President Donald J. Trump has now been in office for just over one hundred days. Observers have been quick to mark this milestone and assess the new administration’s performance, especially on headline-grabbing issues like immigration and foreign policy. Amidst the hubbub, however, few have commented on how President Trump’s opening moves could affect the multi-billion-dollar biologics industry. President Trump’s actions during his first hundred days on issues like trade, judges, and healthcare have the potential to shape the biologics industry for innovators and biosimilar makers alike for years to come.
The Trans-Pacific Partnership: Dead in the Water?
One of President Trump’s signature campaign promises was the withdrawal of the United States from the Trans-Pacific Partnership, or TPP, a proposed free trade agreement among a dozen Pacific Rim nations with implications for biologics. Back in 2015, before the TPP became a hot-button political talking point, one of the most fiercely-debated issues in the negotiations was the exclusivity period for biologics. In the final rounds of TPP talks, there was a great deal of back-and-forth between those who favored a 12-year exclusivity period, such as the United States, and those who favored a shorter period, such as Australia and New Zealand.
Almost as soon as he entered office, President Trump made good on his campaign promise, signing an executive order withdrawing the U.S. from the TPP. With the U.S. out of the deal, many have speculated that the TPP is dead in the water. Though there have been some recent indications that the other 11 TPP member states may return to the table, it seems fair to say that at least in the short term, the exclusivity period for biologics will remain the same for these countries. And any new negotiations are unlikely to produce a change in the exclusivity period, particularly with the U.S. out of the deal. The final draft of the TPP did little more than maintain the status quo for biologics.
Justice Neil Gorsuch: A Patent Dance Skeptic?
President Trump’s nominee to the Supreme Court, Neil Gorsuch (formerly of the 10th Circuit), was confirmed by the Senate in early April. Marking the end of a year of bitter fighting and partisan rancor following the 2016 death of Justice Scalia, Justice Gorsuch’s nomination was a marquee victory for the President and for the GOP.
One of the first cases on which Justice Gorsuch will weigh in will be Amgen v. Sandoz. Amgen v. Sandoz was the Federal Circuit’s first decision interpreting the litigation provisions of the U.S. biosimilars legislation, the Biologics Price Competition and Innovation Act of 2009 (BPCIA). The Supreme Court granted certiorari earlier this year. The appeal concerns two issues: whether the BPCIA’s “patent dance” pre-litigation dispute resolution procedures are mandatory, and whether biosimilar makers must give 180 days’ notice of commercial marketing after receiving FDA approval.
At oral argument before the Supreme Court in late April (transcript available here), Justice Gorsuch gave few hints on how he might rule, but seemed skeptical of Amgen’s position that the patent dance is mandatory. Though willing to “spot” that “shall” means “shall” in the BPCIA, Justice Gorsuch pressed Amgen’s counsel on why another section of the BPCIA, providing for a declaratory judgment, does not provide the exclusive remedy for a violation of the patent dance. “[I]t’s hard to divorce a right from its remedy, isn’t it, and to understand the contours of that right,” Justice Gorsuch observed. “And if [the patent dance provision] gives you a certain right to information, we usually understand the right in the context of the remedy provided. And here the remedy is [the declaratory judgment provision].”
Though rooted in the minutiae of the BPCIA, the Amgen v. Sandoz case carries immense importance for the biologics industry. A decision is expected by the end of June.
Amgen v. Sandoz: Singing the Same Tune?
In June 2016, while the Supreme Court was still mulling whether or not to grant certiorari in Amgen v. Sandoz, it invited the Solicitor General to file a brief expressing the views of the United States as to whether the Court should hear the case. Later that year, the Solicitor General filed a brief supporting a grant of cert, arguing that the patent dance is not mandatory, that notice of commercial marketing can come at any time, and that an injunction is not available to enforce the provisions of the BPCIA.
Naturally, the Solicitor General’s brief expressed the views of the Obama administration, lame duck though it may have been. It was possible, therefore, that the new administration could take a different position on some or all of the questions before the court in Amgen v. Sandoz. But the Trump administration stayed the course. At the Amgen v. Sandoz oral argument, Anthony A. Yang, Assistant to the Solicitor General, argued for the United States as amicus curiae, supporting petitioner Sandoz’s arguments.
Trumpcare: What about the BPCIA?
Among the most prominent of President Trump’s initiatives during his first hundred days has been the effort to repeal and replace the Affordable Care Act, more commonly known as Obamacare. The BPCIA was enacted as part of Obamacare—specifically, as Title VII to the ACA—though it has so far been spared the public attention and controversy of other provisions like the individual mandate.
The BPCIA is likely to be unaffected by any repeal and replace initiatives. The first Republican healthcare plan, unveiled in March and since effectively abandoned, left the BPCIA untouched. The more recent American Health Care Act of 2017 (H.R. 1628), which was narrowly passed by the House of Representatives, also leaves the BPCIA intact. Whether AHCA, which has sparked considerable controversy, has any legs in its current form remains to be seen. Either way, whatever the fate of Obamacare may be, it appears that there is no support for repealing or replacing the BPCIA.
Regulations: “1 In, 2 Out” for the FDA?
President Trump, wasting no time in making moves to fulfill his campaign pledge to slash the Federal bureaucracy, issued an executive order on January 30 requiring that “for every one new regulation issued, at least two prior regulations be identified for elimination.” Though the exact contours of how this will be implemented remain unclear—authority is delegated to the Office of Management and Budget to iron out the details—the order has the potential to work a sea change in the modern American regulatory state.
One of the regulatory agencies that will be affected by the “1 in, 2 out” order is, of course, the FDA. Whether the “1 in, 2 out” order applies to guidances is not entirely clear. The order defines a regulation as “an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy to describe the procedure or practice requirements of agency.” The FDA’s guidances setting out the regulatory pathway under the BPCIA have been critical to the industry. And industry has pushed for more, not less guidance from FDA on the implementation of the BPCIA. Notably, the FDA issued two guidances relating to the BPCIA in January, just prior to Trump taking office.
First, the FDA issued a final guidance requiring meaningless suffixes for biosimilar names. Despite nearly universal opposition, the FDA mandated that a meaningless, lowercase, four-letter suffix follow a core nonproprietary name. For example, Amgen’s adalimumab biosimilar Amjevita will be known as “adalimumab-atto.” Second, the FDA issued its guidance on demonstrating interchangeability of biosimilars. Under the BPCIA, a non-innovative biologic can qualify as either biosimilar—the designation of every follow-on biologic approved under the BPCIA so far—or interchangeable. There is a much higher bar for approval of a follow-on biologic as interchangeable with the innovator product.
Whether guidances fall under the order or not, the Director of the Office of Management and Budget is empowered to exempt regulations from the order. How exactly the order will affect guidance to industry and the future of biologics remains to be seen.
New FDA Commissioner: Will FDA Help Interpret the BPCIA’s Litigation Provisions?
President Trump recently appointed Dr. Scott Gottlieb to lead the FDA. Dr. Gottlieb, a physician, was formerly a deputy FDA commissioner. As head of the FDA, Dr. Gottlieb’s purview will include regulating drug companies and the pharmaceuticals they produce, including biologics. He was approved by the Senate by a vote of 57-42.
During the Amgen v. Sandoz oral argument, Justice Breyer wondered at multiple points if it might not be easier to address the complex legal issues surrounding the BPCIA through action by the FDA. “Now, we are being asked to interpret very technical provisions that I find somewhat ambiguous,” observed Justice Breyer. “But it’s going to have huge implications for the future. So why isn’t the way to go about this case to ask the agency to issue some regulations?”
So far the FDA has shown no interest in issuing regulations interpreting the BPCIA’s litigation provisions. And, as Justice Breyer noted, there is good reason for the FDA not to promulgate such regulations: “you all will be able to argue that their interpretation exceeds the statutory delegation.” With “1 in, 2 out”, it is all the more unlikely that the agency will change course under the helm of Dr. Gottlieb.