Intellectual property law attorneys from Axinn discuss regulatory and legal events in 2020 that will affect biosimilar markets in 2021.
Developments specific to biosimilars—a new regulatory framework for insulins, incremental market gains, and “patent dance” clarifications—were overshadowed this year by an existential threat to the law governing biosimilar approvals.
Will the BPCIA Survive 2021?
The most significant question facing biosimilar developers this year is whether the Biologics Price Competition and Innovation Act (BPCIA), which provides regulatory approval pathways for biosimilars in the United States, will survive 2021. The BPCIA—Title VII of the Affordable Care Act (ACA)—is caught in the legal crossfire surrounding the latest constitutional challenge to the ACA.
Although the BPCIA has bipartisan support, the ACA’s individual mandate requiring all individuals to maintain health coverage or pay a penalty has been the subject of numerous court challenges. The Supreme Court previously upheld the mandate’s constitutionality (by a 5-4 margin) as a valid exercise of Congress’ taxing power. After Congress reduced the penalty to $0 for failure to comply with the individual mandate, various states contended that the ACA is unconstitutional because the individual mandate does not generate any revenue and thus can no longer be classified as a tax.1 On March 3, 2020, the Supreme Court granted certiorari to decide this question and whether the individual mandate is severable from the remainder of the ACA, which would allow the remainder of the ACA to remain in place even if the individual mandate is found unconstitutional. The latter question is particularly important to biosimilar developers because the district court that originally decided the case concluded that the individual mandate is inseverable from the rest of the ACA. If the Supreme Court affirms this decision, the BPCIA would fall with the rest of the ACA.
Although the Supreme Court has yet to decide the constitutionality challenge at issue in California v Texas, biosimilar developers have reasons to be optimistic. At the November 10, 2020, oral argument, the justices seemed reluctant to strike down the ACA in its entirety even if the individual mandate is unconstitutional. They described Congress’ decision to reduce the penalty to $0 but not repeal the law as “compelling evidence” that Congress wanted to preserve other provisions of the ACA, such as the protections for individuals with preexisting conditions. Chief Justice Roberts and Justice Kavanaugh also appeared skeptical of the argument that the ACA’s legislative findings section constituted an inseverability clause. The tenor of the oral argument suggests that the entire ACA will not be held unconstitutional even if the individual mandate is struck down, although it’s always dangerous to make predictions based on the oral arguments. A decision is expected in 2021.
A Changed Regulatory Scheme for Generic Insulin
On March 23, 2020, over 90 biological products previously governed by the Hatch-Waxman Act, including insulin and human growth hormone, became subject to the BPCIA. The regulatory shift presents follow-on insulin developers with new challenges and new opportunities.2
Despite high consumer demand, few insulin developers working under the old scheme sought approval using the Hatch-Waxman Act’s abbreviated pathways. As a result, only 3 companies supply insulin in the United States, and insulin prices have continued to increase annually by more than 10%.3
With the change to the BPCIA, insulin developers can now choose between 2 abbreviated pathways for approval: biosimilarity and interchangeability. To date, the FDA has not licensed any follow-on biologics as interchangeables. But insulin is a well-documented and structurally uncomplicated protein, and follow-on developers could find the FDA more receptive to approving insulins as interchangeables.
The shift to the BPCIA also provides a different playing field for patent issues. There will be less clarity as to which patents cover the biologic reference product. Unlike the requirement to list patents in the Orange Book for small molecule products, biologic originators are not required to identify patents that might be asserted in the Purple Book provided by the FDA. Therefore, developers will need to undertake more thorough searching to identify patents that could cover their follow-on biosimilar insulin products. On the plus side, follow-on developers will have more control over patent litigation. They can decide whether to initiate the patent dance—the BPCIA-prescribed information exchanges that may lead to patent litigation—or forego that process and let the originator decide the timing and scope of litigation.
The BPCIA offers other advantages to insulin developers that may allow earlier product launches. Most importantly, the BPCIA (unlike Hatch-Waxman) does not require follow-on developers to wait 30 months after being sued before launching their products. In addition, although reference biologics are typically entitled to 12 years of exclusivity, the FDA has stated that insulin products that were approved prior to March 23, 2020, are not entitled to either the 12 years of exclusivity under the BPCIA or the remainder of any exclusivity they may have had under the Hatch-Waxman Act.4 These benefits, combined with the more flexible patent litigation procedures, allow follow-on developers to right-size the scope of litigation in view of their launch plans.
Growing Market Acceptance of Biosimilars
Biosimilars made incremental market gains in 2020. Although the number of regulatory approvals was lower than in prior years, previously-approved biosimilars made significant market advances. These gains may signal that American doctors and patients are overcoming their initial resistance to biosimilars.
On the regulatory side, only 2 new biosimilars were approved by the FDA in 2020, a significant decrease from the record of 10 approvals made in 2019.5,6 Despite the drop-off in approvals, the FDA’s pipeline of biosimilars in development continues to grow. An average of 83 biosimilar projects were enrolled in the FDA’s biosimilar biological product development program during the first 9 months of 2020, compared with the average of 77 projects in 2019.7
Commercially, 6 new biosimilars launched in 2020, matching 2019’s record, and doubling those from 2018.7 Eighteen biosimilars are now available in the United States (vs 29 approvals).9
Biosimilar market shares continue to lag behind generic pharmaceuticals, but there was progress in 2020. In oncology therapeutics, bevacizumab and trastuzumab biosimilars accounted for at least 40% of their respective markets by volume.10 Sandoz’s Zarxio, the first biosimilar approved by FDA, marked its fifth anniversary of regulatory approval by overtaking the reference product in market share.11 These market successes will help improve consumer awareness of biosimilars as safe and effective treatments.
Patent Litigation Under the BPCIA
Notwithstanding court shutdowns due to the COVID-19 pandemic, BPCIA cases were actively litigated this year.
The most important decision, in Genentech v Amgen, addressed 2 issues related to BPCIA patent dance procedure. Reference product sponsor Genentech alleged that Amgen’s Avastin biosimilar infringed 26 Genentech patents. Genentech sought to dismiss Amgen’s counterclaims and affirmative defenses based on alleged deficiencies in Amgen’s patent dance disclosures under the BPCIA. First, Genentech argued that Amgen was barred from asserting counterclaims for declaratory relief under the BPCIA because it did not provide sufficient manufacturing information during the patent dance. Judge Connolly from the District of Delaware rejected this argument, holding that Amgen was not barred because, unlike a complaint, “the filing of counterclaims does not constitute ‘bringing an action’” under the BPCIA.12 Genentech also argued that Amgen was barred from raising invalidity arguments that were not included in its “section 3B” contentions during the patent dance. Relying on the Supreme Court’s Sandoz decision, Judge Connolly also rejected this argument.13
Three new BPCIA cases also were filed in 2020. Amgen brought 2 cases against Hospira asserting patents covering Amgen’s neutropenia treatments, Neulasta and Neupogen. The third case, Genentech v Samsung Bioepis, also involved Avastin. These cases are worth watching in 2021 because they raise a variety of issues, including infringement under the doctrine of equivalents and the level of detail required in patent dance disclosures.
Looking Ahead to 2021: Legislation and One Last Guidance From FDA
Congress is considering several bills aimed at jump-starting conversion to follow-on biologics. For example, the Increasing Access to Biosimilars Act of 2020 was introduced in the House of Representatives and Senate as HR 6179 and S 4134, respectively, to reduce the cost of biologics for senior citizens by providing an additional payment to eligible providers who furnish or dispense biosimilars to Medicare beneficiaries.
Other legislation from 2019 to 2020 aimed at limiting the number of patents that can be asserted in BPCIA litigation and providing biosimilar applicants an Orange Book–type database of patents stalled in Congress. With the promise of new filings in 2021 and the concomitant litigation, the issue of which patents and how many can be asserted during the patent dance may take center stage once again.
Finally, the FDA published draft guidance in November 2020 addressing 3 issues concerning biosimilarity and interchangeability:
Comments on this draft guidance must be submitted to the FDA by January 19, 2021.
Despite the ongoing pandemic, the biosimilars pathways provided for in the BPCIA continued to evolve in 2020 through regulatory developments and judicial decisions. The pending litigations and proposed legislation create the potential for 2021 to be an equally—if not more—active year for the biosimilars industry.
1. Mathias T, Ropka S, Clegg R. What ACA’s uncertain future means for biologics patents. Law360. February 27, 2020, 2:14 PM. https://www.law360.com/articles/1247932
2. Mathias T, Ropka S, Clegg R. Old drug, new tricks? How the BPCIA could increase generic competition for insulins. Biosimilar Development. June 23, 2020. https://www.biosimilardevelopment.com/doc/old-drug-new-tricks-how-the-bpcia-could-increase-generic-competition-for-insulins-0001
3. FDA. Statement from FDA Commissioner Scott Gottlieb, M.D. on new actions advancing the agency’s biosimilars policy framework. December 11, 2018. Silver Spring, MD: Office of Media Affairs, FDA. https://www.fda.gov/news-events/press-announcements/statement-fda-commissioner-scott-gottlieb-md-new-actions-advancing-agencys-biosimilars-policy
4. FDA. Interpretation of the “Deemed to be a License” provision of the Biologics Price Competition and Innovation Act of 2009: guidance for industry. Silver Spring, MD: Center for Drug Evaluation and Research, Center for Biologics Evaluation and Research, FDA; December 2018: 8-10. https://www.fda.gov/media/119590/download
5. FDA. Biosimilar product information. https://www.fda.gov/drugs/biosimilars/biosimilar-product-information. Accessed December 23, 20202.
6. Amgen. 2020 biosimilar trends report. Thousand Oaks, CA: Amgen Biosimilars; September 2020: 9. https://www.amgenbiosimilars.com/-/media/Themes/Amgen/amgenbiosimilars-com/Amgenbiosimilars-com/pdf/USA-CBU-80723-2020-Amgen-Biosimilar-Trends-Report.pdf
7. FDA.FDA-Track: Center for Drug Evaluation & Research - pre-approval safety review – biosimilars dashboard. Silver Spring, MD; Center for Drug Evaluation and Research, FDA; September 30, 2020. https://www.fda.gov/about-fda/fda-track-agency-wide-program-performance/fda-track-center-drug-evaluation-research-pre-approval-safety-review-biosimilars-dashboard
8. 2020 biosimilar trends report at 9.
10. Id at 24.
11. Id at 47.
12. Genentech, Inc v Amgen Inc. Civ. No 17-1407, 2020 WL 636439, at *4 (D Del February 11, 2020).
13. Id at *5.