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What’s Next for Biologics Under USMCA?

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The USMCA’s intellectual property provisions add additional layers of ambiguity to the already complex issues surrounding biological product exclusivity and its future in US law.
Please note: This is an archived post. Some of the information and data discussed in this article may be out of date. It is preserved here for historical reference but should not be used as the basis for business decisions. Please see our main Insights section for more recent posts.

Since August 2018, the Trump administration has been actively negotiating an alternative trade agreement to the North American Free Trade Agreement.1 Called the United States-Mexico-Canada Agreement (USMCA), its numerous provisions include a chapter on intellectual property protections. Under current US law, reference biologics currently enjoy 4 and 12 years of data and market exclusivity, respectively.2 By contrast, USMCA provides market protection to reference biologics for a minimum of 10 years.3 USMCA also defines biological products more broadly than under US law, which creates potential misalignment where some products that FDA regulates as drugs may be considered biologics under the USMCA.

There has been significant pushback on the USMCA from members of Congress,4 as well as numerous attempts to reduce the market exclusivity duration in US law.5 The outcomes of ongoing discussions around the USMCA will have important ramifications for all manufacturers of branded, generic, and biosimilar products.

The State of Exclusivity Provisions

The Biologics Price Competition and Innovation Act (BPCIA), part of the Affordable Care Act (ACA), created an abbreviated pathway–Section 351(k)–for biosimilar follow-on products. Section 351(k) promotes long-term competition by allowing biosimilar sponsors to incorporate data from an originator product, reducing data burden and time to approval for follow-on product sponsors. However, BPCIA also protects originator products by providing regulatory exclusivity, running concurrent with patent exclusivity:

  • For 4 years, the FDA cannot accept applications for biosimilars (data exclusivity period)6
  • For 12 years, the FDA cannot approve biosimilar applications (market exclusivity period)7

The Obama administration had previously proposed reducing the market exclusivity provision to 7 years.8 Since the 114th Congress, Representative Jan Schakowsky (D-IL) has led efforts to reduce originator market exclusivity to 7 years. Her latest effort, HR 3379, was introduced in the House in June 2019. The bill, which has bipartisan support, would reduce originator biologic market exclusivity even further, to 5 years.

If USMCA is ratified as is, any future Congressional reduction of market exclusivity to fewer than 10 years becomes–although not impossible–highly unlikely. In July 2019, over 100 members of Congress signed a letter expressing “strong opposition” to the 10-year minimum for biological product market exclusivity protection. For USMCA to take effect, Congress must complete Trade Promotion Authority (TPA) procedures and approve an implementing bill.9 House Speaker Nancy Pelosi has recently stated that “[W]e hope that we’re on a path to yes.”10 Whether this path includes revisiting and amending the market protections provision remains unclear.

USMCA’s “Biological Products” Definition Is More Expansive than US Law

An additional area of misalignment between the USMCA and current US law is how “biological products” are defined under each for purposes of determining exclusivity. US law defines biological products to include proteins (except any chemically synthesized polypeptide).11 Currently, the FDA uses the following definitions:

  • proteins refers to alpha amino acid polymers > 40 amino acids in size12
  • peptides means polymers ≤ 40 amino acids in size; these are considered drugs regulated under the Food, Drug, and Cosmetic (FD&C ) Act13
  • chemically synthesized polypeptide[s] are polymers “made entirely by chemical synthesis” and > 40 but < 100 amino acids in size;14 these products are also regulated as drugs under the FD&C Act

Significantly, the FDA has proposed amending regulations to include the above definitions of proteins and chemically synthesized polypeptides.15 The USMCA  however, does not include the “chemically synthesized polypeptide” exception in its definition of a biologic. Therefore, chemically synthesized polypeptides between 41 and 99 amino acids may be considered biologics and be eligible for at least 10-years of market protection under USMCA. In practical terms, this could include currently approved products like glatiramer acetate and tesamorelin.16

The Uncertain Future of the ACA

The future of the ACA is in doubt as the US Court of Appeals for the 5th Circuit deliberates Texas v. US. Last year, the US District Court for the Northern District of Texas held that the individual mandate was unconstitutional and inseverable from the rest of the ACA and that, consequently, the entire ACA could be overturned.17 If the 5th Circuit upholds this decision, the case would likely be appealed to the US Supreme Court.

If the ACA is overturned, Congress would be under immediate pressure to reauthorize BPCIA. The complex interplay between the intellectual property provisions of USMCA and the future of BPCIA’s exclusivity provisions, taken together, pose significant uncertainty for all stakeholders focused on developing innovative medicines.

Looking Ahead

Despite movement on several fronts in Congress, the ratification of USMCA and the legal challenge to the ACA each remain important and unresolved issues. How these issues unfold over the remainder of the year will directly impact biopharmaceutical innovation and competition in 2020 and beyond.

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1 The White House, President Donald J. Trump is Keeping His Promise to Renegotiate NAFTA (27 Aug 2018)

2 Public Health Service (PHS) Act Sec. 262(k)(7), codified at 42 USC § 262(k)(7).

3 USMCA, Chapter 20.49.1.

4 See, e.g., The Honorable Jan Schakowsky, et al., Letter to Ambassador Robert E. Lighthizer (11 Jul 2019)

5 H.R. 3379 (2019), H.R. 6577 (2018), S. 771 (2017), H.R. 1776 (2017), S. 3904 (2016), H.R. 5573 (2016).

6 42 USC. 262(k)(7)(B).

7 42 USC. 262(k)(7)(A).

8 See, e.g., Office of Management and Budget, Budget of the United States Government, Fiscal Year 2017 (9 Feb 2016), at 66).

9 Executive Office of the President, Office of the United States Trade Representative, United States-Medico-Canada Agreement

10 Pramuk J, CNBC, Pelosi tells Cramer that Democrats are optimistic that they’re on ‘a path to yes’ on Trump’s North American Trade Deal (17 Sep 2019).

11 42 USC. 262(i).

12 FDA, Draft Guidance, The “Deemed to be a License” Provision of the BPCI Act Questions and Answers–Guidance for Industry, (Dec 2018), at 4; available at (accessed 16 Sep 2019); see also FDA, Impact Story: Developing the Tools to Evaluate Complex Drug Products: Peptides (current as of 5 Feb 2019).

13 FDA, Draft Guidance, ANDAs for Certain Highly Purified Synthetic Peptide Drug Products That refer to Listed Drugs of rDNA Origin (Oct 2017), at 2

14 Supra note 6.

15 Definition of the Term “Biological Product”; FDA Proposed rule, 83 Fed. Reg. 63817 (12 Dec 2018) (to be codified at 21 C.F.R. pt. 600).

16 Usmani SS, et al. THPdb: A database of FDA approved therapeutic peptides and proteins, PLoS One. 2017;12(7): e0181748.

17 See Texas, et al., v. United States, et al., Civil Action No. 4:18-cv-00167-O (N.D. Tex. 2018), at 15.

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