The Shortened Approval Pathway for Biosimilars: Will It Alter Universities' and Startup Biotechs' Reliance on Patents?

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By Beverly Lubit, Greenberg Traurig

It is generally understood that patents are central to the Hatch-Waxman1 legislative and regulatory scheme that created an abbreviated approval pathway for generic small molecule drugs. The Biologics Price Competition and Innovation Act of 2009 (BPCI Act),2 a subtitle of the Patient Protection and Affordable Care Act (“Affordable Care Act),3 which was signed into law on March 23, 2010, and which amends Section 351 of the Public Health Services Act (PHS Act) (codified as 42 U.S.C. 262) creates what is widely viewed as an abbreviated approval pathway for biological products (biosimilars and interchangeables) that will be implemented over a 10-year transition period ending March 23, 2020.

While the law is unlikely to alter universities' and startup biotechnology companies' reliance on patents, it is likely to affect their attractiveness to prospective investors and partners, and hence their valuation.

The BPCI Act

The BPCI Act applies to biological products that are either biosimilar or interchangeable with a biological product that is already approved by the FDA (i.e., a “reference product”) as safe, pure and potent.

The term “Biological Product“ as used in the BPCI Act refers to a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein (except any chemically synthesized polypeptide) or analogous product, or arsphenamine or derivative of arsphenamine (or any trivalent organic arsenic compound), applicable to the prevention, treatment, or cure of a disease or condition of human beings.4 Peptides will continue to be regulated as drugs under the Food, Drug and Cosmetic Act (“FD&CA”).5 Chemically synthesized polypeptides (defined as any alpha amino acid polymer (a) made entirely by chemical synthesis and (b) less than 100 amino acids in size) will continue to be regulated as drugs under FD&CA, unless the chemically synthesized polypeptide otherwise meets the statutory definition of a “biological product.”6

The term “biosimilar” or “biosimilarity” as used in the BPCI Act means (a) that the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components; and (b) that there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity and potency of the product.7

To meet the higher standard of “interchangeability,” a biosimilar applicant must provide sufficient information to demonstrate (1) biosimilarity, (2) that the biological product can be expected to produce the same clinical result as the reference product in any given patient and, (3) that the risk in terms of safety or diminished efficacy of alternating or switching between the use of the biological product and the reference product is not greater than the risk of using the reference product without such alternating or switching.8

Patents Are Part of the Regulatory Framework of the BPCI Act

There are significant differences relating to patents between the BPCI Act and Hatch-Waxman, some of which are indicated below.

A biosimilar applicant is required 1) to give the sponsor of the application for the reference product (hereinafter referred to as the “reference product sponsor” or RPS) notice that an application for a biosimilar has been filed9 and 2) to give the RPS confidential access to a copy of the application and such other information that describes the process or processes used to manufacture the biological product within 20 days after the biosimilar sponsor is notified by the Secretary of Health and Human Services that the application has been accepted for review.10 The BPCI Act does not specify a maximum time interval between these two events.

Additional information requested by the RPS may be provided by the biosimilars applicant; since no trigger event is specified, the biosimilar applicant can choose whether to comply.

The RPS must provide a patent list to the biosimilar applicant, but the applicant has discretion on whether to provide a similar list to the RPS. Both parties are required to provide a detailed statement on a claim by claim basis.

RPS's Patent List

More specifically, within 60 days of receipt of the application and description of manufacturing processes, the RPS must provide (i) a list of patents that it “believes a claim of patent infringement could reasonably be asserted” by it or by a patent owner that has granted an exclusive license to it; and (ii) “an identification of the patents on its list that it is prepared to license” to the biosimilar applicant.11 Thus, under this provision, a biosimilar applicant requests from the reference product holder a list of patents related to the product. If the RPS omits a patent, the RPS will be precluded from enforcing that patent against the biosimilar applicant. Patents that are later-issued or later-acquired are discussed below.

Under Hatch-Waxman, the FDA publishes patent information after approval of a New Drug Application (“NDA”) in the Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”).1213

The RPS patent list does not create an Orange Book for biologics, but approximates an Orange Book listing. Unlike the Orange Book, which list only patents covering the drug product, formulation, composition, and product-by-process patents (to the extent that they claim a product that is novel), RPS patent lists can include process patents. The FDA has no role, even ministerial, in the RPS listing process.

Biosimilar Applicant's List and Detailed Statement

Within 60 days of receipt of the RPS's Patent List, the biosimilar applicant (i) “may provide to the RPS a list of patents” to which the biosimilar applicant “believes a claim of patent infringement could reasonably be asserted” by the RPS; (ii) must provide to the RPS a detailed statement describing, on a claim by claim basis, the factual and legal basis of the opinion of the biosimilar applicant that each patent listed by the RPS or by the biosimilar applicant is invalid, unenforceable, not infringed, or will expire before launch, and (iii) must provide to the RPS a response to the RPS's identification of patents the biosimilar applicant is prepared to license.14

Therefore, notification by the biosimilar applicant to the RPS of invalidity or noninfringement is optional. The BPCI Act also does not require biosimilar applicants to file any kind of patent certification with the FDA. Moreover, development of a biosimilar product by biosimilar applicants can lead to development of patentable inventions; patents on such inventions are not part of the patent exchange.

RPS's Detailed Statement

Within 60 days of receipt of the biosimilar applicant's patent list, the RPS is required to submit a detailed statement as to why each patent described in the biosimilar applicant's detailed statement is valid, enforceable and infringed.15 There is no equivalent Hatch-Waxman provision.

Patent List Negotiation

After exchanging detailed statements, the parties must enter into good faith negotiations in an attempt to agree on which, if any, of the listed patents shall be the subject of an action for patent infringement.

If they can agree, the RPS shall bring an action for patent infringement with respect to each such patent within 30 days of such agreement.16

If, however, within 15 days of beginning negotiations, the parties cannot agree on a final and complete list of patents that shall be the subject of an action for patent infringement, the biosimilar applicant must notify the RPS of the number of patents if any, it believes should be the subject of an action for patent infringement.17 The biosimilar applicant has an incentive to bring all relevant patents into play to avoid a last-minute preliminary injunction (see below). No later than 5 days thereafter, the parties must simultaneously exchange lists of patents they believe should be the subject of an action for patent infringement. The number of patents on RPS's list, however, may not exceed the number of patents listed by the biosimilar applicant, except where the biosimilar applicant does not list any patent. In that case, the RPS may list one patent.18 Therefore, the biosimilar applicant, i.e., the likely defendant, controls the number of patents in patent infringement litigation where the parties cannot agree on the patent list. There are no equivalent Hatch-Waxman provisions.

The RPS must bring suit for infringement within 30 days from the date the parties (A) reached agreement as to the patents that shall be the subject of an action for patent infringement which were described in their detailed statements or (B) exchanged lists of patents they each believe should be the subject of an action for patent infringement after failing to each agreement on their respective lists.19 Therefore, the period from the time the RPS receives notice of the filing of a biosimilar application, exchanges patent lists, negotiates those patents that shall be subject of an infringement action plus the 30 days within which the RPS must bring suit for infringement is more protracted than the 45-day time period under Hatch-Waxman from receipt of notice with certification and a detailed statement to commence litigation. Unlike Hatch-Waxman, there is no 30-month stay during which a biosimilar application may not be approved,20 180-day exclusivity period for the first to file,21 or conditions for its forfeiture.22

Newly Issued or Licensed Patents

Within 30 days of a patent's issuance to, or exclusive licensing by, the RPS and after it has provided the biosimilar applicant with its RPS patent list,23 if the RPS reasonably believes that a claim of patent infringement could reasonably be asserted based on that patent, the RPS must provide to the biosimilar applicant a supplemental patent list that includes such patent.24 Within 30 days of receiving the RPS's supplemental patent listing, the biosimilar applicant must provide a detailed statement;25 the added patent then will be subject to the section of the BPCI Act that governs preliminary injunctions (see below). However, the BPCI Act does not specify how late in the process the RPS can provide the supplemental patent listing. Similarly, under Hatch-Waxman, appropriate newly issued patents must be listed in the Orange Book, must be certified against, and may be sued upon.

Preliminary Injunction

Generally, a plaintiff may seek a preliminary injunction to maintain the status quo and therefore prevent the irreparable harm that may flow from a defendant's actions. The BPCI Act limits conditions under which a RPS may do so.

At least 180 days before the date of the first commercial marketing, the biosimilar applicant must provide notice to the RPS.26 After receiving the 180 day notice, but before this date, the RPS may seek a preliminary injunction prohibiting the biosimilar applicant from engaging in the commercial manufacture or sale of the biological product until the court decides the issue of patent validity, enforcement and infringement, but only with respect to any patent that is included in one of the parties' patent lists under Section 7002(l)(3). No preliminary injunction is available on patents that were in the final lists of disputed patents for trial.27

An RPS thus has an incentive to bring suit, because no preliminary injunction is available on patents that were in the final lists of disputed patents for trial, and a biosimilar applicant has an incentive to bring all relevant patents into play in order to avoid a preliminary injunction.

Limitations on Declaratory Judgment Actions

If the biosimilar applicant provides the RPS with the required confidential information,28 neither party may bring a declaratory judgment action with respect to any patent that is (a) included in one of the parties' patent lists under BPCI Act, §7002(l)(3); and (b) NOT included in the lists of patents described in BPCI Act, §7002(l)(4) or BPCI Act, §7002(l)(5)(B) prior to receipt of notice of intended commercial marketing. If the biosimilar applicant does not provide this information, the RPS, but not the biosimilar applicant, may bring a declaratory judgment action on a patent that claims the biological product or its use.

If a biosimilar applicant fails to provide the RPS with a detailed statement, notify the RPS of the number of patents if any, it believes should be the subject of an action for patent infringement, provide the Secretary of Health and Human Services with a copy of a complaint within 30 days of service, or provide the RPS with notice of the first commercial marketing of the biosimilar product as required under BPCI Act, §7002(l)(9)(B) and (C),29 only the RPS may bring a declaratory judgment action for declaration of infringement, validity, or enforcement of any patent included in the list under §7002(l)(3)(A).30

Impact of BPCI on Universities and Small Biotechnology Companies

The BPCI Act undoubtedly will influence how companies choose to protect their investments in commercializing biological products. Many of the factors identified by FDA as critical to support a demonstration of biosimilarity31 and to scientifically justify additional conditions of use32 are protectable either as trade secrets or by patents.

Since biologic inventions typically have a long development time, decisions regarding how to best protect them will have to be made early.

Secrecy is the foundation of a trade secret, while the quid pro quo of patent protection is disclosure of sufficient information to describe the invention and to allow others to make and use the invention in exchange for a patent term of 20 years from the earliest effective filing date, subject to patent term adjustment for USPTO and regulatory delay, during which others can be excluded from making using selling offering to sell, or importing the claimed invention into the U.S.

The FD&CA prohibits disclosure or use of any information acquired under its authority concerning any method or process, which, as a trade secret, is entitled to protection,33 but does not define the term “trade secret.” What constitutes a trade secret is unsettled in the context of the approval process for biosimilars and is likely to be decided ultimately by the courts. In April 2012, Abbott Laboratories filed a Citizen's Petition with the FDA, asking the agency not to approve any biosimilar that cites as its reference product Humira® (adalimumab), its monoclonal antibody treatment for rheumatoid arthritis, or any other product for which the Biologic License Application (“BLA”) was submitted to the FDA on the ground that FDA would have no choice but to use trade secrets submitted to the FDA when approval for Humira® was first sought, i.e., prior to the enactment of the BPCI Act, e.g., the manufacturing information, and analytical, preclinical and clinical data in the BLA. These arguments were similar to ones first voiced when, prior to Hatch-Waxman, FDA sought to approve so-called “paper NDAs,” the regulatory precursors of the ANDAs.

Although there has been discussion in the media34 over whether the BPCI Act makes patents covering biologic products irrelevant, driving companies to forgo patents in favor of trade secrets to protect biologic inventions, patents are likely to remain relevant, at least for the foreseeable future, for their value to exclude others, which complements the 12 year market exclusivity provided by the BPCI Act.35

However not all patent claims have equal value. For example, a given RPS has an incentive to maintain as a trade secret those manufacturing and formulation details that can result in clinically meaningful differences between a biosimilar product and the reference product in terms of safety, purity and potency, because patent claims directed to those details will be of little value to the RPS, but of considerable value once publicly disclosed to a biosimilar applicant. Thus, manufacturing processes other than those known in the art (e.g., a specific expression vector, cell line, or medium) should be maintained as trade secrets, because even minor modifications in manufacturing by a biosimilar applicant can result in large clinical differences, for example, in increased immunogenicity or decreased potency, which would ultimately affect the interchangeability of the biosimilar product. Patents that broadly claim biologic products and their uses, however, likely will retain their value to the RPS. Such patents are likely to remain the protection of choice for universities and small biotechnology companies.

Generally, universities are engaged in pre-commercial research. Academic pressure to publish argues against maintaining the results of such research as trade secrets. Non-established investigators benefit from patents, which allow their work to be recognized as commercializable. It is foreseeable that the ease with which a biosimilar applicant may be able to establish biosimilarity in view of what is disclosed, enabled, and claimed, in addition to usual considerations of the time line for exclusivity, can impact the value of any patent to potential licensees and partners. Even though manufacturing processes other than those known in the art, which generally are developed upon scale-up for commercialization, are unlikely to be the subject of a university patent, early investment in a patent portfolio by prospective partners may become desirable in order to be able to control information flow.

As for small startup biotechnology companies, such companies generally have few, if any, physical assets and must instead generate patent assets that enter into the calculus for determining valuation: A decision to keep their valuable technology as trade secrets thus is likely to impact directly the ability of such companies to attract investors. Because investors invest to get a return on their investment, anything that increases the perceived risk or that clouds an investor's ability to assess that risk increases the likelihood that an investor will place their investment dollars elsewhere. Because the earliest date by which a biosimilar application can be submitted to the FDA is 4-years from the date of first approval of the reference product,36 it is foreseeable that the perceived risk of entry of a biosimilar will impact an investor's exit strategy, and, as a result, a company's valuation, even though market approval of the biosimilar is an additional eight years away.37


In this respect, by keeping key manufacturing processes critical to ensuring potency, safety and purity of a biologic product as a trade secret, small startup biotechnology companies and universities can help reduce the risk that their key intellectual property assets will be exposed to biosimilar companies.

Beverly Lubit is a shareholder in the Intellectual Property & Technology Practice of Greenberg Traurig's New Jersey office. She has experience in addressing Hatch-Waxman issues in patent litigation and in regulatory issues with an emphasis on life sciences. She works with emerging companies developing practical IP strategies to help bring their products, including biological products, to market.


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