Maintaining Incentives for Healthcare Innovation: Response to the FTC's Report on Follow-On Biologics

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Congress is considering legislation that would create an abbreviated FDA approval process for follow-on biologics (FOBs), which proponents anticipate will promote competition and lower prices in the market for biologic drugs. In June of 2009 the FTC published a report on FOBs (“the FTC Report”), which attempts to forecast the nature of competition between innovator biologics and FOBs, and offers a number of substantive recommendations regarding specific provisions of the various FOB bills. In particular, the FTC Report concludes that there is essentially no justification for the inclusion of a substantial data exclusivity period (“DEP”) for innovators in pending FOB legislation, and that Congress should not include a pre-approval patent dispute resolution process (“PPRP”). The FTC Report bases its conclusion that a substantial DEP is unnecessary to adequately incentivize innovation in biologics in part on a misapplication of the results of a study I conducted in 2007 on the written description doctrine of patent law.

In this article I offer a response to some of the conclusions and recommendations set forth in the FTC Report. In particular, I think it is important to clarify the scope and implications of my study on the written description doctrine, and explain why I believe that the FTC over-interpreted the results of the study to arrive at a conclusion that is unsupported by the data. In my view an extended DEP for innovators is justified and should be included in FOB legislation enacted by Congress. I also disagree with the FTC's conclusion that a PPRP is unnecessary and unwarranted for biologic drugs; such a process is appropriate and would be important to maintain adequate incentives for innovation. Some of the proposed FOB legislation would discriminate against the developers of innovative biologic drugs, not only with respect to FOB producers, but also in comparison to the treatment currently afforded conventional drug innovators. These discriminatory provisions should be removed or rectified to provide a more balanced approach to promoting competition while maintaining adequate incentives for investment in biotechnology.

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Minnesota Journal of Law, Science and Technology