Protecting Data Exclusivity, Protecting the Future of Medicine

Protecting the intellectual property of biologics is complicated, difficult, and essential to the future of medicine.  Not surprisingly, the proposed 12-years of data exclusivity for biologics is one of the remaining sticking points in the Trans-Pacific Partnership trade negotiations.  Data exclusivity is essential to the future of biologic medicines, but the nuances of their production greatly complicate the logistics of protecting their intellectual property.

What makes biologics different

The chemical structures of traditional “small molecule” pharmaceuticals are generally well defined.  Accordingly, laboratory analysis can determine all of the components and replication (generic production) is fairly straightforward.  In contrast, due to their complexity, biologics are very difficult and sometimes impossible to characterize scientifically.  In many cases, some of the components of a finished biologic may be unknown.[1]  Consequently, the U.S. Food and Drug Administration (FDA) has struggled to establish “interchangeability” for complex proteins.   Unlike conventional “small molecule” drugs for which a generic drug can be shown to be the same as an innovator drug, a biosimilar [follow-on biologic (FOB), subsequent entry biologic (SEB)] is a product that is similar but not identical to the pioneer biologic.

According to Amgen, “a biologic medicine is a large molecule typically derived from living cells and used in the treatment, diagnosis or prevention of disease.  Biologic medicines include therapeutic proteins, DNA vaccines, monoclonal antibodies, and fusion proteins”. [2]   Many biologics are produced using recombinant DNA (rDNA) technology and are made by genetically engineering living cells to produce the required proteins rather than through chemical synthesis.  In addition, biologics are considerably larger than “small molecule” drugs, often 200 to 1,000 times their size and significantly more complex structurally.  Given both the size of biologics and their sensitivity, these medicines are almost always administered through an injection into a patient’s body.

The sensitivity of these complex proteins make them more difficult to characterize and to produce such that even minor differences in manufacturing processes or cell lines may result in variations in the resulting protein.  Predictably, this sensitivity makes quality control all the more important and production complications more disastrous.  Beyond the 500 cases of fungal meningitis linked to contaminated injectable corticosteroids formulated by the New England Compounding Center and the 150 deaths resulting from tainted Chinese heparin, immunogenicity problems may even result from small changes made by the innovator company under controlled conditions.   Consider the case of EPREX as described by BIO, the Biotechnology Industry Organization:

Immunogenicity is an important concern regarding the safety of biologics. This occurs when our bodies treat a protein as if it is a foreign substance and try to attack the protein with antibodies. Unlike chemical drugs, all biologics have the potential to stimulate antibody production in patients and such responses are highly unpredictable. Sometimes the antibodies produced in response to a biologic have no effect. Other times they bind and inactivate the biologic, causing disease progression. In still other cases, they can bind to and inactivate a patient’s naturally occurring protein, which means that the patient may be left with no options other than regular blood transfusions.  One example of immunogenicity occurred a few years ago when, at the request of the European Health Authorities, Johnson & Johnson made a change in the manufacturing process for its EPREX product – a product that had been marketed for a decade with no evidence of immunogenicity problems. The change caused a serious adverse reaction in a small number of patients. These patients lost their ability to make red blood cells because they produced an antibody (triggered by the EPREX) that inactivated both the administered protein (EPREX) and the body’s natural protein that is essential for red blood cell production. Johnson & Johnson eventually was able to determine the cause of this adverse reaction and correct it, but only after a very lengthy and expensive investigation.  The EPREX case shows that one protein can be different from another in ways that cannot be detected in the laboratory, but are seen only by the body’s exquisitely sensitive immune system. If one change to a well-established complex manufacturing process, made by the manufacturer who has intimate knowledge of the process, can cause a problem with immunogenicity, surely the risk is even greater with an entirely new manufacturer and process – as will be the case with follow-on biologics. [3]

The extreme sensitivity of biologics points to the challenges of defining the parameters of protection and the importance of safety.  Safety must be a priority in the development, production and protection of biologics.  Since a minute alteration in the raw materials, temperature, pH, cell line, or manufacturing process can result in a significant change in the medicine’s quality, efficacy or safety, the interchangeability and substitutability of these products must be approached with extreme caution.

Biologics, the future of medicine

To date, close to 200 biologic medicines have transformed the lives of more than 800 million patients.[4]  While these numbers testify to the current value of biologics, it is estimated that they will become increasingly important therapies in the future.  Analysis suggests that by 2017 biologics will comprise seven of the top ten global pharmaceuticals and 30 percent of the pharmaceutical industry pipeline will be biologics.

Why patents aren’t enough

Traditionally, “small molecule” drugs are patent protected for a twenty-year term.  Biologic medicines, however, are more difficult to comprehensively protect with patents due to their size, complexity, and numerous similar effective variants.[5]   This comprehensive protection is critical given the investment and risk associated with biologics.  Estimates are that the pre-approval cost of developing a biologic approaches $1.2 billion and that the time needed to recover the pre-approval R&D costs be between 12.9 and 16.2 years.[6]  In the United States, the Biologics Price Competition and Innovation Act of 2009 (“Biologics Act”) provides for 12 years of exclusivity for the drugs.  Through this, Congress endeavored to fill the void left by patents and trade secrets in the protection of biologics.  In contrast, the period of data protection for “small molecule” drugs is five years, but this exclusivity is less important because generic drugs are required to contain the identical active ingredient. In the case of biosimilars, similar effective variants are sufficient.  That is, regulatory approval does not require identity with the pioneer biologic product it references, hence the source of the potential patent protection gap.  As a result, without an extended period of data exclusivity, a competing product could elude the innovator’s patent while relying on the innovator’s data for regulatory approval.  Amgen notes that this is exacerbated by two issues.  “First, because of the nature of biologic products – large molecules produced by living cells and organisms through highly specific processes – patent protection is often narrower than that of small molecule drugs.  Second, the creation of an abbreviated pathway for approval of similar biological products creates new and strong incentives for competitors to exploit this patent protection gap.” [7]

Although patent protection and data exclusivity may be considered complementary forms of protection, they serve distinct purposes.  Patents are granted for innovations that are novel, non-obvious and useful, covering both breakthrough advances and incremental improvements.  In contrast, data protection incentivizes the lengthy development work which is necessary to establish safety and efficacy and secure regulatory approval of a new product.  This complementary protection requires biosimilar manufacturers to independently conduct the comprehensive pre-clinical and clinical trials for their own product, or to wait the 12 years specified by the Biologics Act before requesting a regulatory shortcut to approval based on the innovator’s prior approval and data.  Given the complexity and sensitivity of biologics, this protection both safeguards the innovator’s investments while also ensuring patient safety.[8]   Accordingly, the negotiations surrounding the Trans-Pacific Partnership (TPP) include provisions for 12-years of data exclusivity for biologics.  This protection is crucial for the development of future biologic medicines and the preservation of the incentives needed to encourage investment in these drugs.

A misplaced focus on cost savings

Much of the debate surrounding data exclusivity for biologics centers on the mistaken belief that this provision would lock in high prices for biologic drugs.  This was precisely the focus of a recent letter from the AARP to U.S. Trade Representative Michael Froman (link here).  However, the cost savings achieved with generic “small molecule” drugs is unlikely to be available through biosimilars.  In the case of conventional “small molecule” drugs, over three to five years the cost of developing a generic is approximately $1-5 million, providing a lower-cost alternative for patients.[9]  In contrast, many of the shortcuts available to generic manufacturers will not be available to biosimilar producers who are expected to need to invest in clinical trials as well as manufacturing and post-approval safety monitoring programs similar to those of the innovative biologic company.  Consequently, biosimilar products are estimated to take eight to ten years to develop at a cost of $75-250 million.[10]  Current studies estimate cost savings from biosimilars will be between ten and 20 percent less than the cost of the pioneer biologic.  European data shows that biosimilars offer just a 10% discount from the brand.[11]  It is not worth undermining the future of this technology with weakened intellectual property protection for the limited cost savings anticipated through biosimilar competition.   The incentives to invest in biologic vaccines and therapies must be preserved with 12 years of data exclusivity.

A healthy IP infrastructure must include data exclusivity   

Biologics are vital to health, and data exclusivity is vital to innovative biologics.   As technology changes to enable the development of new biologic vaccines and therapies, intellectual property protection must also evolve to ensure protection for these products.  As countries and economies more closely integrate, medical collaborations and multinational research initiatives will become more common and more important.  These efforts should not be hindered by discrepancies in intellectual property infrastructure.  Moreover, transparency, consistency and predictability are essential to the investments of time, talent and financial resources required for the discovery and development of new biologics.  If we value the future of biologics, we must protect them with 12 years of data exclusivity.


[1] Biotechnology Industry Organization (BIO). “How do Drugs and Biologics Differ?” online posting, 10 November 2010.

[2] Amgen. “Biologics and Biosimilars: An Overview,” online posting, 2012.  Available at:

[3] Biotechnology Industry Organization (BIO). “Why is Patient Safety a Concern in the Biosimilars Debate?” online posting, 10 November 2010.  Available at:

[4] Guildford-Blake, R. and Strickland, D. “Guide to Biotechnology 2008,” Biotechnology Industry Organization (BIO), online posting, 2008. Available at:

[5] Stroud, Jonathan. “Power without a Patent: Twelve-year biologics data exclusivity period and a totality-of-the-evidence standard for biosimilarity,” online posting, 2nd International Conference and Exhibition on Biowaivers and Biosimilars, September 23-25, 2013, Raleigh, NC.  Available at:

[6] DiMasi, J.A., and H.G. Grabowski. “The Costs of Biopharmaceutical R&D: Is Biotech Different?” Managerial and Decision Economics, vol.28, no.4-5, June 2007, pp.469-479.

[7] Biotechnology Industry Organization (BIO). “The Trans-Pacific Partnership and Innovation in the Bioeconomy: The Need for 12 years of Data Protection for Biologics” online posting, 18 July 2013.  Available at:

[8] Biotechnology Industry Organization (BIO). “The Trans-Pacific Partnership and Innovation in the Bioeconomy: The Need for 12 years of Data Protection for Biologics” online posting, 18 July 2013.  Available at:

[9] Please see CBO Cost Estimate (S.1695), Biologics Price Competition and Innovation Act of 2007, As

Ordered Reported by the S. Comm. on Health, Education, Labor, and Pensions on June 27, 2007.  Available at:

[10] Kambhammettu, Sumanth.  “The European Biosimilars Market: Trends and Key Success Factors,” online posting, October 27, 2008.  Available at:

theeuropean-biosimilars-market-trends-and-key-success-factors; and Amgen. “Biologics and Biosimilars: An Overview,” online posting, 2012.  Available at:

[11] Howell, Peter.  “How much cheaper will biosimilars be?” FiercePharma, online posting, March 2, 2012.  Available at:

The Author

Kristina M. L. Acri née Lybecker

Kristina M. L. Acri née Lybecker is an Associate Professor of Economics at Colorado College in Colorado Springs, and Chair of the Department of Economics and Business. She earned a B.A. from Macalester College, with a double major in Economics and Latin American Studies, and received her Ph.D. in Economics in 2000 from the University of California, Berkeley. Dr.Acri's research analyzes the challenges surrounding intellectual property rights protection in innovative industries: incentivizing pharmaceutical research and development especially on neglected diseases, addressing the difficulties of strengthening intellectual property rights protection in developing countries, battling the problems related to pharmaceutical counterfeiting and the unique nature of protection for biotech therapies. Recent publications have also addressed alternatives to the existing patent system, the balance between pharmaceutical patent protection and access to essential medicines, and the markets for jointly produced goods such as blood and blood products. Kristina has testified in more than a dozen states on the economics of pharmaceutical counterfeiting. She has also worked with US Food and Drug Administration, Reconnaissance International, PhRMA, the National Peace Foundation, the OECD, the Fraser Institute, the Macdonald Laurier Institute, and the World Bank, on issues of innovation, international trade, and corruption.

Warning & Disclaimer: The pages, articles and comments on do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of Read more.

Discuss this

There are currently 5 Comments comments.

  1. Raj Bawa, PhD November 11, 2013 11:22 am

    Excellent analysis.

  2. Erich Boger November 11, 2013 1:52 pm

    I enjoyed reading your article, however I drew a contrarian conclusion from the information that you presented. It seems that you are presenting the argument of why 12 years of exclusivity is not necessary.

    Given that (1) biosimilars are predicted to offer approximately 10%-20% discount relative to the innovator product and (2) the high cost of manufacturing and obtaining regulatory approval; this would appear to offer a disincentive to prospective biosimilar applicants. In particular, the unique US FDA requirement of interchangeability may prove to be a very high bar to surmount. Additionally, obtaining reimbursement approval for biosimilars could be problematic. Given that the regulatory and reimbursement playing field is tilted in favor of the innovator companies, why would an additional 12 years of exclusivity be mandated? Reflexively, the 12.9 to 16.2 year time interval is cited to recoup a biologic pre-approval cost of 1.2 billion. Perhaps a reevaluation and more critical analysis of the cited conclusions of DiMasi and Grabowski (Managerial and Decision Economics, 28: 469-479, 2007) may be in order to more accurately reflect the competitive regulatory and market advantages enjoyed by the innovator product relative to the commercialization challenges faced by the biosimilar developer. Innovative product developers should reap a substantial return on their investment, however the key question becomes what is the right balance between promoting commercialization and market competition.

  3. Jonathan Stevens November 13, 2013 4:29 pm

    I’m still wondering how, in a court of law, you can claim ownership to somebody’s internal workings. Hmmm….

  4. Gene Quinn November 13, 2013 5:21 pm


    I’m sure you realize that is not what is going on here. So why with the ridiculous statement? What is your agenda?

    If you want to comment here that is fine, but I’m not going to allow anyone to erroneously confuse the issues and attempt to create a hysteria. Facts matter in debate on IPWatchdog.


  5. Handal Morofsky November 15, 2013 3:51 pm

    I have to agree with Erich. It seems that the playing field is very much tilted in favor of pioneer companies such that 12 year data exclusivity period would serve to simply evergreen the patent process. Wouldn’t it make sense, if this is indeed necessary for innovative reasons, to push for extensions on patent terms rather to demand a new sui generis mechanism for extending protections?