Ensuring Innovation Act Changes Eligibility for New Chemical Exclusivity

Pharmacy TimesJune 2023
Volume 89
Issue 6

Law aims to encourage competition in the pharmaceutical industry, making it easier for generics to enter market.

Drug exclusivity protects brand name drugs from generic drug competition for a period by delaying the entry of generic drug products to the marketplace.

Credit: renaschild - stock.adobe.com

Credit: renaschild - stock.adobe.com

High prices for brand-name drugs are the reason why prescription drugs are unaffordable for many individuals. Brand-name prices in 2018 were nearly 3.5 times higher in the United States than in other high-income countries,1 leading to adults skipping necessary medications at much higher rates in the United States than those in comparable countries.1

Exclusivity allows drug companies to recoup the investments they made while researching the drug and compiling data for FDA review and approval. So drug exclusivity is necessary and cannot be eliminated. But it is possible to decrease the loopholes that allow some drugs to earn exclusivity despite not having any new true innova-tion in their content.

On April 23, 2021, President Joseph R. Biden signed into law the Ensuring Innovation Act, which amends the requirements for new chemical entity (NCE) and orphan drug exclusivities under the Federal Food, Drug, and Cosmetics Act.2

The law provides statutory authority for the existing FDA practice of defining “active ingredient” more narrowly, focusing on the active moiety in certain situations, such as when determining whether a new drug is entitled to a market exclusivity period or providing priority review of drugs for treating rare pediatric diseases.3

Generally, the FDA defines “active moiety” as the core ion or molecule in a drug responsible for the relevant pharmacological or physiological action.3 By contrast, the agency defines an “active ingredient” as a component in a drug that is intended to furnish pharmacological activity or another direct effect.

The FDA’s existing practice of interpreting active ingredient as active moiety in certain situations, as statutorily authorized by this bill, tends to exclude some drugs from market exclusivity.3 This legislation would close the loopholes to prevent awarding market exclusivity to products that do not truly represent innovation and unnecessarily delaying the entry of less expensive generics.

The Drug Price Competition and Patent Term Restoration Act (informally known as the Hatch-Waxman Act) established the 5-year NCE exclusivity in 1984.

Since then, the FDA has been fighting new drug application (NDA) holders over the interpretation of “active ingredient” as requiring a new “active moiety.”4

The change in exclusivity requirements is designed to restore some balance to the Hatch-Waxman Act by acceler-ating the ability of generics manufacturers to enter the market with respect to NCEs by preventing NDA holders from making an intervening product switch to an insubstantially different active moiety that is then protected by addition-al exclusivities.4 Making substantive changes to a drug is mandated to meet the requirements of the definition to be a new “active moiety.”

In the 2015 court case Amarin Pharma Inc v US Food and Drug Administration, the US District Court for the District of Columbia reversed the FDA’s denial of NCE exclusivity to Amarin’s Vascepa (icosapent ethyl). The court ruled that the FDA cannot divide active ingredients into multiple active moieties and then deny exclusivity based on one of the many moieties in the previously approved drug.5 The FDA did not appeal the court’s ruling in favor of Amarin in 2015. But with more clarity in the new statute, the agency has confirmed the right to deny any exclusivity if it does not show true innovation. This closes the loopholes that allowed more exclusivities to noninnovative drugs and prevents those drugs from having high prices.

On the same day the president signed into law the Ensuring Innovation Act, he also signed the Advancing Education on Biosimilars Act. With this enactment, the Department of Health and Human Services (HHS) will provide online educational materials for caregivers, health care providers, and patients on the meaning of the terms and the standards for review and licensing of biological products, including biosimilars and interchangeable biosimilars.2

Combined, these legislative changes will promote bio-similar and generic drug awareness and use.


1. Cicchiello A, Gustafson L. Brand-name drug prices: the key driver of high pharmaceutical spending in the U.S: an international comparison of pre-scription drug spending and costs. The Commonwealth Fund. November 17, 2021. Accessed October 28, 2022. https://www.commonwealthfund.org/publications/2021/nov/brand-name-drug-prices-key-driver-high-pharma-ceutical-spending-in-us

2. Biden signs bill limiting new drug exclusivity awards to innovations in active moiety. Hogan Lovells Engage. April 27, 2021. Accessed October 28, 2022. https://www.engage.hoganlovells.com/knowledgeservices/news/biden-signs-bill-limiting-new-drug-exclusivity-awards-to-innova-tions-in-active-moiety#:~:text=Biden%20signs%20bill%20limiting%20new%20drug%20exclusivity%20awards%20to%20innovations%20in%20active%20moiety,-27%20April%202021&text=On%20April%2023%2C%20U.S.%20President,exclusivity%20awards%20and%20promoting%20biosimilars.

3. S.1636 - 116th congress (2019-2020): Ensuring Innovation Act. Accessed October 28, 2022. https://www.congress.gov/bill/116th-congress/sen-ate-bill/1636

4. Locke Lord quickstudy: Ensuring Innovation Act alters eligibility for new chemical exclusivity. Locke Lord. April 26, 2021. Accessed October 28, 2022. https://www.lockelord.com/newsandevents/ publications/2021/04/locke-lord-quickstudy-innovation-act.

5. 119 F Supp 3d (WP) 196 (SDNY 2015).

About the Authors

Prinsa D. Patel is a PharmD-MSPS dual degree candidate at the University of Kentucky College of Pharmacy in Lexington.

Joseph L. Fink III, JD, DSc (Hon), BSPharm, FAPhA, is professor emeritus of pharmacy law and policy at the University of Kentucky College of Pharmacy in Lexington.

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