Biosimilars: Data Exclusivity and the “Patent Protection Gap”
Several bills are currently pending in Congress establishing expedited marketing approval pathways for biosimilar drugs. The proposed pathways are analogous to the pathway for small molecule chemical drugs established by the passage of the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act. The Hatch-Waxman Act includes a data exclusivity provision whereby the FDA is prohibited from approving a competitor’s drug application relying on the innovator’s data for a statutory period of time. Recent debates concerning the biosimilar bills have focused on the data exclusivity period. These debates highlight the differences between biological drugs and small molecule chemical drugs and why a longer exclusivity period may be necessary to fill the “patent protection gap.”
Debate on Data Exclusivity Period
Under the Hatch-Waxman Act, a five-year exclusivity period is permitted for a new chemical entity. A three-year exclusivity period is permitted for new clinical investigations of small molecule drugs and other exclusivity periods are granted as incentives to develop drugs for children or small patient populations. With regard to biosimilars, proposals on data exclusivity terms have ranged from no exclusivity period to over 12 years. House bill H.R. 1427 sponsored by Representative Henry Waxman provides for five years of exclusivity while H.R. 1548 sponsored by Representative Anna Eshoo provides for an exclusivity period of up to 14.5 years. An FTC report questions whether any data exclusivity period is necessary, suggesting that existing patent protection and market-based pricing would offer sufficient incentive for biological drug development. The Biotechnology Industry Organization (BIO) counters that the FTC’s report failed to account for the advantage given to follow-on companies who rely on the innovator’s development and research work. In addition, BIO also notes that reliance on patent protection for biological drugs may be inadequate since the biosimilar regulatory approval pathway creates a “patent protection gap.”
Patent Protection Gap
According to BIO, a “patent protection gap” exists because a biosimilar drug is not required to be the “same” as the innovator drug. Representative Waxman’s bill requires only that the biologically similar drug have “no clinically meaningful differences between the biological product and the referenced product would be expected in terms of the safety, purity and potency if treatment were to be initiated with the biological product instead of the referenced product.” In other words, if the biosimilar drug is shown to have no “clinically meaningful difference” when compared to the innovator drug, it can theoretically gain approval even though the biosimilar drug may be different in structure, administration, or mechanism of action.
Differences Between Biological and Chemical Drugs
One of the critical differences between biological drugs and chemical drugs is that biological drugs are made by living cells whose DNA has been modified by introduction of the gene of interest to synthesize the active component. Compared to small molecule drugs made up of only a few dozen atoms, biological drugs can consist of many thousands of atoms making up the protein, which is folded into a complex three-dimensional structure. Living cells synthesizing biological drugs must be grown and maintained in a highly controlled sterile environment and any contamination (viruses, bacteria, mold, etc.) can have catastrophic consequences. The innovator company may seek to protect products and processes — including gene isolation, cell-line creation, maintaining cell growth and isolation and purification of the biological drug from the cells — through patents or trade secrets. Follow-on companies will not likely have access to the products or processes and will likely seek to design around any relevant patents.
Argument for a Longer Exclusivity Period
BIO argues that recent trends have been towards narrowing biotech patents, and therefore a substantial exclusivity period is necessary because reliance on patents alone cannot guarantee incentives to foster innovation of biological drugs. This argument may have some support. In an unpublished paper, two law professors stated that for composition of matter patents on biotech drugs:
There does not appear to be a single appellate-level decision in which a patent on the active ingredient of a biotech drug has been found valid and infringed.
The paper also noted that competitors can circumvent patent protection by shifting production of the biotech drugs to foreign countries where no patent protection exists or where enforcement is weak or nonexistent. Although the paper concludes that multiple barriers exist to entry of biosimilars thereby promoting competition and lowering costs, it agrees that a reasonable basis exists for a twelve-year exclusivity term to support innovation of biological drugs.
It appears that a longer term data exclusivity period may be gathering support as a number of organizations and legislators were recently reported to back follow-on biologics bills containing 12-year data exclusivity terms.
The exclusivity debates mark the ongoing dialog in establishing a regulatory pathway for biosimilar drugs. In the upcoming months, we will explore, in a series of posts, the legal and regulatory landscape concerning biosimilars and any notable commercial activities by the pharmaceutical industry as they relate to patents.