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 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 free of investment in the 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 ” 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 (NDA).6 An “active the product); 2) essential to approval; 3) exclusivity strategy for their products. In moiety” is defi ned as the or sponsored by the applicant; and 4) not a some instances, government authorities 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. Th e for a study to evaluate the pediatric application for the “same drug” and SPC term may not exceed fi ve years eff ectiveness and safety of the drug.26 the “same orphan indication,” if from the date on which it takes eff ect. Pediatric exclusivity, once attained for the applicant demonstrates that the In 2005, the EU Data Exclusivity a drug, applies not only to the specifi c product is “clinically superior”—safer, Directive31 was brought into force drug product studied in the pediatric more eff ective or signifi cantly more under which, sponsors may receive population, but to all of the applicant’s convenient than the fi rst drug.22 up to 11 years of exclusivity for new dosages, formulations and indications Th is provides an incentive for drug drugs. Th e exclusivity available under for drugs with existing marketing companies to continue to develop the Directive may include eight years exclusivity or patent life that contain innovative and eff ective products for of data exclusivity, two years of the same active ingredient.27 A pediatric the orphan drug market. marketing exclusivity, and a potential study does not have to be successful D. Pediatric Exclusivity one year extension. for the sponsor to obtain pediatric Historically, little drug testing was In addition, under the EU Orphan exclusivity.28 Th e drug will be awarded conducted in pediatric populations. drug regulations,32 which became six months of pediatric exclusivity, as Since children may metabolize and eff ective in 2000, the Community and long as the sponsor submits a study that respond diff erently to particular drug the Member States may not accept or responds to FDA’s requirements in its products, the lack of pediatric data grant for 10 years, a new marketing “written request.”29 raised concerns among regulators, authorization, or an application legislators and practitioners. In order II. EU Overview to extend an existing marketing to address this concern and encourage In the past few years, the EU authorization, for the same therapeutic pediatric drug development and has expanded signifi cantly the indication as an orphan drug. Finally, testing, Congress enacted the Best opportunities for drug manufacturers Regulation (EC) No 1901/2006 Pharmaceuticals for Children Act in to obtain market exclusivity for their (Paediatric Regulation), which became

36 UPDATE May/June 2009 www.fdli.org

G8943_May_JuneF.indd 36 5/6/09 12:23:01 AM eff ective on January, 26, 2007, provides “generic medicinal product” may Th e Orphan Drug Regulation sponsors with the right to apply for a rely on the data from the reference establishes a centralized procedure six month extension to the product’s drug to demonstrate the generic’s under which sponsors may apply for SPC in return for conducting pediatric bioequivalence, necessary to gain orphan drug designation. Th e sponsor studies on the product. marketing approval.38 However, during must submit an application for orphan A. EU Data Exclusivity “8+2+1” the two-year period of marketing designation at any time prior to the Under the Data Exclusivity Directive, exclusivity, EU authorities cannot application for marketing authorization. pharmaceutical companies may receive approve a marketing authorization for EMEA, through its Committee for up to 11 years to market their product the generic product. Moreover, the Orphan Medicinal Products (COMP), without risk of competition.33 Th ese initial marketing authorization holder is responsible for reviewing and 11 years of exclusivity are comprised may obtain a one-year extension of granting orphan drug applications. of what the European Parliament has marketing exclusivity if it obtains an COMP must provide an opinion on the termed an “8+2+1” regime.34 A drug additional authorization during the orphan drug designation within 90 days company introducing its product initial eight-year exclusivity period which, if favorable, is then forwarded to market in the EU can enjoy eight for one or more new therapeutic to the European Commission, which years of data exclusivity, two yearsof indications that demonstrate generally must adopt the decision marketing exclusivity and a one year signifi cant clinical benefi t over within 30 days.42 extension.35 existing therapies.39 During this time, Th e benefi ts of orphan drug During the eight-year period of data marketing authorizations for a generic designation in the EU are vast. If exclusivity competitors cannot submit product cannot be approved. marketing authorization is granted generic applications for marketing B. Orphan Drug Designation pursuant to the EU’s centralized authorization. During this time, Th e EU Orphan Drug Regulation,40 procedure or by all Member States, the innovator’s data is treated as a which was adopted on December 16, the Community and the Member trade secret and new entrants cannot 1999 and became eff ective on April States will not, for 10 years, accept reference the data until the expiration 27, 2000, establishes incentives to another application for a marketing of the eight-year data exclusivity period. encourage the research, development authorization, grant a marketing A company that wishes to apply for and marketing of orphan drugs. authorization or accept an application marketing approval within the data To obtain orphan drug designation, to extend an existing marketing exclusivity period must perform its own 1) the drug must either be (a) authorization, for the same therapeutic safety and toxicology studies, and its intended to diagnose, prevent, or indication with respect to a similar own clinical trials, without dependence treat a life-threatening or very serious medicinal product.43 on the inventor’s data.36 condition affl icting no more than Regulation No. 847/2000 and recent Th e Data Exclusivity Directive fi ve in 10,000 people in the EU; or guidance interpret the term “similar includes a proviso that patent laws in (b) intended to diagnose, prevent, medicinal products” as those products EU member states should not prevent or treat a life-threatening or very with the same active substance or the sponsors from conducting the studies serious and chronic condition that, same principal molecular structural and trials necessary to obtain marketing without incentives, would probably features (but not necessarily all of the authorizations for the generic products, not be marketed given its low same molecular structural features), and the necessary consequential likelihood that the marketing would which acts via the same mechanism requirements.37 Although the scope generate suffi cient return to justify the as the substances in the currently and eff ect of this provision are not investment; and 2) there must not be authorized orphan product, and which entirely clear, it appears to permit any satisfactory method of diagnosis, has the same therapeutic indication.44 generic companies to undertake the prevention, or treatment in the Although market exclusivity for studies necessary to obtain marketing European Community, or if a method orphan drugs is generally granted for a authorization. does exist, the medicinal product period of 10 years, it may be extended Aft er the eight-year data exclusivity should be of signifi cant benefi t to to 12 years for pediatric products, or period ends, manufacturers of a those aff ected by the condition.41 may be reduced to six years if, at the

FDLI May/June 2009 UPDATE 37

GG8943_May_JuneF.indd8943_May_JuneF.indd 3737 55/6/09/6/09 112:23:022:23:02 AMAM end of the fi ft h year of exclusivity, the Sponsors that include data from The decision to adopt a single drug no longer satisfi es the original the PIP in their marketing approval orphan drug application reflects designation criteria (e.g., there is applications or in applications to a larger initiative between the suffi cient evidence that the product vary or extend an existing marketing Commission, FDA and EMEA to is profi table enough to not justify approval for a product that is minimize costs to the pharmaceutical maintenance of product exclusivity).45 authorized in all Member States may industry and simplify the approval In addition, the sponsor may lose apply for a six-month extension to process,51 and drug manufacturers its exclusivity if it consents to a the product’s SPC. This extension have presented numerous additional second orphan drug application or is will apply, not only to the product’s “areas for simplification” of the unable to supply enough of the drug pediatric indication, but to all marketing authorization processes in question. In addition, a second indications of the product having for consideration.52 applicant can obtain marketing the same active ingredient. The SPC IV. Conclusion: approval if it can demonstrate that term extension will not be available Recommendations its drug, “although similar … is safer, if a sponsor applies for, and obtains, Taking advantage of the multiple more eff ective or otherwise clinically a one-year extension of the products’ forms of market exclusivity available superior” as compared to the initial marketing protection “on the grounds in both the United States and EU is orphan drug.46 that the new pediatric indication critical for securing the optimum Additional benefi ts of orphan drug brings a significant clinical benefit in financial return on a new or updated designation include access to advice comparison with existing therapies.” drug. A pharmaceutical manufacturer from the EMEA on what is needed The Paediatric Regulation also can capitalize on these opportunities to achieve marketing approval, a creates a new type of marketing authorization, the Paediatric Use by considering the following centralized mechanism under which Marketing Authorization (PUMA), recommendations: sponsors may obtain marketing for medicinal products not protected A. Develop a comprehensive approval, and a reduction or waiver of by SPC or SPC qualifying patents. long term exclusivity strategy that fees for marketing authorization. 47 PUMAs may provide eight years incorporates the various testing and B. Pediatric Exclusivity of data exclusivity and 10 years development activities required. Th e Paediatric Regulations marketing exclusivity for those B. Plan Your Exclusivity signifi cantly changed the regulatory products developed exclusively for Strategy Early environment for pediatric medicines.48 use in the pediatric population.49 Considering the potential for Th e Paediatric Regulations require a product’s patent to expire before applicants to include, in their III. Recent Efforts the product is introduced to market, marketing authorization application, Toward U.S./EU a sponsor should assess early its data on their product’s use in children Harmonization optimal exclusivity strategy. It resulting from an agreed-upon As a result of the increasing is essential for the innovator to pediatric investigation plan (PIP). similarity of the U.S. and EU familiarize itself with the numerous In addition, as of January 26, 2009 exclusivity standards, and the trend exclusivity options and to consider applicants must include pediatric for drug innovators to introduce whether any such options are data in applications to vary or extend their products in both markets, there available for its product (i.e., Is the an existing marketing authorization have been efforts to simplify the dual product intended for an orphan for drug products protected by or exclusivity process. In late 2007, the population, is it safe for children, eligible for an SPC to include any new United States and EU consolidated are there other indications for the indication, pharmaceutical form, or their orphan drug market approval product in the pipeline, is future OTC route of administration. Applicants requests into a single application, status a possibility). By preparing may be excused from the pediatric although each regulatory body an exclusivity strategyearly, a data requirements only if they receive continues to independently review manufacturer can prepare for any a waiver or a deferral. the common application.50 steps necessary to attain additional

38 UPDATE May/June 2009 www.fdli.org

G8943_May_JuneF.indd 38 5/6/09 12:23:02 AM forms of exclusivity, and can 15 See id. EU v. US generic pharmaceuticals regulation, 16 See id. (Dec. 2006) available at http://74.125.47.132/ maximize its time in the market 17 See generally 21 U.S.C. § 360aa, 360bb, 360cc, search?q=cache:kYZG1zMLquMJ: without competition. 360dd, 360ee, and 42 U.S.C 236; see also 21 C.F.R. www.ashurst.com/doc.aspx%3Fid_ C. Take advantage of U.S./EU Part 316. Content%3D2133+EU+%E2%80%93v-+US+gene 18 See generally 21 U.S.C. § 360cc, 360ee, and 42 ric+pharmaceuticals+regulation&hl=en&ct=cln Simplifi cation Procedures U.S.C 236; see also 21 C.F.R. Part 316.; see also k&cd=1&gl=us; see also Article 10(6) of Directive http://www.fda.gov/orphan/grants/info.htm and Th e orphan drug exclusivity 2004/27/EC. http://www.fda.gov/orphan/taxcred.htm. 38 See id. (B), See also Drouault-Gardrat, supra note common application suggests that 19 See 21 U.S.C. 360bb; see also 21 C.F.R. Part 316. 26. there may be a trend toward EU/U.S. 20 See generally U.S.C. § 360aa-360dd; see also 21 C.F.R. Part 316. 39 See revised Article 10(1) of Directive 2004/27/EC. harmonization. Keeping abreast of 21 See id. 40 Regulation (EC) No 141/2000 of the European any new developments, such as 22 See id. Parliament. additional common exclusivity 23 Best Pharmaceuticals for Children Act of 2007 41 Guideline on aspects of the application of Article (BPCA), Pub. L. No. 11–185, § 501–503, H.R. 8(2) of Regulation (EC) No 141/2000: Review of applications or mutual recognition 3580–54 — 3580–68. On September 27, 2007, the period of market exclusivity of orphan me- policies, will save drug manufacturers Congress enacted Title V of the Food and Drug dicinal products; See id.; See also Jenkins, supra Administration Amendments Act of 2007 both time and money. note 34. (FDAAA) (titled “Best Pharmaceuticals for Chil- 42 Regulation No. 141/2000. dren Act of 2007”), which reauthorizes the Best 43 See Article 8(1) of Regulation No. 141/2000. Pharmaceuticals for Children Act for fi ve years. 1 FDCA of 1938, ch. 675, 52 Stat. 1040 (codifi ed as 44 Regulation No. 847/2000 of April 27, 2000; see 24 Id. amended at 21 U.S.C. §§ 301–397). also Communication from the Commission, 2 See Relman, Arnold S. and Angell, Marcia, 25 See id. Guideline on aspects of the application of Article America’s Other Drug Problem, The New Repub- 26 See id. 8(1) and (3) of Regulation (EC) No 141/2000: lic, (Dec. 16, 2002). Th e length of patent protec- 27 See http://www.fda.gov/cder/Pediatric/faqs.htm. Assessing similarity of medicinal products versus tion was previously 17 years from the date of the 28 Id. authorized orphan medicinal products benefi ting patent grant, but clinical trials and FDA approval 29 Id. oft en took up nine of these years. Since June 8, 30 Regulation (EEC) No 1768/92, dated June 18, from market exclusivity and applying derogations 1995, patent terms extend up to 20 years from the 2002, entered into force on January 2, 1993. from that market exclusivity, (19 Sept. 2008). fi ling date of the earliest patent application.Avail- 31 Directive 2004/27/EC, amending Article 10 of 45 See Communication from the Commission, able at www.uspto.gov/go/taf/patdesc.htm. Directive 2001/83/EC. Guideline on aspects of the application of Article 3 See generally 21 U.S.C. §§ 355, 360cc and 35 32 Regulation (EC) No 141/2000 of the European 8(2) of Regulation (EC) No 141/2000: Review of the U.S.C. §§ 271, 282[.] Parliament. period of market exclusivity of orphan medicinal 4 See id. 33 See Drouault-Gardrat, Paule & Peterka, Juliette, products, (17 Sept. 2008). 5 See id. Optimizing your business development of pharma- 46 Article 8, Regulation No. 141/2000. ceuticals in the EU; some regulatory changes you 6 See 21 U.S.C. §§ 505(c)(e)(D)(ii), 505(j)(5)(D)(ii); 47 See Jenkins, supra note 34. see also 21 C.F.R. § 314.108. should know, (June 21, 2006), available at www. 48 See “Th e Orphan drugs strategy” available at 7 21 C.F.R. § 314.108 (a). solutionslab.com. www.ec.europa.eu/health/ph_threats/non_com/ 8 21 C.F.R. § 314.108 (b). 34 Ashurst, (Dec.2005), Life Sciences and Regulatory rare_6_en.htm. 9 http://www.fda.gov/oc/initiatives/generics/white- Update: EU v. US generic pharmaceuticals regula- 49 See id. paper.html. tion. 10 See id. 35 See Directive 2004/27/EC – New European Data 50 See “EU and US harmonize ‘orphan drugs’ ap- 11 See 21 C.F.R. § 314.108. Exclusivity Provisions article and Drouault- proval procedures” Euractiv.com (Nov. 29, 2007), 12 See id. Gardrat, supra note 31 available at http://euractiv.com/en/health. 13 See Id. 36 See id.(B). 51 See id. 14 See 21 U.S.C. § 505(c)(3)(E)(iii), (iv) 37 Ashurst, Life Sciences and Regulatory Update, 52 See id.

FDLI May/June 2009 UPDATE 39

GG8943_May_JuneF.indd8943_May_JuneF.indd 3939 55/6/09/6/09 112:23:032:23:03 AMAM