The Potential Effect of Amgen’s Launch on Biosimilar Licensing Deals

Imagine this interesting and perhaps very real-life scenario. It could have several implications for the present biosimilar marketing picture.

Biosimilar licensing deals

A reference manufacturer, we’ll call them Arby, signs multiple licensing deals with biosimilar manufacturers, to launch their products sequentially in 2025. The licensing deals all conclude outstanding patent litigation between the parties. But one biosimilar manufacturer doesn’t sign. We’ll call them Brooklyn Industries (BI for short).

Despite Arby’s contention that its patents on the reference product Yultira are valid until the year 2045, BI decides to launch at risk in July 2020. According to the phased launch schedule, another manufacturer, Thousand Oaks, was supposed to have the first biosimilar available on the market, with a three-month jump on the other seven competitors. Does that really give BI a five-year start over all of its competitors? And what if BI had an interchangeable biosimilar designation? Would that enable them to lock up the marketshare?

Biosimilar Licensing Deals: The Acceleration Effect

This scenario is actually playing out today with Amgen’s launch announcement of its trastuzumab and bevacizumab biosimilars (Kanjinti® and Mvasi®, respectively). Other manufacturers, including Pfizer, Samsung Bioepis, Mylan/Biocon, Teva/Celltrion have licensing agreements in place with Genentech (a subsidiary of Roche) for launch of their Herceptin® biosimilars. Only Amgen’s Mvasi and Pfizer’s Zirabev® are approved (so far) to compete for the bevacizumab business. The details of the licensing deals signed by Roche have not been released publicly, so we do not know when the first “authorized” biosimilars were supposed to launch. Conjecture abounded that it would be in 2019, nevertheless.

How does Amgen’s Kanjinti launch affect the licensing agreements that were signed with Roche? Does it mean that Amgen gets a substantial head start on the competition? Do the licensing contracts consider this possibility?

According to Kevin M. Nelson, JD, at the Chicago-based law firm Schiff Hardin, this scenario is considered in a typical pharmaceutical licensing arrangement. “Typically, settlement agreements in the pharma space include what are called acceleration clauses. Such clauses will allow an agreed-upon launch date to be accelerated to an earlier date in the event the patent or patents are invalidated or found not infringed in another litigation, or if a competing product or authorized competing product comes on the market before that agreed-upon date.”

Biosimilar licensing deals
Kevin M. Nelson, JD

He added that these acceleration provisions “can come in a variety of flavors from a change in royalty rate or structure, a requirement to leave the market if the ‘unauthorized entrant’ leaves the market, or perhaps agreed damages.” 

Accelerating Clauses Are One Thing. Accelerating Launch Is Another Matter

The fact that Amgen has announced its immediate launch may present more pragmatic problems for the other manufacturers, Mr. Nelson pointed out. Let’s say that you were a member of the Mylan/Biocon team. Your product was approved more than 18 months ago (the first one approved). Let’s also say that your licensing agreement with Genentech allowed you to launch after November 1 (a purely speculative, arbitrary date). Finally, assume that your licensing agreement was generous: it allowed you to launch as soon as possible after another competitor jumped the starter’s gun. Is it feasible to launch immediately, perhaps four months early?

“The biosimilar companies cannot just fire up the machines and have product ready tomorrow,” stated Mr. Nelson. There are all of the logistical issues surrounding a launch that must be considered: “Manufacturing, packaging, sales, and distribution all take time,” he said. “And you don’t want inventory to go bad—especially not this type as it is expensive. They may have some reserve lots or made small batches just in case, so we could see a trickle into the market.”

Remember, also, that payer and health system contracts are not arrived at overnight. Even if the Mylan/Biocon team did have lots available for shipment, they might not have places in the US to ship, other than to a group purchasing organization or distributor’s warehouse.

Typically, payers will not cover pharmaceutical agents outside of medical exceptions before the Pharmacy & Therapeutics Committee review, and this can happen anytime between 60 days and 9 months of the launch. And this is not a product that will revolutionize therapy or immediately fill an unmet clinical need. Only large discounts can move the needle here, and establish a contract quickly. Therefore, the anticipated short window of opportunity that Amgen may have in launching Kanjinti may get a little shorter but perhaps by not much.

When I mentioned the Arby, er Abbvie, scenario, Mr. Nelson agreed that it would be an entirely different ballgame. Had Boehringer Ingelheim decided to enter the market (as an interchangeable or not), their launch “would have caused absolute chaos.” Imagine trying to pull forward launch date plans of seven manufacturers by three years!

Analyzing FDA Chief Gottlieb’s Remarks—Part 2: FDA and Marketing Exclusivity

Food and Drug Administration Chief Scott Gottlieb, MD, received a great deal of coverage for his recent remarks on providing better access to biosimilars. He seems intent on finding solutions to the underlying problems in delayed biosimilar launches.

He discussed in the interview with CNBC perhaps the most intractable problem: The US biosimilar industry has been severely affected by the reference drug manufacturers filing multiple patent filings and extending their market exclusivity well past the 12 years provided by law. For example, it was hoped that an adalimumab biosimilar would already be marketed, but it now seems that 2022/2023 may be the earliest in US launch because of this “patent maze.”

Dr. Gottlieb agreed that patents filed to protect “small changes in how you manufacturer the drugs” shouldn’t convey an additional 12 years of market exclusivity, and he thinks we’ll see less of these actions in the biologic space going forward. However, “there’s no silver bullet here in terms of trying to really make this market go gangbusters. I think Food and Drug Administrationthis is going to be a slow build. But we’re going to be coming out with…about a dozen policies that I think incrementally will each move the ball in the direction of trying to create more avenues of biosimilar competition.”

One of the underlying challenges is that market exclusivity is described by two components: (1) regulatory (defined by Congress and FDA) and (2) patent law outlined in the US Constitution (and governed by the courts). The first is typified by the Biologics Price Competition and Innovation Act (BPCIA), which specifies 12 years of market exclusivity for the biologic manufacturer.

Originally, the Obama Administration wanted 7 years of market exclusivity but settled for 12 in order to pass the BPCIA. Based on Dr. Gottlieb’s remarks, it seems to be a question of what the FDA can do on its own to effect change. Perhaps the only leverage the agency has today over biologic manufacturers is at the time of approval. I really can’t envision what power it can wield in this fight; does the agency have the authority to cut deals with manufacturers to limit patent applications in exchange for drug approval? It may be that Dr. Gottlieb will try to work with Congress to circumvent the problem through amendments to BPCIA.

Another potential area may be to help biosimilar manufacturers take on the risk of launching before patent disputes are settled. Technically, any biosimilar manufacturer is allowed to launch after its 180-day exclusivity period expires postapproval. Pfizer (and its partner Celltrion) was the first to launch “at-risk.” Although biosimilars have been approved for drugs other than infliximab and filgrastim, manufacturers have been reluctant because of the financial penalties, including profits, which may be awarded by a court to the manufacturer of an originator product. This is why Sandoz has not launched Erelzi® (etanercept-szzs), which gained approval in 2016.

Pfizer’s At-Risk Launch of Inflectra Pays Off (at Least a Bit)

The US Court of Appeals handed Pfizer a big victory in its gamble to bring its biosimilar version of Remicade® to the market before the completion of patent litigation. On January 23, the Appeals Court ruled that Johnson & Johnson’s ‘471 patent in the case was declared invalid, clearing the way for sales of Inflectra® (infliximab-dyyb). Had Pfizer lost the suit, J&J could have sought Inflectra’s (and Samsung/Merck’s Renflexis®’s) revenues in addition to other damage claims.

Remicade’s ‘471 patent expiration was September 2018, but the US Patent and Trademark Office earlier ruling contended that the antibodies at the center of this patent were already included in patents that had previously expired.

Remicade is manufactured and sold by J&J’s subsidiary, Janssen Biotech.

In a widely publicized case, Pfizer sued J&J in September 2017 for anticompetitive practices, which it believes held down the sales of Inflectra to a spare $74 million for the first three quarters of last year. Although J&J is seeking to appeal the decision, with the patent expiration date looming, as well as limited sales of Inflectra, this would seem to be of relatively little benefit.

In any case, J&J is wary of losing marketshare and revenues on Remicade. According to Bloomberg News, Janssen Biotech saw fourth-quarter revenues from the biologic drop almost 10%, to $1.47 billion. Increasing competition from other biologics for similar indications and other biosimilar versions of infliximab worldwide have contributed to reduced sales.