By Sapna W. Palla
The market for “biosimilars,” generic versions of approved biological drugs which is an over $100 billion industry, is rapidly growing. Indeed, it is expected to be the single fastest-growing biologics sector in the next five years. By some accounts, global sales of biosimilars are expected to reach $10.90 billion by 2021 up from $3.39 billion in 2016.
In the United States, the Biologics Price Competition and Innovation Act (“BPCIA”) was enacted in March 2010 as part of the Patient Protection and Affordable Care Act (“ACA”).1 The BPCIA provides a pathway for the approval of biologics by the United States Food and Drugs Administration (“FDA”) based on similarity or interchangeability with a licensed biologic as well as specific procedures for patent dispute resolution and litigation between an innovator (also known as the Reference Product Sponsor or “RPS”) and a biosimilar applicant (“Applicant”). The patent resolution aspect, often referred to as the “patent dance,” lays out the steps and schedule during which an Applicant and RPS exchange certain information and conduct future litigation between the parties. However, the complex and largely untested regulatory scheme under the BPCIA has a number of ambiguities which have left it susceptible to challenge. Not surprisingly, the BPCIA provisions and interpretation of the provisions have been the subject of intense litigation and dispute in the United States.
The United States biosimilars market is still nascent. Despite the BPCIA being in place for five years, to date, only four biosimilars have been approved by the FDA, and only two, Sandoz Inc.’s Zarxio® and Pfizer Inc.'s Inflectra®, have entered the U.S. market. While the United States is still coming to grips with the biosimilar regime, in Europe it is much more established. The European Union established an approval pathway in 2005, approved its first biosimilar in 2006, and remains the world leader in numbers of regulatory-approved biosimilars and pipeline candidates. More than twenty biosimilars have been approved by the European Medicines Agency (EMA) in the past ten years.
This article will discuss the United States biosimilar regulations, the litigation surrounding it and the impact of the new presidency, point out key differences with Europe, and provide guidance for companies operating internationally in the biosimilars space.
Newly Issued Guidelines for “Interchangeability” Under the BPCIA
The BPCIA categorizes biosimilar products as “biosimilar” or fully “interchangeable” without providing criteria for demonstrating these categorizations. The importance of designating a biosimilar to be “interchangeable” versus having “biosimilarity” is two fold. If a biosimilar is designated to be “interchangeable,” pharmacies are allowed to automatically substitute lower-cost biosimilars like traditional generics. The first interchangeable biosimilar of a particular biologic also gets market exclusivity for a certain period of time. The FDA’s explication of “interchangeability” was awaited since the creation of the BPCIA. In January 2017, the FDA finally issued its long awaited draft guidance on biosimilar interchangeability. The guidance provides an overview of key scientific considerations for demonstrating the interchangeability of a biosimilar product to its reference product many of which are favorable to the biosimilar industry.
The guidance states that interchangeability needs to be demonstrated for every indication held by an innovator product that a biosimilar is copying. However, the data and information needed to support this does not require clinical research for all indications. The FDA will permit biosimilar applicants to extrapolate data and information supporting a demonstration of interchangeability in one indication to the remaining indications as long as sufficient scientific justification for such extrapolation is provided.
The guidance also addressed the use of switching studies which are clinical studies in which patients are switched between the biosimilar and the innovator product to determine whether they are in fact interchangeable. The FDA encourages biosimilar applicants to discuss their proposed developments plans with the FDA and provide scientific justification if they don’t intend to conduct a switching study. The FDA also strongly recommends the use of a U.S.-licensed innovator product in switching studies, even though biosimilarity may be established with a non-U.S. licensed comparator.
Finally, the guidance also describes less burdensome interchangeability requirements. For example, the guidance states that analytical laboratory data can be used to show that a biosimilar is identical to the innovator product thus reducing the reliance on clinical studies. In another example, the FDA states that in cases with strong clinical data demonstrating interchangeability, it may be willing to award an interchangeability designation without waiting for post-market data.
The “Patent Dance” and Marketing Approval Under the BPCIA
The BPCIA specifies a complex and lengthy procedure for patent information exchange and litigation often termed the “patent dance.”
The statute states that within 20 days after a biosimilar application has been accepted for review, the Applicant “shall” provide the RPS its application and a description of its manufacturing process.2 Within 60 days of receipt, the RPS must provide the Applicant with a list of all patents the RPS believes could “reasonably be asserted” against the Applicant and identify those patents it would license.3 Within 60 days of receipt, the Applicant may provide its own list of potentially infringed patents that could be asserted by the RPS and must provide either (1) a detailed statement for its basis that the patent(s) cited by the RPS are invalid, unenforceable or not infringed or (2) a statement that the Applicant will not market its product until the expiration of the listed patent(s).4
Within 60 days of receipt of the Applicant’s statement, the RPS must provide a detailed statement of why it believes the patent(s) will be infringed, as well as a response to the Applicant’s statements concerning validity and enforceability.5 After the patent-exchange process has been completed, the parties have to engage in negotiations to determine which patents will be litigated.6 If an agreement is reached, the RPS has 30 days to bring suit on the patents agreed to by the parties. If an agreement is not reached, the Applicant has to notify the RPS of the number of patents to be litigated.7 Within 5 days of notification, the parties have to exchange lists of the patents they believe should be litigated with the limitation that the number of patents submitted by the RPS cannot exceed the number listed by the Applicant. If the Applicant does not list any patents, the RPS may list only one patent.8 The RPS has 30 days to bring suit on the patents listed.9
The statute also provides for “notice of commercial marketing” where the Applicant “shall provide notice to the [RPS] not later than 180 days before the first commercial marketing” of the biosimilar.
Legal Challenges to the BPCIA: The Amgen v. Sandoz Fight
Five years after the BPCIA was introduced, the Federal Circuit had its first opportunity to substantively interpret the provisions of the BPCIA in a dispute between Amgen (the innovator) and Sandoz, Novartis’s subsidiary, (the Applicant).10 This case arose from Sandoz’s application for Zarxio®, its biosimilar version of Amgen’s Neupogen® (filgrastim) which is used to treat neutropenia-related infection in cancer patients receiving chemotherapy. Zarxio® is the first biosimilar approved by the FDA.
In this case, the Federal Circuit addressed whether the disclosure and patent exchange provisions of the BPCIA are mandatory or whether either party can opt out of the requirements and settle as specified in the statute. The divided decision interpreted the “information exchange” and “notice” provisions of the BPCIA.
“Information exchange” provision
Amgen alleged that Sandoz failed to comply with the information exchange provisions set forth in paragraph (l)(2)(A) of the BPCIA by opting not to provide Amgen with a copy of the biosimilar application within 20 days of the FDA’s notice of acceptance. The U.S. District Court for the Northern District of California agreed with Sandoz’s interpretation of this provision, holding that despite the use of “shall,” disclosures under the notice provision are not intended to be mandatory because the BPCIA expressly provides remedies for the innovator in the event that the Applicant does not comply with the disclosures.
The Federal Circuit’s majority opinion analyzed the language of the notice provision in the context of the BPCIA as a whole and concluded that Congress intended “shall provide” to be permissive, not mandatory. The majority’s reasoning followed the District Court on this issue, in that the BPCIA expressly contemplates an Applicant’s failure to disclose the application by setting forth consequences for such failure. 11
Amgen also argued that the 180 day notice of commercial marketing provided by Sandoz was ineffective under paragraph (l)(8)(A) of the BPCIA because such notice was given before the FDA approved Sandoz’s biosimilar product. The District Court held that the Applicant may give such notice any time after the FDA accepts the biosimilar application for review, in this case prior to FDA approval.
The Federal Circuit concluded that the Applicant cannot give effective marketing notice until after the FDA has approved the biosimilar application, thus reversing the District Court on this issue. The majority focused on ensuring the existence of a “fully crystallized controversy” with respect to the scope of the approved application before injunctive relief could be granted.12
In addition to providing pre-approval marketing notice to Amgen, Sandoz had also given Amgen notice of commercial marketing after it received FDA approval. The Federal Circuit enjoined Sandoz from marketing Zarxio® until 180 days after the post-approval notice, giving Amgen a six month extension of exclusivity.13 Both parties requested rehearing en banc but the petitions were denied.
United States Supreme Court to Review the BPCIA Provisions
In January 2017, the U.S. Supreme Court granted certiorari to review some of the patent dispute resolution provisions of the BPCIA. There are two issues before the Supreme Court. First, Sandoz’s February 2016 petition for certiorari asked the Court to decide whether biosimilar applicants have to wait for approval to give pre-marketing notice. In particular, the question before the Court is: Whether notice of commercial marketing given before FDA approval can be effective and whether, in any event, treating 42 U.S.C. § 262(l)(8)(A) as a standalone requirement and creating an injunctive remedy that delays all biosimilars by 180 days after approval is improper.
Second, Amgen’s March 2016 conditional-cross petition for certiorari asked the Court to decide whether biosimilar applicants have to join in the patent dance. In particular, the question before the Court is: Is an Applicant required by 42 U.S.C. § 262(l)(2)(A) to provide the Sponsor with a copy of its biologics license application and related manufacturing information, which the statute says the Applicant “shall provide,” and, where an Applicant fails to provide that required information, is the Sponsor’s sole recourse to commence a declaratory-judgment action under 42 U.S.C. § 262(l)(9)(C) and/or a patent-infringement action under 35 U.S.C. § 271(e)(2)(C)(ii)?
The Solicitor General of the United States filed an amicus brief that sided with Sandoz on both issues. In particular, the Solicitor General thinks the Federal Circuit correctly held that the information exchange provisions of 42 USC § 262(l)(2)(A) are optional, but does not agree that the pre-marketing notice required by 21 USC § 262(l)(8)(A) cannot be given until the biosimilar product has been approved by the FDA.
The Supreme Court is likely to hear oral arguments in April, with a decision expected before July. The outcome is important because it will affect how quickly lower-cost biosimilars get to market.
The Impact of the Trump Presidency
President Trump has expressed his mandate to substantially lower costs of medications and decrease regulatory hurdles for approval of new drugs. It is likely that biosimilars which aim to replace costly biological drugs will be the focus of this mandate. In particular, the BPCIA was enacted in March 2010 as part of the Affordable Care Act which President Trump has stated he intends to repeal completely and has already begun the process for attempting to do so. Therefore, the survival of the BPCIA and the form in which it survives is unclear at this time. While a total repeal of the BPCIA’s regulatory pathway and litigation framework is impractical, there could be a piecemeal reworking of the law. What is also likely is that there will be an impact on the pricing of biologics as the regulatory framework becomes more accommodative for biosimilars.
Key Differences Between the U.S. and European Regulatory Regimes
The EMA has developed its regulatory scheme for biosimilars using a more transparent process than the U.S. which has resulted in clearer guidelines for biosimilar applicants as compared to the U.S. The EMA Committee for Medicinal Products for Human Use (CHMP) has issued several product specific guidances that set out product requirements in greater detail including for recombinant erythropoietin, somatropin, recombinant interferon alpha and human soluble insulin.14 The EMA has also issued several concept papers and draft guidelines and holds public scientific workshops to assist applicants.15
In another move to provide transparency and guidance, the EMA is planning to launch a tailored scientific advice pilot project slated to begin in February 2017 to support the development of new biosimilars. 16 The aim of the project is to test the value of scientific advice for the development of biosimilar medicines. The EMA will recommend which tests and studies applications need to carry out based on the scientific advice provided. The goal is to allow applicants to make informed decisions about their biosimilar development strategy. The pilot project will be open to all companies who wish to receive scientific advice on their biosimilar products and includes a pre-submission meeting to review the suitability of the data package.
The exclusivity period for the innovator products and when biosimilars come onto the market differ between the U.S. and Europe. In Europe, the exclusivity period is the same for both biologics and chemical drugs, 10 years. Under the BPCIA, a biosimilar may not be approved until 12 years after the date on which the innovator product was first licensed under section 351(a) of the Public Health Service Act. Thus, a biosimilar in Europe can potentially enter the market earlier than in the U.S.
Whether and how a biosimilar can be substituted for an innovator product also differs between the U.S. and Europe. In Europe, substitution is determined at the member state level and therefore not addressed in the EMA guidelines. The EMA guidelines only state that biosimilars are not generics and the decision to treat a patient with a biosimilar as opposed to the innovator product must be made by a qualified health care professional.17 In the U.S., substitution is determined at the state level in accordance with state pharmacy laws though, as discussed above, the FDA has now issued guidelines to determine interchangeability.
In addressing what types of data and extrapolations of data can be used to support biosimilarity, the EMA has been more explicit in providing guidance from the beginning. For example, it has stated that for recombinant proteins it may be possible to extrapolate similarities from one indication to other indications. Justification for doing so depends on the clinical experience, literature and safety issues in different populations. The U.S. has lagged behind in clarity on this aspect. As discussed above, the FDA has just issued draft guidelines which address extrapolation to show interchangeability. It remains to be seen how the FDA will apply these guidelines.
Considerations for Multinational Biosimilar Companies
There are several factors that companies operating globally in the biosimilar space need to take into consideration as they plan their biosimilar strategies. As discussed above, there are a number of differences in the biosimilar regimes in the U.S. and Europe as well as the extent to which these regimes have moved forward in reviewing and approving biosimilars. There is also ongoing uncertainty in the U.S. as to how the provisions of the BPCIA will be interpreted and applied pursuant to the ongoing litigations as well as the new administration.
Differences in the timing for approval of a biosimilar application between the United States and Europe is important. The EMA takes on average about 18 months to review a biosimilars applicationDespite a slow start in implementing the BPCIA, the FDA took just 10 months to approve Sandoz’s Zarxio®. While 2016 was an active year for biosimilar approvals in the U.S., 2017 could be the year that the floodgates open in the U.S. Several biosimilar applications have been accepted for review by the FDA and could result in more approvals in 2017. In some cases, the U.S. might be a better forum for a speedier approval process.
Now that the U.S. has issued guidelines for interchangeability, there is additional opportunity in the U.S. to get approval for a product that will be more easily substituted for the innovator product. Companies should be cognizant of how the FDA enforces these new guidelines and be ready to take advantage based on the strength of their clinical data.
The extent to which clinical data is used to support an application differs between the two regimes. The FDA focuses more on analytics while the EMA adopts a more clinically focused approach. Under the new interchangeability guidelines, the FDA has stated that it would prefer clinical data from a U.S. licensed comparator to demonstrate interchangeability. However, if a company is considering getting approval both in the U.S. and Europe it could consider doing clinical studies that could be used for the EMA and use the same data in the U.S. to get approval as a biosimilar. If it still wants to demonstrate interchangeability in the U.S., it could conduct more limited studies for this purpose but it will at least have the benefit of the clinical data to get an early approval in the U.S.
In 2017, there will be more guidance on the interpretation and application of the BPCIA. Depending on how the U.S, Supreme Court rules, it may be easier and quicker for innovators to assert their patent rights against potential infringers. In addition, if the Trump administration succeeds in reducing the burden of the regulatory framework, it might be easier to get approval in the U.S.
Given the complex and often inconsistent regulatory frameworks for the approval of biological products under the BPCIA and the EMA, multinational applicants and innovators are likely to encounter uncertainties as U.S. legislation is interpreted and enforced by the courts. As discussed above, both applicants and innovators will have to engage in careful strategic and innovative thinking to determine how they can best position themselves to get approval and protection for their biosimilars.
1 42 U.S.C. § 262.
2 42 U.S.C. § 262(l)(2).
3 42 U.S.C. § 262(l)(3)(A)
4 42 U.S.C. § 262(l)(3)(B)
5 42 U.S.C. § 262(l)(3)(C)
6 42 U.S.C. § 262(l)(4)(A)-4(B)
7 42 U.S.C. § 262(l)(5)(A)
8 42 U.S.C. § 262(l)(5)(A)(i),(ii)
9 42 U.S.C. § 262(l)(6)(B)
10 Amgen Inc. v. Sandoz Inc., 794 F.3d 1347 (Fed. Cir. 2015))
11 Amgen, 794 F.3d at 1355.
12 Amgen, 794 F.3d at 1358.
13 Amgen, 794 F.3d at 1359.
Sapna is a partner in Wiggin and Dana LLP’s Intellectual Property Practice covering patent, copyright and trademark matters. In the patent area, her practice focuses on an array of technologies, including pharmaceuticals, biotechnology, drug delivery systems and medical devices, with an emphasis on Hatch-Waxman patent infringement cases. She has over 15 years of experience in patent litigation and experience in various jurisdictions including the Federal Circuit. Sapna also counsels a variety of US and international clients regarding US intellectual property law by providing them with infringement, validity, enforceability and clearance opinions, and by advising them in licensing and antitrust matters, and conducting intellectual property due diligence investigations in connection with acquisitions and licensing deals.