Eli Lilly 2015 Annual Report Download - page 20

F8
FINANCIAL REPORT
some cases the innovator company may be protected from approval of generic or other follow-on versions of
a new medicine beyond the expiration of the compound patent through manufacturing trade secrets, later-
expiring patents on methods of use or formulations, or data protection that may be available under
pharmaceutical regulatory laws. The primary forms of data protection are as follows:
• Regulatory authorities in major markets generally grant data package protection for a period of years
following new drug approvals in recognition of the substantial investment required to complete clinical
trials. Data package protection prohibits other manufacturers from submitting regulatory applications
for marketing approval based on the innovator company’s regulatory submission data for the drug.
The base period of data package protection depends on the country. For example, the period is five
years in the U.S. (12 years for new biologics as described below), 10 years in the EU, and eight years
in Japan. The period begins on the date of product approval and runs concurrently with the patent
term for any relevant patent.
• Under the Biologics Price Competition and Innovation Act of 2010, the FDA has the authority to
approve biosimilars. A competitor seeking approval of a biosimilar must file an application to show its
molecule is highly similar to an approved innovator biologic and include a certain amount of safety
and efficacy data which the FDA will determine on a case-by-case basis. Under the data protection
provisions of this law, the FDA cannot approve a biosimilar application until 12 years after initial
marketing approval of the innovator biologic, subject to certain conditions.
• In the U.S., the FDA has the authority to grant additional data protection for approved drugs where
the sponsor conducts specified testing in pediatric or adolescent populations. If granted, this
“pediatric exclusivity” provides an additional six months, which are added to the term of data
protection as well as to the term of any relevant patents, to the extent these protections have not
already expired.
• Under the U.S. orphan drug law, a specific use of a drug or biological product can receive "orphan"
designation if it is intended to treat a disease or condition affecting fewer than 200,000 people in the
U.S., or affecting more than 200,000 people but not reasonably expected to recover its development
and marketing costs through U.S. sales. Among other benefits, orphan designation entitles the
particular use of the drug to seven years of market exclusivity, meaning that the FDA cannot (with
limited exceptions) approve another marketing application for the same drug for the same indication
until expiration of the seven-year period. Unlike pediatric exclusivity, the orphan exclusivity period is
independent of and runs in parallel with any applicable patents.
Outside the major markets, the adequacy and effectiveness of intellectual property protection for human
pharmaceuticals varies widely. Under the Trade-Related Aspects of Intellectual Property Agreement (TRIPs)
administered by the World Trade Organization, more than 140 countries have agreed to provide non-
discriminatory protection for most pharmaceutical inventions and to assure that adequate and effective rights
are available to patent owners. Implementation of this agreement differs between developed and developing
countries, with many developing countries limiting protection for biopharmaceutical products under their
interpretation of “flexibilities” allowed under the agreement. Thus, certain types of patents, such as those on
new uses of compounds or new forms of molecules, are not available in many developing countries. Further,
many developing countries do not provide effective data package protection even though it is specified in
TRIPs.
Certain of our Elanco animal health products are covered by patents or other forms of intellectual property
protection. Historically, upon loss of effective market exclusivity for our animal health products, we have not
generally experienced the rapid and severe declines in revenues that are common in the human
pharmaceutical segment.
There is no assurance that the patents we are seeking will be granted or that the patents we hold will be
found valid and enforceable if challenged. Moreover, patents relating to particular products, uses,
formulations, or processes do not preclude other manufacturers from employing alternative processes or
marketing alternative products or formulations that compete with our patented products. In addition,
competitors or other third parties may assert claims that our activities infringe patents or other intellectual
property rights held by them, or allege a third-party right of ownership in our existing intellectual property.