The PRICED Act Takes a Stab at Reducing Biological Product Reference Product Exclusivity From 12 Years to 7 Years

By Kurt R. Karst –       

For several years now, the Obama Administration’s annual budget requests (here, here, and here, for example) have included proposals to reduce to 7 years the current 12-year period of Reference Product Exclusivity (“RPE”) for biological products licensed under Section 351(a) of the Public Health Service Act (“PHS Act”), and which RPE was created by the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”).  But the proposals never gained traction in Congress (at least not in the form of a legislative proposal) . . . . Until now. 

Earlier this week, Representative Janice Schakowsky (D-IL) introduced H.R. 5573, the Price Relief, Innovation and Competition for Essential Drugs Act (“PRICED Act”).  The PRICED Act “would foster competition and provide opportunity for more biologics to enter the marketplace and drive down costs,” says Rep. Schakowsky in a press release.  “In the same way the entrance of generics helped increase competition and boost access to more affordable prescription drugs, an increased number of biologics and equally effective 'biosimilars' will provide additional competition in the marketplace and make life-saving drugs more affordable for consumers.”

The two-page bill is short and sweet.  It would amend the RPE provisions at PHS Act § 351(k)(7)(A) to strike “12 years” and insert “7 years” in its place.  Conforming amendments would also be made to PHS Act § 351(m) (paragraphs (2)(A) and (3)(A)), which concerns the addition of 6 months of pediatric exclusivity, to show the 12-year-to-7-year change.  The 7-year period (or 7.5 years with pediatric exclusivity) would match the amount of exclusivity for a biological product granted under the Orphan Drug Act.

In terms of applicability, the PRICED Act would “apply only with respect to a biological product for which the reference product . . . is licensed under [PHS Act § 351(a)] on or after the date of enactment of this Act.” In other words, if the PRICED Act is signed into law, there would be a cohort of biological products with 12-year RPE and another cohort with 7-year RPE.  That means that Section 7002(h) of the BPCIA would eventually become moot.  That provision states:

(h) ORPHAN PRODUCTS.—If a reference product, as defined in Section 351 of the Public Health Service Act (42 U.S.C. 262) (as amended by this Act) has been designated under section 526 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bb) for a rare disease or condition, a biological product seeking approval for such disease or condition under subsection (k) of such section 351 as biosimilar to, or interchangeable with, such reference product may be licensed by the Secretary only after the expiration for such reference product of the later of—

(1) the 7-year period described in section 527(a) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360cc(a)); and

(2) the 12-year period described in subsection (k)(7) of such section 351.

The National Committee to Preserve Social Security and Medicare (“NCPSSM”) issued a press release supporting the PRICED Act. “Long exclusivity periods delay competition and drive up drug costs.  Long exclusivity periods are particularly problematic for biologics because of their significant expense,” says NCPSSM.  Several other organizations also support the legislation, including the AARP, Center for Medicare Advocacy, and Families USA. 

Coincidentally, the introduction of the PRICED Act comes on the heels of a set of conclusions adopted by the Council of the European Union earlier this month. Among other things, the Council expresses concern about the effects of patent and non-patent exclusivities on generic competition, and invites the European Commission to prepare:

an evidence based analysis of the impact of the incentives in these EU legislative instruments, as implemented, on innovation, as well as on the availability, inter alia supply shortages and deferred or missed market launches, and accessibility of medicinal products, including high priced essential medicinal products for conditions that pose a high burden for patients and health systems as well as availability of generic medicinal products.  Among those incentives, particular attention should be given to the purpose of supplementary protection certificates as defined in the relevant EU legislative instrument and the use of the “Bolar” patent exemption, the data exclusivity for medicinal products and the market exclusivity for orphan medicinal products.

The likelihood that the PRICED Act will progress with any speed through the current Congress and end up getting signed into law by the end of President Obama’s term is pretty low. But the bill is yet another sign of the concern on Capitol Hill over drug prices.