Test Data Protection Overview

1. BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG LONDON LOS ANGELES NEW YORK PALO ALTO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C. Test Data Protection Overview Jeffrey P. Kushan, Washington, D.C. On behalf of the Biotechnology Industry Organization (BIO)

2. What is Test Data? • Data generated from testing of a regulated product to ensure the product may be safely used and is effective • Test data is generated by rigorous, comprehensive and controlled scientific experiments • Test data provides objective evidence about safety and effectiveness of the regulated product • Test data helps protect the public health • Regulated products may not be marketed without approval by government regulatory authority • Test data is used by regulatory authorities to independently determine that a product is safe and effective before it is placed on the market and used by patients

3. Examples of Regulated Products • TRIPS identifies two categories of regulated products that are entitled to protection • “Pharmaceutical products” • Drugs: small chemical molecules • Biological products: large chemical molecules such as proteins made by biotechnology, vaccines • “Agricultural chemical products” • Pesticides and Fertilizers: chemical compounds used in agricultural applications • Source: TRIPS Agreement, Article 39.3.

4. Generating Test Data is Risky, Expensive and Time-Consuming • New therapeutic agents • On average, it costs US$ 1.2 to 1.3 billion* and 10-15 years to bring a pharmaceutical product having an “active ingredient” that has never been approved (i.e., a “new chemical entity”) to market • Greater than 90% of products in development fail before getting to clinical trials, and only 30% of those entering clinical trials are approved • Clinical testing in humans is a significant contributor to cost and complexity of pharmaceutical development and clinical data generation, with scale of testing often thousands of patients over many years • Agricultural chemical products • New agricultural chemical entities typically cost more than US$ 200 million to bring to market • Sources: Dimasi et al., Manage. Decis. Econ. 28: 469–479 (2007); www.croplife.org. *These figures incorporate the costs of failed efforts to bring a new product to market.

5. The Pharmaceutical Test Data Dossier • A compilation of data and reports describing the pharmaceutical product, including: • Pre-clinical evidence, including from analysis of the components of the product (e.g., the active ingredient) by in vitro and animal testing • Clinical evidence, including data from well controlled clinical investigations that evaluate effects of administering the product to individual human subjects, and summaries and analysis of such data • Manufacturing information and data, including a description of the product, its components and properties, how the product is made, manufacturing batch records showing consistency and variations in the production of the product, etc. • Other evidence, both from public literature and non-public sources, relevant to safety and effectiveness of the product • Source: 21 U.S.C. 355(b)(1) [§ 505(b)(1)]; also, 21 C.F.R. § 314.50, which sets forth the specific requirements of a new drug application before the FDA.

6. The Pharmaceutical Test Data Dossier • Some information in the dossier cannot be publicly disclosed • Personal privacy restrictions prohibit disclosure of information concerning the experiences of patients who participated in the studies • Trade secret rights exist in various portions of the dossier, particularly manufacturing information • Clinical data for biologics is linked to the particular method used to make the biological product • During pendency of its review, the dossier as a whole is handled as confidential business information • The regulatory authorities will base their decision to approve a new pharmaceutical product on the dossier considered as a whole, not on discrete or isolated elements of the dossier

7. How is Test Data Protected from Unfair Commercial Use? • By providing a period of time during which a regulatory authority will not rely, directly or indirectly, on the innovator’s test data to support approval of a third party application • Regulatory agencies rely on an innovator’s test data if they base their decision to approve a third party application on: • A review of the data in the innovator’s dossier • An earlier approval by the same agency of the innovator’s application, or findings on the safety or effectiveness of the innovator’s product • An earlier approval by another agency of the innovator’s product, or that agency’s findings on safety or effectiveness, or • Published summaries of the test data (e.g., information in the approved prescribing instructions for the product)

8. Market Dynamics Where Data Protection Is Provided to Innovators • During the data protection period, the innovator’s product competes with different products that can be used to treat the same disorder or disease • Regulatory authority can approve other products supported by complete dossiers of independently generated clinical data • Intense competition from different products in this period – on average, new innovator products enter market within 2.5 years of market introduction of first innovative product* • After the data protection period ends, the innovator’s product competes with generic or biosimilar products • Regulatory authorities can approve abbreviated applications that reference the innovator product, leading to less expensive versions • Both forms of competition benefit public health • * Source: Tufts Center for the Study of Drug Development, CSDD Impact Report, “Marketing exclusivity for first-to-market drugs has shortened to 2.5 years,” 11(5) (2009).

9. Public Health Benefits of Test Data Protection • Encourages companies to conduct initial clinical testing of new* pharmaceutical products • Provides regulatory authorities the objective scientific evidence needed to evaluate and justify approval of new pharmaceutical products • Provides benefits to patients by encouraging clinical testing of new drugs, regardless of patent status, for use in treating unmet medical needs • A “new chemical entity” is an active ingredient that has never been approved by the regulatory authority of the country for use in the same type of product

10. Public Health Benefits of Test Data Protection • Encourages additional clinical testing of an approved product to enable use in treating other diseases • Many pharmaceutical products can treat multiple diseases, but each new use requires independent clinical proof of effectiveness and safety • Experience shows that companies conduct extensive additional clinical research to support new uses of approved pharmaceutical products during the period of data protection • Experiences with biologics approvals in the United States: • 47% of approved rDNA and monoclonal antibody products have been approved for at least one additional disease/disorder beyond the original indication • One third of the new indications for these products were approved more than 7 years after the first approval Source: Said et al., Continued Development of Approved Biological Products, Boston Consulting Group, White Paper (Dec. 2007)

11. Public Health Benefits of Test Data Protection • Enables lower cost, safe and effective generic and biosimilar products to be brought to market • Products can be approved on the basis of an “abbreviated” application not having a complete dossier of clinical evidence • A generic drug must have the identical active ingredient and exhibit the same behavior in the body • A biosimilar product cannot be “identical” to the innovator product, and requires additional clinical evidence to support approval • Generics and biosimilars are produced for a defined and existing market, have a far lower risk of failure of development, and a significantly reduced cost of development relative to innovator products

12. Phases of a Pharmaceutical Product AbbreviatedApproval Possible Pre-Clinical Clinical Development Third Indication Second Indication First Indication Data Protection Period Start of Clinical Investigations First Approval Second Approval ThirdApproval

13. Two Different Obligations in TRIPS Article 39 • Article 39.2 • Requires laws/regulations that enable private parties to prevent unauthorized disclosure of their “confidential business information” (i.e., trade secret protection) by any entity, including government agencies and employees • Article 39.3 • Requires measures that prevent a regulatory authority from making “unfair commercial use” of undisclosed test or other data provided to the authority to support grant approval of the innovator product

14. Article 39.3 Imposes Distinct Obligation Beyond Non-Disclosure • If Article 39.3 only imposed obligation to not disclose confidential information, it would be redundant with obligations of Article 39.2 • Separate and distinct provisions in an international agreement are presumed to impose distinct obligations • Second sentence of Article 39.3 requires protection from unfair commercial use even if a Member requires disclosure of some of the “protected” test data for reasons necessary to protect public health • Regulatory authorities often require a summary of the clinical trials to be included in the prescribing instructions for the product, and make other clinical trial information available online

15. What is “Unfair Commercial Use” • Something that provides an unfair commercial advantage to one entity at the expense of another • A regulatory agency’s conclusion that a generic or biosimilar product is safe and effective product is necessarily based on the test data dossier supporting approval of the referenced innovator product • The regulatory authority thus “uses” the referenced innovator’s test data dossier to justify approval of an abbreviated application referencing an innovator product • Allowing a generic or biosimilar product to enter the market too soon after the referenced innovator product has been launched constitutes an unfair commercial use of innovator’s test data

16. The Unique Bifurcated U.S. System • New and generic “drugs” regulated under the § 505 of the Federal Food Drug and Cosmetic Act • “Drugs” generally have a “small molecule” active ingredient • Abbreviated New Drug Application (ANDA) may not be filed for a period of 5 years from original approval of new drug, unless it contains a patent challenge, in which case it may be filed 4 years after approval • If ANDA filed during fourth year, FDA may not approve the ANDA until 7.5 years after NDA approval • ANDA approvals take on average 2 to 2.5 years from filing to be approved. • Effectively, U.S. provides 7.5 years of data protection from the approval date of a new drug application • Source: 21 U.S.C. § 355(b)(1) (new drug applications); § 355(b)(2) (other applications referencing earlier approval); § 355(j) (abbreviated new drug applications)

17. The Unique Bifurcated U.S. System • Biological products are regulated under § 351* of the Public Health Service Act • No current abbreviated pathway for approving biosimilar biological products • Each application (BLA) must be supported by independently generated clinical data • This means these products presently have an infiniteperiod of data protection • Pending legislation • Biosimilar legislation that has passed the relevant House and Senate Committees would provide 12 years of data protection, plus an additional 6 months for pediatric studies • Source: * 42 U.S.C. § 262; ** H.R.

18. European Practices • Drugs and biological products are regulated under a single legal regime in the centralized approval procedure of the European Medicines Agency • Single legal regime applies to both “small molecule” drugs and “large molecule” biological products • Effective period of data protection for both types of products is 10 years, which may be extended to 11 if a new indication representing a significant clinical benefit in comparison with existing therapies is approved within 8 years of original approval

19. Market Incentives Provided by Test Data Protection • Providing test data protection encourages innovator companies to enter and participate in markets, which increases the likelihood of: • Earlier launches of innovator products in the market, given the increased prospect for commercial success in that market • Improved education among caregivers about the pharmaceutical product, its uses and its safety profile • Entry of generic and biosimilar products once viable domestic market for the innovator product has been established • Domestic clinical investigations to evaluate new applications of product or its therapeutic profile in the domestic population

20. Data Protection vs. Patents • Two distinct and independent mechanisms • Patents protect technological inventions, and • Are limited to a specific technological advance, and measured by novelty/inventiveness over public knowledge • Enable owner to prevent unauthorized use of the invention • Original patents often expire around time of product approval due to extended period of development and clinical testing • May not be available for new products that contain a publicly known chemical compound, or for new uses discovered by additional clinical research • Often do not provide adequate commercial protection in countries that do not have a long-established or robust patent systems

21. Unique Features of Test Data Protection • Test Data protection • Is available even if the pharmaceutical product is not eligible to be patented, which ensures there is an incentive to conduct clinical testing needed to secure approval of new drugs and new uses of drugs • Only prohibits regulatory agency from relying on innovator’s approval to approve another application – any entity can secure marketing approval by supporting the application with a complete and independently generated clinical dossier • Provides greater certainty than patents, both in developed and developing country markets, which functions to provide an incentive for innovator companies to undertake risky, expensive and difficult clinical testing of the product

22. Conclusions • Test data protection systems • Provide all countries with many important public health benefits • Support competition by both product innovation and on price • Test data protection under TRIPS must extend beyond simply preventing public disclosure or theft of confidential data in the test data dossier • The only viable way to provide effective test data protection is to defer the date on which a regulatory authority may rely on a prior approval of an innovator product to approve a generic or biosimilar application