Washington Editor

WASHINGTON – Tangled webs of regulatory requirements and a murky lack of transparency are keeping several countries on the U.S. Trade Representative's (USTR) list of trade partners that bear watching when it comes to opening the door to American biopharmaceuticals and protecting their patents.

In a special report released last week, the USTR noted that biopharma has voiced concerns about the "policies of several industrialized trading partners, including Finland, Germany, Greece, Japan, Korea, New Zealand, Poland and Taiwan, on issues related to innovation in the pharmaceutical sector and other aspects of health care goods and services."

Of those countries, only Finland and Greece were placed on the USTR's official watch list, but the report singles out some of the others because of their regulatory policies.

Finland and Norway are both on the watch list because their regulatory framework regarding "process patents filed before 1995, and pending in 1996, denies adequate protection to many of the top-selling U.S. pharmaceutical products currently on [their] market," according to the report.

Some countries weren't listed because they have strong commitments to protect intellectual property (IP) rights. But the trade office noted that "unreasonable regulatory approval delays and potentially unfair reimbursement policies can discourage the development of new drugs" and block market access.

For instance, health care reform legislation introduced in Poland last year would change the country's pricing, reimbursement and clinical trials policies.

The pharmaceutical industry generally is not given an opportunity to provide its perspective on such health policy initiatives in Poland.

As for New Zealand, U.S. biopharma continues to express concerns about the transparency, fairness and predictability of the country's pricing and reimbursement system, as well as its overall climate for innovative drugs.

While the trade office recognized the progress Japan has made, it said the country needs to continue improving transparency and further reform its reimbursement and regulatory systems to facilitate access to innovative biopharmaceuticals.

The Pharmaceutical Research and Manufacturers of America agreed.

"The value of IP protection should not be undermined by discriminatory market access barriers, including discriminatory government pricing and reimbursement policies," the trade association said.

"We welcome USTR's recognition of market access barriers faced by U.S. pharmaceutical companies and their efforts to eliminate them in many countries in order to provide for affordable health care today and support the innovation that assures improved health care tomorrow," it added.

The USTR keeps two lists – a priority watch list and a watch list. Many of the countries on the priority list have not done enough to rein in counterfeiting or protect patents and proprietary information. China, for example, adopted prosecution guidelines last year that tripled the threshold for investigating and prosecuting the trade of counterfeit products, including biopharmaceuticals.

The USTR urged China to recognize counterfeiting as a crime, regardless of the value of the products involved. It also recommended that China seize and destroy all equipment used to make counterfeits.

Canada remains on the priority list due, in part, to its regulatory review process for drug approvals.

India got its spot on the priority list because of provisions that prohibit patents on certain chemical forms absent a showing of increased efficacy. This could limit the "patentability of potentially beneficial innovations, such as temperature-stable forms of a drug or new means of drug delivery," the report said.

The USTR also recommended that India address its patent application backlog, streamline its patent opposition proceedings and establish an effective system to protect against unfair commercial use and unauthorized disclosure of data submitted in drug marketing applications.

Although the U.S. mapped out a plan last year to remove Israel from the priority list because of longstanding regulatory issues with biopharmaceuticals, Israel has not completed the plan. The Knesset is considering legislation to protect biopharma test data, but it has yet to draft bills dealing with patent term extensions or patent publication. Once those areas are addressed, Israel will be removed from the list.

While not on the priority list, Brazil is on the watch list because it needs to provide an effective system to protect against unfair commercial use and unauthorized disclosure of confidential test and other data submitted for drug marketing approval.

PDUFA Negotiations and Regulatory Uncertainty

Biopharma's demands in the PDUFA V negotiations with the FDA seemed to boil down to one thing – predictability.

In the give-and-take to shape the reauthorization of PDUFA, which sets user fees and agency performance commitments, industry demanded improved review times, more transparency and better communication.

The price of that increased predictability is funding for 119 full-time-equivalent employees and an additional $4.17 million for direct costs associated with regulatory science proposals and other enhancements for PDUFA V, according to minutes the FDA recently posted of several closed-door negotiations.

In exchange for the funding, the agency agreed to post annual progress reports on its PDUFA commitments, including the hiring and placing of new staff.

During the Jan. 31 session with an industry steering group, the FDA noted that emerging scientific areas, such as patient-reported outcomes, biomarkers and pharmacogenomics, are cropping up more and more in sponsors' drug development programs. This has increased the agency's review time and exceeded its resources.

In meeting with stakeholders in March, the FDA said development has shifted from "me-too" drugs to more innovative products, making development "more complex for indications that are more difficult to achieve." To address the emerging scientific uncertainties that this raises, the agency has drafted new industry guidances and collaborated with other federal agencies and academia.

After nearly a year of negotiations, the FDA is finalizing the draft PDUFA proposals, which it plans to release later this year.

The recommendations will be presented to Congress next year for final action.

Marketing Practices Cost Merck $44.3M

Serono Laboratories Inc., EMD Serono Inc., Merck Serono S.A. and Ares Trading S.A. have agreed to pay $44.3 million to resolve False Claims Act allegations over the marketing of Rebif.

From the launch of Rebif (interferon beta-1a) in 2002 through December 2009, Serono allegedly paid health care providers an inducement to promote or prescribe Rebif, a treatment for relapsing forms of multiple sclerosis, according to the Department of Justice.

The providers were paid for participating in hundreds of speaker training meetings and programs, as well as attending consultant, marketing and advisory board meetings at upscale resorts.

As this was the second case settled with Serono, part of Darnstadt, Germany-based Merck KGaA, the Office of Inspector General (OIG) at the Department of Health and Human Services (HHS) extended Serono's existing corporate integrity agreement three years and added enhanced provisions, such as requiring company officials to take responsibility for ensuring and monitoring compliance.

"If we can alter the cost-benefit calculus of some directors and executives, OIG can influence corporate behavior without putting access to government health care benefits at risk," HHS Inspector General Daniel Levinson said.