By Donald Zuhn —

Last April, Abbott
Laboratories filed a Citizen Petition with the U.S. Food and Drug
Administration, asking the agency to refrain from accepting biosimilar
applications under the Biologics Price Competition and Innovation Act (BPCIA)
that cite reference products (biologics) for which a biologics license
application (BLA) was submitted to the FDA prior to March 23, 2010 (see "Abbott Asks FDA to Refuse
Certain Biosimilar Applications").  The BPCIA, which provides an approval pathway
for biosimilar biological products and constitutes a portion of the Patient
Protection and Affordable Care Act that was signed into law on March 23, 2010,
allows the FDA to accept biosimilar applications four years after a reference
product has been licensed and to approve such applications twelve years after
the reference product has been licensed.

In its Petition, Abbott
specifically asked the FDA to:

[C]onfirm that it will not accept for filing,
file, approve, or discuss with any company, or otherwise take any action
indicating that the agency will consider, any application or any
investigational new drug application (IND) for a biosimilar that cites, as its
reference product, BLA 125057 for Humira® (adalimumab) or any other product for
which the biologics license application (BLA) was submitted to FDA prior to
March 23, 2010, the date on which the BPCIA was signed into law.

Abbott explained that the
FDA should refuse biosimilar applications for all pre-enactment reference
products, including its own biologic Humira®, because to approve such
applications would constitute a taking under the Fifth Amendment of the U.S.
Constitution, which requires just compensation. 
Noting that "[a]n innovator's resulting license application
typically reflects more than a decade of research and contains analytical,
preclinical, and clinical data, as well as detailed manufacturing information,
most of which qualifies as trade secrets," Abbott contended that
"[t]hese trade secrets are the private property of the reference product
sponsor and are therefore protected by the Fifth Amendment to the U.S.
Constitution."  According to Abbott's
Petition, "[w]hen FDA approves a biosimilar biological product on the
grounds that the reference product has been shown safe, pure, and potent, it
uses these trade secrets."

The FDA continues to
collect comments regarding Abbott's Citizen Petition, and has thus far received
comments from the Generic Pharmaceutical Association (GPhA), Therapeutic
Proteins International, LLC (a manufacturer and supplier of finished biosimilar
recombinant therapeutic proteins products based in Chicago, IL), and Zuckerman
Spaeder LLP (a litigation firm with offices in Washington, DC, New York, Tampa,
and Baltimore).  Each of these commenters has asked the FDA to deny Abbott's Petition.  Last month, the Washington Legal Foundation
(WLF), a public interest law and policy center, became the most recent group to
submit comments on Abbott's Citizen Petition, but in contrast with the GPhA,
TPI, and the Zuckerman firm, submitted its comments in support of Abbott's
Petition.

The WLF's comments begin by noting
that:

Any company that submitted a biologics license
application (BLA) to FDA after adoption of the BPCIA in 2010 was on notice that
FDA would be using information submitted in support of the application to
evaluate the safety of biosimilars.  Accordingly,
the company would have no basis for seeking Fifth Amendment compensation for
such use of its trade secret information, because it would have no reasonable
investment-backed expectation that its information would not be so used.  But many if not all companies that submitted a
BLA to FDA before adoption of the BPCIA (including Abbott, which submitted an
application for Humira® in 2002) would very reasonably have believed that their
trade secret information would not be used to assist their competitors in this
manner and, on the basis of that belief, invested heavily in the development of
their biological product.

As a result, the WLF
supports Abbott's request that the FDA not approve any application or any
investigational new drug (IND) application for a biosimilar that cites a
reference product for which the BLA was submitted to the FDA prior to March 23,
2010, albeit with the caveat that the FDA could approve such applications if it
had "made an explicit determination that approval of that specific biosimilar
would not trigger federal government liability under the Takings Clause."  With respect to this caveat, the WLF
acknowledges "[i]t is possible that some sponsors who submitted BLA
applications in the months immediately preceding March 23, 2010, lacked a
reasonable investment-backed expectation that FDA would neither disclose their
trade secrets nor use them as the basis for approving biosimilars."  In its comments, the WLF expresses concern
that "approving biosimilars without first giving serious consideration to Fifth
Amendment compensation claims that would arise therefrom would seriously erode
both property rights and public confidence in the reliability of government
promises," adding that "[i]f FDA determines that it is free to ignore
its past promises of confidentiality to BLA applicants, businesses subject to
government regulation will be less willing in the future to spend the massive
sums necessary to develop innovative and life-saving products."

The WLF explains that:

Congress adopted the BPCIA for the purpose of
reducing health care costs, both for itself and for other purchasers of
biological products.  Those cost savings
are to be effected by reducing the profits that would otherwise flow to the
manufacturers of biological products, by increasing competition and thereby
forcing down prices.  Congress concluded
that although forcing down prices — and thereby decreasing the profitability
of producing biological profits — might lead to a reduced number of new,
life-saving biological products by reducing incentives to engage in research
and development, any such detriments were outweighed by the BPCIA's cost-saving
potential.  The Constitution does not
restrict Congress's right to undertake such cost-benefit calculations.

The federal government is not permitted,
however, to reduce health-care costs by taking private property.  Reduced health-care costs may be a laudable
goal, but the Constitution does not permit it to be accomplished at the expense
of property rights.  The Fifth
Amendment's Takings Clause was "designed to bar Government from forcing
some people alone to bear public burdens which, in all fairness and justice,
should be borne by the public as a whole." 
Armstrong v. United States,
364 U.S. 40, 49 (1960).

With respect to Abbott's
citation of Ruckelshaus v. Monsanto Co.,
467 U.S. 986 (1984), in support of its position on BLAs submitted to the FDA
prior to March 23, 2010, the WLF argues that the case is "directly on
point and requires a finding that approving biosimilar applications would
require that Takings Clause compensation be paid to many if not most sponsors
of approved BLAs that were filed before adoption of the BPCIA in 2010."  According to the WLF, in Ruckelshaus, which involved Monsanto's submission of trade secret
data to the EPA in support of its application to register a pesticide, the Supreme
Court deemed one factor to be dispositive with respect certain of Monsanto's
claims, namely "Monsanto's reasonable investment-backed
expectations that information it supplied to EPA would not be disclosed and would
not be used by EPA to approve registration applications submitted by Monsanto's
competitors."  The WLF contends
that:

Monsanto
demonstrates that if the federal government begins granting biosimilar applications
with respect to reference products for which BLAs were filed before the
adoption of the BPCIA in March 2010, it will face significant Takings Clause
liability to sponsors of those approved BLAs. 
. . .  [F]or many decades FDA
provided explicit assurances to the biotech industry that it would maintain the
confidentiality of data supplied in connection with BLAs to the extent that the
data offered any competitive advantage to the supplier of the data, and that it
would not use the data to approve biosimilars because FDA had no authority to
do so.  In light of FDA's explicit
assurances, biotech companies' expectations that confidentiality and use
restrictions would be maintained was certainly "reasonable."  Those expectations were also
"investment-backed"; indeed, biotech companies routinely invest more than
$1 billion dollars to develop a biological product and to win approval for
their BLAs.

With respect to the GPhA's
argument that "reasonable expectations must also take into account the
regulatory environment, including the foreseeability of changes in the
regulatory scheme," the WLF notes that it "does not necessarily
disagree," but adds that:

[T]he foreseeability of changes in the regulatory
scheme does not excuse efforts by the federal government to renege on explicit assurances
that the biotech industry has relied on, to the tune of billions of dollars.  The federal government is largely free to
alter regulatory schemes on a prospective basis; but the Takings Clause
requires it to pay compensation to individuals and businesses when the changed regulatory
scheme retroactively unsettles their reasonable investment-backed expectations
and thereby destroys their property.

In response to the
Zuckerman firm's argument that the BPCIA provides manufacturers of biological
products with just compensation for the use of their trade secrets in the form
of exclusivity periods, the WLF contends that this argument is "without
merit," noting that "[w]hile the exclusivity periods afforded to
manufacturers of biological products by the BPCIA undoubtedly have some monetary
value, that exclusivity is worth considerably less than the profits they would
generate if FDA were to honor its commitment not to use their trade secret data
in approving biosimilars."

The WLF closes its comments
by asserting that

Because there is no evidence that Congress
contemplated that the United States could be required to pay "just
compensation" claims to biotech companies, FDA should not approve a biosimilar
application for any reference product for which a BLA was submitted before
March 23, 2010, unless and until FDA has determined that the sponsor of the
reference product, at the time the BLA was submitted, lacked a reasonable
investment-backed expectation that its trade secret data would not be disclosed
or used by FDA.

In so arguing, the
WLF explains that:

The absence of any mechanism for paying
potentially massive "just compensation" claims to biotech companies
indicates that Congress did not authorize FDA to confiscate trade secret rights
that those companies reasonably expected would be honored.  Neither the BPCIA's statutory language nor
its legislative history includes any indication that Congress reached any
conclusions regarding the strength of the Takings Clause claims that sponsors
of approved BLAs were likely to raise in response to the Act.  In the absence of such an indication, the
most logical conclusion is that Congress intended that FDA should make such determinations
on a case-by-case basis before approving a biosimilar.

The WLF therefore concludes that:

Until such time as
FDA determines, after careful consideration, that the sponsor of the pre-March
2010 reference product at issue reasonably expected (at the time it submitted
its trade secret information) that FDA would make uncompensated use of the
trade secrets to assist competitors, FDA should not approve an application to
market a biosimilar based on that reference product.  Any other policy would expose FDA to massive
Takings Clause liabilities that Congress has not authorized the agency to
incur.

Additional information regarding
Abbott's Citizen Petition, including copies of the comments submitted to date (except
for the WLF's comments, which have yet to be posted), can be found here.

For additional information regarding this topic, please see:

• "Rep. Eshoo Expresses Views on Abbott's Biosimilars Petition in Letter to FDA," October 25, 2012
• "FDA Continues to Review Abbott Petition on Biosimilars," October 24, 2012
• "Abbott Asks FDA to Refuse Certain Biosimilar Applications," April 23, 2012