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An in-depth analysis of the patent provisions of the new legislation.
On March 23, 2010, some four decades after the modern US healthcare reform debate began, comprehensive reform provisions were signed into a law. Among thousands of pages of legislative text are the most extensive and potentially farthest-reaching amendments to the statutory provisions governing biologics in the 65-plus-year history of Section 262 of the Public Health Service Act (PHSA), pursuant to which the US FDA approves biologic license applications (BLAs). Those PHSA amendments—set forth in Title VII, Subtitle A, of the healthcare reform law and known as the Biologics Price Competition and Innovation Act (BPCIA)—are the culmination of a 14-year debate. That debate began in earnest in 1996, when the FDA adopted its original comparability guidance and, three weeks later, issued its pioneering approval of the first comparable biologic, Biogen Idec's Avonex (interferon β-1A). In licensing Avonex, the FDA allowed Biogen to rely on the results of a clinical trial of another company's interferon β product manufactured from a different cell line in a different facility in another country—reliance that the FDA's expert reviewers determined was scientifically justified based on Biogen's demonstration that the products were "biochemically and functionally equivalent"—without requiring Biogen to conduct any clinical trials on Avonex.
John M. Engel
Fourteen years later, the BPCIA is designed to leverage what has long been recognized as the next logical step—flowing directly out of the Avonex comparability determination and hundreds of other comparability determinations that the FDA subsequently rendered—by establishing a new regulatory pathway for biosimilars. Thus, under the BPCIA, a biosimilar is a biological product demonstrated to be "highly similar" to a reference biologic from another company that the FDA previously licensed. By adopting this approach to biosimilarity, Congress could be considered to have codified the FDA's longstanding comparability standard. For many years, comparability has been
"[A] conclusion that products have highly similar quality attributes before and after manufacturing process changes and that no adverse impact on the safety or efficacy, including immunogenicity, of the drug product occurred. This conclusion can be based on an analysis of product quality attributes. In some cases, nonclinical or clinical data might contribute to the conclusion."1
Against this historical regulatory backdrop, the BPCIA establishes a biosimilar pathway that adds explicit, albeit waiveable, mandates to the BLA-licensure provisions of the PHS Act for the first time in their 66-year history. Most notably, the law establishes an express requirement that a biosimilar application include "a clinical study or studies (including the assessment of immunogenicity...)." This contrasts with the very broad, longstanding statutory regime, which was in place throughout the biotech revolution and that was aptly summed up in the Federal Court decision affirming the FDA's comparability determination for Avonex:
"Biogen and FDA acknowledge FDA's past insistence upon clinical trials of each drug being considered for approval, but they contend that no statute or regulation requires it and submit that the use of data on "comparable" drugs is within FDA's discretion.... Neither the PHSA itself nor FDA's regulations issued under the PHSA provide that the clinical study offered to demonstrate the safety, purity and potency of a new biological product shall have been conducted on that very product.... FDA conceded that it had never before approved a new biological drug on the basis of a clinical study of a "comparable" drug, but FDA demonstrated by reference to public documents that the principle of comparability was not unknown and that, in fact, it had been previously applied in other situations."2
Under the BPCIA, the statutory regime that the FDA must apply to a "highly similar" biosimilar differs significantly from the very broad and straightforward provisions governing traditional BLAs, which make no reference to clinical trials or other studies, and simply require a demonstration of safety, purity, and potency to secure BLA approval for an originator biologic. Although Congress greatly amplified the detail of the requirements for what must be included in a biosimilar application, Congress nonetheless delegated scientific responsibility for implementing those requirements to the FDA. In doing so, Congress established what can be, on a product-by-product basis, a self-implementing pathway and one that, in all cases, defers to the expert scientific judgment of the FDA's career reviewers in the same review divisions having responsibility for the counterpart reference biologic BLA.
From a regulatory science perspective, therefore, what remains to be seen is whether, and if so, to what extent, the provisions of this new pathway governing highly similar biosimilars will affect comparability determinations for biological products regulated under traditional BLAs. Even before enactment of the new law, some signs seemed to be emerging that pre- and post-manufacturing change comparability assessments may be subjected to regulatory requirements that could approach those now codified for biosimilars. For example, in connection with Myozyme (alglucosidase alfa) for use in patients with Pompe disease, when the sponsor sought approval for product made at a significantly higher scale after completing a comprehensive comparability exercise, the FDA's initial review uncovered problems indicating the products were not comparable. The FDA's subsequent review found insufficient data to establish clinical comparability between the products. The FDA then requested that the sponsor submit a new BLA with clinical data to support separate licensure of the large-scale product as a new product, for which a new brand name, Lumizyme, was required, albeit with the same international nonproprietary name (INN), alglucosidase alfa.3
Traversing the 16-year history between the approvals of Avonex and Lumizyme, it would not be appropriate to suggest that either of them, or any of the comparability assessments in between, are necessarily harbingers of things to come. However, it certainly is clear from these and many other regulatory precedents that demonstrating comparability remains a sponsor's burden and one that needs to be met case-by-case on a data-driven basis. More broadly, depending on how the FDA evaluates biosimilar applications for highly similar biologics in the future, the biosimilars provisions of the BPCIA ultimately could become the foundation for one of the most transformative regulatory paradigm shifts in the years to come.
In the regulatory pathway itself and in the provisions delegating its implementation to scientific experts at the FDA, Congress established a regulatory pathway that generally enables sponsors to pursue development and approval of biosimilars that they have demonstrated to be highly similar to a previously licensed biologic.
It is not reasonable to apply that same conclusion, however, to the remaining nonregulatory BPCIA provisions. That is because much of the rest of the BPCIA is disproportionately focused on patent rights, including unprecedented disclosures to enable enforcement of patent rights, and unparalleled limitations on the exercise of patent rights. Unlike the relatively straightforward regulatory pathway-related provisions, which consume about three pages of legislative text, the patent provisions take double that amount of space to codify what can only be considered a convoluted process. Indeed, simply mapping out the patent challenge and enforcement process reveals that it is Kafkaesque in its disorienting complexities.
Unfortunately, in the years of legislative debate leading up to enactment of the BPCIA, the emphasis from an intellectual property (IP) perspective was on provisions granting nonpatent exclusivity to originators who pioneer the development of innovative biologics. As if exclusivity were the only issue on the table, stakeholders on all sides of the debate often concentrated their advocacy on the period of years: Should it be 5 or 20, 7 or 14, 10 or 11 or 12? Reasonable arguments were presented on various sides of the issue, and Congress ultimately determined that 12 years was an appropriate nonpatent exclusivity period to incentivize R&D for biologics.
What was lost in the undue focus on this exclusivity period is that Congress codified an exclusivity regime unlike any other that preceded it. One of the most significant distinctions is that it provides for a flat 12-year period (plus pediatric exclusivity when attainable) running from the date of the original approval of the first BLA for a biological product. In practical terms, this means that, as of the day of enactment, there already were several dozen biologics that do not receive any nonpatent exclusivity, including blockbusters like Amgen's Enbrel, Epogen, and Neupogen; Genentech's Rituxan and Herceptin; and J&J's Procrit and Remicade. Moreover, Congress codified detailed provisions (so-called "anti-evergreening" prohibitions) that prevent exclusivity from being granted to slightly modified biologics that are not truly innovative.
The intensity of the debate around the exclusivity provisions was matched only by the equally intense support among most stakeholders for a patent-challenge process tied to the FDA's regulatory review process. A general consensus emerged among most stakeholders that early patent challenges should be encouraged, but there was no comparable emphasis on adopting a mechanism for concluding litigation. The result was a proverbial patent thicket—ironically, one that presents unique challenges for biotech patent holders and biosimilar sponsors alike.
For a biosimilar sponsor, the law imposes an unprecedented mandate to turn over its complete BLA and its entire manufacturing process to its direct competitor within 20 days of filing of the application by the FDA. This disclosure occurs some six-to-nine months before patent litigation is initiated in Federal court with attendant judicial oversight of the process.
For biotech patent holders, the law effectively compels patentees to put their entire patent estate at risk prematurely—when a biosimilar application is filed and potentially long before it enters the market—and imposes unprecedented limitations on enforcement of their rights for any patent not put at risk. These results flow from just a few of the many intricate aspects of the new law's patent-challenge process. First, there is a mandate that the reference BLA holder "shall" provide the biosimilar sponsor—within 60 days of receiving its application and manufacturing process—a list of all patents under which the BLA holder believes a patent-infringement claim reasonably could be asserted against a party making, using, offering to sell, selling, or importing into the US the biosimilar product. Second, to encourage full disclosure of a comprehensive patent list, the new law provides that the owner of any patent not disclosed on a timely basis, i.e., on the initial list or a supplemental list provided within 30 days of a later-acquired patent being issued or in-licensed, is statutorily precluded from enforcing that patent-infringement litigation against the biosimilar applicant. Finally, even for timely disclosed patents, if the statutory timelines are not followed (with litigation initiated before expiry of the relevant 30-day statutory window) or if timely litigation is dismissed without prejudice, the sole and exclusive remedy for infringement is a reasonable royalty. Consequently, biotech patentees confront a real Hobson's choice—either list and risk all patents or "hold back" one or more patent(s) having substantially diminished value. Like so much else in the law's intricate patent provisions, these unparalleled curbs on patent rights create an unlevel playing field for biotech-patent enforcement and are likely to trigger any number of legal and constitutional challenges that will divert resources to a potential plethora of lawsuits spawned by this convoluted new patent-challenge process. None of these outcomes is good for any segment of the biopharmaceutical industry, and all of them represent unsound IP public policy.
The fundamental flaw in the BPCIA's patent-challenge provisions and the one repeatedly underscored both by the Federal Trade Commission in recommending against their adoption and by the one stakeholder that consistently opposed their enactment is that for the first time in the history of the biotechnology industry, biotech patent challenges are tied directly to the initiation of the regulatory review and approval process.4 This ill-considered approach, however, applies only to biosimilar applications; it does not apply to traditional BLAs. In addition to codifying an overarching disparity across patent-enforcement regimes in the biotechnology industry, the approach creates perverse incentives. Sponsors that otherwise might submit biosimilar applications may undertake the additional regulatory burden of submitting a traditional BLA to avoid the unprecedented requirements and inherent complexities of the biosimilar patent-challenge provisions. Like any other traditional BLA applicant, such a sponsor then would have much greater control over its own destiny in terms of any patent disputes. It could take steps to defer litigation until the postapproval phase, or it could potentially initiate an action during the preapproval phase.
Such choices generally have always been available to traditional BLA sponsors in connection with hundreds of patent disputes that have arisen among traditional BLA sponsors and between those sponsors and other patent holders. A fair number of those disputes have been settled or resolved through alternative-dispute-resolution mechanisms like arbitration, while others have resulted in published opinions. The latter category can be quite useful in elucidating the newly created disparity in patent-enforcement regimes across biologics sponsors.
For example, there is the "other" Avonex litigation, the patent lawsuit amongst Biogen, Schering Corporation, and Berlex. While Biogen's BLA was pending at the FDA, the agency and Biogen focused on BLA review and approval, and patent litigation ensued at the end of that review.5 Although Biogen ultimately prevailed on its non-infringement claim, it is worthwhile to consider whether the outcome might have been altered if, when the FDA accepted Biogen's BLA, Biogen had been statutorily compelled—without any discovery request, without any ability to meaningfully object, and without any court oversight—to turn over its complete BLA and its entire manufacturing process. Similarly, when Schering Corporation and Biogen were joined in patent litigation against Amgen on a Biogen patent licensed to Schering Corporation, that suit was initiated after the BLA (now held by Intermune) for Amgen's Infergen (interferon alfacon-1) was approved by the FDA.6 Amgen ultimately prevailed, but it is not unreasonable to ponder how the course of that case might have been affected if Amgen had been statutorily compelled to disclose its trade secrets in its BLA and manufacturing process at the time of BLA filing. Equally worth considering is the patent litigation that Genentech filed against Boehringer Mannheim after the FDA approved a new thrombolytic to compete against Genentech's Activase.7 Although the various reteplase infringement lawsuits ultimately were resolved under unique circumstances (after Roche acquired Boehringer Mannheim, sold US marketing rights to Retavase to Centocor, and then joined Genentech's board),8 it undoubtedly would have been a fascinating situation if Boehringer Mannheim had been required preapproval and immediately post-filing to turn over its entire BLA and complete manufacturing process to Genentech.
The prospect of statutorily compelled precomplaint discovery linked to the FDA regulatory review process is merely a hypothetical prospect in these historical cases, and the question of its impact is by definition rhetorical. Nonetheless, given the patent estates and biologics at issue, these cases can be informative case studies for visualizing the impact of such a preapproval patent-resolution process. That process and its unprecedented draconian penalties are the new norm for patent disputes involving biosimilars.
The inclusion of these patent provisions creates the single greatest hurdle to the realization of the potential that otherwise would be achievable through the regulatory pathway Congress enacted. They are deterring, and probably will continue to discourage, any number of biosimilar applications that could meet the requirements of the new regulatory pathway but that either will be submitted as BLAs or simply will be abandoned. For as long as such perverse outcomes persist, the competitive impact of biosimilars will not be fully realized. The biopharmaceutical industry will not be fully subjected to the market-based competition that can both enhance access to lower cost high-quality biologics and also motivate R&D of the next generation of biologics. Moreover, the US healthcare system as a whole—which was the focal point of the broader law in which the BPCIA was enacted—will not benefit from the savings that otherwise could be achieved. As Europe has demonstrated, biosimilars that are equally as safe and effective as their originator counterparts are producing substantial savings. In the current economic climate, there is an imperative for the US to achieve that same economic outcome and the public health benefit of expanded access to biologics. It can be accomplished through a straightforward fix that, for patent-enforcement purposes, reverts to the status quo ante, eliminates patents from the PHSA entirely, and puts all BLA sponsors on the same footing.
The views presented in this article solely represent the author's personal opinions and do not constitute the views of his law firm or any of its clients.
John M. Engel is the managing partner at Engel & Novitt, LLP, Washington, DC, 202.207.3303, firstname.lastname@example.org
1. International Conference on Harmonization. ICH harmonized tripartite guideline: Q5E comparability of biotechnological/biological products subject to shanges in their manufacturing process. 70 Fed. Reg. 37861–62. 2005 Jun 30. See also FDA Guidance concerning demonstration of comparability of human biological products, including therapeutic biotechnology-derived products. 61 Fed. Reg. 18612–13. 1996 Apr 26.
2. Berlex Laborat ories, Inc. v. FDA, 942 F. Supp. 19, 25 (D.D.C. 1996).
3. US Food and Drug Administration. Dockets. Available from: http://www.fda.gov/ohrms/dockets/ac/08/slides/2008-4389s1-01-FDA.pdf; http://www.fda.gov/ohrms/dockets/ac/08/briefing/2008-4389b1-04-Genzyme.pdf. See also http://www.accessdata.fda.gov/drugsatfda_docs/nda/2010/125291s000TOC.cfm.
4. Federal Trade Commission Report. Emerging Health Care Issues: Follow-on biologic drug competition 2009. Jun; 52–63. Available from: http://www.ftc.gov/os/2009/06/P083901biologicsreport.pdf (PDF pages 68-79). See also http://www.ftc.gov/os/comments/healthcarecompissues/537778-00009.pdf and http://www.ftc.gov/os/comments/healthcarecompissues/537778-00032.pdf.
5. Biogen, Inc. v. Schering AG, 954 F. Supp. 391 (D. Mass. 1996). See also Biogen, Inc. v. Berlex Laboratories, Inc., 318 F.3d 1132 (Fed. Cir. 2003).
6. Schering Corp. & Biogen, Inc. v. Amgen Inc., 969 F. Supp. 258 (D. Del. 1997). See also Schering Corp. & Biogen, Inc. v. Amgen Inc., 222 F.3d 1347 (Fed. Cir. 2000).
7. Genentech, Inc. v. Boehringer Mannheim, 47 F. Supp. 2d 91 (D. Mass. 1999).
8. Kleid DG. Patent Litigations. In: Scientist and patent agent at Genentech: An oral history conducted in 2001 and 2002 by Sally Smith Hughes for the Regional Oral History Office. The Bancroft Library. University of California, Berkeley; 2002. Available from: http://content.cdlib.org/view?docId=hb1t1n98fg;NAAN=13030&doc.view=frames&chunk.id=div00167&toc.depth=1&toc.id=div00047&brand=calisphere.