Regulatory data protection for pharmaceuticals

Innovation in the biopharmaceutical industry requires significant investments. Intellectual property rights, such as regulatory data protection (RDP), are in place to incentivise innovation.

RDP is a key feature of the World Trade Organisation Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and is included in many trade agreements. The importance of RDP in promoting innovation has been recognized by both developed and developing markets such as Chile, Mexico, and Colombia.

Policy makers lack important evidence

In 2002, Brazil enacted data package exclusivity that introduced RDP for veterinary and agricultural products, while explicitly excluding products for human use (biopharmaceutical products). Recently, a report from the University of Rio de Janeiro has reinvigorated the discussion.

Our ambition with this report is to close the knowledge gap by building on the University of Rio de Janeiro report. We provide comprehensive, data-based evidence to study the impact of RDP on the availability of both innovative and generic medicines, healthcare expenditures, and foreign direct investment.

Currently, the debate focuses on rising healthcare expenditure and a weaker generic and biosimilar industry as consequences of introducing RDP. We find that not to be true. In fact, we find evidence of the opposite, starting with the availability of innovative medicines.

RDP leads to more available medicines

Introducing RPD in Brazil will make it more attractive for innovative biopharmaceutical companies to offer their medicines in Brazil. We have examined the experiences from those markets providing RDP and predict that the number of innovative medicines in Brazil may increase by 34-39% (equal to 570 new innovative medicines) due to Brazil introducing RDP.

More available medicines create a positive ripple effect

With 570 more innovative medicines available, the generic and biosimilar industry has more ‘raw material’ to leverage. Across the 18 markets investigated, we find that 2.5 generic and biosimilar medicines are on average available for every innovative medicine. The number for Brazil is slightly higher at 3.2, possibly due to the market’s strong generic and biosimilar industry. With more innovative medicines available to fuel the generic and biosimilar industry, we expect an additional 1,800 generic and biosimilar products to become available in Brazil over time. 

The availability of additional innovative medicines leads to more foreign direct investment going into Brazil from the innovative industry. We find that the number of new clinical trials can be expected to increase to more than 1,000 per year, which is more than double the current yearly average. This is a major investment as on average 73% of the total cost of developing an innovative medicine and bringing it to the market is research and development. The reason for the increase is likely to be caused by the Brazilian market becoming more important to the innovative companies. That in turn incentives them to include more Brazilian patients in clinical trials as it will allow the companies to present ANVISA with clinical data for the market’s own population. This improves the relevance of the data for ANVISA thereby improving chances of receiving a marketing authorisation (and later reimbursement). 

With increasing clinical trial investments going into Brazil, we find that the market has an opportunity to build a high value Brazilian innovative industry alongside a growing generic and biosimilar industry. Learning from markets that have been able to grow innovative industries, we find they followed a three-step strategy. The first step is to put in place a robust system of protecting innovation including RDP.

Were Brazil to follow a similar three-step strategy, we believe that the Brazilian innovative and generic industries could grow from today’s 6.6 bn USD to 10.2 bn USD in total. This growth will support a whole ecosystem of suppliers and partners. We find that this may add another 14.4 bn USD to the Brazilian economy effectively driving a total of 24.7 bn USD of Brazilian gross domestic product (GDP). This can sustain almost 800.000 local jobs.

Healthcare expenditure to stay unchanged

We find that in most markets that have introduced RDP, healthcare expenditure increased in the short run but reverted to its initial trajectory after 5-10 years. We believe there are three reasons for this pattern:

First, for most available medicines, RDP does not extend the period of protection from generic entry. This means that generic entry continues to exert a downward pressure on healthcare costs. Second, innovative medicines launched thanks to the presence of RDP allow for savings on other, more ineffective healthcare services over time. Third, markets prioritise spending on innovative medicines in line with the market’s willingness to invest in improved healthcare. Availability of new medicines does not decide Brazil’s future healthcare expenditure, Brazilian politicians do.

In conclusion

Based on rigorous analyses across 53 markets covering more than 10 years, we find strong evidence of multiple benefits of adopting RDP in Brazil. We find benefits for patients, the generic and innovative industries and the Brazilian economy. 

The study is commissioned by Interfarma and PhRMA.