Washington Editor

The president's proposal to shorten the exclusivity period for biologics in fiscal 2012 as a debt-busting move could end up costing the government money by opening the floodgates to biosimilars long before the FDA is ready.

Reducing the exclusivity from 12 years to seven, as President Barack Obama has proposed, would have "ramifications that could potentially be very significant from an FDA perspective," said Mark Brown, a partner at King & Spalding and former associate chief counsel at the FDA.

Since the 12-year exclusivity is a matter of law, that's the time frame the FDA is using in drafting its biosimilar guidance, preparing to review biosimilar applications and planning its inspection schedule. Shortening that time would mean biosimilar applications would hit the agency five years earlier than it's preparing for, Brown told BioWorld Today.

Under the 12 years of exclusivity laid out in the Affordable Care Act, the FDA expects to be hit with a wave of biosimilar applications for monoclonal antibodies beginning in 2016. Although the agency is meeting with some drugmakers on biosimilars, it is not fully prepared to review biosimilars yet as too many details, such as labeling and timing of manufacturing inspections, have to be resolved. (See BioWorld Today, July 21, 2011, and July 26, 2011.)

The agency plans to address some of those details in a guidance it hopes to complete by the end of this year. However, that guidance, which has been in the works for nearly two years, is built on the 12-year exclusivity. If the exclusivity were reduced, the agency would have to redraft parts of the guidance, an effort that could take resources from other guidances the agency is working on.

Changing the exclusivity period now also would mean the FDA would have to reallocate its resources and priorities, Brown said, adding that there could be "profound ramifications" to the agency unless its budget were significantly increased to grow its resources for biosimilar inspections and reviews.

The president's proposal, which was included in the debt-reduction plan he unveiled Monday, comes as the FDA is negotiating with industry for unique biosimilar user fees. Recognizing that the new 351(k) path could drain critical agency resources needed to review innovative biologics, the FDA is looking for ways to get some of the biosimilar fees up front. Those user fees would not be in place until fiscal 2013. (See BioWorld Today, May 10, 2011, and Sept. 20, 2011.)

A change in exclusivity that could speed the time of arrival of the first big wave of biosimilars also could impact the agency's ability to meet performance goals for the follow-on drugs.

As it is, when the FDA opened user fee negotiations for biosimilars, it proposed a five-year performance phase-in that would start with 50 percent timely review targets for biosimilars and interchangeable biologics in 2013. The goal would increase 10 percent each year, reaching 90 percent by 2017.

The reality is that the biosimilar pathway is still in development. That fact, coupled with the costs to the FDA, brings into question the savings that would come from reducing biologic exclusivity.

According to the president's debt reduction plan, the shorter exclusivity would result in a $3.5 billion savings over 10 years.

But when he called for seven-year exclusivity in his 2012 budget proposal earlier this year, Obama acknowledged that it wouldn't create any savings immediately but would lead to about $2.34 billion in savings over the next decade. (See BioWorld Today, Feb. 16, 2011.)

Meanwhile, biopharma is concerned about the impact on industry and the economy if the exclusivity were shortened.

"Shrinking the exclusivity period is a step back and inconsistent with a policy of reinvigorating an economic climate that supports innovation and domestic job growth," Antoinette Konski, a partner with Foley & Lardner LLP, told BioWorld Today.

Noting that the innovation supporting the development of a successful biologic is more complex than that required for a small-molecule drug, she said biologics deserve a robust exclusivity period to encourage the necessary level of R&D.

The Biotechnology Industry Organization (BIO) also took issue with the uncertainty created by trying to change a provision that's already a matter of law.

"A reduction in the exclusivity period will jeopardize the careful balance established in the biosimilars pathway to reduce costs, ensure patient safety and encourage continued biotechnology innovation that will create jobs and lead to breakthrough therapies and cures," BIO President and CEO Jim Greenwood said in a statement.

Shortening the exclusivity also could cost the U.S. its edge in medical innovation. The European Union provides 10 years of data exclusivity, which may be extended for an additional year for certain new indications.