Recent debates over how to structure an approval pathway at the United States Food and Drug Administration for follow-on biologics (FOBs) have taken a predictably polarized turn, with the pioneer drug manufacturers on one side, and the FOB industry on the other. Each side is arguing for statutory entry restrictions in the form of exclusivity periods that they argue will promote innovation and consumer access to lower-priced biologic drug products. These entry barriers are based on those in the Hatch-Waxman Act's approval process for generic small-molecule drugs. Recently, the Federal Trade Commission (FTC) provided an independent analysis of how the proposals would likely affect consumers. The FTC's Report, Emerging Health Care Issues: Follow-On Biologic Drug Competition, concluded that the likely market dynamics of FOB competition will resemble brand-to-brand drug competition, rather than a generic drug product. This article explains how an FOB regulatory approval pathway need only rely on the US patent system and market-based pricing to continue to incentivize development of both pioneer and FOB drugs. Further, inclusion of entry barriers in the form of regulatory exclusivity periods and special patent resolution procedures would likely harm consumers by delaying FOB entry and decreasing the pace of biotech innovation.
See The Federal Food, Drug, and Cosmetic Act, 21 U.S.C.A. § 301 et seq. (2009), as amended by the Drug Price competition and Patent Term Restoration Act of 1984 (the ‘Hatch—Waxman Act’) and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
The Report recognizes that to the extent that new biologic molecules cannot obtain patent protection, an exclusivity period may be warranted. Id. at vii.
4.
Historically, some biologic protein products have been regulated as drugs under the FD&C Act, including insulin and human growth hormones. The FDA has approved six follow-on protein products under the FD&C Act. See Assessing the Impact of a Safe and Equitable Biosimilar Policy in the United States Hearing Before H. Subcomm. on Health and the H. Comm. on Energy and Commerce, 110th Congress (2007) (statement of Janet Woodcock, Deputy Commissioner, Chief Medical Officer, FDA), http://energycommerce.house.gov/cmte_mtgs/110-he-hrg.050207.Woodcock-testimony.pdf.
5.
The branded biopharmaceutical industry frequently points with alarm to the Indian and Chinese manufacturers, and claim that they will enter the US biologic markets overnight with FOB products currently sold in Asian and emerging markets, devastating the incentives to develop new, life saving drugs for Americans. Yet, it is the European and US-based pharmaceutical companies who are locating their own R&D and manufacturing centers in Asia and in emerging markets to compete against those companies; while these Indian and Chinese firms have thus far not been able to enter the European market, which has had FOB pathways for several years and patent expiry in those same markets for over 5 years. Further, marketing, patent and regulatory barriers in the United States are formidable barriers to any new entrant, and will remain so.
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Notably, the biopharmaceutical industry does not appear to be predicting a more rapid decline in current biologic companies’ market share once FOBs enter the market. A review of industry reports to shareholders and in filings before the Securities and Exchange Commission confirms this prediction. If such speculative market share erosion cannot be relied upon for shareholder reports, it appears unwise to rely upon it for public policy purposes.
7.
See Centocor, Inc. et al v. Abbot Laboratories, Civ. Action No. 2:2007cv00139 (E.D. Tex. April 16, 2007); Genentech, Inc. v. Chiron Corp., 112 F.3d 495, 501 (Fed. Cir. 1997) (reversing district court's claim interpretation in interference proceeding because it was ‘not the broadest, reasonable interpretation of the count’.) (citing Genentech, Inc. v. The Wellcome Found., Ltd., 29 F.3d 1555 (Fed Cir. 1997)); Amgen, Inc. v. Chugai Pharm. Co., 927 F.2d 1200, 1219 (Fed. Cir. 1991) (affirming trial court's finding that certain claims were valid and infringed); Amgen, Inc. v. Hoffmann-LaRoche Ltd., 2008 U.S. Dist. LEXIS 77343 (D. Mass. 2008) (granting permanent injunction for infringement of claims directed to a specific amino acid sequence); see also Amgen Inc. v. Hoechst Marion Roussel, 579 F. Supp. 2d 199, 210 (D. Mass. 2008); Chiron v. Genentech, Inc., 268 F. Supp. 2d 1126, 1138 (E.D. Cal. 2008); Genentech, Inc. v. Insmed Inc., 436 F. Supp. 2d 1080, 1091–92 (N.D. Cal. 2006) (granting patent holder's partial motion for summary judgment and finding literal infringement of a patent claiming ‘Preparation of Human IGF via Recombinant DNA I Technology’).
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In others, even though the pioneer manufacturer lost its infringement suit, competitive entry did not occur because of other market barriers.
9.
Biogen, Inc. v. Berlex Labs, 318 F.3d 1132, 1140-42 (Fed. Cir. 2003) (affirming trial court's finding that there was no literal infringement and vacating summary judgment of non-infringement under the doctrine of equivalents); Genentech, Inc. v. The Wellcome Found. Ltd., 29 F.3d 1555, 1569 (Fed. Cir. 1997) (reversing trial court's denial of defendant's Judgment of Matter of Law (JMOL) in part because an element of the doctrine of equivalents was not met); Novo Nordisk of N. America, Inc., v. Genentech, Inc., 77 F.3d 1364, 1367–71 (Fed. Cir. 1996) (vacating preliminary injunction on grounds that district court erred in finding literal infringement where ‘direct expression’ of human growth hormone did not cover alleged infringer's ‘cleavable fusion’ process for producing the hormone); Hormone Research Foundation, Inc., v. Genentech, Inc., 904 F.2d 1558, 1563–67 (Fed. Cir. 1990) (finding no literal infringement, vacating infringement under the doctrine of equivalents, holding that the patentee did not intend ‘corresponding to’ and ‘similar’ to have the same meaning, and ruling that ‘corresponding to’ reflected true identity).
See Orphan Drug Act, 21 U.S.C.A. § 360aa-dd (2009); 21 U.S.C.A. § 355a. The FDA grant of 6 months exclusivity is added to any existing marketing exclusivity or patent protection.
The Burrill Report ‘Financing Activity May Lift Cloud Hanging over Biotech Industry’ (26 May 2009)(One of the ‘largest ever rounds of venture financing’ occurring during the Clovis oncology securing $145 million in VC fund).
16.
SeeBranscombL. M.AuerwaldP. (2002) Between Invention and Innovation: An Analysis of Funding for Early Stage Technology Development, prepared for National Institute of Standards and Technology (‘NIST’), Department of Commerce, http://www.atp.nist.gov/eao/gcr02-841/contents.htm; NIST, Depatment of Commerce, Beyond Measure: A Profile of ATP Health Care Investments (2003), http://www.atp.nist.gov/atp/brochures/healthcare.pdf, (estimating that federal funding accounts for 21–25 per cent of funding during the ‘valley of death’ period between basic research and product development).
17.
Avalere Health LLC, ‘Examination of Biologics and Their Next Generation’ (April 2009) (concluding that next-generation biologic products were likely meaningful improvements to the products to reduce side effects, improve dosing or convenience).
