Buying Time

Marketing exclusivity is the lifeblood of the US pharma industry. Every day a brand-name drug is on the market without generic competition brings tremendous revenue to its manufacturer.

Consider, for example, that by the end of 2002, an estimated 40 pharmaceuticals-generating a combined annual revenue of more than $16 billion-will either go off patent or lose existing market exclusivity in the United States. Sales for some of those products exceed $4 million a day. Extending exclusivity by a few months, weeks, or even days represents significant revenue by any standard.

The Best Pharmaceuticals for Children Act (BPCA), signed into law by President Bush on January 4, 2002, gives pharma companies another opportunity to extend their market exclusivities by six months. But many manufacturers will continue to let this valuable opportunity slip away because they fail to recognize all the advantages pediatric exclusivity has to offer. This article outlines the provisions of that act and how they affect the industry and explains what pharma companies can do to obtain exclusivity.

FDAMA Extended

The BPCA extends, until October 2007, the pediatric exclusivity provision of the Food and Drug Administration Modernization Act of 1997 (FDAMA)-with some amendments. Congress enacted the program initially because it recognized that there was a lack of information about the effects of drugs and biological products in children. Its sole purpose is to entice pharma companies to conduct pediatric clinical studies to generate that information.

Essentially, the pediatric provision allows FDA to grant a manufacturer an additional six months of market exclusivity for a brand-name therapy if the company conducts acceptable pediatric studies it. The six-monthexclusivity period is added to the end of a product's existing patent term or any other market exclusivity term for an approved therapy containing the same active ingredient as that subjected to the pediatric study. During the exclusivity period, FDA cannot approve a generic version.

FDA Patent Terms

Pharma companies can earn pediatric exclusivity for an approved drug as well as one in the approval process. For an approved product, three essential elements must be satisfied before it is eligible for pediatric exclusivity:

• The applicant must receive a written request from FDA asking for pediatric studies. The request describes the studies needed and the time frame for their completion.

• The studies must be submitted within the time frame specified in the written request.

• The studies performed must meet the terms specified in the written request.

The procedures for candidates in the approval process are essentially the same as those for approved products, except that non-approved drugs need not be on FDA's priority list. Also, such studies need not be completed before the new drug application (NDA) for non-pediatric use is approved.

Initiating the Process

Even if a pharmaceutical company does not receive a written request from FDA, it can submit a proposed pediatric study to the agency and request that it issue a written request for the drug. In fact, the agency strongly encourages manufacturers to submit such proposals. As of November 1, 2001, FDA had received 281 such submissions. Of those, 208 resulted in the issuance of a written request. The procedure for asking FDA to make a drug eligible for pediatric exclusivity is provided on FDA's website, www.fda.gov/ cder/guidance/2891fnl.htm.

Convincing FDA to issue a written request for a therapy can be tremendously valuable to pharma companies, especially if they have one or more unexpired US patents covering an approved product or its use. However, manufacturers must submit their proposed pediatric study requests with sufficient time to permit

• FDA to review the proposal and issue a written request

• the company to initiate, complete, and file the pediatric study report

• FDA to review and approve the report before the product's US patent or exclusivity expires.

Pediatric exclusivity is intended as an add-on to existing marketing exclusivity or patent protection. If the product's patent expires before the pediatric data is submitted and accepted by FDA, no six-month pediatric exclusivity will be awarded. Preferably, companies should submit their requests at least three years before the expiration of a US patent or exclusivity period. (See "Timing is Everything,") If a company is unfamiliar with FDA practice, it should consider hiring outside counsel familiar with the agency's regulations.

Timing is Everything

Franchises and Exceptions

Companies with a series of products containing the same active ingredient have even more to gain from pediatric exclusivity. One of the most significant benefits of pediatric exclusivity is that it attaches not only to the product studied in the pediatric population but also to all the exclusivity periods of the applicant's formulations, dosages, and indications that contain the same active ingredient. (See "To All That Applies,")

Assume, for example, a brand-name company obtained approval for an oral formulation, an intravenous formulation, and a topical cream containing the same active ingredient. All the products have remaining market exclusivity or patent life. If the pharma company conducts studies for the active ingredient in the oral formulation, an additional six-month exclusivity period will be granted to all dosage forms and all indications with the same active ingredient as the product studied. In addition, pediatric exclusivity will be added to the end of any patent term covering the active ingredient or an approved use of such ingredient.

To all that applies

Generally, products with no patent life remaining cannot qualify for pediatric exclusivity. Under certain conditions, however, pediatric exclusivity may be granted to such a product if the pediatric studies themselves qualify for a new exclusivity period under the Hatch-Waxman Act. Assume, for instance, a product approved for use in adults has no patent life or exclusivity remaining. If that drug were subsequently approved for use in children pursuant to an FDA written request, it could then earn three years of marketing exclusivity for the new indication under the Hatch-Waxman Act, plus an additional six months of exclusivity for conducting the pediatric trials .

Nevertheless, such exclusivity has limited value because it applies only to the product's use in children, not adults. Thus, during the three-and-a-half-year combined exclusivity period, FDA could still approve a generic product for use in adults. Although the generic would not be approved for children, doctors would probably prescribe it "off-label" to children during the pediatric exclusivity period and beyond, substantially weakening the value of the pediatric exclusivity. For that reason, manufacturers typically do not pursue three-year Hatch-Waxman exclusivity for a pediatric indication if a generic for the same product can be approved for adults during that time.

Similarities

BPCA contains many of the same provisions as the original FDAMA program. Following are three examples:

• A pediatric study need not be successful for the product to qualify for exclusivity, nor is the six-month extension dependent on whether information from the requested study is included in the product's label. As long as the company submits a pediatric study that meets FDA's requirements, six months of exclusivity will be awarded.

• If a generic or abbreviated new drug application (ANDA) is ready for approval after submission of a pediatric study report for the brand-name drug but before FDA has accepted the report, FDA will delay approval of the generic for up to 90 days while it makes a decision. If exclusivity is then granted, the six months are considered to have been running during the delay period.

• Under limited circumstances, a product may receive two six-month exclusivity periods. For instance, if one six-month period has already been earned for a therapy, an additional six months may be added to a three-year exclusivity period granted for a new indication. But the second six-month period cannot delay approval of an orphan drug application or an ANDA.

Differences

PCA also brought about the following important changes to FDAMA's pediatric exclusivity program:

Generic approval process. The BPCA requires prompt approval of a generic for adult use even when its labeling omits the pediatric information listed on the label of the brand-name product. That represents an exception to FDA's rule that the labels for the brand-name product and the generic be identical.

Specifically, BPCA allows such generics to be approved if the labeling includes a statement indicating that, because of marketing exclusivity awarded to the brand-name manufacturer, the product is not labeled for pediatric use. BPCA also authorizes FDA to include in a generic's label any appropriate pediatric contraindications, warnings, or precautions, regardless of whether such information is protected by patent or other exclusivity.

That change in the approval process is good for generics and lessens the value of pediatric exclusivity. For example, if the label of the brand-name product is indicated for both children and adults, but the Hatch-Waxman exclusivity for adult use has expired, a generic can then be approved for use in adults, which means US doctors can prescribe the generic "off-label" to children during the Hatch-Waxman exclusivity period for the pediatric indication.

Restoration of generic exclusivity. BPCA provides for restoration of generic exclusivity when it overlaps with six-month pediatric exclusivity. Under Hatch-Waxman, the first generic manufacturer that files an ANDA challenging a brand-name manufacturer's patent may be awarded six months of generic exclusivity. During that period, FDA cannot approve a subsequently filed ANDA for a generic version of that specific therapy.

The six-month generic exclusivity period begins after a court finds the challenged patent invalid, unenforceable, or not infringed. If the patent is found valid, enforceable, or infringed, the generic exclusivity period begins on the date the brand-name patent expires. Pediatric exclusivity also begins on the date the patent term expires or is held invalid and unenforceable by a US court.

By providing for restoration of generic exclusivity when it overlaps with the pediatric exclusivity period, the BPCA resolves the issue of whether two periods should run concurrently or consecutively. Specifically, if the generic exclusivity period expires at some point after the pediatric exclusivity period, the generic exclusivity period will be extended by the number of days of the overlap. Alternatively, if the generic exclusivity period expires during the pediatric exclusivity period, the generic exclusivity period will be extended by six months.

Written requests and market exclusivity. Under the new rules, if FDA issues a written request for pediatric studies on a product that has market exclusivity, the company must inform FDA whether it will conduct the pediatric studies. It must provide such notification within 180 days after receiving the request.

If the company does not agree to conduct the pediatric studies specified in the written request, FDA can authorize the National Institutes of Health to award a grant to conduct such studies, even though the drug has remaining market exclusivity.

Extended sunset provisions. Under FDAMA, FDA could not accept applications for written requests after January 1, 2002. BPCA permits FDA to continue accepting such applications, but it provides that no product can receive a six-month pediatric exclusivity period unless FDA makes a written request for that therapy on or before October 1, 2007. (See "Advance Planning.")

Advance Planning

Companies planning to ask FDA to issue a written request should do so in time to permit the agency to review the proposed pediatric studies and issue a written request well before that deadline.

The financial value of pediatric exclusivity can be great. Most blockbuster drugs with sales of more than $1 billion are slated to receive pediatric exclusivity. Drugs that have been awarded six months of pediatric exclusivity include Schering-Plough's Claritin (loratadine). Eli Lilly's Prozac (fluoxetine), and Bristol-Myers Squibb's Glucophage (metformin). For its additional six months of exclusivity for Claritin, S-P garnered an additional $975 million in sales. And Eli Lilly and Bristol-Myers Squibb reportedly earned $831 million and $648 million, respectively, for additional sales of Prozac and Glucophage as a result of their pediatric exclusivity.