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Executive Summary

Sen. Hatch (R-Utah) is looking at legislation to provide 8-10 years of market exclusivity for genetically engineered drug products. The senator is investigating approaches to extend the period of market exclusivity for biotech products with sizable market potential but weak patent protection as an alternative to tinkering with the existing Orphan Drug Act. Hatch's staff is beginning the examination of biotech exclusivity incentives without prejudice to the exact means of assuring exclusive marketing. However, there are two standard approaches to that goal. Congress can attempt (1) to amend patent laws or (2) to prohibit FDA from approving second versions of an orphan product until a period of exclusive marketing had expired. The issue of biotech exclusivity is a new twist in the Capitol Hill response to the criticisms of the Orphan Drug Act. For the past several years, leading Congressional figures have expressed concern that biotech companies have been misusing the seven-year market exclusivity provisions of the Orphan Drug Act. The implied criticism has been that companies have been using the orphan law to get de facto monopolies for products with substantially larger market potential than intended by the orphan incentives. Two of the targets of Capitol Hill attention have been human growth hormone -- Lilly's Humatrope and Genentech's Protropin -- and the as-yet-unapproved Amgen erythropoietin (Epogen). After several false starts at amending the Orphan Drug Act, however, the key Capitol Hill players are now looking at a way to break off the issue of incentives for biotech products and treat it separately from the consideration of incentives for products aimed at rare diseases. One sign of the change in attitude is a shift in Sen. Kennedy's (D-Mass.) interest in orphan drug hearings. After early signs of interest in hearings, Kennedy's staff has recently suggested there will not be Labor & Human Resources Committee action this spring. Any intense public interest in the pricing of a new orphan or biotech product could, of course, revise Kennedy's interest. Hatch's concept of extended exclusivity for biotech products contains an important stipulation: sponsors of subsequent versions of the biotech product would be able to enter the market if they develop data to show that their products are superior. The intent of the proposal is to provide incentives for constantly improving technology and to prevent falling behind foreign competition. The suggestion of granting legislative authority to FDA to make superiority determinations between biotech products is clearly a rough spot in the early legislative planning. Previous attempts to give FDA explicit authority to make those types of decisions have been fought vigorously by the pharmaceutical and medical communities. As part of his review of the biotech situation, Hatch is considering patent law amendments to allow for the patenting of certain naturally occurring compounds. The Utah Senator's proposal would also contain provisions for expediting patent review procedures at the Patent & Trademark Office. Hatch is ranking minority member of the Senate Judiciary Committee's Patents Subcommittee, which has jurisdiction over patent legislation; Kennedy also sits on the subcommittee. Rep. Waxman (D-Calif.) also recently determined that expanding patent law provisions for biotech products would be the preferred way to prevent the use of orphan drug provisions for drugs with potentially large markets. Some concern has been expressed by Orphan Drug Law proponents outside Congress that even patent legislation might have an indirect adverse effect on development of drug products for orphan diseases. The concern is that biotech product sponsors might not expend the necessary resources to produce clinical experience and labeling for orphan diseases if patent protection becomes available for the more lucrative uses. Several groups have also looked at administrative remedies to the confusion under the orphan drug rules. Hatch, however, has been described as "not being too thrilled" about an administrative solution to the orphan drug act. Under the administrative approach, the FDA commissioner might, for example, be authorized to allow subsequent drug product developers to come to the market and join a previously approved orphan product with market exclusivity. Examples of situations in which "shared exclusivity" would be permitted might include cases when subsequent products offer advantages to the original or when the target patient population turns out to be far greater than the 200,000-patient threshold. The Pharmaceutical Manufacturers Association recently considered a series of administrative changes to the act. An ad hoc group, under the chairmanship of Pfizer General Counsel Paul Miller, reviewed the association's position toward the orphan act and reportedly suggested a number of administrative changes. At its Feb. 16 meeting, the PMA board rejected the suggestions for administrative changes to the orphan act and decided to continue supporting retention of the act in its current form. FDA Com. Young has recently reflected a similar hands-off position to the orphan act. In a late January letter to Hatch and Kennedy, Young said that the current act has been a useful incentive to "promote the development of drugs that would not otherwise be made." Young noted that previous attempts to change the orphan act have "proved to be difficult."(ITEM 200)#050928M001J59307# #970804M001XFCWP5# (ITEM 201)(COPYRIGHT) 1989 F-D-C Reports, Inc., The Pink Sheet, February 20, 1989

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