Landmark Healthcare Reform Legislation Creates Statutory Pathway for Biosimilar Biologics

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act of 2010 (“PPACA”), Public Law No. 111-148.  This massive, groundbreaking piece of legislation contains, for the first time, a statutory pathway for licensure, or approval, of biological products that are biosimilar to, and possibly interchangeable with, earlier biological products (termed “reference products”) licensed under the Public Health Service Act. 

According to PPACA, a “biosimilar product” is a biological product that is “highly similar to the reference product notwithstanding minor differences in clinically inactive components” and has “no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product.”  A biosimilar product, in turn, may be deemed “interchangeable” with the reference product if it “can be expected to produce the same clinical result as the reference product in any given patient” and “for a biological product that is administered more than once to an individual, the risk in terms of safety or diminished efficacy of alternating or switching between use of the biological product and the reference product is not greater than the risk of using the reference product without such alternation or switch.” 

Once a biosimilar product is approved as interchangeable, it may be substituted for the reference product without the intervention of a healthcare provider prescribing the reference product.

The biosimilar provisions of PPACA provide for (i) exclusivity for the reference product; (ii) a patent resolution process between the sponsor of the reference product and the applicant for the biosimilar product; and (iii) exclusivity for the first biosimilar product determined to be interchangeable with the reference product.

Reference Product Exclusivity

PPACA provides for 12 years of reference product exclusivity from date of first licensure of the reference product during which the FDA may not approve biosimilar product applications.  This exclusivity may not be obtained by the reference product sponsor for (i) a supplement for the biological product that is the reference product; (ii) a product having a change with respect to the reference product (not including a modification to the structure of product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device or strength; or (iii) a product having a modification to the structure of the reference product that does not result in a change in safety, purity or potency. 

In addition to the 12-year period during which a biosimilar product may not be approved, reference product exclusivity also does not permit the filing of a biosimilar application less than four years after the date of first licensure of the reference product.  Moreover, an additional six months may be added to the 12- and four-year exclusivity periods if the reference product was also studied in pediatric populations.

The Patent Resolution Process

PPACA sets forth a complicated scheme for litigating certain patents and seeking judicial resolution prior to the marketing of a biosimilar product.

Exchange of Information Between the Biosimilar Applicant and the Reference Product Sponsor

Within 20 days of acceptance of a biosimilar application for review, the biosimilar applicant is required to send the reference product sponsor’s legal representatives, under a duty of confidentiality, a copy of the biosimilar application and additional detailed information relating to the method of manufacture of the biosimilar product.  Within 60 days of receipt of this information, the reference product sponsor is required to provide a list of all patents for which it believes a claim of patent infringement could reasonably be asserted against the biosimilar applicant if it engaged in the making, using, offering to sell, selling or importation of the biosimilar product.  Within 60 days of receipt of the reference product sponsor’s patent list, the biosimilar applicant may provide its own counter-list of patents with respect to which it believes a claim of patent infringement could reasonably be asserted by the reference product sponsor.  For each patent on the reference product sponsor’s list and the biosimilar applicant’s counter-list, the biosimilar applicant needs to provide either a statement that it does not intend to begin commercial marketing before the date of patent expiry or a detailed statement of invalidity, unenforceability and/or non-infringement of that patent.  Within 60 days of receipt of the biosimilar applicant’s detailed statement, the reference product sponsor needs, in turn, to provide a counter-detailed statement explaining, for each patent addressed in the biosimilar applicant’s detailed statement, why the patent will be infringed as well as a response to statements of invalidity and unenforceability raised in the biosimilar applicant’s detailed statement. 

PPACA has certain penalties for non-compliance with the aforementioned exchange of information.  For example, if there is a patent that should have been included in the reference product sponsor’s patent list and was not included in accordance with the required timing provisions, then the reference product sponsor loses a cause of action for infringement of that patent by the biosimilar product.

Litigation Scenarios

PPACA covers different litigation scenarios: (i) “immediate” patent infringement litigation after the exchange of the patent lists (with different rules if the biosimilar applicant and the reference product sponsor agree or do not agree on which of the patents on the respective patent lists should be the subject of litigation); (ii) preliminary injunction proceedings after notice is given regarding commercial marketing of the biosimilar product; and (iii) declaratory judgment actions. 

With respect to the scenario relating to “immediate” patent infringement, the first step is dividing the originally listed patents into an “immediate” list and a “non-immediate” list.  Those patents on the “immediate” list can be asserted in the “immediate” infringement action.  The reference product sponsor and biosimilar applicant must attempt to agree on which of the previously listed patents should be on the “immediate” list.  Absent such agreement, the biosimilar applicant provides the reference product sponsor with the number of patents it believes should be on the “immediate” list.  Five days thereafter, the reference product sponsor and biosimilar applicant must provide one another with their respective lists of patents which will together make up the “immediate” list.  Each party’s list is limited to the number of patents earlier provided by the biosimilar applicant.  If the biosimilar applicant listed no patents to be litigated, the reference product sponsor may place one patent on the “immediate” list.  The remaining patents listed earlier but not placed on the “immediate” list comprise the “non-immediate” list.  Once the process of identifying which patents comprise the “immediate” list is completed, litigation on those patents is supposed to commence within 30 days.  If any patent on the “immediate” list is asserted after that timeframe, then a reasonable royalty is the sole and exclusive remedy that may be granted if infringement is found.

With respect to the scenario relating to preliminary injunction motions, such motions cannot be brought until the biosimilar applicant provides notice of its intention to commercially market its biosimilar product.  After receiving this notice, which must be no later than 180 days before the date of first commercial marketing, the reference product sponsor may seek a preliminary injunction with respect to patents on the “non-immediate” list.

With respect to the scenario relating to declaratory judgment actions, such actions are subject to certain restrictions.  If the biosimilar applicant has provided the reference product sponsor with a copy of the biosimilar application and manufacturing information, then the biosimilar applicant and the reference product sponsor may not bring, before the aforesaid notification of commercial marketing, an action for declaratory judgment with respect to patents on the “non-immediate” list.  In addition, the reference product sponsor may bring a declaratory judgment action early if the biosimilar applicant failed to provide certain required information to the reference product sponsor.  Depending on what information the applicant failed to provide, the early declaratory judgment action may be brought by the reference product sponsor with respect to either the patents originally listed by the reference product sponsor or any patent claiming the biological product or use of the biological product.

Exclusivity for the First Biosimilar Product Determined to be Interchangeable

Under PPACA, exclusivity is granted to the biosimilar applicant that first received a determination that its biosimilar product is interchangeable with the reference product.  A subsequent biosimilar product can be approved but cannot receive a determination of interchangeability with the reference product until the earliest of the following events:

1. Twelve months after the first commercial marketing of the biosimilar product first determined to be interchangeable;
2. Eighteen months after a final decision of a court from which no appeal (other than a petition to the U.S. Supreme Court for a writ of certiorari) has been or can be taken with respect to all of the patents asserted in the “immediate” patent infringement litigation against the biosimilar applicant that first received a determination of interchangeability;
3. Eighteen months after approval of the biosimilar product first determined to be interchangeable if no “immediate” patent infringement litigation was brought against the biosimilar applicant that first received a determination of interchangeability; or
4. Forty-two months after approval of the biosimilar product first determined to be interchangeable if an “immediate” patent infringement litigation was brought against the biosimilar applicant that first received a determination of interchangeability and that litigation is still pending after 42 months.

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As can be seen from the above, the provisions of PPACA relating to biosimilars are very complex and are likely to result in much patent counseling as well as more biotechnology-related patent litigation.  It remains to be seen whether PPACA will lead to the growth of a biosimilar industry similar to the growth of the generic pharmaceutical industry after enactment of the Hatch-Waxman Act.