Intellectual Property Issues Under The Trans-Pacific Partnership

By Joseph M. Reisman, Ph.D., Partner, Knobbe Martens; Sheila N. Swaroop, Partner, Knobbe Martens; Scott R. Seeley, Associate, Knobbe Martens

On November 5, 2015, after five years of largely secret negotiations, the parties to the Trans-Pacific Partnership (TPP) published the official language of this agreement[1]. The TPP is a multi-national trade agreement between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States. The stated goals of the TPP are to liberalize trade among member nations and to equalize regulatory restrictions and intellectual property (IP) protections among the parties. This article highlights three intellectual property provisions in the TPP that are pertinent to biopharmaceutical companies.

1.Market Exclusivity For Biologics

The TPP provisions that have generated the most publicity in the biopharmaceutical industry relate to the market exclusivity for biologics. Market exclusivity includes data exclusivity, and refers to all barriers to market entry of a follow-on product.  As shown below, most nations participating in the TPP currently provide five to eight years of market protection for pharmaceuticals, and presumably would afford similar market exclusivity for biologics:  

The current domestic laws of Chile, Malaysia, Mexico, Peru, and Vietnam do not explicitly refer to biologics, but likely provide five years of protection. The only member nation that does not currently provide any period of market exclusivity is Brunei, while the United States currently offers the longest period of exclusivity, providing twelve years for biologics.

The TPP attempts to harmonize these periods of exclusivity in Article 18.52. In particular, Article 18.52(1) gives member nations two options for providing market protections. Under Article 18.52(1)(a), a member nation will provide at least eight years of data exclusivity for biologics. Under these terms, a third party cannot rely on previously submitted safety and efficacy data for a biologic without the consent of the original applicant, thus effectively blocking subsequent “biosimilar” manufacturers from using such data to obtain approval for follow-on products during this time period. Alternatively, under Article 18.52(1)(b), a member nation can provide five years of exclusivity as described above, coupled with an additional three years of “other measures” that must “deliver a comparable outcome in the market.”

In cases where the TPP provisions are inconsistent with the current laws of a member nation, the TPP contemplates transition periods to allow nations to put the required protections in place before they begin enforcement. These transitional periods generally range from five to 10 years. Furthermore, some nations have negotiated special provisions. Brunei and Malaysia can require an original applicant to file for market approval in Brunei or Malaysia within 18 months of market approval anywhere in the world. If the applicant does not apply for market approval in Brunei or Malaysia within that time period, they forfeit their exclusivity in those countries. When submitting a follow-on application in Peru, the applicant may rely upon marketing approval obtained in another TPP member nation.  If the applicant chooses to rely on marketing approval previously obtained in another TPP member nation in their Peruvian submission, then the period of market exclusivity in Peru will run from the original date of marketing approval obtained in the other TPP member nation, provided that Peru approves the follow-on application within 6 months of filing.  This provision thus allows Peru to shorten the period of exclusivity so that it expires based upon the date of the original filing in the other TPP member nation.

These minimum requirements in the TPP do not appear to impact the current biologic regimes in the U.S., Canada, and Japan, each of which already provide at least eight years of exclusivity to biologics. However, they will provide new periods of market exclusivity for biologics in the other member nations.

2.The Definition Of New Pharmaceutical Product

Another relevant provision in the TPP is the proposed definition of new pharmaceutical products set forth in Article 18.53. This article defines a new pharmaceutical product as a pharmaceutical product that does not contain a chemical entity that has been previously approved in that country.  While this definition is consistent with U.S. statutory law, it appears to conflict with recent guidance from the U.S. Food and Drug Administration, and thus could create some ambiguity regarding exclusivity for fixed-combination products.  

Specifically, 21 USC § 355(j)(5)(F)(ii) of the Federal Food Drug and Cosmetic Act defines a new chemical entity as one that does not contain a previously approved active ingredient and specifies periods of exclusivity for new chemical entities. However, in October 2014, the FDA issued guidance applying this statute to fixed-combination dosage products, stating that “a fixed-combination drug product that contains a drug substance with a single, new active moiety would be eligible for 5-year NCE exclusivity, even if the fixed-combination also contained a drug substance with a previously approved active moiety.”[4] In other words, FDA now awards 5-year “new product” exclusivity to certain fixed-combination dosage products even if they contain a previously approved chemical entity, as long as the fixed-combination product also contains at least one new active ingredient. In comparison, Article 18.53 of the TPP would appear to prohibit such an award of exclusivity. This difference between the TPP and the FDA’s October 2014 Guidance creates some uncertainty regarding the exclusivity periods for fixed-combination products.  While this provision does not directly impact biosimilars, it provides an example of an apparent inconsistency between a provision of the TPP and the FDA’s interpretation of the corresponding U.S. statute.

3.Enforcement Of Trade Secret Rights

The third relevant provision in the TPP is Article 18.78, which defines and sets forth minimum protections for trade secrets. Article 18.78 defines trade secrets as all undisclosed information that would be subject to protection under Article 39.2 of the TRIPS agreement. The TPP obligates member nations to provide criminal procedures and penalties for: (1) unauthorized access of trade secrets, (2) unauthorized misappropriation of trade secrets, and (3) unauthorized disclosure of trade secrets. Member nations can limit the availability or level of penalties, unless the perpetrator acts for commercial advantage or financial gain, injures the trade secret’s owner, or benefits a foreign economic entity.

In the U.S., holders of biologics applications have asserted civil claims for trade secret misappropriation against the FDA and biosimilar applicants. These claims are in connection with the FDA’s reliance upon previously submitted data to obtain biosimilar approval. The expansion of trade secret protection in TPP member nations may incentivize these types of claims to be made in these countries as well.

In conclusion, the high degree of flexibility and numerous exceptions built into the TPP creates some uncertainty as to whether biosimilar market launches will be justified in many of the TPP member nations, particularly the smaller markets.  The manner in which each TPP nation implements the biologics provisions, both through statutory enactment and through judicial and regulatory decision-making, will be crucial in determining how favorable these markets will be for biosimilars.  

Joseph M. Reisman, Ph.D. is a partner in the San Diego, CA office of Knobbe Martens. Dr. Reisman's practice involves patent prosecution and strategic counseling, chiefly for clients in the pharmaceutical industry, as well as patent litigation, with a focus on Paragraph IV disputes under the Hatch-Waxman Act.

Sheila N. Swaroop is a partner in the Orange County, CA office of Knobbe Martens. Ms. Swaroop’s practice involves litigation of intellectual property disputes for clients in a variety of industries, including life sciences, pharmaceuticals, and medical devices.

Scott R. Seeley is an associate in the Seattle, WA office of Knobbe Martens. Mr. Seeley’s practice involves patent prosecution and litigation of intellectual property disputes for clients in the pharmaceutical and biotechnology industries.