Blog Big Molecule Watch August 16, 2019

An Interview with Prof. Arti Rai about the Role of “Patent Thickets” in U.S. Biosimilar Market Entry

Last week, Big Molecule Watch sat down with Professor Arti Rai to discuss an article she recently co-authored, “How logically impossible patents block biosimilars.” The article, published earlier this month in the journal Nature Biotechnology, examines the differences between the patent and drug approval legal and regulatory regimes and how so-called “patent thickets” may impact biosimilar market entry in the United States.

Professor Rai is an internationally recognized expert in intellectual property, administrative and health law, and innovation policy.  She currently serves as the Elvin R. Latty Professor of Law and Faculty Director of the Center for Innovation Policy at Duke University School of Law.  Professor Rai started her legal career as a patent and appellate litigator at a law firm and, since then, she has worked as a litigator for the U.S. Department of Justice, led policy analysis at the U.S. Patent and Trademark Office of the legislation that became the America Invents Act, and taught at a number of law schools, including Duke, Harvard, Yale and the University of Pennsylvania.  Professor Rai is a frequent speaker and lecturer on topics relating to IP and health care law and policy, including biosimilars. Last summer, Professor Rai was a featured panelist at the rollout event for the FDA’s Biosimilar Action Plan at the Brookings Institute.

Below is our interview with Professor Rai, which was conducted by Goodwin attorney and Big Molecule Watch editor Josh Whitehill.  It has been lightly edited for length and clarity.


Big Molecule Watch: Thanks for joining me today. Before we dive into your article, can you tell me about your background and research interests?

Prof. Rai: Sure. I started out as a private sector patent lawyer and then worked as a government lawyer at the Federal Programs Branch of the Department of Justice, defending agencies in health cases. That was all before I went into academia. I’m very interested in the intersection of IP and health and all the issues raised by that intersection, of which we know there are many. That’s my general background. In addition to doing work on biologic patent thickets and also looking at evergreening in the context of small molecules, I’ve also done a fair amount of work on trade secrets and patents surrounding manufacturing processes. I’m also really interested in university patenting and the ways innovation occurs as a consequence of university patenting. My most recent government service was as the Administrator of External Affairs—essentially the chief policy officer—at the U.S. Patent and Trademark Office from 2009 to 2010.

Big Molecule Watch: What did that PTO role entail?

Prof. Rai: It entailed doing a lot of the leg work to justify the passage of the American Invents Act and the creation of the Patent Trial and Appeal Board. That was the primary goal that I sought to achieve and luckily for me, it was achieved.

Big Molecule Watch: That was certainly a game-changer for what that did. I’d like to talk about biosimilars generally. What role do you see biosimilars playing in the U.S., for example, as compared to generic drugs?

Prof. Rai: That’s a great question. Patents and patent thickets, regrettably, are only one piece of the puzzle. There’s also the question of whether we will ever get anything approaching an interchangeability designation from the FDA, which would make a big difference for provider comfort in switching over from the originator. Relatedly, insurance coverage for biosimilars is a challenge because there’s still this sense that biosimilars aren’t as good as the originator even if they may be a bit cheaper. Of course, that relates to the problem of biosimilars not being that much cheaper, at least currently, than the originator. In prior work, my co-author Nicholson Price and I have attributed a part of biosimilar cost to the need to reverse engineer the originator biologic, which takes time and money, and then have to prove similarity to the FDA through some sort of clinical performance study, which is all very different from small molecules.

Big Molecule Watch: Do you view the roll-out of biosimilars in the United States as successful in accomplishing the goal so far?

Prof. Rai: Not yet. I’m optimistic in the long-term but, thus far, we haven’t gotten there. I think the sets of problems include patents, regulation, and changing providers’ minds and insurance companies’ minds about biosimilars. So, three different categories of challenges, all of which need to be addressed.

Big Molecule Watch: Do you think biosimilars in the U.S. face any insurmountable hurdles that can’t be overcome without intervention, be it legislative, regulatory or something else?

Prof. Rai: I do think the FDA needs to do all it can to make the regulatory processes as streamlined as possible. I’m told by my friends who are focused on that piece of the puzzle—Gillian Woollett, in particular, and Mark McCamish, who has written a lot on this—that the FDA is probably too strict in applying both similarity and interchangeability. That’s one piece of the puzzle the FDA could address on its own without Congress intervening. One understands FDA’s hesitation because it doesn’t want to have a problem with some sort of immunogenic reaction from a biosimilar it approves, like what happened with J&J and Eprex in Europe; but nonetheless, even the EMA, where that actually occurred, has been much more liberal. So that’s one piece. The second piece is harder from a regulatory/legislative standpoint: It’s moving the hearts and minds of providers and insurers. But I think if biosimilar price went down significantly, which would happen if the regulatory burdens weren’t as great and fighting through the thicket wasn’t such of a problem, insurers would start paying attention because they care about price.

Big Molecule Watch: You mentioned that insurance coverage for biosimilars in some instances has been difficult. Can you explain that in a little more detail?

Prof. Rai: Sure, and this is where some antitrust intervention might also help. For example, we now have antitrust lawsuits attacking tactics by originator companies where the insurer loses certain negotiated discounts  on the originator biologic if it covers biosimilars to that drug. Pfizer’s antitrust lawsuit against J&J regarding Remicade alleges that sort of behavior. In general, the PBM (Pharmacy Benefit Manager) system is a complicated system across the board for all therapeutics. So as part of any general overhaul of the system, it would be wise to think about making sure that deals between pharma and PBMs can’t be used to deter biosimilar entry.

Big Molecule Watch: I want to talk about your article. It’s right there in the title, the phrase “logically impossible patents”—I thought it was pretty eye-catching. Could you explain what you mean by that terminology for potential readers?

Prof. Rai: Sure, first, I should respond to the potential objection that we’re trying to be eye-catching but not being accurate in the sense that some of these patents might be valid. In that case how can we say that they’re logically impossible? We mean “logically impossible” in the sense of being logically impossible for blocking biosimilar entry. So that’s what we mean. We don’t mean that the patent itself cannot be valid. It could be an improvement on the original method of manufacturing, but it can’t be the only way to manufacture the biologic that was approved by the FDA.

Big Molecule Watch: Thanks, and I fully got that from reading the article. In your view, have these logically impossible patents—I’ll just use that terminology as shorthand—have they so far impacted the biosimilar system in the U.S.?

Prof. Rai: I think they have added to the thicket problem in a way that should be easier to handle than other parts of the thicket problem. As we note in the article, there are probably some patents that are obvious or not enabled, but the lack of novelty piece is a more cut and dried determination. So if some part of that thicket could be cleared quickly—and this is where the article relates to some forthcoming work I plan to do on the PTAB—if some part of that thicket could be cleared, particularly at the PTAB, that would be good. In the best case scenario there could be some coordination before the fact between the PTO and the FDA, so these patents didn’t issue. Now there may be other thicket patents that are harder to clear, but this strikes us as low-hanging fruit in the world of patent thickets.

Big Molecule Watch: With the Humira biosimilar market, people often point in an accusatory way to the fact that AbbVie authorized biosimilars of Humira in Europe beginning in October of this past year, and 4 or 5 are on the market in Europe now, but AbbVie’s settlement and license agreements in the U.S. don’t allow biosimilar makers to come onto the market until 2023. Your article referred to this as a delay that will result in billions of dollars in monopoly profits. Is it actually problematic, or is it something that’s inherent of having two different legal systems?

Prof. Rai: I do think that it’s indicative of a problem. I don’t think it’s slam dunk proof because obviously AbbVie filed more patents here and we have different legal systems. But that said, with respect to the novelty and non-obviousness pieces, I don’t view those issues as being decided very differently in Europe than here. So in my estimation AbbVie is filing patents here that are just as invalid here as they might be in Europe..

Big Molecule Watch: In the U.S., a bunch of AbbVie’s adalimumab patents have been challenged through IPR proceedings and some of the patents survived the IPR challenges, whereas in Europe, in addition to there being fewer patent filings and patent grants, there were a lot of revocations.

Prof. Rai: That’s an issue I’m really interested in. Going forward, I plan to look at the PTAB in particular. I’ve heard that the PTAB is excluding certain types of evidence as prior art. That strikes me as problematic. If the PTAB is excluding certain types of evidence, I worry that the PTAB is not performing its proper role.

Big Molecule Watch: There have been certain types of potential prior art that the PTAB has often excluded even though in a federal district court setting, where there’s a higher burden of proof, it is much easier to establish it as prior art than it seems to be in the PTAB, which is supposed to have a lower standard. For example, the PTAB sometimes refuses to recognize drug labels as prior art—not in every instance, but we’re seen it over and over again—even with supporting declarations, it can be difficult to get it in. Do you have any thoughts on this?

Prof. Rai: That’s one of the issues I plan to explore in the future. A potential funder came to me and said, look, the PTAB is not performing its role properly in this space. That was one of the examples that they used. It sounds like your experience is similar.

Big Molecule Watch: I think one of the main themes of your article is the mismatch between the United States’ drug approval and patent grant regimes and the disconnect between the USPTO and FDA. Do you have any particular proposal for resolving these discrepancies?

Prof. Rai: It strikes me that if the PTO knew exactly what molecules had been approved by the FDA, it could focus on patent applications that were relevant to those molecules, including manufacturing patent applications, but not limited to that.

Big Molecule Watch: Do you think the USPTO would be in a position to identify those patent applications?

Prof. Rai: I think so. For example, if the PTO knew the approved molecule, if they could look at the manufacturer and the first composition of matter patent filed, and begin to trace out the range of different patent applications that might be relevant.

Big Molecule Watch: With regard to the Senate’s proposed “Biologic Patent Transparency Act,” if enacted, do you think it will make a big difference if reference product sponsors have to list patents in the Purple Book?

Prof. Rai: I think that getting that transparency started, getting that ball rolling, will begin to help us understand what more information might be needed. You know, in any given case, if the BPTA fell short, why did it fall short? Why did this patent slip through? The details would matter a lot for purposes of it working immediately. But even if it didn’t work immediately, one could give the FDA some rulemaking authority to make adjustments as necessary.

Big Molecule Watch: The House more recently passed a somewhat similar bill, the “Purple Book Continuity Act.” As currently drafted, this bill, if enacted, would require reference product sponsors to list patents in the Purple Book to the extent that it identified the patents in a (l)(3)(A) list during the patent dance exchanges. It seems like the House bill, as currently drafted, could give a competitive advantage to second-filers because they would have the patent list in the Purple Book, whereas the first-filer wouldn’t. Do we have an understanding of why they wanted to tie the Purple Book patents to the (l)(3)(A) list exchanged during the patent dance, to the extent that happens, versus doing something more akin to what they do with generic drugs and have the reference product sponsor just list the patents that cover the drug?

Prof. Rai: I don’t know, but that strikes me as a real problem with the bill as drafted.

Big Molecule Watch: These kinds of bills are definitely hard to draft. I’d like to thank you for spending this time with me today. I’m looking forward to seeing what you publish next.

Prof. Rai: Okay, thanks so much.

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