A statutory and regulatory scheme to encourage the development
of "biologics," drug products made in living organisms,
has been a goal for more than a decade, and the Biologics Price
Competition and Innovation Act ("BPCIA") was enacted on
March 23, 2010. The U.S. Food and Drug Administration
("FDA") is working to implement the BPCIA and published
draft guidelines for the industry on February 7, 2012.
The policy rationale of the BPCIA, similar to that of the 1984
Hatch-Waxman Act for pharmaceutical compounds, is to reduce the
cost of biologics through increased innovation and increased entry
by generics into the biologics market by creating data and market
exclusivities for innovators, reliance for generics on the
already-submitted data of innovators, generic market exclusivity
and a structured mechanism for generic challenge of innovator
patents. Unlike small-molecule drugs, however, there is
heightened concern that biologics might perform differently than
the innovator product because biologics have greater molecular
complexity and their safety and efficacy might be affected by the
use of different molecular clones, cell banks or fermentation or
purification processes. Consequently, approval of generic
biologics will require more stringent analysis than small-molecule
generic drugs and likely will include clinical testing of
efficacy.
Innovators warned Congress that a Hatch-Waxman approach to
biologics would cause a loss of market share due to the speedy
entry of generic biologics and, therefore, reduce interest in the
development of new biologics. To provide incentives for
innovators and compensate for instances in which the remaining term
of relevant patents at the time of market entry is short, Congress
provided four years of data exclusivity between FDA approval and an
abbreviated filing for a generic biologic relying on the
innovator's data and market exclusivity. This prevents
approval of a generic biologic until 12 years after approval of the
innovator product. The 12-year market exclusivity is more
than twice as long as the five years provided under the
Hatch-Waxman Act for new chemical entities, but does not apply to
new indications, routes of administration, dosing schedules, dosage
forms, delivery systems, delivery devices, or strengths of the
innovator biologic, or to a modification of the structure of the
biologic that does not result in a change in safety, purity or
potency.
To be approved for marketing, the abbreviated application must
demonstrate that the generic biologic is either
"biosimilar" to or "interchangeable" with the
already-approved innovator product. To be biosimilar, a
generic biologic must utilize the same mechanism of action and have
the same administration, potency, dosage form and strength, and
have "no clinically meaningful differences" from the
innovator product. There is substantial uncertainty about
what effects will be "clinically meaningful differences"
and how the generic manufacturer will establish their
absence.
Generic biologics categorized as biosimilar will be considered an
alternate therapy with a different active ingredient from that of
the innovator product. Consequently, pharmacies and hospitals
will not be permitted to substitute a biosimilar product for the
innovator drug. The first biosimilar to enter the market will
not be entitled to a period of exclusivity from competition from
other biosimilar or interchangeable products.
A designation of interchangeability will be necessary for the
generic biologic to be substituted for the innovator by a pharmacy
or hospital. The first licensed interchangeable product will
be awarded exclusivity as to other interchangeable biologics for at
least one year, but will not enjoy exclusivity as to other generic
products that are merely biosimilar. Moreover, it will be
difficult, if not impossible, to achieve
"interchangeability" because it must be shown that the
risk in terms of safety or efficacy of alternating or switching
between the use of the generic product and the innovator product is
not greater than without the alternation or switch.
The BPCIA does not require innovators to list the patents that
cover their products as is done in the "Orange Book" for
pharmaceutical compounds. The generic applicant is required
to submit its application to the innovator. The innovator can
use that application only to determine whether a claim of patent
infringement can be reasonably asserted. The innovator then
must provide a list of all patents owned or licensed by it that
cover its product including those directed to methods or
processes. The biologics applicant then must identify the
patents that it challenges as invalid, not infringed or
unenforceable, provide a detailed statement in support for each
assertion, and also identify the patents for whose expiration it
will wait before marketing its product.
The FDA's draft guidelines represent its "current
thinking" on approval of generic biologics. The
guidelines only discuss biosimilarity for therapeutic protein
products – there is no analysis of interchangeability, or
of biologics other than proteins produced from a cloned
gene.
Generic manufacturers are to take a step-by-step approach to
demonstrate biosimilarity in which they evaluate, at each step, the
extent of remaining uncertainty and "consult extensively"
with the agency.
The steps for establishing biosimilarity are to provide (i)
extensive structural and functional characterization of both the
innovator and biosimilar products, which for proteins is a
functional analysis of primary, secondary and tertiary structure;
(ii) toxicity, pharmacokinetics, pharmacodynamics and
immunogenicity data from studies in animals; (iii) comparative
pharmacokinetic and pharmacodynamic data from studies in humans;
and (iv) clinical data of immunogenicity in humans. A fifth
step of comparative clinical data of safety and efficacy in humans
will be necessary if uncertainties remain after steps one through
four.
It is not clear that manufacturers of generic biologics will
utilize the statutory and regulatory mechanism in view of the
relatively long market exclusivity for innovators and the expected
difficulty of establishing interchangeability to claim generic
exclusivity.
There are additional uncertainties about the BPCIA. The BPCIA is part of the Patient Protection and Affordable Care Act ("PPACA"), which requires individuals not covered by employer- or government-sponsored health insurance plans to maintain minimal essential health insurance coverage or pay a penalty, often referred to as the "individual mandate." The individual mandate has been challenged as unconstitutional. The PPACA does not contain an express "severability" clause stating that if one provision of the Act is struck down as unconstitutional, the remaining provisions of the Act shall remain in effect, which increases the likelihood that if the individual mandate is struck down, the entire Act including the BPCIA will be struck down. The U.S. Supreme Court heard oral argument on the constitutionality of the individual mandate and severability on March 26 through 28. The Court's decision is expected in late June. There is a chance that the BPCIA will be struck down by the Court.
There also is a possibility, depending on the outcome of the
2012 elections, that Congress will repeal the PPACA or amend the
BPCIA. For example, the Obama Administration's budget
proposal for 2013 proposes to amend the BPCIA to reduce market
exclusivity from 12 to seven years.
Goodwin Procter LLP is one of the nation's leading law firms, with a team of 700 attorneys and offices in Boston, Los Angeles, New York, San Diego, San Francisco and Washington, D.C. The firm combines in-depth legal knowledge with practical business experience to deliver innovative solutions to complex legal problems. We provide litigation, corporate law and real estate services to clients ranging from start-up companies to Fortune 500 multinationals, with a focus on matters involving private equity, technology companies, real estate capital markets, financial services, intellectual property and products liability.
This article, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP or its attorneys. © 2012 Goodwin Procter LLP. All rights reserved.
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