeed in the global marketplace. fi nancial benefi ts for the original drug manufacturer. Pharmaceutical companies generally obtain patents on their It is essential that a pharmaceutical company evaluate its products or processes long before their product candidates exclusivity options and develop its competitive strategy early are ready to go to market. Since it can take up to 12 years for a in the drug development process. In the United States, the Ms. Hathaway Mr. Manthei Ms. Scherer is a Partner in the is a Partner in the is an associate law fi rm of law fi rm of in the law fi rm of Latham & Watkins, Latham & Watkins, Latham & Watkins, Washington, DC. Washington, DC. Washington, DC. 34 UPDATE May/June 2009 www.fdli.org G8943_May_JuneF.indd 34 5/6/09 12:22:59 AM FDCA provides several exclusivity the market.5 In addition, exclusivity may pursuant to an approved new NDA or opportunities, including: 1) new be granted for Orphan Drugs to treat supplemental NDA may be granted chemical entity exclusivity; 2) clinical diseases or conditions that aff ect 200,000 three additional years of Clinical investigation exclusivity; 3) orphan drug or fewer individuals in the United States Investigation Exclusivity.11 Sponsors exclusivity; and 4) pediatric exclusivity. and for drugs that have undergone may receive CI Exclusivity for the Similar forms of nonpatent exclusivity certain clinical testing in children. following changes: new dosage forms, are available to pharmaceutical A. New Chemical Entity Exclusivity new indications and a product’s change companies marketing drugs in the EU. A pharmaceutical manufacturer can from prescription to over-the-counter Th is article is intended to provide an gain NCE Exclusivity in the United (OTC).12 To support CI Exclusivity, overview of the nonpatent exclusivity States by introducing a drug that the sponsor must conduct clinical provisions in the United States and contains an “active moiety” that has not (human) trials that are: 1) new (not EU that pharmaceutical companies been previously approved by FDA in a previously used to support approval of should consider when forming a global new drug application (NDA).6 An “active the product); 2) essential to approval; 3) exclusivity strategy for their products. In moiety” is defi ned as the molecule or sponsored by the applicant; and 4) not a some instances, government authorities ion responsible for the drug substance’s bioavailablity study.13 have established a common application physiological or pharmacological action.7 CI Exclusivity prevents FDA from for a specifi c form of exclusivity, Since the NCE Exclusivity attaches approving a competitor’s ANDA or refl ecting the recent trend toward to the drug’s active moiety, FDA cannot other application for the protected harmonizing and simplifying the process approve or even accept a competitor’s modifi cation supported by the clinical by which a drug manufacturer can attain abbreviated new drug application trial. It does not, however, prevent the exclusivity in the United States and EU. (ANDA) or 505(b)(2) application submission or approval of ANDAs for (that relies on investigations that were the original indication.14 Unlike NCE I. U.S. Overview not conducted by or for the 505(b)(2) Exclusivity, FDA can accept an ANDA As a result of recent FDCA applicant) for a generic or follow-on and start the review process during amendments, drug manufacturers product that is based on the same active the CI Exclusivity period. However, now benefi t from exclusivity periods moiety during the fi ve-year exclusivity FDA may not deliver its approval of that can be twice as long as they were period, regardless of whether the drug is the competitor’s application until the 20 years ago, when companies were intended for the same indication as the period of exclusivity is over.15 As with required to rely almost exclusively on original innovative drug, or for another NCE Exclusivity, CI Exclusivity will not the drug product’s patent term.2 Th e indication.8 prevent FDA approval of a competitor’s Drug Competition and Patent Term Since the approval process for an NDA that is supported by its own Restoration Act, or the Hatch-Waxman ANDA averages approximately two clinical trials.16 Act, passed in 1984, provides up to fi ve years9 and FDA cannot accept an ANDA C. Orphan Drug Exclusivity years market exclusivity to companies for review during the period of NCE Th e huge investment in time and introducing a new chemical entity to exclusivity, the period of exclusivity money required to develop and the market (NCE Exclusivity) and up from generic competition can exceed obtain approval of pharmaceutical to three years’ market exclusivity for seven years. However, NCE exclusivity products raised concerns that drug conducting clinical trials to support does not prevent FDA acceptance and companies would not expend the changes to products already on the approval of another NDA for a product resources to develop products to treat market (Clinical Investigation or CI with the same active moiety that relies rare or unusual conditions for which Exclusivity).3 Pharmaceutical companies on clinical trials conducted by or for the the market is limited or that, if such are not required to apply for these second NDA applicant.10 products were developed, their cost Hatch-Waxman exclusivities.4 B. Clinical Investigation Exclusivity would be prohibitive. Congress passed Th e Center for Drug Research and Drug companies that sponsor the Orphan Drug Act in 1983 to address Evaluation (CDER) decides the forms additional clinical testing on a this concern and stimulate innovation of exclusivity that are available for each previously-approved drug that leads in this potentially underserved area.17 new pharmaceutical product entering to changes in the marketed product Th e Orphan Drug Act provides drug FDLI May/June 2009 UPDATE 35 G8943_May_JuneF.indd 35 5/6/09 12:23:00 AM manufacturers with seven years of 2002. 23 Th e Best Pharmaceuticals for products. Since 1993, European drug market exclusivity period aft er FDA’s Children Act grants six additional companies have been able to obtain a approval of the drug, as well as research months of exclusivity (aft er all other supplementary protection certifi cate grants and tax credits for each new forms of exclusivity have expired) (SPC) to extend for up to fi ve years the orphan drug developed. 18 Orphan to drug manufacturers who conduct patent for certain medicinal products drugs are defi ned as those intended to pediatric clinical studies on their marketed in the EU in order to treat diseases and conditions that aff ect marketed product and develop useful compensate them for the lengthy time 200,000 or fewer Americans, or for information about the safety and period required to obtain regulatory which the sales in the United States are eff ectiveness of their product approval of these products.30 not reasonably expected to cover the in children.24 In accordance with Regulation (EEC) drug manufacturer’s cost of research Pediatric exclusivity attaches only No 1768/92, an SPC will be granted and development for the drug.19 to products that already have another only if, at the date of application, the If a product is granted orphan drug form of marketing exclusivity—the product 1) is protected by patent; 2) is 25 exclusivity, FDA may not approve (but designation cannot stand on its own. the subject of the fi rst valid marketing may accept) applications for generic Th erefore, a sponsor who obtains authorization granted to market the or second innovator products that pediatric exclusivity will have its patent, product for a medicinal use; and 3) contain the same active ingredient NCE Exclusivity, Clinical Investigation has not already been the subject of an and are labeled for the same orphan Exclusivity, or orphan drug exclusivity SPC. Th e SPC comes into force only indication.20 However, FDA may accept extended by six months. aft er the corresponding general patent and approve applications for drugs Pediatric exclusivity is granted to expires for a period equal to 1) the having the same active moiety, for a a sponsor with an approved NDA period which elapsed between the date for a particular drug, who conducts diff erent indication.21 on which the patent application was a pediatric study(ies) in response In addition, FDA may accept and fi led and the date of the fi rst marketing to a “written request” from FDA approve a subsequent orphan drug authorization, minus 2) fi ve years.
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