On the same day that FDA approved the first biosimilar of Humira, the fourth biosimilar to be approved in the U.S., it also denied a citizen petition filed by Abbott Laboratories (now AbbVie) requesting that FDA not accept any filing or approve any application for a biosimilar version of Humira® (adalimubab), AbbVie’s best-selling biologic, or any other product for which a biologics license application (BLA) was submitted to FDA prior to March 23, 2010, the date on which the Biologics Price Competition and Innovation Act (BPCIA) was signed into law. AbbVie argued that to accept or approve any such biosimilar filing would constitute an unconstitutional taking under the Fifth Amendment. AbbVie filed its petition in April 2012, long before any biosimilar was approved in the U.S. and before Amgen filed its biosimilar application for Humira with FDA. All four of the U.S. biosimilars approved to date have relied on BLAs submitted to FDA prior to March 23, 2010. In each case, the biosimilars were approved for all of the requested therapeutic indications of the innovator product based on extrapolation, without the biosimilar maker having to conduct clinical trials that otherwise would have been necessary for approval of the indications.

In its petition, AbbVie argued that the manufacturing information and analytical, preclinical, and clinical data contained in an innovator’s BLA constitute trade secrets or confidential commercial information of the innovator company. AbbVie maintained that the information in the BLA is private property protected by the Fifth Amendment. AbbVie explained that, because FDA approval of a biosimilar application is based upon FDA’s determination that the referenced BLA demonstrated the innovator company’s product to be safe, pure, and potent, FDA necessarily uses the innovator company’s trade secrets and confidential commercial information for the benefit of its competitors. AbbVie analogized its situation to that in Ruckelshaus v. Monsanto, 467 U.S. 986, 1005-06 (1984) (Monsanto), a leading regulatory takings case that applied the factors laid out by the Supreme Court in Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978) (Penn Central) for determining whether a regulatory taking has taken place. It argued that it had an investment-backed expectation that its trade secrets and confidential commercial information would not be used to approve a biosimilar and that use of its BLA to that end constituted a taking.

In denying AbbVie’s petition, FDA concluded that AbbVie lacked a protected property interest in the information contained in its Humira BLA and failed to demonstrate the existence of a taking under Penn Central. FDA stated that under the Freedom of Information Act (FOIA), all of AbbVie’s records are available for public disclosure unless they are specifically exempted. FDA explained that its disclosure regulation for biological products provides that, after a BLA is approved, “[a]ll safety and effectiveness data and information,” which includes the analytical, preclinical, and clinical data that AbbVie pointed to, are made “available for public disclosure unless extraordinary circumstances are shown.” The burden to demonstrate “extraordinary circumstances” rests with the party seeking to prevent disclosure. FDA concluded that, because the information in question was presumptively available to the public, it could not be considered a trade secret under the Uniform Trade Secrets Act. FDA emphasized that AbbVie, therefore, had no protected property interest in its Humira BLA after approval and that without such a property interest there could be no use of the information by FDA that would give rise to a taking.

FDA then analyzed AbbVie’s claims under the three Penn Central factors and concluded that, even if AbbVie demonstrated the existence of a property interest and use of the property, there was still no regulatory taking.

FDA found the first Penn Central factor, “the extent to which the regulation has interfered with distinct investment-backed expectations,” was the most important of the three factors. According to FDA, far from supporting AbbVie’s position, the Supreme Court Monsanto decision held that statutory silence on disclosure of information—which FDA found to be the case here before the BPCIA was enacted—is insufficient to form the basis of a reasonable investment-backed expectation. In addition, FDA brushed away its own pre-BPCIA statements that a competitor would not be able to rely on safety and effectiveness data in a BLA to gain approval for a biosimilar product. It found that such statements fell short of “an explicit governmental guarantee” that could form the basis of a reasonable investment-backed expectation. Finally, FDA said that the record showed that AbbVie was on notice of the possibility of the creation of a U.S. biosimilar pathway at the time it submitted its BLA for Humira to FDA.

As to the second Penn Central factor, “the economic impact of the regulation,” FDA found that, through statements it issued to the public and its investors, AbbVie contradicted its argument that use of the information in the Humira BLA would destroy AbbVie’s competitive edge. For example, FDA noted that the CFO of AbbVie stated in 2014 and its CEO in 2015, respectively, that Humira would be an “important cash flow generator well after 2017” and would be “a durable performing asset” even if FDA approved a biosimilar of Humira. FDA also stated that, by bringing patent infringement lawsuits against biosimilar makers, AbbVie could potentially prevent any economic harm that would otherwise ensue from an approval of a biosimilar product under the BPCIA. Finally, FDA stated that AbbVie itself could benefit economically from the BPCIA’s application to BLAs preceding its enactment by developing its own biosimilars of products approved under such BLAs.

Turning to the third and final Penn Central factor, the “character of the governmental action,” FDA found that it, too, weighed against finding an unconstitutional taking. One aspect of the inquiry was whether the regulatory burden was distributed among many property owners, which would weigh against a taking, or whether its impact was concentrated on a few unlucky parties. Here, AbbVie was only one of many who submitted BLAs prior to the enactment of the BPCIA. Another aspect of the inquiry was whether the government action amounted to a physical invasion of property, which would weigh in favor of a taking, or was merely an adjustment of economic benefits and burdens. FDA found that the BPCIA merely balanced innovation against consumer interests.

FDA’s decision denying AbbVie’s 2012 petition is certainly unsurprising at this point. FDA approved three biosimilar applications that rely on pre-March 2010 BLAs after the petition was filed and prior to the approval of a biosimilar of Humira. It will be interesting, however, to see if AbbVie will challenge FDA’s determination that the BPCIA poses no unconstitutional taking for innovator products filed with FDA prior to its enactment.