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Friday, July 15, 2016

TPP at risk from 'Hatch(ed)' accusations that Australia's data exclusivity steals US patents

By Sarah Matheson, Partner and Ric Morgan, Special Counsel 

Allens has released a discussion paper, Biologic medicines and biosimilars in the Australian landscape, and the news reports today of the comments of US Senator Orin Hatch on the Trans Pacific Partnership (TPP) trade agreement and biologic medicines make this all the more relevant.

In this most recent skirmish in relation to the TPP and the agreement about how innovation associated with biologic medicines should be protected, the US Senator is insisting on 12 years' data protection and has accused Australia of wanting to 'steal US patents'. Linking the two concepts, and the language of 'stealing patents', is both curious and inflammatory. First, data exclusivity and patents provide separate and distinct protections for innovation that proceed in parallel. Secondly, by asserting that the TPP deal only requires Australia to provide five years of protection, he misstates the requirement imposed by the TPP's agreed text in relation to data exclusivity. This hyperbole blurs the real dispute that does exist about what protections should be afforded to those that bring biologic medicines to market. We have explored this issue in a more detailed white paper developed in support of our discussion paper.

Data protection

Data exclusivity protects the information provided by a sponsor when seeking marketing authorisation (or in Australia parlance - registration on the Australian Register of Therapeutic Goods). The general requirements for obtaining marketing authorisation are remarkably similar through-out the major developed economies. The relevant National Registration Authority (NRA) - the Therapeutic Goods Administration (TGA) in Australia, the Food and Drug Administration (FDA) in the US and in Europe, the European Medicines Agency (EMA) - needs to be satisfied that the product is safe and efficacious and manufactured to a sufficient quality. Only then will the product receive marketing authorisation.

These restrictions are designed to balance the interests of the original sponsor, those wishing to compete and those of the wider community, as are restrictions on how an NRA can use the information. This restriction on use is referred to as data exclusivity. In some jurisdictions including the US, there are additional restrictions on the NRA's right to allow competitor products to enter the market based on providing the original sponsor with a period of market exclusivity. This is where there are prohibitions on providing marketing authorisation to competing products for defined periods of time.

TPP negotiations

The negotiation of the TPP brought into stark contrast the differences in exclusivity provided in different nation states. Data exclusivity for biologics emerged as a particularly difficult issue in the negotiations. The US government pressed hard for exclusivity periods similar to those provided under its US's Biologics Price Competition and Innovation Act (BPCIA)—these, when combining data and market exclusivity provisions, can be in excess of 12 years.

Other nation states robustly resisted this US position with Australia being a lead advocate for its own position of providing a five-year period from the granting of the originator's marketing authorisation during which the TGA is not permitted to rely on the data—a policy applied to all medicines.

Ultimately, the TPP provides a compromise position, the broader implications of which may not yet be fully apparent. The relevant section of the TPP (Article 18.51) states:

With regard to protecting new biologics, a Party shall either:
(a) with respect to the first marketing approval in a Party of a new pharmaceutical product that is or contains a biologic, provide effective market protection … for a period of at least eight years from the date of first marketing approval of that product in that Party; or, alternatively,
(b) with respect to the first marketing approval in a Party of a new pharmaceutical product that is or contains a biologic, provide effective market protection:
(i) …for a period of at least five years from the date of first marketing approval of that product in that Party,
(ii) through other measures, and
(iii) recognising that market circumstances also contribute to effective market protection to deliver a comparable outcome in the market.

To translate, this means the TPP parties must either directly provide eight years of exclusivity or make sure that even if there is only an explicit period of five years, something comparable to eight years' protection is achieved.

Senator Hatch's position

Yesterday's accusation by Senator Hatch is a continuation of his previous position. Earlier this year, he said that the failure of the White House to move the TPP requirement beyond five years of market exclusivity for biologics to the 12 years provided for in the US would essentially kill chances for a Senate vote on the TPP. The 12 years of exclusivity outside of patent protection is important because in the US, the protection provided by patents in the biologics field is increasingly limited.

As a result of the US position on patentability that has been developing in cases such as US's Myriad and also Prometheus and Sequenom, the scope of patentable subject matter for many aspects relevant to innovation in biologic medicines has been substantially reduced. Indeed, it might be said that if US patents have been 'stolen' it is a result of these developments in the US patent system.

Senator Hatch also ignores the TPP obligation that Australia provide 'a comparable outcome in the market' to eight years of protection.

Australia's position

It may be that Senator Hatch's position reflects an underlying lack of trust and understanding between the Australian and US trade negotiators. The Australian position as put by the Australian Minister for Trade during the TPP negotiations and now Special Trade Envoy, Andrew Robb, was that US pharmaceutical corporations could be assured of the same monopoly rights over biologic medicines that they enjoy in the United States. If this is a reference to the 12 years US pharma expects, it is difficult to see how that can be the case.

Rather, Mr Robb must presumably have meant that the Australian position is intended to fall within the second part of the TPP provision - five years of explicit protection with other measures to bring the period of protection to a situation comparable with eight years.

These other measures are provided by the processing times for biosimilar applications by the TGA. Taking the TGA's guidance on timing, there will always be at least a year of combined pre-submission and post-submission evaluation. This takes no account of the 'clock-stop' periods where the TGA seeks information from sponsors. When these are taken into account, it would be unusual for the total period before any follow on product obtained marketing approval to be under seven years and for more difficult applications, which would include most biosimilar applications, it could easily take eight years.

Nonetheless, there are reasons to be concerned that the protections Australia promised during the TPP negotiations may not meet the requirements of the TPP.

First, unlike in the US, Australia's data protection only applies where the information sought to be protected 'is not available to the public'. This is under threat by the EMA's current approach to making such information available. The recent Productivity Commission draft report on its inquiry into Australia's Intellectual Property Arrangements recommended a similar approach to public disclosure of the sponsor's data.

Secondly, at the time of the TPP negotiations, Australia's patent position was much stronger than that in the US. However, almost immediately after the signing of the TPP, the Australian High Court handed down its decision in the Australian Myriad case. The Australian outcome is different from that in the US and has a different impact on the patentability of innovation relating to biologic medicines. Relevantly, while Australia's limits on patentability may restrict more aspects of genetic code than in the US, Australia probably retains broader patent protection than in the US, most notably in relation to patents covering diagnostic methods. Certainly IP Australia has interpreted the High Court's decision this way. Be that as it may, the reasoning of the High Court, arguably undermines previous understandings of how patentable subject matter should be confined and introduces uncertainty about how innovation in biologic medicines will be protected by patents in the future.

That the whole of the TPP should be put at risk due to this dispute about data protection, as suggested by Senator Hatch, seems odd. Nonetheless, the proper balance of protection for biologic medicines is clearly a matter of great interest and we invite feedback on this issue and the others raised in our discussion paper Biologic medicines and biosimilars in the Australian landscape

We gratefully acknowledge the assistance of our colleagues in the  Allens Healthcare sector team

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