Government Shutdown Could Take a Substantial Toll on Biosimilars, Experts Say

Kelly Davio

When the shutdown ends, said Scott Lassman, JD, partner at Goodwin, “It’s not going to be like flipping a switch…this is going to have longer-term consequences.”

As the US government enters the 25th consecutive day of a partial shutdown that President Trump has warned could stretch for “months or even years,” the FDA is facing dwindling funds that are impacting its capacity to review drug applications.

During the shutdown, the FDA cannot accept any new user fees, and as such, sponsors of new applications will need to wait for the shutdown to end before they can submit their products for review. However, in a January 5 comment on Twitter, FDA Commissioner Scott Gottlieb, MD, indicated that the agency continues to work on existing drug applications for which user fees were paid prior to December 22, 2018, and that the agency had enough funds in its carryover balances from 2018 to fund “about one month” of work. On January 12, Gottlieb tweeted an update that the agency is evaluating when it will “cross a threshold, beyond which, we have to declare that we will not be able to meet medical product user fee goals for 2019.”

Speaking to The Center for Biosimilars® in an interview, Scott Lassman, JD, and Robert Cerwinski, JD, both partners at Goodwin, explained the impact that biosimilar developers will feel from the ongoing shutdown once the FDA runs out of funds.

Lassman, who practices in Goodwin's Technology and Life Sciences Group, says that, while the FDA will attempt to get as much work accomplished as possible before the coffers run dry, programs that are not approved prior to funding running out will be delayed. When the shutdown ends, he added, “It’s not going to be like flipping a switch…this is going to have longer-term consequences.”

Lassman said that developers should expect to encounter long delays as the FDA gets back to work, and he predicted that those delays could last for several months. “I think it’s going to be a mess,” he added.

Industry is likely to remember those delays when negotiating the next Biosimilar User Fee Act (BsUFA) agreement, he added, noting that while the FDA is not required to meet 100% of its goals under the BsUFA, it is likely to receive a spate of negative publicity and criticism from both Congress and industry over missed milestones. However, in this case, the FDA has “a very good explanation” for any goals it fails to reach as a result of the shutdown, said Lassman.

Cerwinski, who focuses on litigation involving pharmaceuticals and biologics, says that the impacts of the shutdown could be keenly felt by smaller biosimilar developers. “The companies that are out there right now burning cash without a product on the market are obviously very sensitive about their launch timeline. A lot of their business planning has been focused around the launch timeline, and if those timelines get pushed for any reason, that’s obviously a significant event for them.”

Bigger companies with more diversified product portfolios will likely feel less of an impact, he said, but even so, biosimilars stem from significant investment, and the date of market entry is a critical factor for developers of all sizes, especially if they are engaged in a race against competitors to be first to market.

Beyond the impact on launch dates, there also exists a potential for the shutdown to impact ongoing patent litigation over biologics. At the moment, said Cerwinski, the US court has enough funding to function as usual through January 18. After that date, limited emergency funding may be made available to provide “essential services.” What services those may be remains unclear, however. The district courts may adopt a district-by-district approach to how they will operate, and the workers who staff those courts may be working without pay for an extended period of time.

With respect to inter partes review (IPR) proceedings before the Patent Trial and Appeal Board of the Patent and Trademark Office (PTO), Cerwinski said, “It may be a little bit of a different story.” Because the PTO, like the FDA, operates under user fees, the office is currently using money collected last year, and has enough funds to operate for approximately 1 month. “We could see a disruption in operation if we go on much longer than a month,” he said, adding that an interruption would likely mean a delay in IPR adjudications.