Document Type

Article

Publication Date

2016

Abstract

This article contributes to an ongoing academic and public policy dialogue over whether and on what terms U.S. law should provide “data exclusivity” for new medicines. Five years after a new drug has been approved on the basis of an extensive application that may have cost more than one billion dollars to generate, federal law permits submission of a much smaller application to market a duplicate version of the drug. This second application is a different type of application, and it may cost no more than a few million dollars to prepare. A similar sequence is true for biological medicines: twelve years after approval of an application that may have cost over one billion dollars to generate, the law permits approval of a smaller and less expensive application for a duplicate. Scholars, courts, and policymakers use the phrase “data exclusivity” to describe the period before the new pathway opens – a nod to the fact that applications of the second type rely on the research submitted by the first entrant. The primary “myth” of data exclusivity is that it is a benefit provided by the government for the benefit of first entrants. This article reframes data exclusivity instead as a period of time during which all firms are subject to the same rules governing market entry. It uses this insight as the foundation for an exploration of the complex web of legal, regulatory, and practical factors that may influence whether and on what terms firms enter the market with duplicates during and after that period, and for a systematic comparison of the new drug exclusivity and biological product exclusivity schemes in order to propose an approach that could prompt strategic decisions – both during and after that period – that will contribute to dynamic social welfare.

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