Trump FY 2020 Budget Renews Push To Reform 180-Day Exclusivity

US FDA would get an overall increase in funding under the president's fiscal year 2020 budget proposal, although the generic drug industry opposes reforms targeting the 180-day exclusivity clock for first filers.

President Trump is proposing another relatively hefty increase in funding for the US FDA in his fiscal year 2020 budget proposal, and perhaps more significantly, the administration is doubling down on its desire to reform the 180-day exclusivity clock for first generics.

The president's budget would include a budget of $6.1bn for FDA, marking a $643m (12%) overall increase over the annualized FY 2019 continuing resolution levels, according to an HHS summary of the budget released March 11. Trump previously proposed a 13% increase funding for FDA in his FY 2019 proposal, a boost much larger than had been seen in recent years. (Also see "Trump's Budget Surprise: FDA Gains 13% Increase" - Pink Sheet, 12 Feb, 2018.)

Of the $643m proposed increase for FY 2020, $362m would come from budget authority while $281m would be derived from user fee revenues.

An important caveat of the budget, however, is that it is merely a wish list of the president. Congress holds the ultimate authority to make actual changes in funding.

But the generics industry may nevertheless be feeling uneasy that the administration's budget again includes a proposal to address the first generic exclusivity clock, which would be triggered once a subsequent application is tentatively approved. (Also see "Trump's Budget Request To Include ANDA Exclusivity Changes" - Pink Sheet, 11 Feb, 2018.)

Under the current framework, the sponsor is allowed time to launch the product when the first generic of a brand drug is approved. The six months of exclusivity begins once the product is on the market, and no other generics for that product may be marketed during that time.

The reform proposal in the budget is designed to speed generic entry and thus competition, but after it was proposed last year, officials seemed to shift their  energy to implementing the administration's drug pricing blueprint. (See sidebar.) Still, the return of the 180-day exclusivity reform idea is worrisome to the generics industry.

Chip Davis, President and CEO of the Association for Accessible Medicines (AAM), said in a statement that the proposal to amend the 180-day exclusivity clock for first generics "would only weaken this critical incentive for competition and ensure that more non-innovative brand-name drug patents remain in place, delaying the availability of generic medicines for patients."

Davis further addressed the 180-day exclusivity period in a March 11 briefing with reporters where he expressed concerns about two bills that would also make exclusivity reforms: the Bringing Low-cost Options and Competition while Keeping Incentives for New Generics (BLOCKING) Act (HR 938), and the Fair and Immediate Release (FAIR) of Generic Drugs Act (HR 1506).

The BLOCKING Act, introduced by Reps. Kurt Schrader (D-OR) and Buddy Carter (R-GA), would allow FDA to approve a subsequent generic application prior to the first applicant’s first date of launch when certain conditions have been met. Meanwhile, the FAIR Act, sponsored by Nanette Barragán (D-CA), would allow a generic filer who wins a patent challenge in court or is not sued for patent infringement by the brand drug manufacturer to share in the 180-day exclusivity period of first applicants who enter into patent settlements that delay entry.

Both bills will likely be discussed at a House Energy and Commerce Subcommittee on Health Hearing on March 13.

"To begin to propose minimizing or reducing or sharing of that 180-day provision, without providing the examples by which you are proposing a solution to right now in our view that's in search of a problem, is very concerning to us," Davis said. "I get on a philosophical level when people are saying the goal is to make sure we don't just have one generic competitor, we want to have a second, a third and a fourth."

"But I think this is an area, as I was referring to potential unintended consequences, where if you're focused so much on two, three and four, and you begin minimizing the incentive of the first filer, then you're going to have a harder time getting to two, three and four because no one is going to want to file first. Nobody's going to want to take the risk to file first."

The president's proposal would also only allow first generic applicants with a deficient application to avoid forfeiting their 180-day exclusivity in "instances where the change in the requirements for approval was the only reason the applicant failed to obtain tentative approval."

"Currently, first applicants with a deficient application for a generic drug before FDA can avoid forfeiting their 180-day exclusivity by claiming the failure is caused by a change in or a review of the requirements for approval imposed after the date on which the application is filed," the proposal states. "Some first applicants have taken advantage of ambiguities of this provision, avoiding forfeiture and delaying generic competition."

Brands Could See Narrowed Exclusivity Too

Trump's budget also broaches narrowing the definition of "new chemical entity," a designation that comes with five years of exclusivity if approved. Such a move would codify FDA's "active moiety" approach in interpreting existing law, according to the budget.

"Five-year new chemical entity exclusivity will apply only to drugs with significant changes to their chemical structure compared to current drugs," the budget states. "This proposal codifies a narrow definition to avoid awarding exclusivity to products that do not represent a true innovation."

The budget further contains a broad request of $3.8bn for "medical product safety investments," which would constitute a $428m increase from FY 2019. The $3.8 bn total would include $1.8 bn in budget authority and $1.9bn in user fees.

Additionally, the proposal includes a $55m request for FDA's activities related to opioids, which would, in part, go toward hiring new staff for international mail facilities.

In a statement, the Alliance for a Stronger FDA said that it is "quite pleased with the proposed increase in appropriated funding for FDA."

SOTU Items Get Some Color

The budget also shines some light on ideas floated by the president during his 2019 State of the Union speech.

Trump noted in his address, for instance, that his next budget proposal to Congress would include a request for $500m over the next 10 years to fund childhood cancer research. (Also see "How Much Can Trump’s Childhood Cancer Funding Proposal Boost Drug Approvals?" - Pink Sheet, 6 Feb, 2019.) The FY 2020 proposal says that the National Institutes of Health will invest $50m "to launch an initiative to accelerate and expand drug discovery and clinical trials, understand the biology of all pediatric cancers, and create a national data resource for pediatric cancer."

"This initiative will support research to develop new, more effective, and safer treatments for childhood cancers, and complement ongoing research within the [National Cancer Institute]," the HHS budget request states. "Through this initiative, NCI will aggregate data from pediatric cancer cases and coordinate with others that maintain data sets to create a comprehensive, shared resource to support childhood cancer in all its forms."

However, total funding to NCI under the president's proposal would drop $897m from the previous fiscal year, from $6.1bn to $5.2bn. Nancy Goodman, founder and executive director of the non-profit organization Kids v. Cancer, said in a statement that the president's $500m proposal "is difficult to be seen as real" with an across-the-board cut for NCI.

Trump also announced a plan in his State of the Union Address that will aim to reduce new HIV infections by 75% in the next five years and by 90% in the next 10 years. (Also see "US Initiative To End HIV Epidemic Will Boost PrEP Access" - Pink Sheet, 6 Feb, 2019.) Under the president's budget proposal, $50m would be allocated to the Health Resources and Services Administration for expanded pre-exposure prophylaxis (PrEP) services, outreach, and care coordination in community health centers.

Dead On Arrival, Democrats Say

Several Democrats slammed the president's budget request upon its release. House Appropriations Committee Chairwoman Nita Lowey (D-NY) described the proposal as "irresponsible," specifically slamming the cuts in funding for scientific and medical research.

Rep. Frank Pallone (D-NJ), who chairs the Energy and Commerce Committee, said that the budget "is a sham and has absolutely no chance at ever becoming a reality."

On the Senate side, Appropriations Committee Chairman Sen. Richard Shelby (R-AL), refrained from criticizing the budget.

“I look forward to reviewing additional details of the President’s budget proposal in the coming week," Shelby said in a statement. "Throughout the next few months, the Senate Appropriations Committee will conduct hearings and carefully review the President’s proposal as we work to draft and pass spending bills for FY2020. I am hopeful that we can build on the early success of the FY2019 appropriations process.

Derrick Gingery contributed reporting.