Ha Kung Wong and April Breyer Menon Discuss Promising and Not-so-Promising Biosimilar Legislation

The Center for Biosimilars® (CfB): Hello Matthew Gavidia. Today on the MJH Life Sciences News Network, The Center for Biosimilars® is pleased to welcome Ha Kung Wong, intellectual property law attorney with Venable Fitzpatrick in New York and April Breyer Menon, expert on biosimilar patent law and the founder of April Breyer Consulting in Chicago.

To get started, April, can you discuss what were the circumstances that prompted legislators to offer the Hatch-Waxman Integrity Act?

Menon: So, the Hatch-Waxman Integrity Act deals with the interplay between generic and biosimilar FDA approval pathways and their patent dispute frameworks. Currently, a company seeking to bring a generic or biosimilar drug to market can take advantage of a shortened FDA approval pathway that allows them to rely on some of the data from the reference product's application for generic drugs. That's called the Abbreviated New Drug Application (ANDA) pathway and for biosimilars, that is the pathway that set up under the Biologics Price Competition and Innovation Act or the BPCIA.

Patent disputes are guided by frameworks that were set out by Congress. So, for generic drugs, we have the Hatch-Waxman framework, and that has patent listings in the Orange Book for the small molecule drug patents and then it deals with certification letters on which patents may be challenged in litigation and sets up a 30-month stay for the litigation to take place. For the BPCIA, that sets up the patent dance information exchange between the [reference] biologic manufacturer and the biosimilar [manufacturer].

Starting in 2012, additional patent dispute procedures were introduced, called inter partes review (IPR) and post grant review (PGR) proceedings, at the patent office. These are possibly a faster way to challenge drug patents than in the district court. So, there was some concern after the IPRs and PGRs started that they were upsetting the balance that Congress have set out in the patent frameworks in Hatch-Waxman and BPCIA. So, the Hatch-Waxman Integrity Act actually seeks to restore that balance by requiring manufacturers to either choose to use the shortened FDA approval pathways or use an IPR PGR proceeding. Basically, they can't use both and the idea is that was kind of reset the balance that Congress intended.

CfB: This bill has been stymied in Congress for 15 months. What are its chances of passage and why?

Menon: So, this bill has actually been introduced in the Congress 3 different times. The fact that it's been stalled for so long could be concerning for passage, especially since right now it really seems that Congress and the current administration seem to prefer legislation that would decrease drug prices and bring generics and biosimilars to market more quickly.

And it's possible but this bill could actually adversely impact that effort by prolonging time disputes and slowing down the approval of generics and biosimilars. An example of that would be, now, a biosimilar manufacturer could file an IPR early on in the product development process and it could potentially have that IPR invalidate the patent before litigation would even be filed. So, it could completely eliminate the need for litigation on that patent.

Another challenge of this bill is that it's singling out 1 particular industry, and it's effectively removing some of the mechanisms that they have to challenge patent validity. This bill may effectively end up shielding small molecule drug patents and biologic drug patents from IPRs completely, just because of the fact that FDA approval is so expensive. The shortened drug pathway for approval would be preferable probably to using an IPR or PGR. Overall, I think that there are a lot of challenges that might come into play to get this bill passed, and especially the sentiment in Congress regarding drug prices and wanting to bring biosimilars and generic drugs to market more quickly.

CfB: So, whether or not this bill goes anywhere, what would you say are some of its most logical or meaningful elements?

Menon: I think that the biggest impact of this bill is that it would potentially eliminate duplicative proceedings. So, right now, the drug patents could be challenged both at the patent office and in the district court. And I know I gave an example earlier of how that could speed up the process if the IPR was filed before litigation, but the potential concern is that IPRs could actually drag out litigation. If the litigation is filed first, and then an IPR is filed, then the litigation might be stayed while the IPR is decided, and then they have to go back to the litigation. So, it can actually cause the disputes to take longer and be more expensive.

Another concern is that there are different standards at the patent office and in district court. So, you could actually end up having a different patentability determination for the same patent. A couple of examples of the different standards would be that there's no presumption of validity at the patent office. The patent office uses the preponderance of the evidence standard, which is a reduced standard compared to litigation and the district court.

Data have actually shown that duplicative proceedings have been a pretty big issue since the creation of IPRs and PGRs. Pentaxia did a study of IPRs from when they started in 2012 through the first half of 2017 and they found that almost 80% of IPRs were filed in what they called a defensive proceeding. So, that meant they were filed after the district court case had already been filed. Those are the ones that tend to drag out the patent litigation longer.

We've actually collected some data for Biologics HQ looking at just biologic drug patents, and we found that for those [kinds of patents], only 37% of IPRs are actually filed patents that were already in active district court cases and that would be a district court case between any parties. So, if you look at only IPRs filed on patents that have been challenged by the same parties, it was actually only 26%.

So, this doesn't seem to be quite as big as an issue for biologic drug patents as [it is for] patents as a whole. We did a little bit different analysis for small molecule drug patents listed in the Orange Book. For that we looked at whether patents have been challenged by both and IPR and in the district court litigation at any time by any party, and we found that actually 95% of those patents were challenged in both. If you do that same analysis for biologic drug patents, it's 64%. So, you can see that duplicative proceedings at some time or another are an issue. This bill could actually be somewhat helpful to eliminate those, although it might have a bigger impact on small molecule drugs than biologics.

CfB: Moving on to the Stop Stalling Act. This act is intended to prevent the abuse of citizen petitions by innovator drug companies. First of all, what is a citizen petition and how have these been misused? And additionally, April, can you discuss how widespread is this practice?

Menon: Sure. So, citizen petitions are a way for the public to raise scientific and health concerns about drugs that the FDA is reviewing. These petitions can either ask that the FDA take some sort of action or refrain from taking action on a particular drug application. The citizen petition process can be misused by people or companies that are filing petitions that don't actually raise a legitimate scientific or health concern and they only seek to delay FDA action by causing unnecessary investing. Sometimes they even file a series of sham petitions, just to delay FDA approval for as long as possible.

This type of petition does appear to be used in a rather widespread manner. In 2016, Rutgers Law School did a study where they looked at a particular type of citizen petition that would request the FDA take action against a pending generic drug application. And they found in the 4 years before this study that 92% of that type of citizen petition were filed by brand name pharma companies, and then 92% of those were ultimately rejected by the FDA. So, that shows that there wasn't an actionable issue in 92% of those petitions that were being filed.

CfB: This act would make sham petitions actionable in what way?

Menon: Well, this act creates a Federal Trade Commission (FTC) cause of action against sham petitions as unfair methods of competition. So, the act would define a sham petition as a petition or series of petitions that are objectively baseless and attempt to use a governmental process to interfere with the business of a competitor. It seems to be trying to narrowly tailor it to just this type of sham petition and not any petition, only those that are objectively baseless.

Menon: It's also going to create a rebuttable presumption of illegality for petitions that the Secretary of Health and Human Services [HHS] determines were submitted primarily for the purpose of delaying approval of the drug application. And then, this act would grant the FTC the authority to seek a civil penalty in district court for any violations of the act.

CfB: Has recent FDA guidance on citizen petitions made the Stop Stalling Act redundant?

Menon: No, it hasn't. The FDA guidance is separate from the act because the act creates a cause of action for the FTC to bring a case in district court and to seek monetary penalties. The FDA guidance, on the other hand relates to how the FDA will actually handle the citizen petition. So, it describes how the FDA will determine whether it will delay a drug application's approval, because it's actually necessary to protect the public health, or whether the FDA can just summarily deny the petition because on its face. It doesn't raise a valid scientific or regulatory issue. So, really, the guidance and the act would work hand in hand, with the FDA having the ability to summarily deny the petition is a sham and then the FTC would then be able to go to district court and seek penalties for filing that petition.

CfB: How likely is it for this legislation to pass?

Menon: This legislation appears to have bipartisan support. It's already advanced in both houses of Congress and we can see from the FDA guidance that the FDA is aware of this issue and is taking it up and tried to make strides towards preventing this. So, it really seems that for this particular legislation that there are very few challenges at the moment.

CfB: The Biologic Patent Transparency Act would force innovator companies to make public the patents protecting their products and is intended to limit the filing of patents to block ongoing biologic product applications. Ha Kung, why has patent transparency become a problem?

Wong: It's kind of like asking, Matt, why didn't the Chicago Bulls re-sign Phil Jackson and Michael Jordan in 1999, giving them 1 more chance to win a seventh championship ring? The answer is there were lots of problems. Same is true here, but I think that there's 1 reason that's particularly relevant. Biologic drugs are very scientifically complex, as most come from living organisms and aren't as simple as small molecule drugs, where everything is essentially just a handful of carbons, oxygen, and hydrogen. There are often many more patents filed on each biologic drug because of this complexity, including composition of matter, formulation, methods of use, and most important, manufacturing patents, something that might not have been as important for the small molecule space. So, some innovator biologic drug manufacturers, because of this, have identified over 100 patents that potentially cover aspects of the drug.

And with all the scientific and manufacturing complexity, it can be difficult for an innovator to determine exactly which patents cover which aspects of the product, which means it can be even more difficult for a biosimilar manufacturer to identify all of the potential patents that may cover its biosimilar product.

So, as a result of this, biosimilar manufacturers may not have a complete understanding of what patent issues they may face in the future prior to committing resources to development. And this is a very, very different scenario than for the generic small molecule drug manufacturer that has much more patent transparency, because they can view the list of patents covering small molecule drugs in the Orange Book. So, as you can see, doing something similar for biologics may reduce issues of patent transparency in the field. So, the Biologic Patent Transparency Act would require innovator companies to list patents for which a holder or exclusive licensee believes a claim of patent infringement could reasonably be asserted by the holder in the FDA’s Purple Book.

So, it ended up being kind of the biologic version of the Orange Book, if you will. However, while the Senators’ [Susan Collins, R-ME; Tim Kaine, D-VA] comments on the bill state that it will target patent thickets by limiting enforcement of patents issued after a biosimilar application has been submitted to the FDA, the actual text of the bill does not include this provision. Thus, the bill currently will not limit the filing of patents that could impact potential biosimilars.

CfB: How will the act increase transparency and create advantages for biosimilar manufacturers?

Wong: Well, I think there's a couple things to consider. First of all, it adds information to the Purple Book such as biosimilarity, interchangeability designations, exclusivity [periods], approved indications, and it makes the Purple Book searchable. In other words, it actually makes the Purple Book usable and useful, like the Orange Book is. So, I think there's some benefit there. It also specifically requires that in the Purple Book you list compositions, method of use, and method of manufacturing patents. That's something different than what you see in the Orange Book, which the holder or, in some cases the exclusive licensee, believes a claim of patent infringement could reasonably be asserted by the holder, which is similar to the requirement for listing in the Orange Book. They also say that you want to list any patent or patent infringement that could reasonably be asserted.

So, there is some parallel there, and we've seen how useful the Orange Book is. And this could make the Purple Book more useful. Now, of course, there's a penalty for failing [to list the patent in a timely manner]. You can't bring an infringement action under the BPCIA if you don't list a patent, and that's pretty draconian, and that's something we'll talk about in a little bit. But because biosimilar manufacturers would know in advance if they have this listing, which patents they could be infringing, they may be able to challenge patents earlier in the product development process or attempt to design around the patents. This may impact the pace of patent dispute processes and get biosimilars to market more quickly.

Another potential advantage to biosimilar applicants is that they could essentially circumvent the BPCIA patent dance by choosing not to provide the RPS [reference product sponsor] a copy of their [abbreviated Biologics License Application] to start this patent dance process, but they would still have the benefit of knowing which patents could be asserted against them pursuant to this listing in the Purple Book.

CfB: Contrary to the way it appears on the surface, this bill is highly complex and perhaps impracticable. Can you explain why?

Wong: Well, on the one hand, it's very challenging for a reference product sponsor [RPS] to know which patents to list. So, with a strict penalty for failing to list, the number of patents in play may actually increase, since an RPS may be more likely to list any patent that could possibly be reasonably relevant, which still leads to each litigation being determined on a case by case basis, after evaluating all the applicable patents during the patent dance. Ultimately, this may then have little impact on the speed of litigation. Now, on the other hand, there may be minimal incentive for an RPS to list patents, like there is in the Hatch-Waxman Act, because there's no specific accrued benefit, like the promise of 30-month stay of generic small molecule drug approval. So, maybe they would not want to list at all.

This does, as I mentioned earlier, have this penalty of barring infringement claims, and that doesn't exist in the Hatch-Waxman space. And some people may see this as being too harsh of a penalty, so that's another thing that could be an issue. Then, they could be seen as potentially inconsistent with the entire process of the BPCIA. I mean, Congress did go through and put together a pretty elaborate scheme for trading patent information and the BPCIA would absolutely be shortcutted, in a process that was not contemplated at all by the BPCIA or Congress when they passed it.

And then, all together, this could lead to further disincentivizing the use of the patent dance by a biosimilar because why would they need it anymore? They have to list the patents and the Purple Book. At the end of the day, this doesn't mean you have to actually limit the number of patents that an RPS could obtain on a biologic. So, it's really unclear how this would address the so-called patent thickets.

CfB: Given all that, is there a way to make this bill workable and gain more transparency?

Wong: Well, that's akin to asking whether there's anything we could do to make the last Star Wars movie more watchable. The answer is probably not. But that's an interesting question here because there are interesting aspects in the bill's current form worth saving, such as improving information in the Purple Book like biosimilarity, interchangeability designations, exclusivity, and improved indications, all of which make the Purple Book more beneficial to everyone.

Now, perhaps 1 potential change could be to provide an explicit incentive for listing the patents in the Purple Book, and making the penalty for failing to list a patent less severe, similar to what we see in Hatch-Waxman, where there's a 30-month stay of approval given for patents listed in the Orange Book. And the penalty there for failing to list patents is simply you don't have the 30-month stay approval, and not the complete removal of your ability to enforce the patent. So, perhaps that way, it becomes more of a give and take, like the Orange Book space, and it might be more palatable on both sides and plus more practical in terms of effects.

CfB: The Affordable and Safe Prescription Drug Importation Act would allow the United States to import select lower priced drugs from Canada, possibly leading to drug imports from other countries. American people are strongly in favor of this type of legislation, but there are some very real problems with this bill. Can you explain this, Ha Kung?

Yeah. I'll do this in summary fashion because there are a lot of problems here. First of all and foremost, there may be quality and safety concerns about allowing people to take drugs that haven't been approved by the FDA. We all know the story of thalidomide in the 1950s and how it was approved overseas. It led to tragic birth defects and it was never approved by the FDA. Clearly, we have the FDA for a reason and bypassing requirements can be very dangerous.

And secondly, drug availability may be an issue. I mean, the fact of the matter is that if only 20% of US prescriptions were to be sourced from Canada, we would exhaust the entire Canadian drug supply in 103 days, which I don't think Canadians would be happy about. And of course, that's reflected in what Canadian officials have said. They've generally been opposed to this policy for that very reason. And ultimately, it may not be an efficient way to lower drug prices, as compared to simply implementing pricing restrictions, similar to those that were implemented in Canada.

And finally, we have actually had similar policies that were introduced in 2003 and 2017. Neither passed. It's unclear why this would be any different.

CfB: Given all that, how would you rate this bill's chances of passage?

Wong: Well, I'd say this bill's chances of passage are about as high as the chance that Carol Baskin from the Netflix documentary, The Tiger King, wasn't involved with her ex-husband's disappearance. She was super shady, but I digress. While this bill appears to have significant public support, the logistics may not be feasible. Canada doesn't have the drug supply necessary to supply the United States, and if only a fraction of the drugs are imported from Canada, the savings are going to be minimal. And of course, with the potential safety concerns with bypassing the FDA, I’d say it would be challenging for this bill to pass.

CfB: The Biosim Act will temporarily increase reimbursement for biosimilar drugs to average sales price (ASP) plus 8%, up from the current 6% plus ASP. So, April, what's the idea behind paying physicians more for using biosimilars?

Menon: The idea is that financial encouragement may help to increase the uptake of biosimilars, which we know has been an issue so far in the United States. So, currently biosimilars and reference products are reimbursed at the same rate. That means that each 1 is reimbursed at their ASP, and then 6% of the reference products’ ASP is added to that. So, from a reimbursement perspective, there's really no incentive to prescribe one drug over the other.

Now, there might actually be increased costs to the doctor in prescribing a biosimilar. Some examples would be that they may have to spend extra time with the patient explaining what biosimilars are and answering their questions. If they're switching from a reference product to a biosimilar, they'd have to explain the risks and benefits of that. They might have to spend extra time monitoring and following up with the patient. And all of that together could make prescribing the biosimilar a less attractive alternative. So, the idea is that this added reimbursement for biosimilars might help doctors offset those potential increased costs.

CfB: How would you rate this bill's chances of passage as currently packaged?

Menon: Well, so right now, this bill is packaged as an amendment to the Lower Drug Costs Now Act, which is a very expensive drug pricing bill that came out of the House. And because of the way it's packaged, it might have a difficult time passing just because of some of those other provisions in that act. One example is that another provision allows the government to negotiate drug prices paid by Medicare. And that provision in particular has been opposed by a number of people in Congress, particularly Republicans, because they feel it interferes with the free market. So, even if this drug itself might not have so many issues because of its past packaging, it may make it rather difficult to pass.

CfB: So, Ha Kung, in an election year, how might this dynamic spur or hinder the passage of drug price legislation?

Wong: Well, we all know that the Trump administration can be unpredictable, not only on Twitter, but in terms of policy. It seems like drug pricing is something that was a priority. So, President Trump may push for legislation, but it's unclear at this point, since there's so many other priorities in the immediate horizon, not the least of which is [coronavirus disease 2019] COVID-19 and the economy.

Regardless, the public is generally in favor of drug pricing initiatives. So, we may see legislators trying to push something through or at least provide some demonstrable progress as part of their bid for re-election or in support of their party. However, let's not forget the lobbyists, as many companies and groups that contribute to campaigns appear to oppose many of these bills, which may lead to limited congressional support.

CfB: Not to forget about the COVID-19 pandemic, how does this play into the success or failure of the legislation we've discussed?

Wong: Well, with all the attention currently focused on COVID-19, Congress has had limited ability to be in session and debate these bills. So, clearly, that makes it difficult for these bills to progress. But COVID-19 could have a long-term impact on people's health care. So, it will be interesting to see where some of this legislation could go, as health concerns are at the forefront of everyone's mind, including politicians’. Clearly, access to medications is in part based on [intellectual property] and regulatory requirements, and COVID-19 is a clear example of a virus unchecked by any developed treatment. The current increased focus on finding better medications for future potential pandemics may spur increased interest in passing bills that impact future biologic drug uptake, particularly with respect to vaccines.

CfB: Even if legislation can speed approval of biosimilars, we still have issues with uptake. Can you explain?

Wong: Well, while the uptake has been increasing the biosimilar market share still significantly lags behind reference products for most drugs. Even if more drugs are approved, the United States still needs to make efforts to increase awareness and education on biosimilars for doctors and patients. Biologic and biosimilar drug prices may also require more significant control by the government to encourage use of those drugs by doctors, who are less familiar with them and also subject to taking up more of their time to administer them since they may need to spend more time educating patients on biosimilars, answering questions, and in turn, have increased follow-up appointments. So, ultimately, you need to get buy-in from the politicians, the payers, the physicians, and the patients, and all that is a very tall order.

CfB: Thank you both for joining us today.

Wong and Menon: Thanks, Matt.

CfB: To learn more, visit our website at centerforbiosimilars.com. I'm Matthew Gavidia. Thanks for joining us.