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CLIENT ALERT— The New Biosimilar Pathway: Biologics Price Competition and Innovation Act

Executive Summary

The most important provision of the recently enacted health care reform act for most biopharmaceutical companies has nothing to do with expanding access to medical insurance. The Biologics Price Competition and Innovation Act (“Biosimilar Act”) establishes a long-awaited pathway for biosimilar (also known as biogeneric or follow-on biologic) product approval and management of resulting patent infringement actions.

Pharmaceuticals (small molecules produced by chemical reactions) have long been subject to generic competition, but biologics (larger proteins produced by genetically-engineered organisms) have not. This is because the generic competition provisions of the Drug Price Competition and Patent Term Restoration Act (“Hatch-Waxman Act”) apply to products approved under the Food, Drug, and Cosmetic Act, which include pharmaceuticals, but not to products approved under the Public Health Service Act, which include biologics.

With biologics capturing an increasing share of the prescription market, there have been increasing calls for a biosimilar pathway for companies to obtain FDA approval of generic versions of existing biologics based upon lesser showings of safety and efficacy than is required for the pioneer biologic.

The new act provides such a pathway, but it does so quite differently than for pharmaceuticals. It imposes completely new disclosure requirements for patents that are demanding and time-sensitive, and it imposes these requirements on both pioneer and biosimilar manufacturers. These requirements will demand sophisticated legal counseling and planning by both parties, especially since many speculate that pioneer biopharmaceutical companies will themselves be interested in marketing biosimilars.

The Biologics Price Competition and Innovation Act

Like the Hatch-Waxman Act for generic pharmaceuticals, the Biosimilar Act (1) establishes standards for application and approval, (2) provides a term of data exclusivity, and (3) establishes a scheme for handling patent disputes, but it does so quite differently than the Hatch-Waxman Act.

Standards for Biosimilarity and Interchangeability

A biosimilar applicant must demonstrate that the biologic exhibits both biosimilarity and interchangeability with the pioneer biologic. Biosimilarity must be based on data from (1) analytical studies, (2) animal testing and (3) one or more clinical studies. The data must demonstrate that the biologic is “highly similar to the reference product notwithstanding minor difference in clinically inactive components” and that there are no “clinically meaningful differences” between the biosimilar and the pioneer biologic in terms of “safety, purity, and potency of the product.”

Moreover, an applicant must establish that the biosimilar is interchangeable with the pioneer product, meaning it can be safely substituted for the pioneer product in a multiple administration regimen without diminishing efficacy without intervention of a health care provider.

Data Exclusivity

Lots of the debate concerning biosimilar legislation focused on the length of time before the biosimilar applicant could rely upon the pioneer manufacturer’s data to support its application. Different bills proposed anywhere from 3 to 12 years of data exclusivity, as opposed to the 3-5 years of data exclusivity for pharmaceuticals under the Hatch-Waxman Act. The Biosimilar Act provides that a biosimilar application cannot be made effective until 12 years after the date on which the reference product was first licensed. Further, an application cannot even be submitted until 4 years after the approval of the pioneer product.

Patent Disclosure Requirements

The act contains demanding and time-sensitive requirements for disclosure of relevant patent information after submission of a biosimilar application. These requirements are as follows:

•  20 days after being notified that a biosimilar application has been accepted for review, the biosimilar applicant must provide a copy of the application to the pioneer manufacturer (“reference product sponsor”). The applicant may also provide additional information requested by the pioneer manufacturer.
•  60 days after receiving this application, the pioneer manufacturer must provide the applicant with a list of patents that the sponsor believes “could reasonably be asserted” by the pioneer manufacturer (or by its exclusive licensor) with respect to the pioneer product. The list must include an identification of which patents the pioneer manufacturer would be prepared to license to the biosimilar applicant.
• 60 days after receiving the list of patents, the biosimilar applicant must provide the pioneer manufacturer with a detailed statement describing, on a “claim by claim basis”, the “factual and legal basis” for the applicant’s position that any patent listed is invalid, unenforceable, or will not be infringed by the commercial marketing of the biosimilar. Alternatively, the biosimilar applicant can provide a statement that it does not intend to begin commercial marketing of the biosimilar before the patent(s) expire(s). The biosimilar applicant may also provide the pioneer manufacturer with its own list of patents that the applicant believes could be asserted against its biosimilar.
• 60 days after receipt of the list and statement, the pioneer manufacturer must provide the applicant with a similarly detailed statement describing, on a “claim by claim basis”, the “factual and legal basis” for the pioneer manufacturer’s opinion that such patent will be infringed by the biosimilar, as well as a response concerning any such patent’s validity and enforceability.
• 180 days before the date of the first commercial marketing of the biosimilar, the applicant must notify the pioneer manufacturer, who may then seek a preliminary injunction.

Failure by the biosimilar applicant to provide any of these required disclosures can result in the pioneer manufacturer gaining the right to bring an action for declaratory judgment of infringement, validity, or enforceability of any patent reasonably believed to be infringed by the biosimilar. 

After these required exchanges, the act requires good faith negotiations by the parties to agree on which patents will be the subject of any infringement action. Within 30 days of either agreeing on this list of patents, or exchanging a final list of the patents each party believes should be the subject of an infringement action, the pioneer manufacturer must bring an infringement action.

The pioneer manufacturer also has 30 days to amend this list after the issuance of a new patent (or date of exclusive licensing of a patent) that the pioneer manufacturer reasonably believes is also infringed by the biosimilar. If the pioneer manufacturer prevails in this action before approval of the biosimilar, the court must enter a permanent injunction prohibiting further infringement.

Failure to bring an infringement action within the 30-day mandate (or bringing an infringement action that was dismissed without prejudice or was not prosecuted to judgment in good faith) will result in the available remedy being limited to a reasonable royalty only. Finally, failure by the pioneer manufacturer to timely include a relevant patent in the exchanged list will preclude the pioneer manufacturer from later bringing an infringement action against the biosimilar applicant with respect to that undisclosed patent.

Implications Moving Forward

The long-awaited biosimilar pathway provides great opportunities and great risks for biopharmaceutical companies. From a patent standpoint, it avoids many of the problems that have arisen under the Hatch-Waxman Act for generic pharmaceuticals, such as the numerous issues regarding its requirement to list relevant patents in the “Orange Book.”

Nevertheless, the completely new patent scheme introduced for biosimilars will take years for the FDA and the courts to sort-out. In the end, it may very well be more burdensome on the parties than the Hatch-Waxman Act, which has spawned a tremendous amount of litigation.

The patent provisions of the Biosimilar Act establish demanding and time-sensitive disclosure requirements for a biosimilar applicant and for a pioneer manufacturer. Given the detail required and the complexity of the issues, both parties should conduct the necessary investigation and analysis well before a biosimilar application could be filed. Based on that investigation and analysis, both parties should develop detailed infringement, validity, and enforceability positions before receiving the other party’s patent list or positions.

Failing to take these actions early will likely result in a party rushing to prepare the very detailed statements required by the law for both parties, running the serious risk of making a potentially determinative mistake. Both parties also face penalty for failure to comply with the detailed disclosure requirements mandated by this bill. These requirements will necessitate sophisticated legal counseling, active portfolio diligence, and time-sensitivity.

For Further Information

Please contact your Wolf Greenfield attorney to discuss how this legislation may affect your patent strategies and goals.