License Compliance Issues For Biopharmaceuticals: Special Challenges For Negotiations Between Companies And...

Biopharmaceuticals are therapeutic products based on biotechnology. They are manufactured by or from living organisms and are the most complex of all commercial medicines to develop, manufacture and qualify for regulatory approval. In recent years biopharmaceuticals have rapidly increased in number and importance with over 400() already marketed in the U.S. and European markets alone. Many companies throughout the world are now ramping up investments in biopharmaceutical R&D and expanding their portfolios through licensing of early-stage biotechnologies from universities and other non-profit research institutions, and there is an increasing number of license agreements for biopharmaceutical product development relative to traditional small molecule drug compounds. This trend will only continue as large numbers of biosimilars and biogenerics enter the market.A primary goal of technology transfer offices associated with publicly-funded, non-profit research institutions is to establish patent protection for inventions deemed to have commercial potential and license them for product development. Such licenses help stimulate economic development and job creation, bring a stream of royalty revenue to the institution and, hopefully, advance the public good or public health by bringing new and useful products to market. In the course of applying for such licenses, a commercial development plan is usually put forth by the license applicant. This plan indicates the path the applicant expects to follow to bring the licensed invention to market. In the case of small molecule drug compounds, there exists a widely-recognized series of clinical development steps, dictated by regulatory requirements, that must be met to bring a new drug to market, such as completion of preclinical toxicology, Phase 1, 2 and 3 testing and product approvals. These steps often become the milestone/benchmark schedule incorporated into license agreements which technology transfer offices use to monitor the licensee's diligence and progress; most exclusive licenses include a commercial development plan, with penalties, financial or even revocation of the license, if the plan is not followed, e.g., the license falls too far behind.This study examines whether developmental milestone schedules based on a small molecule drug development model are useful and realistic in setting expectations for biopharmaceutical product development. We reviewed the monitoring records of all exclusive Public Health Service (PHS) commercial development license agreements for small molecule drugs or therapeutics based on biotechnology (biopharmaceuticals) executed by the National Institutes of Health (NIH) Office of Technology Transfer (OTT) between 2003 and 2009. We found that most biopharmaceutical development license agreements required amending because developmental milestones in the negotiated schedule could not be met by the licensee. This was in stark contrast with license agreements for small molecule chemical compounds which rarely needed changes to their developmental milestone schedules. As commercial development licenses for biopharmaceuticals make up the vast majority of NIH's exclusive license agreements, there is clearly a need to: 1) more closely examine how these benchmark schedules are formed, 2) try to understand the particular risk factors contributing to benchmark schedule non-compliance, and 3) devise alternatives to the current license benchmark schedule structural model. Schedules that properly weigh the most relevant risk factors such as technology classification (e.g., vaccine vs recombinant antibody vs gene therapy), likelihood of unforeseen regulatory issues, and company size/structure may help assure compliance with original license benchmark schedules. This understanding, coupled with a modified approach to the license negotiation process that makes use of a clear and comprehensive term sheet to minimize ambiguities should result in a more realistic benchmark schedule.