IP Explained: Three forms of IP protections for medicines

Intellectual property (IP) protections for the biopharmaceutical sector provide incentives that help to promote the discovery and development of life-saving medicines for patients and foster a competitive market for generic and biosimilar medicines. There are three forms of IP protections critical to biopharmaceutical development, and although they work together in a complementary fashion, each is distinct and governed by different statutory provisions.

In today’s IP Explained, we unpack the differences between each protection and consider how they work together to balance innovation and competition. 

• Patents are unique in that they are property rights granted by the United States Patent and Trademark Office and can be issued or expire independent of a drug’s regulatory approval status. Patents provide inventors in all industries the exclusive right to sell an invention for a set period of time before others may copy and sell it. They both foster invention and promote competition by requiring detailed public disclosure of a new technology. However, patents alone do not grant authorization to market new drugs; manufacturers must still seek Food and Drug Administration (FDA) approval to bring a new drug to market. Although patents are important to all technology-intensive industries, they are particularly vital to the biopharmaceutical industry, given the lengthy, costly and highly uncertain research and development (R&D) process that leads to new and improved medicines. While patents may prevent a competitor from bringing an exact duplicate of a medicine to market, they do not act as an absolute bar against bringing similar, non-infringing, products to market. And once the patent has expired, the invention can be freely used by anyone.
• Data exclusivity, also referred to as data protection, prohibits third parties, for a limited time, from using or relying upon an innovator’s valuable clinical data to obtain FDA approval for their product. Data protection does not prevent third parties from conducting their own R&D and clinical trials to seek and obtain regulatory approval for a competing product. In this way, it operates very differently than a “market exclusivity,” which is described below.
• Market exclusivity is often confused with data exclusivity but they’re actually very different. Market exclusivity prohibits a third party from obtaining FDA approval for a particular pharmaceutical product and entering the market, for a set period of time, even with its own data. This form of IP protection is intended to encourage investment in R&D when market-based incentives are insufficient such as with orphan drugs. The Orphan Drug Act (ODA) incentivizes the development of new medicines to treat diseases affecting small patient populations, often referred to as rare diseases. Specifically, the ODA blocks third parties from obtaining approval of a product that is the same as an orphan drug, for the same use, for seven years.

While patents, data exclusivity and market exclusivity each play a unique role in protecting IP, they all work together to support a competitive marketplace. In 2018 alone PhRMA member companies invested $79.6 billion in R&D to pursue new and improved treatments and cures –about 4,000 of which are in development in the U.S. – that enable a healthier future for patients.

For more information on the importance of IP protections, visit our IP page and stay tuned for our next IP Explained post.