By Donald Zuhn —

California Healthcare Institute Applauds Eshoo-Inslee-Barton Amendment

Last Friday, the House Committee on Energy and Commerce passed a health care reform bill by a close 31-28 vote (see "House Committee Approves Health Care Reform Bill Calling for 12-Year Exclusivity Period").  One of the mark-ups to the bill was an amendment offered by Representatives Anna Eshoo (D-CA), Jay Inslee (D-WA), and Joe Barton (R-TX), which provides a licensure pathway for biosimilar biological products that includes a provision preventing the FDA from approving a biosimilar application until 12 years after the date on which the reference product (i.e., the innovator biologic) was first licensed.  The amendment, in contrast with the bill as a whole, was passed by a comfortable 41-11 margin.

In a statement issued on the day the House bill passed out of Committee, the California Healthcare Institute (CHI), an independent organization comprising more than 250 biomedical companies and academic and research institutions involved in researching and advocating policy to forward the interests of California's biomedical community, applauded the approval of the Eshoo-Inslee-Barton amendment.  In particular, the organization said it "supported the development of a science-based biosimilars approval pathway that employs the best science to make sure that products are safe for patients, that encourages price competition among manufacturers, and provides ample incentives to encourage continued private-sector investment in the next generation of breakthroughs," and that the Eshoo-Inslee-Barton amendment met these objectives.  Noting that the Senate Health, Education, Labor and Pensions (HELP) Committee had also recently approved an amendment providing a 12-year exclusivity period for biologic drug makers (see "Senators Hatch and Enzi Champion 12-Year Data Exclusivity in Senate"), the CHI stated that it was "pleased the amendment approved today similarly provides for 12 years of data exclusivity as well as the identical FDA regulatory pathway framework from the HELP measure."  The CHI was "also pleased that the amendment includes important patent dispute resolution provisions from HR 1548 that would establish an equitable framework for exchanging information among innovator manufacturers, biosimilar manufacturers and third-party patent holders, such as universities and private research institutes whose scientific breakthroughs are often licensed to the private sector for commercial development."

New York Times Says Data Exclusivity Period May Not Matter Much 

In an article published last month, New York Times reporter Andrew Pollack contends that the data exclusivity period being debated in Congress "may ultimately not matter as much as the most vitriolic debaters insist."  On one side of the debate, innovator drug companies argue that if the exclusivity period is too short, innovation will be harmed.  On the other side of the debate, generic drug companies and consumers (as well as employers and insurers) argue that if the exclusivity period is too long, potential cost savings will be wiped out.  Mr. Pollack, however, suggests that "neither the threats to innovation nor the potential savings from generic competition are as great as claimed."

In support of this assertion, Mr. Pollack points first to the patent system, since "whatever the exclusivity period, biologic drugs would also continue to be protected from copycats by patents," adding that "in many cases, the patent protection would last longer than the exclusivity period, making the Congressionally mandated exclusivity a moot point."  He lists Genentech's Avastin and Heceptin as two good examples, since according to Mr. Pollack, both drugs are patent protected until 2019, which is 15 years after Avastin's 2004 FDA approval date and 21 years after Heceptin's 1998 FDA approval date.  Mr. Pollack contends that "[w]here the exclusivity period might matter most would be in the cases of drugs whose patents were nearing expiration by the time the developer succeeded in winning F.D.A. approval," but he argues that this "seldom happens."

As for cost savings, Mr. Pollack notes that based on Congressional Budget Office (CBA) estimates, generic biologics might save the government "only about $10 billion in the next 10 years," which he argues is "a relative drop in the bucket when it comes to paying for health care reform, which is expected to cost about $1 trillion over 10 years."  This smaller-than-expected impact is due in part to the amount of health care spending that is dedicated to drugs, with biologics accounting for only 16% of total prescription drug spending and pharmaceuticals representing only 10% of overall health care spending.  Mr. Pollack predicts that biologic cost savings will also be impacted by greater regulatory scrutiny, stating that "[b]ecause even small changes might affect the drug's safety or activity, it is likely that makers of biosimilars will have to conduct at least some clinical trials to win F.D.A. approval of their drugs."

Washington Post Backs Shorter Exclusivity Period

An editorial in last week's Washington Post said the Senate HELP Committee's passage of a 12-year data exclusivity period "would drive costs to consumers above even current levels, making the title [of the bill — the Affordable Health Choices Act –] little more than a mockery."  The Post remarked that one would have thought that a bill so named "would have made an effort to provide affordable health choices."  The Post also noted that last year, sales of biologic drugs "comprise[d] approximately 25 percent of new drugs."  (While this number seems to b
e at odds with the N.Y. Times figure of 16%, the Post refers to "new" drugs, albeit without defining what it means by "new" drugs.)

The Post editorial also questions the claim by "[b]ig pharmaceutical companies" that a "lengthy" exclusivity period is needed to encourage continued innovation, citing the Federal Trade Commission report which "suggested the opposite — that the biotech industry's patents on its biologic innovations are so strong that no added exclusivity period is necessary" (see "No One Seems Happy with Follow-on Biologics According to the FTC").  The Post argues that while biologic drugs involve a more complicated manufacturing process, "the flip side is that many stages of the process can be patented — from the drug products themselves to the genes that produce them to the cells in which they are made."  According to the editorial, "[t]his makes entry into the market by follow-on-biologics, or 'biosimilars,' more difficult because multiple patents are harder to design around."

Instead of a 12-year exclusivity period, the Post finds favor with the Obama Administration's "generous compromise" of a 7-year period (see "Follow-on Biologics News Briefs – No. 4").  Calling any additional protection "not only unnecessary but harmful," the Post asserts that a longer period would create "[a]n extended monopoly [that] would delay the entry of biogenerics and drive costs even higher."  In fact, the Post goes even further by supporting Rep. Waxman's 5-year exclusivity period, which the editorial argues better "balances incentives for innovation against the need for price competition."

    By Kevin E. Noonan —

The most troublesome point of contention in the follow-in biologics (FOBs) debate has undoubtedly revolved around the term for data exclusivity.  In a subject so complex, it may be understandable that there are differing views about the importance of data exclusivity, and whether this is "much ado about nothing" or a vitally-important part of any follow-on biologics regime.

Whether the data exclusivity provisions are of almost supreme importance depends, in part, on the significance of patent protection in biologics and the extent of protection patenting can be expected to give biologic drugs.  The Federal Trade Commission thinks patents in this area (as well as other factors) are sufficiently robust that its recent report concluded that no data exclusivity period is needed (see "No One Seems Happy with Follow-on Biologics According to the FTC").  In its report, the FTC asserts that patent protection may be sufficient protection, particularly because biologic drugs "are covered by more and varied patents compared with conventional small molecule drugs."  The report opines that data exclusivity would be in addition to the incentives provided by patent protection and market-based pricing, and thus data exclusivity would provide no additional incentives to developing biologics drugs.  The report concedes that data exclusivity might be necessary "to the extent that there are new biologic molecules that cannot obtain patent protection," but sees no evidence for such an eventuality.  The FTC report also declined to foresee any need for an ANDA-like mechanism to resolve patent disputes between pioneer biologic drug manufacturers and FOB producers prior to FDA approval of FOBs.  The report contends that patent infringement litigation, or the threat thereof, will be a sufficient disincentive to inhibit FOB companies from entering the market prior to patent expiry, even if they have obtained FDA approval.  Paradoxically, the reasoning behind this conclusion seems to reside in the Commission's belief that the Hatch-Waxman ANDA scheme has resulted in "extensive litigation, unintended consequences and delayed generic entry," which could with equal force suggest that there will be a need for a mechanism in FOB legislation to address patent issues (albeit with the benefit of 25 years of ANDA litigation experience).  The report also bases its conclusions on the lack of need for ANDA provisions in FOB legislation (particularly the 30-month stay of FDA approval) on the grounds that these provisions in the Hatch-Waxman regime were required to protect innovator drug companies from "judgment-proof" generics companies, because the market share (and revenues) lost by the innovator would be impossible to recover from a generic infringer even if the innovator prevailed in litigation.  The report's conclusion, that only established biologics drug manufacturers will be able to enter the FOB space, renders these considerations less important if not entirely moot for FOBs, and hence the report concludes there is no need for protection over and above the threat of patent infringement liability.

Other writers, such as Karl Thiel writing last month in BioWorld Today, have based their argument that the White House proposal of seven years of data exclusivity is sufficient on the grounds that "we require less exclusivity here [than in Europe, which has 8-10 years of data exclusivity] because our patent system is stronger and fills the gap more effectively" (see "Follow-on Biologics News Briefs – No. 6").  He further contends that data exclusivity is "an issue that's frankly been blown out of proportion," because "[e]xclusivity runs concurrent to patent life after all . . . [I]in most cases, it's not going to matter whether it's five or seven or 12 years, because the patent protection will supersede the exclusivity period, at least if you have good lawyers."

These sentiments are in stark contrast to other analyses based on what appear to be a more analytic approach to the problem weighed down by fewer unproven assumptions.  As reported earlier on Patent Docs, Dr. Gregory Glover of the Pharmaceutical Law Group spoke at a Super Session on patent reform entitled "Biotechnology Intellectual Property at the Crossroads" at BIO's International Meeting in Atlanta this year (see "Docs at BIO: Patent Reform Super Session").  Dr. Glover's presentation focused on the interaction between patent protection and regulatory (almost exclusively FDA) requirements, and how the differing "exclusivities" can interact in ways that protect innovation sufficiently or not.  The Hatch-Waxman regime is the paradigm, including the abbreviated approval pathway, permitting a generic company to use the innovator's safety and efficacy data, the data exclusivity period, and patent litigation provisions (specifically, the 30-month stay) that extend innovator protection.

In making this comparison, Dr. Glover discussed what he termed the RS/PS anomaly, i.e., the difference between the scope of regulatory protection (such as data exclusivity) and the scope of patent protection available for small molecule drugs as compared with biologics drugs.  In short, RS and PS "align" for small molecule drugs but do not for FOBs.

He illustrated this situation by comparing the protection periods for the two types of drugs.  For small molecule drugs, new chemical entities (NCEs) have a 5-year period in which the FDA will not accept an application for generic version of an approved drug, coupled with the 30-month stay in approving a generic drug that is imposed when an innovator files suit in response to a Paragraph IV certification from the generic drugmaker that an Orange Book-listed patent on the innovator's approved drug is invalid or unenforceable.  These timelines line up well with the timeline for a new drug according to Dr. Glover's hypothetical.  An innovator company files a provisional patent application followed by a utility application that issues within 3 years.  The company also filed an IND followed by a NDA, which is approved by the FDA within 5 years of the IND filing date.  For an NCE, the Hatch-Waxman Act provides 5 years of data protection, independent of patent protection.  In addition, the innovator has up to 5 years of patent term extension.  This results in the regulatory scope being restricted to about the same extent as the patent scope for traditional small molecule dr
ugs:  the innovator's safety and efficacy data available to the generic drugmaker is restricted to molecules that are substantially identical; similarly, the innovator's patent protection is limited to substantially identical molecules.  Thus, Dr. Glover showed that the extent of regulatory protection (RS) was about equal to the extent of patent protection (PS) for small molecule drugs.

These periods of patent protection and data exclusivity thus provide sufficient protection for conventional drugs, since the periods overlap and there is rarely a situation where the innovator's drug is not protected during the term of patents listed in the Orange Book.

For follow-on biologics, however, the situation is very different.  First, the regulatory standard is much more loosely applied for FOBs, since they are not required to be identical to the innovator biologic drug.  (The regulatory standard for small molecules is "identity" whereas the standard for FOBs is "similarity," as a result of complexities in the molecules themselves and methods — chemical versus biological — for making them.)  For biologics, the regulatory scope is much broader, according to Dr. Glover, because it includes not only substantially identical molecules but also bio-"similars."  Thus, generic competition can be faced by the innovator for molecules other than identical copies of the biologic drug; one example of such an occurrence under the current regulatory scheme is Hoffman-LaRoche's Mircera® drug, which is a pegylated version of erythropoietin (EPO).  While Mircera® has been the subject of continuing litigation between Roche and the EPO innovator, Amgen, the FDA approved Mircera® in November, 2008 (see "Amgen v. Hoffmann-LaRoche: Remaining Issues").

In contrast to this broader scope of generic competition to be faced by biologic drugs, patents on such drugs remain restricted to molecules that are substantially identical to the innovators biologic drug itself.  Thus, the scope of patent protection is substantially narrower than the scope of generic competition for biologic drugs, a situation very different from traditional generic drug competition for small molecule drugs.

Because all pending FOB legislation will permit the FDA to grant regulatory approval to biosimilar as well as bioidentical compounds, the possibility exists for a generic competitor to use the innovator's safety and efficacy data to obtain approval of a biosimilar drug that does not infringe the innovator's patent protection.  This eventuality elevates the importance of data exclusivity for biologic drugs, which may not have sufficient patent protection to prevent marketing of a biosimilar drug that is different enough to satisfy regulatory requirements while falling outside the scope of patent protection.  This is not a case of whether or not the innovator biologic drug companies have clever-enough lawyers; considering how the U.S. Patent and Trademark Office, and the courts, have interpreted the written description requirement, protein-based biologic drugs having even conservative substitutions are likely not within the literal scope of most patent claims.

These considerations remain relevant even in the face of recent approval by Congressional committees of follow-on biologics legislation having 12-year data exclusivity provisions.  As reported on Patent Docs, on Friday the House Committee on Energy and Commerce approved a health care reform bill entitled "America's Affordable Health Choices Act" (H.R. 3200) by a narrow margin (31-28) (see "House Committee Approves Health Care Reform Bill Calling for 12-Year Exclusivity Period").  This bill included an amendment offered by Representatives Anna Eshoo (D-CA), Jay Inslee (D-WA), and Joe Barton (R-TX) that prevents the FDA from approving a biosimilar application until 12 years after the date on which the reference product (i.e., the innovator biologic) was first licensed.  The amendment was passed by the Committee by a comfortable 41-11 margin.  However, ten of the committee's Democratic members voted against the amendment, including Committee Chairman Henry Waxman (D-CA), whose bill on a follow-on biologics regulatory pathway (H.R. 1427) provides only up to 5.5 years of data exclusivity.  A Senate bill, S. 726, was earlier amended to include a 12-year data exclusivity provision and passed by a 16-7 vote from the Senate Health, Education, Labor and Pensions (HELP) Committee on July 14th (see "Senators Hatch and Enzi Champion 12-Year Data Exclusivity in Senate").  While these bills are in agreement on the data exclusivity term, many groups have an interest in reducing the length of the term.  Since these groups include the AARP, Consumers Union, the Coalition for a Competitive Pharmaceutical Market (CCPM; "an organization of large national employers, health plans, PBM's, chain pharmacies, generic drug manufacturers, biopharmaceutical companies and others representing more than 200 million beneficiaries"), the National Coalition on Health Care (NCHC), their influence cannot be ignored.  Moreover, there is sufficient disparity among commentators on the "right" term length for data exclusivity to give members of Congress "factual cover" for following public perceptions on the benefits of biosimilars to support a lower data exclusivity term.  The decisions by the key Congressional committees in recent weeks have been encouraging to innovator biopharmaceutical and biotechnology companies; it remains to be seen whether these victories can be maintained in the final bill sent to President Obama for his signature.