How Regulatory Exclusivity Can Impact Your Generic Business?

Abstract Regulatory exclusivity is one strategy apart from intellectual property rights to get profit and return on investment done by the pharmaceutical industry on the development of drugs. The reason for introducing regulatory exclusivity for drug products was that a lot of time would be lost during the approval of drug products and because of that at the time of approval of drugs very little patent protection was available to that drug. This article is intended to provide an overview of the regulatory exclusivity provisions in the United States that pharmaceutical companies should consider while making strategy for the global launch of their products and to maximize market protection of their products.   Introduction Pharmaceutical companies usually file a patent application at respective countries at the time of an invention related to drug and it will take time more than 10 years to get approval from the authorities (FDA- Food and Drug Authority) and that leaves the patent holder with a much lesser duration, and sometimes none, to actually avail a return on the huge investment in R&D.   Development of pharmaceutical medicine is an expensive process and approval from drug authority takes a lot of time because of this time-consuming process very often patents protection related to pharmaceutical medicine are expired before approval or launch of medicines in the market. As a result, most pharmaceutical industries rely on the exclusivity granted under the FDA- Food and Drug Authority.   Regulatory exclusivity is exclusive marketing rights granted by FDA upon approval of a drug. It may run simultaneously with a patent protection or not. It prevents submission or final approval of ANDAs or 505(b)(2) applications and therefore it is designed in such a way to balance between new drug innovation and generic drug competition.   Pharmaceutical companies generally file patent applications in respective countries at the time of innovation of the product. Approval of the product will take almost 10 years or more from the respective drug authority. This is because the requirement of conducting clinical trials to prove safety and efficacy of any new drug molecule is very tedious, costly and without any guarantee of favourable results. At the time of launch of a product in a market, patent protection left on the product is very little. To provide pharmaceutical companies with a chance to recoup their investment on drug research & development and to give the incentive to do innovation, the FDA has provided regulatory exclusivities to extend the period in which companies can market their products without any competition from generics companies.  
  1. The United States Overview
The Hatch-Waxman Act of 1984 (The Drug Price Competition and Patent Term Restoration Act) introduced regulatory exclusivity in the United States. It provides up to five years market exclusivity to pharmaceutical companies introducing a new chemical entity to the market (NCE exclusivity), up to three years market exclusivity for conducting new clinical investigations (other than bioavailability studies) to support changes to drug products already on the market (Clinical Investigation or CI Exclusivity). Regulatory exclusivity attaches upon approval of a drug product if the statutory requirements are met. There is not any requirement to apply for these Hatch-Waxman exclusivities.   The Orphan Drug Act of 1983 provides up to seven years of market exclusivity to drugs that treat diseases or conditions that affect 200,000 or fewer individuals in the United States. In addition to, The Best Pharmaceuticals for Children Act of 2002 provides 6 months market exclusivity which is attached to the other three exclusivities and the term of the orange book listed patents itself.  
  1. New Chemical Entity Exclusivity (NCE)- 5 years
New chemical entity means a drug that contains no active moiety that has been approved by FDA in any other NDA submitted under section 505(b) of the Federal Food, Drug, and Cosmetic Act. Active Moiety is defined as an ion or molecule which is attributed to the drug’s physiological or pharmacological action.   Since NCE exclusivity attaches to an active moiety of drug, FDA cannot accept or approve generic applications of a drug product containing the same active moiety during the five-year NCE exclusivity.   For example, FDA has approved Erdafitinib on April 12, 2019. FDA has granted five years market exclusivity which is going to expire on April 12, 2023, because FDA has never approved another NDA which contains the same active moiety as Erdafitinib has. Because of 5 years NCE exclusivity, FDA cannot accept any ANDA or 505(b)(2) application which contains same active moiety as Erdafitinib has until NCE expires or FDA can accept the filing of ANDA or 505(b)(2) application which contains paragraph IV filing with respect to any one of the orange book listed patents on NCE-1 year date. ANDA or 505(b)(2) applications can be filed after April 12, 2023, or If ANDA or 505(b)(2) applications contain paragraph IV certification with respect to at least one patent from the orange book listed patents then they can be filed on April 12, 2022.  
  1. Clinical Investigation Exclusivity (CI)- 3 years
Pharmaceutical companies that conduct additional clinical trials on a previously-approved drug may be granted three additional years of Clinical Investigation Exclusivity.   Pharmaceutical companies may receive CI Exclusivity for the following changes: new dosage forms, new indications and a product’s change from prescription to over-the-counter (OTC). In addition, the clinical trials have to be new and do not have to rely on previously done clinical trials on approved drugs. Unlike NCE exclusivity, ANDA or 505(b)(2) applications can be filed during three years of CI exclusivity but they cannot be approved during the period of CI exclusivity. If generic applicants conduct their own clinical trials to support approval of their application then FDA can approve their ANDA or 505(b)(2) during three years period of CI exclusivity.  
  1. Orphan Drug Exclusivity (ODE)- 7 years
To find a cure for rare or unusual conditions, pharmaceutical companies have to invest a lot of money and time as drug research and development costs are really high. As the patient population is very low for orphan diseases, the investment done by pharmaceutical companies to identify cures cannot be recovered even during normal exclusivity periods. Therefore, FDA has given an incentive of 7 years marketing exclusivity to recoup their investment. If a drug product obtains seven years of orphan drug exclusivity then FDA can accept but not approve ANDA or 505(b)(2) application that contains the same orphan indication during this period of exclusivity. One more reason to provide longer exclusivity is to encourage pharmaceutical companies to do research on the areas where the patient population is low, which otherwise gets neglected and because of that, the patient with such disease have to suffer a lot.   For example, Gefitinib (IRESSA) was approved by FDA on July 13, 2015, with seven years of ODE exclusivity which expires on July 13, 2022. Patent protection related to this product is expired but because of ODE, FDA cannot approve any generic version of IRESSA.  
  1. Pediatric Exclusivity (PED)- 6 additional months
Interaction of drugs in children is different compared to adults. In order to encourage pediatric drug development and testing, congress had enacted The Best Pharmaceuticals for Children Act in 2002. The act provides six additional months of exclusivity to pharmaceutical companies who conduct pediatric clinical trials on their approved and marketed drug product and generate information about the safety and efficacy of their drug product in children.   Pediatric exclusivity only attaches to the orange book listed patents, NCE exclusivity, CI exclusivity and ODE exclusivity. Pediatric exclusivity runs after expiry of all other forms of exclusivity. FDA generally initiates “written request” to NDA applicants for a particular drug product. If an NDA applicant conducts pediatric studies and submits to FDA in response to a “written request” from FDA then pediatric exclusivity will be granted to a particular drug product. It is not necessary to have a successful pediatric study to get pediatric exclusivity to a particular drug product. There is only a requirement of submission of pediatric studies to the FDA in response to “written request” initiated by FDA. Pediatric exclusivity bar effective approval of ANDA and 505(b)(2) application.   Conclusion It is very critical to understand the regulatory exclusivities available in the united states of America to get optimum financial benefits and return of research and development cost associated with drug discovery and development. Pharmaceutical companies have to develop a strategy as early as possible on regulatory exclusivities based on the intellectual property rights profile of their medicines. As early strategies provide insight into the timing of generic competition available in the markets, on that basis innovators can maximize their use of regulatory exclusivity by providing additional exclusivity like CI exclusivity and pediatric exclusivity to further restrict generic competition in the markets. Hence understanding the regulatory exclusivity scenario along with patent scenarios will help to make all business decisions like identification of product, starting of product development and evaluation of business cases.