This article first was published at IPWatchdog.com.

The FDA broadly defines biologics as medical products derived from living sources (human, animal, plant, or microorganism) intended to treat or prevent diseases. Biologics thus include such varied vehicles of medical treatment as viruses, vaccines, hormones, human tissue, and gene therapy. The FDA regulates both biologics (typically high molecular weight, structurally complex products) and chemical drugs (low molecular weight, comparatively less complex products). The Food, Drug and Cosmetic Act (FDCA) addresses chemical drugs while the Public Health Service Act governs the licensure of most biologics.

Biologics are big business. Humira®, a biologic used to treat rheumatoid arthritis and other autoimmune diseases such as Crohn’s disease, reported $13 billion in global sales in 2014.[1] The biologic Remicade®, another autoimmune disease treatment, with $10.1 billion in global sales in 2014, was not far behind.[2] Other biologics to have cleared the $1‑billion annual sales threshold and earned the “blockbuster” title include drugs used to treat various cancers (Rituxan®, Avastin®, and Herceptin®), the side effects of chemotherapy (Neulasta®), arthritis (Enbrel®), diabetes (Lantus®), macular degeneration (Lucentis®), and multiple sclerosis (Avonex®).[3] Clinical use of biologics continues to increase and the development of new biologics promises to answer as yet unmet therapeutic needs.

But access to biologics is far from affordable. Consumers, even those with health insurance, often pay a high price for the innovative and complex biologics. On average, for example, a weekly dose of Humira® costs over $5,000 per month; taken once every four weeks, Remicade® costs over $4,500; and a weekly dose of 25 mg Enbrel® costs over $1,100.[4] With the 1984 Hatch-Waxman amendments to the FDCA (Hatch-Waxman Act), Congress provided an abbreviated pathway for the approval of generic versions of brand-name, chemically synthesized drugs, decreasing the time it took for generics to get FDA approval and providing the U.S. consumer with rapid access to lower-priced alternatives to brand-name drug.[5] But until 2010, no such pathway existed for the FDA’s approval of “generic” biologics governed by the PHSA.[6]

In 2010, the Biologics Price Competition and Innovation Act (BPCIA), introduced as part of the Patient Protection and Affordable Care Act, amended the PHSA to include an abbreviated pathway for the licensing of biological products that are biosimilar to or interchangeable with a previously licensed biological product (“reference product”).[7] Biosimilars are biological products that are “highly similar to the reference product notwithstanding minor differences in clinically inactive components” and have “no clinically meaningful differences” when compared to the reference product “in terms of the safety, purity, and potency of the product.”[8] Interchangeable products are biosimilars that meet two additional criteria: (1) they “can be expected to produce the same clinical result as the reference product in any given patient” and (2) they present no greater “risk in terms of safety or diminished efficacy of alternating or switching between use of the biological product and the reference product” than that of using the reference product alone.[9]

Modeled after the Hatch-Waxman Act, the BPCIA seeks not only to encourage competition in the field of biologics but also to promote innovation by, among other things, providing twelve years of market exclusivity to pioneer biologics.[10] Under the BPCIA, a biosimilar applicant follows an abbreviated path to licensure compared to that required to license the reference product. Nonetheless, the biosimilar license applicant must provide analytical studies to show high similarity between the biosimilar and the reference product, animal studies, and a clinical study demonstrating safety, purity, and potency in at least one condition of use for which the license is sought.[11] To the extent the mechanism of action for the reference product is known, the biosimilar license applicant must also provide data to show that the biosimilar uses the same mechanism of action for the relevant condition of use. [12] Finally, the applicant must show that the biosimilar’s proposed condition of use was previously approved for the reference product, that the biosimilar has the same route of administration, dosage form, and strength, and that the biosimilar’s manufacturing and processing facilities meet the regulatory standards.[13]

Like the Hatch-Waxman Act, the BPCIA also sets out a process for identifying disputes over patent infringement and managing any ensuing litigation once an applicant seeks a biosimilar license. First, the BPCIA amended the patent statutes to introduce a new artificial act of patent infringement. Thus, under 35 U.S.C. § 271(e)(2), a biosimilar applicant commits an act of infringement by submitting an application for the licensure of a biosimilar product where the reference drug is covered by one or more patents that the reference product’s sponsor (“RPS”) could assert in an infringement action. Second, the BPCIA mandates cycles of information exchange. Thus, under 42 U.S.C. § 262(l)(2), within twenty days of being notified of its biosimilar application’s acceptance for review by the FDA the applicant provides to the RPS confidential access to the biosimilar application and information about the biosimilar’s manufacturing process.[14] Within sixty days thereafter, the RPS provides to the biosimilar applicant a list of all patents for which the RPS believes it could raise a claim of infringement and identifies those patents that the RPS would be willing to license.[15] In the following sixty days, the biosimilar applicant provides a detailed statement of its position on invalidity, unenforceability, and non-infringement on a claim by claim basis for each patent listed by the RPS and optionally provides its own list of patents for which the applicant believes the RPS could bring a claim of infringement.[16] Within sixty days after receiving the applicant’s statement, the RPS provides its own detailed statement on infringement and a response to the validity and enforceability challenges.[17]

Third, the BPCIA envisions two waves of litigation following the filing of a biosimilar application.[18] To streamline the first wave of litigation, the BPCIA mandates that following the biosimilar applicant’s receipt of the RPS’s detailed statement on infringement, the parties negotiate in good faith to select patents for litigation from the lists initially provided by the RPS and the biosimilar applicant.[19] If the parties agree on the patents for litigation, the RPS files suit for patent infringement over the agreed patents within thirty days of the agreement.[20] In the event that the parties fail to agree—as is likely—within fifteen days of beginning negotiations, the parties simultaneously exchange a list of patents that each party believes should be the subject of an infringement action, with the RPS listing no greater number of patents than the biosimilar applicant.[21] The RPS then files suit for patent infringement within thirty days on each of the patents listed on the simultaneously exchanged lists.[22] Once the RPS files suit, the biosimilar applicant notifies the FDA of the suit and provides a copy of the complaint.[23] But, unlike the Hatch-Waxman Act, the BPCIA has no provision for a stay of FDA approval once suit is filed.

Under the BPCIA, the biosimilar applicant provides to the RPS a notice of commercial marketing no later than 180 days before the date it seeks to first market the biosimilar product.[24] The notice triggers the second wave of litigation, with the RPS authorized to seek a preliminary injunction to keep the biosimilar off the market until the court resolves the issue of patent infringement. The patents at issue may be those that were (1) included on the initial lists exchanged by the parties but not included on the list agreed to by the parties or, in case of no agreement, not included in the lists simultaneously exchanged by the parties following the breakdown of negotiations[25] and (2) issued or licensed after the RPS provided its initial patent list.[26]

Finally, as a further means of streamlining litigation, the BPCIA curtails patent declaratory judgment actions under certain circumstances. First, where the biosimilar applicant has timely shared its application and the biosimilar manufacturing information, under § 262(l)(2), with the RPS, the BPCIA forecloses declaratory judgment actions on any patents not included on the list agreed to by the parties or, if no agreement, on the lists simultaneously exchanged by the parties before the 180-day notice is received.[27] Second, if the biosimilar applicant timely shares its application and manufacturing information but later fails to engage in other actions required by the BPCIA or if the applicant refuses to share its application, the RPS but not the biosimilar applicant may pursue a declaratory judgment for the relevant patents.[28]