New FDA Pathway for Biosimilars--Complex Approval and Litigation Scheme

April 1, 2010
by Charles Raubicheck and Brian Malkin

On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (the Health Care Act) into law. This Act includes the Biologics Price Competition and Innovation Act (“Biosimilars Act”), which enables the Food and Drug Administration (“FDA”) to approve the marketing of biosimilar biological products based on a single reference biological product. This statute has been long anticipated and hotly debated. Much of the debate has focused on how long innovator biological products would be afforded protection from generic entry and the pre-approval litigation scheme.

The Biosimilars Act contains many similarities to the pathway for generic approval of small molecule drugs that was created in 1984 by the Drug Price Competition and Patent Term Restoration Act (the “Hatch-Waxman Amendments” to the Federal Food, Drug, and Cosmetic Act or “Hatch-Waxman”). However, the new law differs from Hatch-Waxman in many key respects. Understanding the similarities and differences will be critical to both innovator and biosimilar companies formulating near- and long-term business strategies.

To that end, we summarize the major provisions and provide specific recommendations that we hope will help both innovator and biosimilar companies begin to develop a strategy for their FDA submissions that takes into account the Biosimilars Act.

I. Biosimilar Regulatory Approval Process

A “biosimilar” biological product is defined as “highly similar” to an innovator’s biological product. (Other terms used during the legislative process to describe these products have been “generic biologics” or “follow-on biologics”.) Biosimilars may include minor differences in clinically inactive components as long as they exhibit no “clinically meaningful differences” in terms of safety, purity, or potency. To establish sameness, applicants must submit data to show biosimilarity, including analytical studies, animal studies, and a clinical study to demonstrate safety, purity, and potency. In addition, the facility that manufactures the biosimilar must meet standards to assure that that biological product is safe, pure, and potent.

FDA further may find a biological product to be “interchangeable” with an innovator’s biological product if FDA determines: (i) the products are “biosimilar”, as described above, (ii) the product should produce the same clinical result as the reference product, and (iii) the biosimilar should not pose a risk in terms of safety or diminished efficacy compared to the innovator’s biological product. FDA may develop product or product-class specific guidances to provide criteria for highly similar and interchangeable products, but FDA must provide the opportunity for public comment on the guidances before finalizing such guidances.

II. Market Exclusivity Provisions

The Biosimilars Act provides innovator biological products with 12 years of market exclusivity, preventing FDA from granting final approval to a biosimilar that references the innovator’s biological product (“reference product”). Further, an applicant may only file an application for a biosimilar product 4 years after date the reference product is approved. This market exclusivity is comparable to the supplemental protection certificate scheme established in the European Union.

Innovator biological products may also obtain additional periods of exclusivity, similar to those available for small molecule products. For example, conducting pediatric studies requested by FDA will add 6 months of exclusivity protection to all pending exclusivities and patents. Innovator biologicals may also obtain orphan drug exclusivity, which would expire upon the later of either: (i) the 12-year period described above, or (ii) 7 years after the orphan drug indication approval.

Similar to the 180-day period of market exclusivity given to first generic drug applicants under Hatch-Waxman, the Biosimilars Act also awards the first interchangeable biosimilar biological product with a period of market exclusivity. However, the time period depends on a number of factors. FDA will approve subsequent interchangeable biosimilars only after the earlier of the following: (i) 1 year after commercial product launch, (ii) 18 months after a final court decision or dismissal (with or without prejudice) on all patents-in-suit against the first approved interchangeable biosimilar product, (iii) 42 months after approval of the first interchangeable product, if such litigation is still ongoing, or (iv) 18 months after approval of the first interchangeable biosimilar biological, if not sued for infringement (see Section III. B. below).

III. Biosimilar Patent Litigation

A. Development of Patent List

Unlike Hatch-Waxman, the Biosimilars Act does not require a central repository of patent and exclusivity information like FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (“the Orange Book”) for small molecule drugs. Similar to Hatch-Waxman, however, the Biosimilars Act does contemplate an initial exchange of information between innovator and biosimilar product companies prior to potential patent litigation. The Biosimilars Act has a complex procedure, starting with the FDA’s acceptance of a biosimilar applicant’s application for review.

• A biosimilar applicant must send notice of its application to the sponsor of the approved reference product within 20 days of FDA’s notification that the application has been accepted for review. At the same time, the biosimilar applicant must provide a copy of its application to the reference product sponsor, under statutory confidentiality terms.

• Within 60 days of receiving the applicant’s notice and application, the reference product sponsor must provide a list of all patents for which a claim of patent infringement could be brought by the sponsor. At the same time, the reference product sponsor must identify all patents that it would be prepared to license to the biosimilar applicant.

• Within 60 days of receiving the sponsor’s patent list, the biosimilar applicant may respond with its own list of patents, but it must provide a detailed statement (similar to a “notice letter” in the generic pharmaceutical context) explaining why, on a claim-by-claim basis, each listed patent is invalid, unenforceable, or not infringed by the proposed biosimilar. The biosimilar applicant can also respond by submitting a statement that it does not intend to begin commercial marketing of the biosimilar before the date of patent expiry. The biosimilar applicant must also indicate whether it would accept any license offered by the reference product sponsor.

• Following receipt of the biosimilar applicant’s statement, the reference product sponsor has another 60 days to provide its own detailed statement regarding the infringement of the proposed biosimilar, as well as a response to the applicant’s allegations of validity and unenforceability.

B. Timely Infringement Suits

Following the last exchange of the detailed statements, the biosimilar applicant and the reference product sponsor must jointly determine which patents should become the subject of a patent infringement action. As with Hatch-Waxman, the act of infringement is “artificial” in that the alleged infringing action occurs prior to commercial marketing of the biosimilar, based on the applicant’s assertion that it intends to market the proposed biosimilar prior to expiration of the patents-at-issue. If the parties agree about the patents-in-suit, then the reference product sponsor has 30 days after the agreement to bring the infringement action.

If the parties cannot agree after 15 days of good-faith negotiations, then each party must compile a list of patents that it believes should be the subject of the infringement suit. Initially, the biosimilar applicant must advise the reference product sponsor of the number of patents that will be on the biosimilar applicant’s list of patents. The sponsor’s list, however, may not exceed the number of patents on the biosimilar applicant’s list—except the sponsor may include one patent if the biosimilar applicant’s list of patents is empty. On a mutually agreed upon date (but no later than 5 days after the biosimilar applicant provides its number of patents to the reference product sponsor), the applicant and sponsor exchange proposed lists. The reference product sponsor has 30 days to file suit against the applicant, but only with respect to each patent included on the lists.

C. Additional Patent Features

• The owner of the patent may not bring suit under 35 U.S.C. § 271(e) for infringement against the biosimilar applicant if the patents were not on the list provided by the reference product sponsor following receipt of the biosimilar application and other relevant information.

• The reference product sponsor may only recoup a reasonable royalty in the event that: (1) the reference product sponsor fails to bring a “timely infringement suit”, or (2) following a timely infringement suit, if the action is dismissed without prejudice or not prosecuted to judgment in good faith.

• Newly issued or licensed patents to the reference product must be added to the patent lists within 30 days of issuance or licensing.

• Biosimilar applicants must provide 180 days advance notice prior to a commercial launch.

• Biosimilar applicants do not file any patent certifications with FDA.

• Unlike generic pharmaceuticals, there is no automatic 30-month stay. However, following notice of the biosimilar’s intent to commercially market, a preliminary injunction may be sought by the reference product sponsor.

IV. Our Initial Observations

The Biosimilars Act imposes a heavy burden on both innovator and biosimilar applicants because of the relatively short, successive timeframes required by the Act. Within the span of about eight months, the reference product sponsor and biosimilar applicant must compile and exchange initial patent lists, provide detailed claim-by-claim analyses, negotiate the patents-in-suit, and then ultimately file suit in view of the biosimilar product’s application and other relevant information.
The Biosimilars Act also provides harsh disincentives for non-compliance. For example, if the reference product sponsor fails to bring a timely infringement suit or the case is dismissed or not prosecuted in good faith, the reference product sponsor may be limited to only a reasonable royalty.
As a result, up-front preparation will be critical.

• Innovator product sponsors should direct their initial strategic planning and resources to filed or potential biosimilar applications for products that will be attractive to potential biosimilar applicants, e.g., because of high product revenues or demand.

• As part of life cycle management, innovator product sponsors should consider the impact of each FDA filing it makes regarding product description and the unique elements of its product that may be difficult for a biosimilar applicant to replicate or demonstrate interchangeability.

• When evaluating innovator biological product targets, biosimilar applicants should evaluate both projected market size for their proposed product, as well as the potential regulatory hurdles to achieving and understanding what would be required to obtain an “interchangeable” rating.

• Innovator product sponsors and biosimilar applicants should carefully scrutinize the patent portfolio surrounding each biological product—at a minimum with regard to patents owned by or licensed to the innovator product sponsor.

• Innovator product sponsors and biosimilar applicants should each determine the optimal scope of litigation. Unlike Hatch-Waxman, where litigation is heavily influenced by Orange Book listings, the scope of litigation under the Biosimilars Act will be decided based on the successive exchanged patent lists. Therefore, it will essential to prioritize the key patents that should be included in the patent lists, as well as the number of patents to assert. These decisions likely will drive the cost and length of litigation.

• Innovator product sponsors should evaluate potential non-infringement and invalidity positions that could be taken by the biosimilar applicant in preparation for the time-sensitive response required by the Act.

• Biosimilar applicants should draft detailed statements for what they believe to be the most relevant patents as soon as practicable.

Our experience with representing both branded and generic companies in Hatch-Waxman cases has demonstrated that the keys for success are often found in diligent groundwork, in addition to excellence in litigation. Also, as we have seen with both branded and generic companies, product development options must be carefully considered. Thorough exploration of these issues will be even more critical for biological products, where the possibility for product and manufacturing differences is far greater, and the type of data, including clinical data, that will be required by FDA is uncertain.

The Biosimilars Act has opened a new gateway for potentially greater public access to important biological therapies—both approved and under development. At the same time, it has opened a plethora of considerations that must be contemplated by all sponsors of biological products, including those for biosimilars.