PCAST Recommendation in Action: “Wildcard Exclusivity” Proposed for “Priority Antimicrobial Products”

By Kurt R. Karst

Way back in September 2014, the President’s Council of Advisors on Science and Technology (“PCAST”) released a report to the President, titled “Combating Antibiotic Resistant Bacteria.”  The report was part of a broader initiative announced by the Obama Administration to address the growing challenges posed by antibiotic resistance. Of the various “push” and “pull” mechanisms discussed in the PCAST report to incentivize the development of antibiotics, the “push” mechanism described as “[t]radable vouchers to extend patent life or market exclusivity of another drug” was of particular interest to us.  As we explained back then, this is longhand for “wildcard exclusivity” (see our previous post here).  Fast-forward almost four years, and the PCAST recommendation has found its way into a legislative proposal.

On June 28, 2018, Representatives John Shimkus (R-IL) and Tony Cárdenas (D-CA) introduced H.R. 6294, the Re-Valuing Anti-Microbial Products Act of 2018 (“REVAMP Act”).  The REVAMP Act, which Reps. Shimkus Cárdenas are reportedly trying to get added to the Pandemic and All-Hazards Preparedness Reauthorization Act of 2018, would amend the FDC Act to add Section 530, titled “Exclusivity to encourage development of novel therapies targeting serious microbial infections.”

Proposed FDC Act § 530 would provide that if FDA approves an NDA or BLA for a product designated as a “priority antimicrobial product” under a new designation program described in the bill, then the Agency shall award the application holder a 12-month exclusivity extension period “for the sole purpose of conveying such extension, in whole or in portions, to other sponsors or holders.” The exclusivity would be applied with respect to one or more other drugs for which a 505(b)(1) is submitted to FDA, that is granted 5-year New Chemical Entity (“NCE”) exclusivity, and that is designated as a “fast track product” under FDC Act § 506(b).

The conveyance of exclusivity, in whole or in in part, would need to be immediately communicated to FDA; and, with respect to the recipient drug, would apply to non-patent exclusivity granted under FDC Act §§ 505(c)(3)(E)(ii) and 505(j)(5)(F)(ii) (i.e., NCE exclusivity), FDC Act §§ 505(c)(3)(E)(iii)-(iv) and 505(j)(5)(F)(iii)(iv) (i.e., 3-year exclusivity, and FDC Act § 527 (i.e., 7-year orphan drug exclusivity) – and in addition to any 6-month pediatric exclusivity extension in effect.

Ahh . . . but there’s more . . . . In addition to applying to non-patent exclusivity the conveyed exclusivity would also apply to non-patent exclusivity (and in a manner  similar to how pediatric exclusivity is applied to Orange Book-listed patents)!  According to the bill:

(2) DRUGS SUBJECT TO LISTED PATENTS.—Immediately upon the Secretary’s receipt of a notice under subsection (b), the period during which an approval of an application may not be made effective by operation of subsection (c)(3) or (j)(5)(B) of section 505, as applicable, in the case of a recipient drug that is the subject of—

(A) a listed patent for which a certification has been submitted under subsection (b)(2)(A)(ii) or (j)(2)(A)(vii)(II) of section 505;

(B) a listed patent for which a certification has been submitted under subsection (b)(2)(A)(iii) or (j)(2)(A)(vii)(III) of section 505; or

(C) a listed patent for which a certification has been submitted under subsection (b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) of section 505 if in the patent infringement litigation resulting from the certification the court determines that the patent is valid and would be infringed,

shall be extended after the date the listed patent expires (including any patent extensions) for a period equal to the conveyed exclusivity extension period.

In addition, the bill provides that “the holder of a conveyed exclusivity extension period may sell, exchange, convey, or hold for use, such period.” This could result in the creation of quite a market for the sale of exclusivity (somewhat similar to the market created for priority review vouchers – see here).

But the REVAMP Act does include some limits on wildcard exclusivity. For example, the conveyance and notice of an exclusivity extension period for a drug must be made no later than the last day of the ninth year of the NCE exclusivity period, as extended by GAIN (FDC Act § 505E); and for a biological product, the conveyance and notice of an exclusivity extension period must be made – quite literally – at the eleventh hour: “in the case of a priority antimicrobial product that is a biological product, the last day of the eleventh year of the exclusivity period described in section 351(k)(7)(A) of the Public Health Service Act applicable with respect to such product.”  In addition, a period of patent or non-patent exclusivity would not be extended “if the conveyance of an exclusivity extension period . . . or the provision of notice [of exclusivity conveyance] is made later than 4 years prior to the expiration of such period.”  Finally, FDA may make not more than 10 awards of wildcard exclusivity.  (Of course, that could change if the REVAMP Act is enacted and is successful.)

The REVAMP Act also includes a string attached to the granting of wildcard exclusivity:

As a condition on the award of an exclusivity extension period to the holder of a drug pursuant to subsection (a), the Secretary shall require the holder, upon any conveyance of the period pursuant to such subsection, in whole or in portions, to make a monetary contribution to the Foundation for the National Institutes of Health that—

(1) is in an amount that is equal to 5 percent of the total value of the consideration received by the holder as a result of the conveyance; and

(2) is designated to be used by the Foundation to conduct or support early-stage research on the development of products to treat or prevent a disease attributable to a multi-drug resistant bacterial or fungal pathogen.

The remainder of the REVAMP Act describes, among other things, how FDA is to establish a Committee on Developing Critical Need Antimicrobials. The committee would be tasked with developing a proposed list of critical need antimicrobial priorities, supporting the designation of priority antimicrobial products and the review and disposition of applications for priority antimicrobial products, and developing recommendations to FDA and Congress “regarding other incentives needed to ensure a robust and renewable pipeline of antimicrobial drugs.”

As we’ve noted before (see, e.g., here, here, and here), the concept of wildcard exclusivity has cropped up now and again over the years in legislative proposals, and in various forms and contexts. This latest proposal in the REVAMP Act seems to be the most complex arrangement yet.