On March 23, 2010, President Obama signed into law health insurance reform legislation, H.R. 3590 , a bill which has generated enormous media coverage and publicity. Less publicized is the fact that a subtitle of H.R. 35901, the “Biologics Price Competition and Innovation Act of 2009,” creates the legal and regulatory framework for the approval of follow-on biologics (“FOBs”). Some highlights of the legislation include: 1) creation of a patent information exchange regime prior to FOB patent litigation; 2) creation of biosimilarity and interchangeability standards for assessing FOB applications; and 3) an award of 12 years of data exclusivity for innovator biologics.

The current FOB legislation is far from a wholesale application of Hatch-Waxman to biologics. Some of the unique provisions in the FOB legislation, especially those related to biosimilarity and interchangeability standards, were no doubt created in recognition of the relative complexity of biologics and the unique safety issues posed by these products. The full impact of the FOB legislation will develop over time, however, a review of the legislation suggests several steps biologic product owners, referred to in the legislation as reference product sponsors, should undertake now to prepare for FOBs and future FOB patent litigation.

1. Identify Patents to Assert and Complete Due Diligence Investigations Now

H.R. 3590 does not create an “Orange Book” equivalent for biologics. Instead, the FOB legislation creates a patent information exchange regime between the FOB applicant and the reference product sponsor. Within 60 days after receiving a copy of an FOB application, the reference product sponsor is required to provide the FOB applicant “a list of patents for which the reference product sponsor believes a claim of patent infringement could reasonably be asserted[.]” H.R. 3590 also requires the reference product sponsor provide the FOB applicant, on a claim by claim basis, the “factual and legal basis of the opinion of the reference product sponsor that such patent will be infringed by the commercial marketing” of the FOB and “a response to the statement [made by the FOB applicant] concerning the validity and enforceability” of such patents. A reference product sponsor only has 60 days to identify those patents it may wish to assert in a future patent litigation.

Given the demands of these provisions and the relatively short time in which to comply, reference product sponsors should assess their patent portfolios now to have a firm understanding of which aspects of the product and/or processes are protected, the scope of protection, how much patent term remains, and whether the technology is owned or licensed-in. Also, because the reference product sponsor must provide a legal opinion supporting the factual and legal basis for infringement, validity, and enforceability months before any patent lawsuit can be filed, conducting a complete due diligence investigation now will allow reference product sponsors to quickly, and with certainty, identify patents to assert when the time comes.  

2. Identify and Evaluate Potential Infringement Issues

The complexity and variability of biologics, combined with the inability to fully characterize these products, preclude adopting a therapeutic equivalence standard similar to that applied to the approval of generic small molecule drugs under the Hatch-Waxman Act. Instead, H.R. 3590 requires the FOB applicant demonstrate that “the biological product and reference product utilize the same mechanism or mechanisms of action.” The FOB legislation also adopts “biosimilarity” and “interchangeability” standards that may create challenges for establishing patent infringement.

Under H.R. 3590, an FOB applicant demonstrates biosimilarity based upon data from analytical studies, animal studies, and a clinical trial that demonstrate that the biological product is both "highly similar to the reference product notwithstanding minor differences in clinically inactive components; and . . . there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product.” Interchangeability means that the FOB may be “substituted for the reference product without the intervention of the health care provider who prescribed the reference product.” To be deemed interchangeable, the FOB must be both “biosimilar to the reference product” and “be expected to produce the same clinical result as the reference product.”

H.R. 3590 does not require an FOB to be identical to its reference product. Therefore, FOB applicants may be incentivized to argue that their FOB is “highly similar” to the reference product and works by the same mechanism of action, but does not infringe any patent covering the reference product or the method of its manufacture. Given these flexible standards, reference product sponsors should evaluate their patent portfolios now with an eye toward both patent validity, as discussed above, and determining what information or testing would be necessary to establish infringement. Further, reference product sponsors should evaluate what modifications could be made to the reference product or its method of manufacture that would result in a “highly similar” biologic and whether those modifications are patentable. Such actions now, may prevent an FOB applicant from designing around the patent portfolio covering the biological product.  

3. Choose Your Jurisdiction Wisely

Under H.R. 3590, jurisdictional challenges may have major implications. Specifically, in the case of a timely filed lawsuit, which is “dismissed without prejudice or . . . [is] not prosecuted to judgment in good faith,” H.R. 3590 limits the remedy available to a reference product sponsor to a reasonable royalty. Therefore, the FOB legislation provides great incentive for FOB applicants to challenge jurisdiction with the hope of getting a dismissal of the case. An FOB applicant may also choose to identify a particular jurisdiction, likely favorable to the FOB applicant, where it would be amenable to suit. Accordingly, reference product sponsors should carefully consider where to file suit and conduct a thorough jurisdictional analysis. In fact, given the duty for the FOB applicant and reference product sponsor to negotiate in good faith on the patents to assert, discussions concerning personal jurisdiction should be part of those conversations.  

4. Assist the FDA In Establishing Guidance for Approving FOBs

H.R. 3590 provides reference product sponsors with an excellent opportunity to shape the approval process for FOB applications. Under H.R. 3590, the FDA “may” issue guidance “with respect to the licensure” of FOBs, including “criteria that the [FDA] will use to determine whether a biological product is highly similar to a reference product,” or guidance, based on “science and experience,” that prevents approval of FOBs in a certain product class. If the FDA chooses to issue such guidance, H.R. 3590 requires the FDA provide the public with an opportunity to comment on any such guidance, including “input regarding priorities for issuing guidance.”

Reference product sponsors should consult their product teams to obtain a full understanding of the procedures it follows to ensure the safety, purity, and potency of its reference product as well as the potential for immunogenicity problems to arise with a “biosimilar” or “interchangeable” FOB. Because the reference product sponsor will have the most experience with the approved biologic, it would benefit the public and FDA to carefully consider any information submitted by the reference drug sponsor prior to issuing any guidance for the approval of an FOB application.  

5. Determine Whether Extension of the Data Exclusivity Period Is Possible

H.R. 3590 provides 12 years of data exclusivity for the reference product. Six month exclusivity extensions are available if the reference product is subsequently approved for use in children (pediatric exclusivity) or if the reference product is approved for a “rare disease or condition.”

Consult with clinicians and the FDA to determine whether pediatric studies are appropriate or whether your reference product treats a “rare disease or condition.” Not only do you have the opportunity to extend your data exclusivity, but an FOB applicant would have to wait an additional 6 months to file an FOB application if pediatric or rare disease exclusivity is granted.