THE BIOLOGICS PRICE COMPETITION AND INNOVATION ACT...

Boston College Intellectual Property & Technology Forum http://www.bciptf.org

Copyright © 2009 Boston College Intellectual Property & Technology Forum, Robert N. Sahr

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THE BIOLOGICS PRICE COMPETITION AND INNOVATION ACT: INNOVATION MUST COME BEFORE PRICE

COMPETITION

Robert N. Sahr*

INTRODUCTION Unlike traditional pharmaceutical drugs, which are small molecule compounds synthesized by chemists, biologics are typically large molecules that are produced in living things. [1] [2] Breakthroughs in the life sciences over the last two decades have led to new biologically derived treatments for debilitating diseases including autoimmune diseases, metabolic disorders, degenerative diseases, blood disorders, and cancer. [3] Several new biological treatments for diseases presently untreatable by other means are currently under development. [4] Despite these advances, new biologics come at a substantial cost for developers, consumers, and health care payers and providers. For developers, internal research, development, and production costs often exceeds a billion dollars per product brought to market. [5] For consumers, the purchase price of any given biologic treatment can be up to several thousand dollars per year. [6] For example, the cost per year per patient for Avastin®, a biologic used to treat colon cancer, is $100,000, and the cost for Cerezyme®, which is used to treat the metabolic disorder Gaucher Disease, is over $300,000. [7] On average, across treatments, the cost of medicinal biologics per patient is over $16,000 per year. [8] For health care payers, the cost of biotech products is rising dramatically. According to IMS Health Inc., a provider of business intelligence for biotech and pharmaceutical companies, expenditures on biologics in the United States was over $40.3 billion dollars in 2006, which marks an increase of 20% from 2005. [9] Public and private insurance companies have declared that a continued increase is not sustainable without cuts to health care coverage. [10] Biologic medicines are of little benefit if they are too expensive for patients to afford. Although Congress has made efforts to make biologics more affordable for the consumer market, such legislation must be carefully balanced to maintain incentives for innovators as they develop new therapeutic regimens. [11] [12] Without adequate incentives for biotechnology companies to discover new market-viable biologic medicine, there would be a dearth of breakthrough products available to patients. The majority of new biologics are discovered by small to medium-sized innovative biotechnology companies. [13] Research and development of biologics is an extraordinarily high risk endeavor requiring a great deal of up-front capital investment, [14] and returns are often not realized for several years due to the length of time required for the product to be developed and go through the stringent regulatory approval process of the Food and Drug Administration (“FDA”). [15] In an effort to reduce the costs of medicine for patients, Congress must be especially careful not to impair the ability of the biotechnology industry to thrive by substantially diminishing profitability. Currently, the biotechnology industry is “still relatively nascent” and is largely fueled by venture capital investment. [16] Of the approximately 1400 biotechnology companies operating in the United States today, only twenty are profitable. [17] Many of these companies are small, with revenues of under a million dollars per year, and do not even have a product on the market yet. [18] Leaders in the biotechnology industry have expressed concern over the ability to secure investments in the wake of new biologics legislation:

Biotechnology researchers must have some certainty that they can protect their investment in the development of new breakthrough therapies for a sufficient period of time in order to secure necessary financial resources. If ... legislation were to fail to provide adequate protections, it could jeopardize the ability of biotechnology researchers to continue to innovate. [19]

In June 2007, a bipartisan bill sponsored by Edward Kennedy (D- Mass.), and co-sponsored by Hillary Clinton (D- N.Y.), Orrin Hatch (R- Utah), Mike Enzi (R-Wyo.), and Charles Schumer (D- N.Y.), titled the Biologics Price Competition and Innovation Act of 2007 (“BPCIA”), was introduced to and unanimously passed by the Senate Committee on Health, Education, Labor, and Pensions. [20] The BPCIA seeks to balance patients' needs for



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affordable biologic medicine with the needs for innovation in the biotechnology industry to continue to develop new therapeutics. [21] This Note will discuss key provisions of the BPCIA and will analyze the likely impact of its passage on innovation in the biotechnology industry and patient access to lower cost biologic medicine. Part I will provide a brief background on biologics and the complexity of their manufacture. Part II will describe the regulation of small molecule drugs under the Food Drug and Cosmetic Act (“FDCA”) [22] and the regulation of biologics under the Public Health Services Act (“PHSA”). In addition, the Hatch-Waxman amendments to the FDCA that allow for abbreviated new drug applications (e.g., generics) will be discussed. [23] Part III will explain why legislative action is necessary for a viable path forward to abbreviated FDA approval of biologics. Part IV will describe key provisions of the BPCIA that lay the framework for regulation of follow-on biologics. Finally, in Part V, this Note will analyze the impact that enactment of the BPCIA might have on innovation in the biotechnology industry and patient access to lower cost biologic medicine.

I. WHAT ARE BIOLOGICS? Since the initial statutory incorporation of biologics in the PHSA, the scope of biologics has expanded. Under the PHSA, the term ‘biological product’ is defined as a “virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, or analogous product ... applicable to the prevention, treatment, or cure of a disease or condition of human beings.” [24] When the PHSA was passed, many biologics were produced from purified extracts of animal blood and tissue. [25] However, owing to further advances in biotechnology, especially the advent of recombinant DNA technology, biologics are now increasingly produced from modified cell lines genetically reprogrammed to mass produce a particular biological product. [26] Now, the scientific definition of biologics has been broadened to include products such as immunoglobulins, monoclonal antibodies, antisense polynucleotides, stem cells, and molecules for gene therapy. [27]

A. Complex Structure and Function of Biologic Proteins Biologically-derived products have a great range of complexity. Since proteins represent the majority of biologic therapeutic products, they exemplify the degree of complexity inherent to biologic products. [28] Proteins are comprised of multiple amino acids, the sequence of which gives rise to its primary structure. [29] Protein products vary greatly in size, having as few as 3 amino acids (e.g., thyrotropin releasing hormone) [30] to as many as 2300 amino acids strung together in one molecule (e.g., Factor VIII). [31] A typical small molecule drug, such as aspirin, has twenty-one atoms and a molecular weight of approximately 180 Daltons. [32] In contrast, a typical biologic has 5000 to 50,000 atoms and a molecular weight of 15,000-100,000 Daltons. [33] However, the complexity of protein synthesis is a result of more than just the sheer number of atoms. Proteins consist of multiple amino acids linked together. This string of amino acids twists, bends, folds, and binds to itself resulting in a particular three dimensional protein structure, or conformation. [34] The highly complex conformation of proteins is critical to their biological activity. [35] Whether large or small, the precise configuration of a protein is very difficult to predict based on amino acid structure. [36] The configuration of a protein is crucial to its biological function, and even a slight change in amino acid sequence can have dramatic effects. For example, sickle cell anemia is caused by a genetic mutation resulting in the deletion of single amino acid from the 574 amino acid protein hemoglobin. [37] Likewise, a mutation resulting in the swap of a single amino acid in amyloid precursor protein has been discovered to be partially responsible for the early onset Alzheimer's disease in a subset of patients. [38] Underscoring the structural complexity of biologics is the potential for minor alterations to significantly affect function.

B. Intricacy of Protein Synthesis Unlike small molecules, which are chemically synthesized, many protein products are currently too large and complex to efficiently synthesize chemically and are thus made from living cells. [39] Because biologics are made by living things, the process of making a biologic cannot be as precisely controlled as the chemical synthesis of small molecules. [40] Even though a specific amino acid sequence can be programmed to be made by cells through



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insertion of specific DNA coding sequences, the ultimate structure of the protein produced is influenced by several additional factors inherent within a particular cell that may not be under the control of a manufacturer. [41] For example, as a protein is synthesized in a cell, “chaperone” proteins and isomerases, [42] which are present within the local intracellular environment, help guide the protein into a particular three dimensional shape after translation. [43] In some cases, they maintain structural integrity by preventing individual proteins from aggregating to form oligomers, or clumps. [44] In living cells, the activity of chaperones or other molecules that interact with proteins during synthesis can add variability to the end product. [45] Therefore, it is possible that the same DNA coding sequence inserted into different cell types will yield different biological products. [46] In addition, after a nascent protein is synthesized it often undergoes further post-translational processing, such as glycosylation. [47] Glycosylation is the attachment of sugar residues to various key places on a protein which can alter its biological properties. [48] As with chaperone and isomerase activity, glycosylation is another process contributing to potential variability in end product proteins made from different types of cells. Thus, some processes inherent to the synthesis of proteins in living cells may not be directly under a biological manufacturer's control and can result in uncertainty of the final product. [49] Of particular concern are subtle, undetectable changes in protein structure or stability. [50] As the function of a protein is critically dependent upon its conformation, [51] a slight change in protein conformation due to a different method of biologic manufacture may result in a follow-on biologic that is not effective, or more worrisome, not safe.

C. Concern for Immunogenicity of Biologics

Immunogenicity refers to the potential for a substance to cause the body to produce antibodies and launch an immune response against a particular antigen. [52] The propensity to become immunogenic is a special concern for large biologics that is generally not problematic for small molecule drugs. Particularly troublesome, subtle and undetectable changes in the conformation of a protein, including minor variations in folding or pattern of glycosylation, can alter its immunogenicity. [53] The story of Epogen® and Eprex® illustrates the elusiveness of predicting the immunogenicity of a biological product and the potentially tragic consequences. Both Epogen® and Eprex® contained the same active ingredient, epoietin alpha, which is similar to an endogenous protein produced in the kidney, erythropoietin. [54] Erythropoietin is responsible for stimulating the production of red blood cells from bone marrow, which is often deficient in patients with kidney failure or undergoing treatment for certain types of cancer. [55] Epogen® was prescribed to anemic patients in the United States and Eprex® was prescribed to patients outside the United States, mainly in Europe. [56] Both Eprex® and Epogen® were produced by cells utilizing the same recombinant DNA technology and had identical amino acid sequences; however, there were slight differences in the way each was formulated and distributed. [57] For example, Epogen® was formulated in human serum albumin, whereas Eprex® was formulated in glycine and Polysorbate 80. [58] In addition, Eprex® was distributed in syringes that were pre-filled for subcutaneous injection. [59] Although the responsible factors and particular mechanisms remain unknown, these apparently minor modifications in some way changed the immunogenicity of the epoietin alpha protein in Eprex®. [60] The change was only discovered after patients taking Eprex® in Europe developed antibodies to epoietin alpha at much higher rates than patients taking Epogen® in the United States. [61] Unfortunately, the antibodies developed by patients taking Eprex® were cross-reactive to the epoietin active ingredient in both Eprex® and Epogen®. [62] Even more tragically, the antibodies were cross-reactive to the patients' own endogenous erythropoietin. [63] Thus, due to an irreversible immune response elicited by taking Eprex®, some patients became not only unresponsive to either treatment, but also suffered worsened anemia due to further compromised function of their endogenous erythropoietin protein. [64] The role of any particular factor, or combination of factors, in the adverse immunogenic reaction in patients on Eprex® remains unclear. [65] Thus, although all types of medicine may have potential risks, the immunogenicity associated with biologics presents a special safety concern.

II. FDA REGULATORY SCHEME The FDA regulates the marketing of medicine in the United States via the granting of approval under the FDCA [66] or licensure under the PHSA. [67] The FDA evaluates new drugs and biologics within its Center for Drug



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Evaluation and Research (“CDER”) or Center for Biologic Evaluation and Research (“CBER”). [68] All new small molecule drugs are evaluated for approval under the statutory authority of the FDCA and most biologics are evaluated for licensure under the PHSA. [69] Historically, CBER was responsible for the licensure of biologics and CDER was responsible for the approval of small molecule drugs; however, in 2003 CDER and CBER partially merged. [70] CBER kept responsibility for licensure of traditional biologics such as vaccines, transplants, and cell and gene therapies, while CDER assumed responsibility for licensure of antibodies, nonvaccine immunotherapies, and recombinant proteins. [71] For reasons that are unclear, a few biologic products such as insulin, growth hormone, glucagon, hyaluronidase, menotropin, and calcitonin had previously been granted marketing approvals by the FDA under the FDCA rather than the PHSA. [72] Nevertheless, despite a few historical exceptions of particular biologics approved under the FDCA, the licensure of new biologic products, whether through CDER or CBER, remains under the statutory authority of the PHSA. [73]

A. Drugs Regulated Under the FDCA According to the FDCA, in order to receive marketing approval of a new drug, the sponsor must submit a new drug application (“NDA”) containing: “Full reports of investigations ... made to show whether or not such drug is safe for use ... and effective in use; [and] ... a full description of the methods used in, and the facilities and controls used for, the manufacture, processing, and packing of such drug ....” [74] Showing safety and efficacy in clinical trials is the final and most formidable of the many hurdles that a new drug sponsor must clear to obtain FDA approval of a new drug. One of the first steps that a hopeful sponsor of a new drug must undertake is preclinical testing in animals to determine putative safety and efficacy windows for treating a particular condition or disease. [75] Next, a new drug sponsor must file an Investigational New Drug (“IND”) application to obtain permission from the FDA to begin testing the drug in humans. [76] Once the FDA reviews the data supporting the safety and potential for efficacy from preclinical testing of the drug, it may then permit the sponsor to run Phase I clinical trials, which are primarily designed to test the safety and pharmacokinetics of the drug in humans. [77] If the results are not unfavorable, then the sponsor may begin Phase II clinical trials. [78] Phase II trials are generally larger than those of Phase I, and include further safety and efficacy testing in patients with a particular condition, disease, or disorder. [79] If Phase II clinical trial results are favorable, a drug a sponsor may continue with Phase III clinical trials, which consist of a relatively large scale and long-term evaluation of safety and efficacy of the sponsor's drug compared to treatment with either no drug or existing drug therapies. [80] Phase III trials necessitate the recruitment of hundreds or thousands of patients afflicted with the particular ailment that the sponsor's drug is indicated to treat. Because of the large number of patients required to be enrolled and the difficulty of finding patients who satisfy eligibility conditions, Phase III trials often must be run at multiple clinical centers. [81] Furthermore, clinical trials are expensive. On average, Phase I-III clinical trials cost a new drug sponsor over $460 million dollars and constitute the bulk of drug development costs. [82] Once completed, all of the data collected will be carefully reviewed by the FDA to render a decision to approve, or disapprove, the sponsor's drug. [83]

B. Biologics Regulated Under the PHSA In order to obtain a license to market a biologic, a sponsor must submit a biologic license application (“BLA”) demonstrating that the product is “[s]afe, pure, and potent; and the facility in which the biological product is manufactured, processed, packed, or held meets standards designed to assure that the biological product continues to be safe, pure, and potent ...” [84] The requirements for licensure under PHSA are similar to the safety, efficacy, and appropriate manufacturing standards set forth by the FDCA, despite the different language used in each statute. [85] The regulatory submission and review processes and phases of development are essentially the same. In fact, the FDA is required by statute to review and approve BLA's under the PHSA in a similar manner to NDA's under the FDCA. [86] However, one major difference persists - the pathway for abbreviated approvals.



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C. Hatch-Waxman Amendments to the FDCA Established Two New Pathways for FDA Approval of Drugs

In 1984, Congress enacted the Drug Price Competition and Patent Term Restoration Act, [87] commonly known as the Hatch-Waxman Act [88] (“HWA”), to amend the FDCA. An important result of the HWA was the creation of a facilitative and a new abbreviated pathway for follow-on drugs to be approved by the FDA. [89] 1. HWA § 505(b)(2) Created a Pathway to Facilitate the Approval Process for New Drugs that are Similar to Approved Drugs

HWA § 505(b)(2) facilitated the approval process for drugs that are similar to previously approved products by allowing the FDA to rely on its prior findings of safety and effectiveness of the similar drug. [90] Section 505(b)(2) expressly permits an applicant to refer to data not generated by or for the applicant, and to which it has not obtained a right of reference or use. [91] Applications submitted under section 505(b)(2) still require a full report of safety and effectiveness, but the applicant need not generate the entire data package as required for a new drug application (“NDA”) under section 505(b)(1). [92] As previously noted, a few biological products have received approval under the FDCA, such as insulin and growth hormone. For biologicals initially approved as new “drugs” under the FDCA, subsequent manufacturers have sought approval for their own “similar” products under 505(b)(2). Importantly, the meaning of “similar” under 505(b)(2) is not tantamount to the meaning of “same” under 505(j). Products regarded to be merely “similar” to, but not the “same” as, a referenced product have not been rated by the FDA as interchangeable, or substitutable, at the pharmacy for the previously approved product. [93] Nonetheless, the FDA has granted approval of similar biological products under 505(b)(2). [94] The factors considered by the FDA in assessing approval were: 1) robustness of the manufacturing process; 2) degree to which structural similarity could be assessed; 3) extent to which mechanism of action was understood; 4) valid, mechanistically related pharmacodynamic assays; 5) comparative pharmacokinetics; 6) comparative immunogenicity; 7) amount of clinical data available; and 8) extent of experience with the original product, or products. [95] Importantly, approval of a biologic (or small molecule drug) under the 505(b)(2) “similar” standards typically does not result in a substitutability rating of the 505(b)(2)- approved compound for a name brand at a pharmacy (i.e., it is not a generic). [96] 2. HWA § 505(j) Created an Abbreviated Pathway for the Approval of Drugs that are “Duplicates” of Approved Drugs

HWA § 505(j) [97] created an abbreviated pathway under the FDCA for approval of compounds that the FDA determines to have the “same” active ingredient as a previously approved compound. [98] Prior to HWA, a manufacturer of a follow-on drug was required to conduct expensive clinical trials to demonstrate safety and effectiveness of their molecule, just as those required by a new drug sponsor. [99] The high cost of conducting such trials effectively suppressed the entry of generic manufactured pharmaceuticals into the market. [100] HWA opened the door for low cost generic drugs by creating the abbreviated new drug application (“ANDA”), which lowered the requirements for FDA approval of subsequent drugs containing the same active ingredient as a drug that had already been approved. [101] For an ANDA under HWA section 505(j), [102] the only clinical test a generic drug manufacturer is required to perform is an abridged study designed merely to demonstrate “bioequivalence” between the drug it manufactures and the drug manufactured by the innovator. [103] As defined by the FDA, “Bioequivalence refers to equivalent release of the same drug substance from two or more drug products or formulations [leading] to an equivalent rate and extent of absorption from these formulations.” [104] Essentially, bioequivalent drugs will possess the same pharmacokinetic properties (absorption, distribution, metabolism, and excretion) which can often be determined by simple measurements of drug levels in blood. [105] Bioequivalency studies require a simpler experimental design with fewer endpoints, patients, study centers, physicians, and dollars. This limited testing spares the generic manufacturer tens to hundreds of millions of dollars in costs stemming from running full scale clinical safety and efficacy trials. Therefore, generic drug manufacturers can bring drugs to market with a relatively small investment and negligible risk of failure. [106] In turn, generic manufacturers can pass those savings on to the public by selling the drug at a fraction of the innovator's price. [107]



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HWA created the modern generic pharmaceutical industry by enabling the FDA to approve generic drugs relying upon the safety and efficacy data generated by the innovator of a new drug. [108] The result has been the entry of over ten thousand generic medicines to the market since 1984. [109] Currently, there are no equivalent HWA provisions for the PHSA. The BPCIA proposes to amend the PHSA in a manner analogous to the HWA amendments of the FDCA to establish an abbreviated pathway for the approval of follow-on biologics.

III. ABBREVIATED APPROVAL OF FOLLOW-ON BIOLOGICS WILL REQUIRE CONGRESSIONAL ACTION The FDA attests that it lacks the legal authority to approve follow-on biologic products under the HWA amendments to the FDCA. [110] For example, in 2003, generic manufacturer Sandoz filed an abbreviated application for Omnitrope®, [111] its version of recombinant human growth hormone, under FDCA 505(b)(2). [112] Sandoz claimed that Omnitrope® was similar to a previously approved human growth hormone product, Genotropin®. [113] The FDA withheld its decision on approvability, citing both scientific and legal uncertainties. [114] Seeking guidance, the FDA initiated “an extended public process through which [it] received and considered significant public comment addressing both the regulatory and legal issues related to 505(b)(2) approvals, and the scientific issues associated with the approval of follow-on protein products in general, and Omnitrope® in particular.” [115] After over two years without a resolution, Sandoz filed suit to force a decision by the FDA and the court concluded that the FDCA required the FDA to reach a decision within six months of submission of an application. [116] Forced to decide, the FDA approved Sandoz's Omnitrope® under 505(b)(2) of the FDCA, [117] but made clear that Omnitrope® was not a generic, and that the HWA abbreviated approval pathways were not applicable to the PHSA. [118] The FDA claimed it lacked the legal authority to approve biologics under the “generic” pathway of FDCA 505(j), stating: “There is no abbreviated approval pathway analogous to 505(b)(2) or 505(j) of the Act for protein products licensed under section 351 of the Public Health Service Act. Such a pathway for the approval or licensure of follow-on protein products under the Public Health Service Act would require new legislation.” [119] The FDA has since made clear that the HWA amendments to the FDCA that created abbreviated pathways do not extend to the PHSA. Consequently, the agency will not approve follow-on versions of any biological product that is regulated under the PHSA via an abbreviated pathway without an express grant of authority by Congress. [120]

IV. THE BPCIA ESTABLISHES A REGULATORY FRAMEWORK FOR FOLLOW-ON BIOLOGICS The BPCIA was proposed in the Senate to amend section 351 of the Public Health Services Act [121] in order to “establish a pathway for the licensure of biosimilar biological products [and] to promote innovation in the life sciences ....” [122] The BPCIA specifically amends the PHSA by the insertion of subsection (k), titled “[L]icensure of biological products as biosimilar or interchangeable.” [123] The term “biosimilar” refers to a biological product consisting of an active ingredient regarded to be similar enough to a previously licensed reference product so as to benefit from any supportive safety and efficacy data submitted to the FDA by the reference product sponsor. [124] An “interchangeable” biologic product refers to a biosimilar product that its sponsor seeks to be regarded as fully substitutable for the previously licensed reference product. [125]

A. Licensure of Follow-on Biologics The term follow-on biologic refers generally to a biologic product for which a sponsor seeks licensure as either a biosimilar or interchangeable product. [126] Follow-on biologics may be granted licensure via an abbreviated process if the FDA is able to rely on knowledge obtained from its prior review of the reference product application. [127] Key provisions of the BPCIA describe the criteria that the FDA must adhere to when deciding to license a follow-on biologic as a biosimilar and/or an interchangeable product. [128] Additional provisions of the BPCIA set up periods of regulatory exclusivity [129] and procedures for resolving patent disputes [130] pertaining to marketed biological products. 1. Requirements for Biosimilarity of a Follow-On Biological Product Under the BPCIA



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The BPCIA establishes a framework for licensure of a follow-on biologic product while leaving a fair amount of flexibility and discretion to the FDA. The BPCIA prescribes five core requirements for licensure of a “biosimilar” under the PHSA. Ultimately, a biosimilar product must be regarded to have “no clinically meaningful differences between [it] and the reference product in terms of safety, purity, and potency ....” [131] For a follow-on biologic product to be licensed as a biosimilar under the BPCIA, the first requirement is that it must be “highly similar” to a referenced product, as demonstrated by analytical studies, animal studies, and clinical studies. [132] Analytical studies are physicochemical laboratory tests of the molecular structure of the biologic. Animal studies are preclinical laboratory tests designed to show in vivo safety and potential for efficacy of the biologic. The size of the required clinical study (i.e., abridged or multi-phased) is not specified in this section, but must be “sufficient to demonstrate safety, purity, and potency ... for [a] condition [] of use for which the reference product is licensed ....” [133] Importantly, the BPCIA allows the FDA to waive these requirements on a case by case basis. [134] A specific provision of the BPCIA expressly grants the FDA discretion to waive any analytical, animal, or clinical trials required by the statute for licensure of a biosimilar follow-on product. [135] Additional requirements for licensure of a biosimilar under the BPCIA are that the follow-on biologic must have the same mechanism of action as the reference product, to the extent that such mechanism is known, [136] and must be labeled for an approved use of a reference product (i.e., indicated to treat the same condition). [137] Further, a follow-on biologic must have the same route of administration, dose form, and strength as the reference product. [138] Finally, the synthesis of a follow-on biologic must be compliant with manufacturing standards that the FDA deems appropriate for consistent safety, purity, and potency of the product. [139] In essence, the BPCIA directs the FDA to assess the “biosimilarity” of biologics under the PHSA by considering the same factors the FDA has historically considered in assessing the “similarity” of products under section 505(b)(2) of the FDCA. [140] 2.Interchangeability of a Follow-On Biological Product Under the BPCIA As defined by the BPCIA, interchangeability “means that the biological product may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product.” [141] The result is that a patient with a prescription for a brand name biologic can be given a substitute (i.e., generic) at the pharmacy. In fact, “[i]n nearly a third of [U.S.] states, state law mandates the dispensing of generic products if the physician has not signed for a brand name product.” [142] Thus, if a lower cost substitute is available, it must be dispensed unless the prescribing physician expressly requests the name brand product. [143] In order to meet the requirements for interchangeability under the BPCIA, a follow-on biologic must at minimum meet the standards for biosimilarity, plus satisfy two additional requirements. [144] The first additional requirement is that the FDA must be convinced that the follow-on product “can be expected to produce the same clinical result as the referenced product.” [145] This requirement may not place a particularly heavy burden on the follow-on applicant because it only calls for an expectation, rather than a demonstration, of the same clinical effects. The amount and type of data that a follow-on sponsor would need to generate to support this expectation, if any, is left to the FDA's discretion. The second requirement, however, sets a very high hurdle for the sponsor of a follow-on product to clear. The second requirement for interchangeability under the BPCIA calls for clinical studies to demonstrate that switching between use of the brand name (reference product) and follow-on product does not result in diminished efficacy or safety in patients compared to maintenance on the brand name product alone. [146] Such studies would significantly add to the time and cost of developing an interchangeable product. Further, it is unclear how a “switching” study should be designed, how many switches between products are necessary, or how many patients would need to be evaluated in order to detect differences in safety or efficacy in the final analysis. [147] At a minimum, such trials would require the recruitment of several patients afflicted with a particular disorder for retesting safety and efficacy of the reference product as the comparator group, along with another group for testing the effects of switching between the reference product and the follow-on product. The cost of such “switching” studies could easily approach the tens to hundreds of millions of dollars that innovators of new biologics must pay to execute Phase II



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and Phase III clinical trials. In summary, the heightened requirement of a clinical “switching” study may place a burden on follow-on manufacturers that renders interchangeability cost prohibitive. Importantly, in contrast to the express provision allowing the FDA to exercise discretion to waive analytical, animal, and clinical tests required for the determination of biosimilarity, [148] there is no express provision in this section that permits the FDA to waive the “switching” clinical trial requirement for interchangeability.

B. Regulatory Exclusivities Under the BPCIA 1. Data Package Exclusivity for Innovators The BPCIA provides an innovator with twelve years of data package exclusivity after the initial approval of a new biologic license application. [149] Data package exclusivity means that the FDA will not consider any of the data generated by the innovator company in making a decision to license a follow-on biologic of another company. [150] Under the BPCIA, the FDA is permitted to review a follow-on manufacturer's application listing a reference product four years after the first licensure of the reference product, but the FDA may not approve the marketing of a follow-on product until the expiration of the twelve year exclusivity period. Thus, a newly licensed biologic product cannot be used as the reference product for approval of a follow-on product for twelve years. [151] This effectively halts any abbreviated licensure of a biosimilar or interchangeable follow-on prior to the expiry of the twelve year exclusivity period because an applicant would have to provide its own full report of safety and efficacy data. A substantial period of data package exclusivity is one important means of protecting the large investment an innovator must make in the course of developing a new biologic. In particular, intellectual property protection for the data garnered from expensive clinical trials helps to preserve incentives to deliver new biologic medicines to patients. [152] 2. Marketing Exclusivity for the First Interchangeable Follow-On Manufacturer The BPCIA also creates a strong incentive for manufacturers to bring follow-on biologic products to market. Under the BPCIA, the first follow-on biologic manufacturer to develop an interchangeable biologic product is awarded up to one year of market exclusivity. [153] That means that during this period a follow-on manufacturer may sell its product free from any competition by subsequent interchangeable products. Under BPCIA section 351(k), for up to one year after licensure of the first interchangeable follow-on (and only after the first), the FDA cannot approve a subsequent follow-on biologic based on the same reference product. [154] This provision would allow the first interchangeable follow-on biologic brought to market to be sold at a relatively high price as the only substitute available for a brand name. [155] Such large profits have proven to be a powerful incentive for generic drug manufacturers to bring the first substitutable small molecule drug product to market under HWA. Indeed, manufacturers of generic drugs, in the absence of competition from other generics, often sell their product at near name brand drug prices, yielding extremely lucrative profits for whoever brings the first generic to market. [156] Under HWA, innovators of new drugs receive five years of data package exclusivity, [157] and the first manufacturer of a generic can receive up to six months of market exclusivity. [158] Once the five year period expires, the FDA will consider the approval of a generic under HWA section 505(j) so long as a valid patent does not preclude manufacture of the drug. [159] Not surprisingly, patent validity is frequently disputed at this juncture.

C. Procedures for Enforcing Intellectual Property Protection The BPCIA sets out specific procedures for innovators and follow-on manufacturers to resolve intellectual property disputes pertaining to licensure of biologics under the PHSA. Submission of an application for license of a follow-on that references a biologic protected by an innovator's patent is considered to be automatic patent infringement. [160] An innovator that is successful in a claim of patent infringement of its patent is entitled to



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injunctive relief, but only if it adheres to the BPCIA's prescribed procedures. [161] 1. Determining Which Patents are at Issue For small molecule drugs regulated by the FDCA, the FDA maintains an index of Approved Drug Products with Therapeutic Equivalence Evaluations [162] that lists all FDA approved drugs and the patents asserted to protect them. Since there is no analogous index for biologics regulated by the PHSA, innovators and follow-on manufacturers must sort out for themselves which patents are believed to be relevant to a particular biologic product. Within twenty days after the FDA notifies a follow-on manufacturer that its application has been accepted for review, the follow-on applicant must send the innovator of the referenced product a copy of the license application along with a description the manufacturing processes intended for use in synthesizing the follow-on product. [163] The rationale for disclosing the intended manufacturing process is that certain biologic products are protected by process patents, which do not protect the biologic per se, but rather its specific method of production. [164] Thus, the innovator needs information about the follow-on applicant's manufacturing process in order to determine which patents may be infringed. 2. Resolving Patent Disputes Within two months of receiving a copy of the application and manufacturing information, an innovator must list all of its patents allegedly infringed by the follow-on sponsor. [165] If a follow-on sponsor still wishes to proceed with its application for FDA licensure, it is then required, within two months of receiving the innovator's list, to provide a detailed statement to the innovator reciting on a claim by claim basis the factual and legal basis for its opinion that each asserted patent is either invalid, unenforceable, or will not be infringed. [166] Likewise, the innovator must then respond to the follow-on sponsor under the same conditions with an opinion detailing how the patent is infringed. [167] The BPCIA requires that innovators and follow-on manufacturers attempt to resolve their disputes in good faith; however, if they cannot agree after fifteen days of negotiations, then each must submit a separate list of patents it contends to be as issue. [168] Peculiarly, in this scenario the follow-on sponsor is ultimately given control over which patents can be enforced through litigation. The BPCIA specifically prohibits an innovator from listing a greater number of patents than are listed by the follow-on sponsor, with the sole exception being that if the follow-on sponsor lists zero patents, then the innovator is entitled to list one. [169] After these lists are exchanged, the innovator then has thirty days to file suit for all claims of infringement. [170] If an innovator fails to act within these rules, the remedy of injunctive relief is forfeited. [171] The BPCIA rules for patent dispute resolution favor follow-on manufacturers. Under the rules, a follow-on manufacturer may ultimately only have to defend against infringement of a single patent held by an innovator, despite the possibility that its activity infringes the claims of more than one patent. [172] In certain circumstances, depending on the number of patents that a follow-on sponsor includes in its list, the innovator may be restricted from employing all of its intellectual property protection. Risk is raised for an innovator if all of the protection it has over a given product may hinge on the claims of a single patent. Should a court find that the claims of that particular patent are not infringed or are invalid, or that the entire patent is unenforceable for any reason, then all patent protection of the biologic product lost. Ultimately, the procedures for enforcing patents may give an advantage to challengers; however, a long period of data package exclusivity awarded to innovators mitigates the imbalance by deemphasizing the role of patents in the protection of intellectual property over new biologics.

V. HOW WILL THE BPCIA AFFECT INCENTIVES TO INNOVATE AND ACCESS TO LOWER COST BIOLOGICS?

A. Innovation Data package exclusivity is essential to foster innovation and the development of new biologic medicine. Patent protection for some biologics is relatively weak, and patents on successful products may not withstand anticipated



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challenges by follow-on manufacturers. [173] The vulnerability of patents creates a great deal of uncertainty for investors and developers of new biologic medicines. [174] A longer period of data package exclusivity lowers the risk of investment in biotechnology. [175] Less risk and uncertainty may help lower costs and increase patient access to new medicines. 1. Data Package Exclusivity Will Stimulate Innovation in the Biotechnology Industry Strong intellectual property protection is critical to maintaining incentives to innovate. The BPCIA provides sufficient protection of intellectual property protection to stimulate the large financial investment in biotechnology required to fuel innovative efforts. The research and development of new medicines is a financially risky endeavor. Innovators must invest tens to hundreds of millions of dollars into the research and development of a potential product with no assurance that it will ever reach the market. In fact, approximately 70% of pharmaceutical products fail to achieve FDA approval after expensive clinical trials have been run. [176] For those products that are fortunate to receive FDA approval, there still is no guarantee to an innovator that the product will generate enough sales to recoup its costs of development. Further, for those products that do become successful sellers, there is yet an additional uncertainty for an innovator--whether the patent covering its product will offer strong enough protection from free-riders seeking to siphon the profits of invention. Data package exclusivity reduces much of that uncertainty. Data package exclusivity provides assurance to an innovator company, perhaps more critically to its investors, that at least the tens to hundreds of millions of dollars and effort spent generating data for an FDA license cannot be usurped by competitors. a. Twelve Years of Data Package Exclusivity Fills the Gaps in Patent Protection for Biologics Unfortunately, patents alone do not provide adequate certainty of intellectual property protection for the enormous investment required to bring a therapeutic product to market. [177] Patents covering successful biologic products are likely to face vigorous challenges due to the special incentive for follow-on manufacturers to bring the first interchangeable product to market. Further, certain biologic patents may not obtain claims of sufficient scope to adequately provide protection from follow-on manufacturers designing around the patent to avoid infringement. [178] (I) Biologic patents will face vigorous challenges by follow-on manufacturers-- A period of market exclusivity to follow-on manufacturers provides a strong incentive to bring the first interchangeable product to market. One way to be first is to attempt to market a follow-on product before the reference product patent expires. Under the HWA to the FDCA, a generic drug manufacturer receives up to six months of market exclusivity for successfully challenging innovator's patent, rendering the patent invalid or unenforceable. [179] Since the passage of HWA, generic pharmaceutical companies have challenged the validity and enforceability of patents on nearly every profitable medicine as soon as the FDA exclusivity period expires. [180] The reward for winning a single patent challenge in court can be worth hundreds of millions of dollars. [181] The BPCIA offers one year of market exclusivity to a follow-on manufacturer bringing the first interchangeable product to market. [182] The BPCIA does not expressly require a follow-on manufacturer to challenge the validity of an innovator's patent to receive a period of marketing exclusivity of its follow-on product, as does HWA; [183] therefore, a follow-on manufacturer may simply wait until the innovator's patent expires and could still receive up to one year of marketing exclusivity if it is first to receive licensure of an “interchangeable” biologic. However, due to the potentially very large profits to be made by a follow-on manufacturer awarded a marketing exclusivity period, competition between follow-on manufacturers to be first is likely to lead to validity challenges of innovator's biologic patents with similar alacrity and vigor as challenges to small molecule drug patents under HWA. With such a strong incentive for patent challengers, it can be expected that patents protecting profitable biologics will be vigorously challenged by manufacturers seeking to introduce a follow-on product. Innovators may be particularly vulnerable to loss of protection if they are limited in the number of patents they may use to defend their products. [184]



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(II) Biologic patents are particularly susceptible to non-infringing “design-around” products--Patent protection is generally weaker for biologics than for small molecule drugs. [185] As discussed previously, one way for a generic manufacturer to be first to market is to invalidate an innovator's patent over the product. [186] Manufacturers of biologics have an additional opportunity that is not available to makers of small molecule drugs, which is to design around the process of manufacture so as not to infringe the patent. [187] Further, since biologics are relatively large molecules, there is greater opportunity for follow-on manufacturers to manipulate the final composition of a biologic in an effort to take it just outside the scope of a patent claim yet still retain biologic activity. Small molecule patents are often capable of conferring protection over a broad genus of compounds, mainly due to the fact that such molecules did not exist in nature prior to synthesis. [188] Conversely, a number of biologic patents are related to naturally occurring substances, for which patent protection is more limited in scope, [189] and broad composition of matter claims are typically disallowed for proteins that already exist in nature. [190] Novel nucleic acids that encode proteins in recombinant systems may be granted composition of matter claims, [191] but there is uncertainty regarding the scope and strength of such claims when tested against the disclosure by the courts. Patent protection fails where it lacks the ability to protect against alternative synthesis strategies. Process and synthesis patents only protect against the use of particular methods of manufacture of a biologic and are easier to design around than composition of matter patents covering the product per se, [192] and narrow composition of matter claims may not cover certain biologically active variants. Therefore, follow-on manufacturers could make a particular biologic product using methods that carefully avoid infringing an innovator's patent, [193] potentially exploiting a major loophole between patent law and FDA regulations. The gap exists wherein a follow-on biologic may be similar enough to a referenced biological product to benefit from abbreviated approval under the PHSA- to be determined by the FDA-yet different enough to not infringe a patent protecting a biological product-which is determined by the federal courts. Without data package exclusivity, a follow-on biologic manufacturer would have an opportunity to piggyback an innovator's product to market during the term of the innovator's patent. [194] The twelve year period of data package exclusivity provided by the BPCIA diminishes the potential exploitation of this loophole. 2. Longer Term of Exclusivity Lowers Uncertainty

The investment in research and development, particularly the great deal of money spent on clinical trials, would be too risky of a proposition if innovative products were not ensured enough exclusive time on the market to recover development costs and earn a profit. Increased risk of investment, if not counterbalanced by an increase in reward, decreases the amount of investment. Inadequate data package exclusivity would likely result in fewer new biologic medicines being brought to market, [195] and higher prices for medicines that are brought to market. In the absence of data package exclusivity, innovators will be uncertain of the length of time that a new product will have to generate enough profit to recover development costs. Therefore, newly approved biological medicines will be priced to recoup investments as quickly as possible. However, if innovators receive assurance that the costs of development could be spread out over a longer period of time (i.e., twelve years of exclusivity on the market), then they could price the product appropriately so as to recoup the development costs of new medicines over a longer duration of market time. This would result in lower initial prices, and allow the costs of development of new medicines to be recouped more gradually, spread across a greater total number of patients.

B. Access to Lower Cost Biologics Price competition among multiple follow-on manufacturers is essential to substantially lower the cost of biologics to consumers. Prices will not be significantly lowered until several interchangeable products reach the market. [196] However, the difficulty, expense, and risk involved in obtaining a rating of interchangeable from the FDA may impede the entry of follow-on biologics into the market. [197] Due to current technical shortcomings in the characterization of biologics by analytical methods, the FDA is reticent to grant licensure of interchangeable products without additional data from clinical trials. [198]



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1. Price Competition Among Multiple Interchangeable Products is Necessary for Lower Costs to Consumers If the BPCIA is enacted into law, consumers may benefit from competition in the market, but only if manufacturers are able to get their follow-on products licensed by the FDA as interchangeable. Interchangeability fosters competition because a prescribed biologic can be substituted at the pharmacy by any lower-priced interchangeable. In contrast, a biosimilar is not regarded as a substitute product, but rather an alternate therapy, [199] and must be separately marketed and specifically prescribed. For the typical small molecule drug, generic prices begin to approach their long-run marginal cost when there are at least ten competitors in the market. [200] Likewise, lower prices for biologics will depend upon the entry of multiple competitors. However, developing a follow-on biologic is more complicated and expensive than producing a generic small molecule drug. [201] The high fixed costs of developing follow-on biologics may deter manufacturers from seeking to enter products into the market, and “[w]ith fewer [follow-on] competitors, [follow-on] biologics will be relatively close in price to branded biologics.” [202] A further impediment to the entry of follow-on biologics competitors, which does not encumber generic drug manufacturers, is the risk of failure and loss of investment. Generic drug manufacturers can rather easily make a small molecule product that is chemically identical to its reference product. [203] The minimal clinical testing that is required for showing bioequivalence for approval of a generic drug is fairly inexpensive compared to the potentially large investment that may be necessary to demonstrate interchangeability of a biologic. [204] Further, since a generic drug is identical to its reference product, the risk that the generic drug will actually fail to be effective, and thus fail to obtain approval, is minimal. A follow-on biologic, however, will most likely not be identical to its reference product. Similar to the risk assumed by innovators, follow-on manufacturers will have no assurance that their product will be granted a license by the FDA at the completion of expensive clinical testing. The difficulty, expense, and risk involved in developing a follow-on biologic may hinder the number of competitors offering interchangeable products. The overall impact of these factors depends primarily on the stringency of FDA requirement for licensure of follow-on products as interchangeable. 2. The FDA is Likely to Set a High Hurdle for Interchangeable Biologics Safety is a primary concern of the FDA. In its view: “[A]ll medical products pose potential risks. The FDA is challenged to make sure that it consistently balances access and innovation against the steps taken to improve our approach to safety issues.” [205] Because of the complexity and uncertainty of biologics, the FDA recognizes that features of the abbreviated approval process for generic small molecule drugs cannot simply be extrapolated to follow-on biologics. [206] As a result, many follow-on products seeking abbreviated licensure may only be deemed as “biosimilar” rather than “interchangeable” despite great effort and expenditure by follow-on manufacturers. To illustrate, FDA approval of the follow-on growth hormone, Omnitrope®, required a great expenditure yet did not result in a generic biologic that is substitutable for a brand name product. [207] The sponsor of Omnitrope® submitted favorable data from four Phase III studies yet still only received a rating of “similar”. [208] Omnitrope® consists of only 191 amino acids, and the FDA considered it to be a relatively simple and well understood protein. [209] Many biologics under development, such as the increasingly popular class of monoclonal antibody therapies, are more complex than the protein in Omnitrope®. [210] The benefits of an abbreviated pathway leading to interchangeability may not be realized for more complex products until scientific and technologic advances are made in the characterization of biologics. According to the FDA, current analytical tools are inadequate to properly assess the interchangeability of follow-on biologics in the absence of extensive clinical trials. [211] The conformation of proteins can change in response to small perturbations in their environment, and the resulting effect on a biologic product is unknown. [212] Greater structural complexity creates even greater uncertainty over structural identification and integrity. The FDA has expressed that its limited understanding of protein structure-functional relationships, along with limitations of current analytical techniques to characterize structures, do not permit the reliable comparisons of complex biologics. [213] The FDA's concerns regarding structural uncertainty of complex biologics is further compounded by concern for the greater potential of larger



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biologics to be immunogenic. [214] Therefore, for manufacturers of follow-on products seeking interchangeability with more complex biologics, such as monoclonal antibodies, the hurdle might be too high to presently clear. 3. Post-Marketing Surveillance Can be Problematic for Interchangeable Biologics An additional safety concern for biologics is their potential for immunogenicity, which may be difficult to detect during clinical trials. Typically, “[P]roblems such as immunogenicity are so rare that they are not detected until post market surveillance, after many more patients have been exposed to the drug.” [215] Since interchangeable biological products may merely be similar, but not identical, it is possible that a reference product, a first follow-on, and a second follow-on will be three distinctive entities with different propensities for immunogenicity. Subsequent follow-ons may further differ from each other even though each is “similar” to the reference product. The BPCIA calls for testing of switches between a follow-on and a reference product, [216] but is silent regarding tests between two follow-ons. One potential safety concern that has not been addressed is the possibility of an adverse event due to patients switching from one follow-on to another. If switching between products were to elicit an adverse effect on safety or efficacy, it would be difficult for investigators to decipher which product was responsible. The existence of multiple follow-on biologics products, which are neither identical to the reference product nor to each other, may cloud data from post-marketing surveillance of products. An adverse event resulting from switching between two follow-ons could jeopardize the entire therapeutic class. If even a few patients were harmed by a particular switch from follow-on to follow-on, many more might suffer if the entire class of products had to pulled from the market.

CONCLUSION The BPCIA establishes a solid framework for approval of follow-on biologics. It sets a high bar for safety, yet also provides the FDA with a great deal of flexibility to lower the bar where and when appropriate. The BPCIA may not result in the immediate market entry of many low cost biologics, but it was written with the foresight to allow the FDA to adapt to advances in science and technology, and determine the specific requirements for licensure on a case by case basis. Biologics have a great range of complexity, and for certain products, similarity and interchangeability can be more readily demonstrated. The BPCIA strongly supports the continued discovery of new medicines. Importantly, the BPCIA recognizes that the solution for follow-on biologics may be similar, but is not the same as, the solution for generic small molecule drugs. Under any legislative framework for follow-on biologics, the full benefits to consumers of an abbreviated approval pathway will not be realized until the science advances sufficiently to lower the amount of expensive clinical testing required by the FDA for licensure of follow-on products. By establishing a prospective pathway for interchangeable follow-on biologics, the BPCIA also provides incentives for innovation by follow-on manufacturers seeking to streamline the process of FDA licensure. As analytical tools for biologics are sharpened, less clinical data may be required by the FDA. As early predictors of clinical outcomes are discovered, the length of clinical trials may be shortened. Innovation that leads to a more efficient process of FDA licensure will lower product development costs for follow-on manufacturers as well as innovators, creating savings that translate into lower cost medicine for patients. * J.D., 2009, Indiana University School of Law- Indianapolis; Ph.D., 2004, Indiana University, Indiana University School of Medicine, Indianapolis, Indiana; B.A., 1993, State University of New York at Albany, Albany, New York. [1]. “Biologics” is the term used by the legislature in the Public Health Service Act (“PHSA”) and proposed amendments thereto. Public Health Service Act (“PHSA”) § 351 (i), 42 U.S.C. § 262(i) (2006). The Food and Drug Administration (“FDA”) also uses the term “protein product.” In this Note, the terms “biologic” and “protein product” are used interchangeably. [2]. Throughout this Note, the term “small molecule drug” is used to represent the class of chemically, as opposed to



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biologically, synthesized pharmaceutical products, although there is no statutory basis for this distinction between the terms “drug” and “biologic”. [3]. Biologic medicines have been marketed to treat a number of diseases including multiple sclerosis, diabetes, rheumatoid arthritis, anemia, sepsis, and various cancers. For a catalog of currently approved biologics and their therapeutic indications, see FDA's Therapeutic Biological Products, http:// www.fda.gov/cder/biologics/default.htm (last visited Apr. 22, 2008). [4]. A search of “biologic” at a clinical trials database maintained by the National Institutes of Health revealed over 1500 clinical trials currently recruiting subjects for investigation of biological medicines. National Institutes of Health, http://clinicaltrials.gov/ (last visited Apr. 22, 2008). [5]. According to Mark Robinson, Chief Operating Officer of Massachusetts Biotechnology Council (“MBC”): “Biologics often require years of research and investments of more than a billion dollars, on average, to go from idea to product.” Kirsty Barnes, Victory of Sorts as “Biogenerics” Bill Passed in U.S. Senate, In-Pharma Technologist.com (June 28, 2007), http://www.biopharma-reporter.com/news/ng.asp?n=77773-bio-gpa-follow-on-biologics (last visited Apr. 22, 2008). [6]. Pamela Jones Harbour, Comm'r, FTC, Remarks at the American Bar Association Sections of Antitrust and Intellectual Property Law, Intellectual Property Antitrust: Strategic Choices, Evolving Standards, and Practical Solutions: The Competitive Implications of Generic Biologics (June 14, 2007), http://www.ftc.gov/speeches/harbour/070614genbio.pdf [hereinafter Harbour Speech]. [7]. Safe and Affordable Biotech Drugs: The Need for a Generic Pathway, Hearing Before the H. Comm. Oversight and Gov't. Reform, 110th Cong. 3 (2007) (statement of Mary Nathan, Gaucher patient and member of the National Organization of Rare Disorders), available at http:// oversight.house.gov/documents/20070326135446-36789.pdf. [8]. Robert J. Shapiro et al., The Potential American Market for Generic Biological Treatments and the Associated Cost Savings, http:// www.insmed.com/PDF/Biogeneric_Savings.pdf (last visited Apr. 22, 2008). [9]. Press Release, IMS Health Inc., IMS Reports U.S. Prescription Sales Jump 8.3 Percent in 2006, to $274.9 Billion (Mar. 8, 2007) (on file with author). [10]. Safe and Affordable Biotech Drugs: The Need for a Generic Pathway, Hearing Before the H. Comm. Oversight and Gov't. Reform, 110th Cong. (2007) (statement of Priya Mathur, Vice Chair of Health Benefits Committee, Board of Administration, California Public Employees' Retirement System), http://www.oversight.house.gov/documents/20070326135031-22529.pdf. [11]. See Rep. Henry Waxman, Issues and Legislation, http:// www.house.gov/waxman/issues/health/generic_biologics.htm (last visited Apr. 22, 2008). [12]. See The Law of Biologic Medicine: Hearing Before the S. Comm. on the Judiciary 108th Cong. (2004) (statement of Sen. Orrin Hatch), http:// judiciary.senate.gov/member_statement.cfm?id=1239&wit_id=51 [13]. Letter from Carl B. Feldbaum, President of Biotechnology Industry Organization, to George W. Bush, U.S. President (Jan. 15, 2004) (on file with author), http://www.bio.org/news/features/2004Letter_to_PresBush.pdf. [14]. The Importance of the Biotechnology Industry and Venture Capital Support in Innovation: Hearing Before the Subcomm. on Rural Enter., Agric., and Tech. of the H. Small Business Comm., 109th Cong. (2005) (statement of David N. Duncan, Chief Executive Officer, Chlorogen, Inc.). [15]. See Biotechnology Industry Organization (“BIO”) position paper, The Difference with Biologics: The Scientific, Legal, and Regulatory Challenges of Any Follow-on Biologics Scheme, http://



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www.bio.org/healthcare/followonbkg/WhitePaper.pdf (last visited Apr. 22, 2008). [16]. BIO position paper, A Follow-on Biologics Regime Without Strong Data Exclusivity will Stifle the Development of New Medicines, http:// www.bio.org/healthcare/followonbkg/FOBMarketExclusivity_050307.pdf (last visited Apr. 22, 2008) [hereinafter BIO Exclusivity Paper]. [17]. Interview with Sen. Orrin Hatch, Supplement to: Richard G. Frank, Regulation of Follow-on Biologics, 357 NEW ENG. J. MED. 841 (2007), AUDIO OF INTERVIEW AVAILABLE AT HTTP://CONTENT.NEJM.ORG/CGI/CONTENT/FULL/357/9/841/DC1. [18]. Id. [19]. Leading Biotechnology Organizations Praise Effort and Express Concerns with New Follow-on Biologics Proposal, http:// massbio.org/news/fobiologics.php (last visited Apr. 22, 2008). (quoting Mark Robinson, Chief Operating Officer of the Massachusetts Biotechnology Council). [20]. Press Release, Senate Comm. on Health, Educ., Labor, and Pensions (June 27, 2007) (on file with author), available at http://help.senate.gov/Maj_ press/2007_06_27_c.pdf. [21]. Id. [22]. Food, Drug, and Cosmetic Act (“FDCA”), 42 U.S.C. § 321. [23]. Hatch-Waxman Act, 21 U.S.C. § 355. [24]. PHSA § 351 (i), 42 U.S.C. § 262(i) (2006). [25]. See generally David M. Dudzinski, Reflections on Historical, Scientific, and Legal Issues Relevant to Designing Approval Pathways for Generic Versions of Recombinant Protein-Based Therapeutics and Monoclonal Antibodies, 60 Food & Drug L.J. 143, 143 (2005). [26]. Id. [27]. Edward L. Korwek, What Are Biologics? A Comparative Legislative, Regulatory and Scientific Analysis, 62 FOOD & DRUG L.J. 257 (2007). FOR A CHRONOLOGY OF PRODUCT CLASS DEVELOPMENTS, SEE BIO'S TIMELINE, HTTP:// BIO.ORG/SPEECHES/PUBS/ER/TIMELINE.ASP (LAST VISITED APR. 22, 2008). [28]. Increasingly popular therapeutic biological products even more complex than single proteins are monoclonal antibodies. Antibodies, which consist of multiple chains of individual proteins, are made by cells of the immune system and are designed to recognize and tightly bind to a specific target. Recombinant monoclonal antibodies are biological products made by the fusion of a beta cell of the immune system to an immortal cell such as a tumor cell. Dianne M. Dinnis & David C. James, Engineering Mammalian Cell Factories for Improved Recombinant Monoclonal Antibody Production: Lessons from Nature?, 91 Biotechnology & Bioengineering 180, 180 (2005). As a biologic medicine, monoclonal antibodies are injected into a patient to bind a specific target, typically inactivating the target to produce a desired therapeutic effect. Francesco Puppo et al., Emerging Biologic Drugs for the Treatment of Rheumatoid Arthritis, 4 Autoimmunity Reviews 537, 537 (2005). [29]. See generally LUBERT STRYER, BIOCHEMISTRY 417-43 (4TH ED. 1995). [30]. Thyrotropin releasing hormone is a three amino acid peptide [(pyro)Glu-His-Pro] secreted by neurons in the brain. Eduardo A. Nillni & Kevin A. Sevarino, The Biology of pro-Thyrotropin-Releasing Hormone-Derived Peptides, 20 ENDOCRINE REVIEWS 599, 599 (1999).



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[31]. Factor VIII is 2332 amino acid protein that is an essential factor involved in the blood clotting response. Factor VIII is missing or deficient in patients afflicted with hemophilia. Peter J. Lenting, The Sequence Glu1811-- Lys1818 of Human Blood Coagulation Factor VIII Comprises a Binding Site for Activated Factor IX, 271 THE JOURNAL OF BIOLOGICAL CHEMISTRY 1935, 1935 (1996) (CITING SADLER, J. E., AND DAVIE, E. W. IN THE MOLECULAR BASIS OF BLOOD DISEASES 575-629 (GEORGE STAMATOYANNOPOULOS, ARTHUR W. NIENHIUS, PHILIP LEDER, & PHILIP W. MAJERUS EDS.,, W. B. SAUNDERS CO. (2D ED. 1987)). [32]. National Institute of Standards and Technology, http:// webbook.nist.gov/cgi/cbook.cgi?ID=50-78-2 (last visited Apr. 22). [33]. Dudzinski, supra note 25, at 190. [34]. Stryer, supra note 29. [35]. ID. [36]. See Christopher M. Dobson, Protein Folding and Disease: A View from the First Horizon Symposium, 2 Nature Reviews. Drug Discovery 154 (2007). [37]. Vernon M. Ingram, Sickle-Cell Anemia Hemoglobin: The Molecular Biology of the First “Molecular Disease”- The Crucial Importance of Serendipity, 167 Genetics 1, 3 (2004). [38]. Jill Murrell et al., A Mutation in the Amyloid Precursor Protein Associated with Hereditary Alzheimer's Disease, 254 SCIENCE 97, 97 (1991). [39]. Benjamin Leader et al., Protein Therapeutics: A Summary and Pharmacological Classification, 7 Nature reviews. Drug Discovery 21, 22 (2008). [40]. BIO, How do Drugs and Biologics Differ?, http:// bio.org/healthcare/followonbkg/DrugsVBiologics.asp (last visited Apr. 22, 2008). [41]. Safe and Affordable Biotech Drugs: The Need for a Generic Pathway, Hearing Before the House Comm. on Oversight and Gov't. Reform, 110th Cong. (2007) (statement of Janet Woodcock, Deputy Comm'r, Chief Medical Officer, Food and Drug Administration) available at http:// oversight.house.gov/documents/20070326104056-22106.pdf [hereinafter Woodcock Statement]. [42]. See Mary-Jane Gething & Joseph Sambrook, Protein Folding in the Cell, 355 Nature 33 (1992). “[I]n cells[,] families of abundant proteins modulate and promote protein folding, assembly and disassembly, and facilitate the degradation of malfolded proteins.” Id. at 33. [43]. Stryer, supra note 29. Translation is the process by which proteins are synthesized by cells, one amino acid at a time, according to instructions of the genetic code carried by ribonucleic acid (RNA). [44]. Hartl et al., Molecular Chaperones in Protein Folding: The Art of Avoiding Sticky Situations, 19 TRENDS IN BIOCHEMICAL SCIENCES 20, 20 (1994). [45]. See Hubb Schellekens, Bioequivalence and the Immunogenicity of Biopharmaceuticals, 1 Nature Reviews. Drug Discovery 457, 457 (2002). [46]. Id. [47]. Stryer, supra note 29.



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[48]. Ricardo J. Sola et al., Modulation of Protein Biophysical Properties by Chemical Glycosylation: Biochemical Insights and Biomedical Implications, 64 Cellular & Molecular Life Sciences 2133, 2133 (2007). Id. at 2134 tbl.1 (INDICATING THAT PROTEIN FOLDING, SOLUBILITY, STRUCTURAL DYNAMICS, CATALYTIC ACTIVITY, THERMAL STABILITY, KINETIC STABILITY, AND AGGREGATION ARE ALL AFFECTED BY GLYCOSYLATION). [49]. See Schellekens, supra note 45. [50]. Id. [51]. Stryer, supra note 29. [52]. Woodcock Statement, supra note 41, at 10. [53]. Michele Kessler et al., Immunogenicity of Biopharmaceuticals, 21 Nephrology Dialysis Transplantation (Supp.) v9, v10 (2006). [54]. See Charles L. Bennett et al., Long-term Outcome of Individuals with Pure Red Cell Aplasia and Antierythropoietin Antibodies in Patients Treated with Recombinant Epoetin: A Follow-up Report from the Research on Adverse Drug Events and Reports (RADAR) Project, 106 BLOOD 3343 (2005). [55]. Loretta M. Itri, (Editorial) Cancer-Related Anaemia Requires Higher Doses of Epoetin Alfa than Chronic Renal Failure Replacement Therapy, 16 Nephrology Dialysis Transplantation 2289 (2001). [56]. See Bennett, supra note 54. [57]. See Huub Schellekens & Wim Jiskoot, Letter to the Editor, Eprex-Associated Pure Red Cell Aplasia and Leachates, 24 NATURE BIOTECHNOLOGY 613, 613-14 (2006). EACH PRODUCT WAS MANUFACTURED BY DIVISIONS OF THE SAME PHARMACEUTICAL COMPANY, BUT CHANGES WERE MADE TO EPREX® AT THE REQUEST OF EUROPEAN REGULATORY AGENCIES. ID. [58]. Bennett, supra note 54, at 3344. [59]. Id. Additional suspected factors include the route of administration and adjuvant leachates from rubber stoppers. Id. at 3346. But see Schellekens & Jiskoot, supra note 57 (discounting the theory of leachates and arguing that epoietin protein aggregates in Eprex® more likely caused the enhanced immunogenicity). [60]. Schellekens & Jiskoot, supra note 57, at 613-14. [61]. Cournoyer et al., Anti-Erythropoietin Antibody-Mediated Pure Red Cell Aplasia after Treatment with Recombinant Erythropoietin products: Recommendations for Minimization of Risk, 15 J. AM. SOCIETY OF NEPHROLOGY 2728 (2004). [62]. Bennett, supra note 54, at 3343. [63]. Id. [64]. Id. [65]. Schellekens & Jiskoot, supra note 57, at 613-14.



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[66]. 21 U.S.C §§ 301-97 (2006). [67]. 42 U.S.C. §§ 201-300 (2006). [68]. See Dudzinski, supra note 25. [69]. New drug “approval” and biologic “licensure” are the terms used within the FDCA and PHSA, respectively. See 21 U.S.C § 355(a); 42 U.S.C § 262(a) (2006). [70]. See Dudzinski, supra note 25, at 178. (providing a review of the history of both the FDCA and PHSA as well as a chronology of FDA organizational changes in response to the development of novel types of therapeutics). [71]. Id. [72]. See Woodcock Statement, supra note 41, at 3. [73]. Id. at 3-4. [74]. 21 U.S.C. § 351(b)(1), 505(b)(1). [75]. FDA, The New Drug Development Process, http:// www.fda.gov/cder/handbook/develop.htm (last visited Apr. 22, 2008) [hereinafter FDA Drug Dev.]. For some types of treatments, efficacy is also evaluated in Phase I trials. [76]. 21 C.F.R. §§ 312.20-23 (2007). Typically, along with preclinical test results, the IND submitted to the FDA contains information regarding the manufacturing processes and controls. [77]. FDA Drug Dev., supra note 75, follow Phase 2 Clinical Studies. [78]. Id. [79]. FDA Drug Dev., supra note 75. [80]. Id. Follow Phase 3 Clinical Studies. [81]. Id. [82]. Joseph A DiMasi et al., The Price of Innovation: New Estimates of Drug Development Costs, 22 Journal of Health Economics 151, 165 (2003) (analyzing costs of clinical trials from data collected between 1985-2000 expressed in dollar values of year 2000). “Aggregating across [the three] phases [of clinical trials], we find that the out-of-pocket clinical period cost per approved new drug is US$ 282 million and the capitalized clinical period cost per approved new drug is US$ 467 million.” Id. A recent report, though based on limited data, estimates an average capitalized cost of clinical trials to be upwards of $600 million dollars (in 2005 U.S. dollars) specifically for biopharmaceuticals. Joseph A. DiMasi & Henry G. Grabowski, The Cost of Biopharmaceutical R&D: Is Biotech Different?, 28 Managerial and Decision Economics 469, 469 (2007). [83]. FDA Drug Dev., supra note 75, follow NDA review. [84]. 42 U.S.C. § 262 (2006); See also 21 C.F.R. §§ 601.20-25 (2007). [85]. Although the criteria and approval processes are similar, the FDA has historically applied stricter manufacturing standards for biologics. For a summary, see Glen D. Jones, Assoc. Dir. Reg. Affairs, Office of Oncology Products, CDER Forum for International Regulators (2007), Biologics License Applications,



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http://www.fda.gov/cder/audiences/iact/forum/200704_jones.pdf (last visited Apr. 22, 2008). [86]. FDA Modernization Act of 1997, Pub. L. No. 105-115, § 123(f), 111 Stat. 2296, 2324 (1997). Section 123(f) states:

The Secretary of Health and Human Services shall take measures to minimize differences in the review and approval of products required to have approved biologics license applications under section 351 of the Public Health Service Act (42 U.S.C. 262) and products required to have approved new drug applications under section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(b)(1)).

[87]. Drug Price Competition and Patent Term Restoration Act of 1984. Pub. L. No. 98-417, 98 Stat. 1585 (codified as amended at 21 U.S.C. § 255 (2006); 35 U.S.C. §§ 156, 271, 282 (2006). [88]. Hatch-Waxman denotes the coauthors of the Act, Senator Orrin Hatch (R-Utah) and Representative Henry Waxman (D-Cal.). [89]. See Woodcock Statement, supra note 39, at 5-6. [90]. FDCA § 505(b)(2), 21 U.S.C. § 355(b)(2) (2006). [91]. Id. [92]. Id.; FDCA § 505(b)(1), 21 U.S.C. § 351(b)(1) (2006). [93]. A fact often overlooked, the FDA's index of Approved Drug Products with Therapeutic Equivalence Evaluations (commonly known as the Orange Book) is merely a guide “providing advice regarding generic substitution to health care professionals and states, but does not mandate on a federal level, which drug products to use when performing generic substitution. Generic substitution mandates are found in individual state laws and regulations.” National Pharmacy, http:// www.nabp.net/ftpfiles/newsletters/nationalnews/4thquarternews2000.pdf (last visited Apr. 22, 2008). See also FDA's Orange Book Preface, http:// www.fda.gov/cder/ob/docs/preface/ecpreface.htm (last visited Apr. 22, 2008). [94]. Janet Woodcock et al., The FDA's Assessment of Follow-On Protein Products: A Historical Perspective, 6 Nature Reviews. Drug Discovery 437, 438 (2007) [hereinafter Woodcock Paper]. [95]. Id. [96]. The Law of Biologic Medicine: Hearing Before the Senate Judiciary Committee, 108th Cong. (2004) (statement by Lester M. Crawford, Acting Comm'r of the Food and Drug Administration) [hereinafter Crawford Statement]. See also, Woodcock Statement, supra note 41. [97]. FDCA § 505(j), 21 U.S.C. § 225(j) (2006). [98]. See Id.; Woodcock Paper, supra note 94, at 437. [99]. See Harbour Speech, supra note 6. [100]. FTC Study: Generic Drug Entry Prior to Patent Expiration (2002), available at http://www.ftc.gov/os/2002/07/genericdrugstudy.pdf [hereinafter FTC Study]. [101]. Id. [102]. 21 U.S.C. § 225(j) (2006).



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[103]. Pharmaceutical equivalence is also required (i.e., identical active ingredient, dose, route of administration, and labeling), but only the demonstration of bioequivalence requires testing in people. Id. [104]. FDA Orange Book Preface, supra note 93. [105]. See 21 C.F.R. § 320 (2007). [106]. The risk of failure is greatly diminished for a generic because the proof of concept (i.e., that a particular type of drug will work to treat a particular type of disorder) has already been established by the innovator. In contrast, an innovator does not know if their drug will be successful until after the clinical trials are run. [107]. A corollary of the ANDA under HWA was the elimination of needlessly duplicative clinical trials; thus obviating the ethical dilemma of treating patients in need of medicine with ineffective doses or placebo for the purpose of generating data to support a hypothesis that has already been proven convincingly. See Harbour Speech, supra note 6. [108]. FTC Study, supra note 100. [109]. See Crawford Statement, supra note 96. [110]. See Woodcock Paper, supra note 94, at 438; See also Woodcock Statement, supra note 41; Crawford Statement, supra note 96; and infra pp. 28-29 and note 118. [111]. Sandoz v. Leavitt, 427 F. Supp. 2d 29, 32 (D.D.C. 2006). [112]. 21 U.S.C. § 355(b)(2) (2006). Human growth hormone is one of the exceptional cases of a biologic that was approved under the FDCA instead of the PHSA. See Dudzinski, supra note 25. [113]. Sandoz, 427 F. Supp. 2d at 32. [114]. Id. In addition, Pfizer Inc., the sponsor of Genotropin®, petitioned the FDA to block the agency from relying on clinical trial data that Pfizer submitted to the FDA for approval of Genotropin®. Pfizer contended that such data was a trade secret that belonged to Pfizer, and that the use of it for approval of another manufacturer's product constituted a taking. Citizen Petition submitted to FDA on behalf of Pfizer, May 14, 2004 and Supplement to the Petition, August 4, 2004 Docket Nos. 2004P-023 11CP1 and SUP 1, available at http://www.fda.gov/ohrms/dockets/DOCKETS/04n0355/04N-0355_emc-000004-02.pdf. [115]. This included the creation of a public docket in 2004 in which 28 sets of written comments were considered, and two sets of public meetings (held on September 14-15, 2004, and February 14-16, 2005). FDA Response to Citizen Petition, May 30, 2006, Re: Docket Nos. 2004P-0231/CP1 and SUP1, 2003P-0176lCP1 and EMC1, 2004P-0171lCP1, and 2004N-0355 at 50, available at http:// www.fda.gov/ohrms/dockets/dockets/04P0231/04P-0231-pdn0001.pdf. [116]. Sandoz, 427 F. Supp. 2d at 41. [117]. 21 U.S.C. § 355(b)(2) (2006). Unlike a true generic drug approved by an ANDA under 505(j), Omnitrope® is not rated as therapeutically equivalent, and thus is not approved to be substituted at a pharmacy for a prescription written for a Genotropin® or any other brand-name growth hormone. As previously noted, the FDA “does not mandate the drug products which may be purchased, prescribed, dispensed, or substituted for one another, nor does it, conversely, mandate the products that should be avoided.” Orange Book Preface, supra note 91. The FDA merely provides “public information and advice to state health agencies, prescribers, and pharmacists to promote public education in the area of drug product selection and to foster containment of health care costs.” Id.



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[118]. Shortly after the approval of Omnitrope®, the FDA posted on its website:

The approval of Omnitrope® in a 505(b)(2) application does not establish a pathway for approval of follow-on products for biological products licensed under section 351 of the Public Heath Service Act, nor does it mean that more complex and/or less well understood proteins approved as drugs under the Food, Drug, and Cosmetic Act could be approved as follow-on products. The majority of protein products are licensed as biological products under the Public Health Service Act, not approved as drugs under the Food, Drug, and Cosmetic Act. There is no abbreviated approval pathway analogous to 505(b)(2) or 505(j) of the Act for protein products licensed under section 351 of the Public Health Service Act. Such a pathway for the approval or licensure of follow-on protein products under the Public Health Service Act would require new legislation.

http://www.fda.gov/cder/drug/infopage/somatropin/qa.htm [hereinafter Somatropin Q&A] (last visited Apr. 22, 2008). [119]. Id. [120]. See Crawford Statement, supra note 94; See also Woodcock Statement, supra note 39. [121]. 42 U.S.C. § 262 (2006). [122]. Biological Price Competition and Innovation Act of 2007, S. 1695, 110th Cong. (as reported by the S. Comm. on Health, Educ., Labor, and Pensions, June 27, 2007) [hereinafter S. 1695]. [123]. S. 1695 § 2(a)(1). [124]. S. 1695 § 2. Specifically, S.1695 section 2(b)(3) states: “The term ‘biosimilar’ ... means there are no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency of the product.” S. 1695 § 2(b)(3). [125]. Id. “The term ‘interchangeable’ ... means that the biological product may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product.” [126]. See Woodcock Paper, supra note 94, at 437. [127]. Id. [128]. S. 1695 § 2(a) insert (k). S. 1695 § 2(a) of the BPCIA inserts sections “(k)” and “(l)” into the PHSA. Sections “(k)” and “(l)” are quite lengthy and contain numerous subsections. In order to guide the reader to specific provisions of inserted sections under S. 1695 § (2)(a), the preceding citation format has been adopted. [129]. S. 1695 § (2)(a) insert (k)(6-7). [130]. Id. § (2)(a) insert (l). [131]. Id. § 2(a) insert (k)(9)(b)(3). [132]. Id. § 2(a) insert (k)(2)(A)(i)(1)(aa-cc). [133]. Id. § 2(a) insert (k)(2)(A)(I)(cc)(AA). [134]. Id. § 2(a) insert (k)(A)(ii).



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[135]. “The Secretary may determine, in the Secretary's discretion, that an element described in clause [2(k)(A)](i)(I) is unnecessary in an application submitted under this subsection.” Id. [136]. Id. § 2(a) insert (k)(2)(A)(i)(II). [137]. Id. § 2(a) insert (k)(A)(i)(III). [138]. Id. § 2(a) insert (k)(2)(A)(i)(IV). [139]. Id. § 2(a) insert (k)(2)(A)(i)(V). [140]. See Woodcock Paper, supra note 92 (discussing the factors that the FDA has considered for approving FDCA regulated protein products under section 505(b)(2) of the FDCA). [141]. Id. § 2(b)(3). This is equivalent to the AB (substitutable) rating of generic small molecule drugs. An AB rating by the FDA means that the FDA considers a generic drug to be both pharmacoequivalent and bioequivalent to a referenced drug, and thus may be substituted at the pharmacy to fill a prescription for the name brand drug. Compounds with an AB rating are listed in the index of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. An electronic version of the Orange Book is provided at FDA, http://www.fda.gov/cder/ob/. [142]. Timoty E. Welty, Editorial, Pharmacy and Generic Substitution of Antiepileptic Drugs: Missing in Action?, 41 The Annals of Pharmacotherapy 1065, 1066 (2007). [143]. Id. [144]. S. 1695 § 2(a) insert (k)(4)(A). [145]. Id. § 2(a) insert (k)(4)(A)(ii). [146]. Specifically, the BPCIA requires that:

[F]or 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 the 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.

Id. § 2(a) insert (k)(4)(b). [147]. As one clinical investigator remarked:

When evaluating the efficacy and safety of a product, careful consideration of clinical trial design must be undertaken. [I]t is unclear if switching from one product to another is current practice and if such a trial design can actually prove safety and efficacy equivalence as opposed to a traditional head to head clinical trial.

Interview with Jake Vinson, Executive Director, Hoosier Oncology Group, Inc. in Indianapolis, Ind. (Feb. 19, 2008) (emphasis added). [148]. S. 1695 § 2(a) insert (k)(2)(A)(ii). [149]. Id. § 2(a) insert (k)(7)(A). “Approval of an [abbreviated] application ... may not be made effective by the Secretary until the date that is twelve years after the date on which the reference product was first licensed ....” Id. [150]. See BIO Exclusivity Paper, supra note 18, at 1. [151]. S. 1695 § 2(a) insert k (7)(A). This provides up to 8 years for the resolution of potential patent disputes between innovators of biologics and follow-on manufacturers, obviating the need for an automatic 30 month stay as



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provided by HWA. See 21 U.S.C. § 355 (j)(5)(B)(iii). [152]. See BIO Exclusivity Paper, supra note 16, at 4. [153]. S. 1695 § 2(a) insert (k)(6).

Upon review of an application ... relying on the same reference product for which a prior biological product has received a determination of interchangeability[,] ... the Secretary shall not make a determination that the second or subsequent biological product is interchangeable ... until ... one year after the first commercial marketing ....

Id.

[154]. Id. [155]. Henry G. Grabowski et al., Entry and Competition in Generic Biologics, 28 Managerial and Decision Economics 439, 439 (2007). [156]. Id. [157]. 21 U.S.C § 355(j)(5)(F)(ii) (2006). [158]. Id. § 355(j)(5)(B)(iv) (2006). [159]. Id. § 355(j)(2)(A) (2006). A follow-on drug manufacturer challenging the validity of an innovator's patent under 21 U.S.C. § 355 (j)(2)(A)(vii)(IV) may submit an application for the FDA's consideration after 4 years from the date of first approval of a reference product. See 21 U.S.C. §§ 355 (c)(3)(E)(ii), (j)(5)(F)(ii) (2006). [160]. S. 1695 § (2)(c)(1), amending the Patent Act, 35 U.S.C. § 271(e) (2006). [161]. S. 1695 § (2)(c)(1). [162]. See supra note 141, Orange Book. [163]. S. 1695 § (2)(a) insert (l)(2)(A). [164]. See BIO Exclusivity Paper, supra note 16, at 3. [165]. S. 1695 § (2)(a) insert (l)(3)(A). [166]. Id. § (2)(a) insert (l)(3)(B). [167]. Id. § (2)(a) insert (l)(3)(C). [168]. Id. § (2)(a) insert (l)(4). [169]. Id. § (2)(a) insert (l)(5). [170]. Id. § (2)(a) insert (l)(6)(B). [171]. Id. § (2)(c)(1).



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[172]. Id. § (2)(a) insert (l)(5)(B). If there is no agreement between a follow-on manufacturer and an innovator as to which of the innovator's patents are infringed, and the follow-on manufacturer does not provide any patents on its list submitted to the innovator and the FDA, then the innovator is restricted to listing a single patent under which to pursue claims of infringement. [173]. See BIO Exclusivity Paper, supra note 16, at 2-3; See also John E. Calfee, American Enterprise Institute for Public Policy Research, Facing Reality on Follow-On Biologics, http://www.aei.org/docLib/20070423_ 200704AHPOg.pdf (last visited Apr. 22, 2008). [174]. Id. at 3. [175]. See Id. [176]. Henry G. Grabowski, Data Exclusivity for New Biological Entities, (Duke University Department of Economics, Working Paper, 2007), http:// www.econ.duke.edu/Papers/PDF/DataExclusivityWorkingPaper.pdf. [177]. See BIO Exclusivity Paper, supra note 16. [178]. Id. at 2-3. [179]. 21 U.S.C. § 355(j)(5)(B)(iv) (2006). An adjudication of non-infringement would also technically qualify a follow-on drug for six months of exclusivity. Id. However, in the case of ANDAs, since the only drugs eligible for an ANDA are identical to reference product compositions, a claim of non-infringement is typically not a viable option. [180]. Kamakhya Srivastava, Paragraph IV Filing as a Business Strategy in the Pharma Industry, http://students.indlaw.com/display.aspx?2427 (last visited Apr. 22, 2008) (describing the frequency of patent challenges under HWA by generic pharmaceutical companies). An ANDA may be submitted under paragraph IV as early as four years after approval of a new drug to initiate patent proceedings, despite the five year period of exclusivity provided for new molecular entities. 21 U.S.C. § 355(j)(5)(B)(iv) (2006). [181]. ParagraphFour.com, Why Generic Drug Companies Challenge Patents, http://www.paragraphfour.com/explained/why_challenge.html (last visited Apr. 22, 2008). [182]. S. 1695 § 2(a) insert (k)(6). [183]. See 21 U.S.C 355 § (j)(5)(B) (2006). [184]. Id. § 2(a) insert (l)(5)(B)(ii). [185]. See BIO Exclusivity Paper, supra note 16, at 2-3; See also Calfee, supra note 173. [186]. 21 U.S.C. § 355(j)(5)(B)(iv) (2006). [187]. BIO Exclusivity Paper, supra note 16, at 2-3. [188]. Id. [189]. Id. [190]. Id.



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[191]. For discussion, see the Manual for Patent Examining Procedure § 2163 (8th ed., 7th Rev. 2008). [192]. BIO Exclusivity Paper, supra note 16, at 2-3. [193]. Id. [194]. Id. [195]. Id. [196]. Henry G. Grabowski et al., The Market for Follow-On Biologics: How Will it Evolve?, 25 Health Affairs 1291, 1291 (2006). [197]. See Grabowski et al., supra note 155. [198]. See infra pp. 51-53. [199]. Safe and Affordable Biotech Drugs: The Need for a Generic Pathway, Hearing Before the H. Comm. Oversight and Gov't. Reform, 110th Cong. 5-6 (2007) (statement of Henry G. Grabowski, Director, Program in Pharmaceuticals and Health Economics, Duke University). [200]. Grabowski, supra note 196, at 1291. [201]. See BIO Exclusivity Paper, supra note 16, at 5-6. [202]. As noted by one prominent economist: “[G]eneric biologics will have high fixed costs from clinical testing and from manufacturing, so there will be less entry than would be expected for generic pharmaceuticals. Grabowski, supra note 149, at 439. [203]. See Woodcock Paper, supra note 94, at 437. [204]. The cost of clinical trials for the purpose of demonstrating bioequivalence typically runs between one to two million dollars. Henry G. Grabowski et al., (White Paper) The Effect on Federal Spending of Legislation Creating a Regulatory Framework for Follow-On Biologics: Key Issues and Assumptions (August 2007), http://www.bio.org/healthcare/followonbkg/Federal_ Spending_of_followonbkg200709.pdf. (last visited Apr. 22, 2008). [205]. FDA, The Future of Drug Safety - Promoting and Protecting the Health of the Public, http://www.fda.gov/oc/reports/iom013007.pdf. (last visited Apr. 22, 2008). [206]. See Woodcock Statement, supra note 41, at 1. [207]. Grabowski, supra note 199, at 11. [208]. Id. at 35. Omnitrope® was approved under the FDCA section 505(b)(2) pathway for “similar” products. 21 U.S.C § 505(b)(2) (2006). [209]. “The approval of Omnitrope® ... does [not] mean that more complex and/or less well understood proteins approved as drugs under the Food, Drug, and Cosmetic Act could be approved as follow-on products.” Somatropin Q&A, supra note 118. [210]. Id. Over 300 monoclonal antibodies are currently in clinical trials. Shapiro, supra note 8, at 2.



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[211]. Woodcock Statement, supra note 41, at 11. To establish that two protein products would be substitutable, the sponsor of a follow-on product would need to demonstrate through additional clinical data that repeated switches from the follow-on product to the referenced product (and vice versa) would have no negative effect on the safety and/or effectiveness of the products as a result of immunogenicity.

Id. [212]. Sven Frokjaer & Daniel E. Otzen, Protein Drug Stability: A Formulation Challenge, 4 Nature Reviews. Drug Discovery 298, 300 (2005). [213]. See Woodcock Statement, supra note 41, at 9.

It is the combination of the protein's amino acid sequence and its structural modifications that give a protein its unique functional characteristics. Therefore, the ability to predict the clinical comparability of two products depends on our understanding of the relationship between the structural characteristics of the protein and its function, as well as on our ability to demonstrate structural similarity between the follow-on protein and the reference product. Although this may be currently possible for some relatively simple protein products, technology is not yet sufficiently advanced to allow this type of comparison for more complex protein products.

Id. [214]. See Woodcock Statement, supra note 39. “For many follow-on protein products - and in particular, the more complex proteins - there is a significant potential for repeated switches between products to have a negative impact on the safety and/or effectiveness. Therefore, the ability to make determinations of substitutability for follow-on protein products may be limited.” Id. at 11-12. [215]. See Generic Pharmaceutical Association Position Paper, Biopharmaceuticals (“Follow-On” Protein Products): Scientific Considerations for an Abbreviated Approval Pathway, http://www.gphaonline.org/AM/Template.cfm? Section=Home&section=Biopharmaceuticals&template=/ CM/ContentDisplay.cfm&ContentFileID=18 (last visited Apr. 22, 2008). “Since the incidence of antibody development does not occur in all patients and can sometimes be rare, a complete understanding of immunogenicity and its possible consequences is not usually possible until there is significantly greater patient exposure after a product has been approved.” Id. at 24. [216]. S. 1695 § 2(a) insert (k)(4)(b).

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