Tag: patent litigation

Dancing With the Stars, Patent Style

In June 2017, the US Supreme Court ruled that the “patent dance” was not mandatory for biosimilar manufacturers. Since then, our discussion of the patent dance (not patent litigation) has been infrequent. The first wave of biosimilars tended to perform the dance (or did it not incompletely). Therefore, manufacturers of drugs like filgrastim, infliximab, epoetin, and others have already hit the dance floor or not. The patent litigation that has resulted or been headed off (less likely!) already occurred. Since the Supreme Court ruling, if you will, the music was still playing, but there were fewer spectators.

The patent dance can be mystifying but it can also be rewarding, say patent attorneys at a recent conference in New York City. Judging whether to participate requires several considerations.

I hadn’t given the patent dance much thought since that time. I was under the impression that the majority of developers of new biosimilars would likely now avoid this process.

An excellent session at the ACI Biosimilar Summit this week in New York City focused the spotlight on the dance floor once again. The meeting itself was chockfull of attorneys—attorneys talking patents. Inevitably, this topic resurfaced. And it caused me to alter my perceptions.

CONTROLLING THE INFORMATION EXCHANGE

The exchange of information that takes place upon initiating the patent dance can still be advantageous to the biosimilar maker and the manufacturer of the innovator biologic. Irena Royzman, PhD, Partner at Kramer Levin, explained, “The patent dance gives control to the biosimilar applicant. It limits the number of patents the innovator can litigate. This is very powerful, especially when the innovator has [a multitude of patents].”

However, there could be advantages for the biosimilar applicant who decides not to participate. For instance, she said, the applicant can keep reference manufacturers from knowing what indications are being sought, unless these are released publicly. They can also shield such critical information as the manufacturing process.

TAPPING IN AND TAPPING OUT

Petra Scamborova, PhD, Director, Dispute Resolution, Regeneron Pharmaceuticals, pointed out that participating in the patent dance does not have to be a black and white decision. “There are several options,” Dr. Scamborova remarked, besides fully participating in the patent dance, which she believes is still the best option for biosimilar manufacturers. “It gets you the patent list early on,” she said, “which commits the innovator to asserting a specific set of patents that they will defend. It also gets you the reference manufacturing information prelitigation,” added Dr. Scamborova.

“If the innovator doesn’t abide by the rules of the dance fully,” she continued, the applicant will be at reduced risk, which may result in “a reasonable royalty only” should the biosimilar maker be on the losing end of a district court decision. Dr. Scamborova also commented that full participation in the patent dance avoids unnecessary litigation down the line.

Charles Klein, Partner, Winston & Strawn LLP, offered another option: “dancing partway,” that is, beginning the patent dance but electing to exit the process before completion. He thinks this may be a viable strategy if the reference product’s 12-year exclusivity is already expired. He noted, “It usually takes 6 to 9 months to get through the patent dance prior to litigation.”  If a biosimilar maker intends to launch their product relatively soon after approval, delaying the litigation by 6 to 9 months can have a material effect on its ability to launch (e.g., 2 yr after approval).

However, undergoing the initial dance steps gains some of the important information during the exchange. “If you elect not to continue the dance,” Mr. Klein said, “the downside is that the biosimilar applicant loses control over the litigation. The sponsor could decide not to sue immediately (though not likely), which will delay resolution. You will also waive the statutory limitations on remedies.”

From the innovator’s perspective, a partial dance is better than no dance at all, Mr. Klein stated, “because you get a good deal of information from the applicant’s application. You control which patents to assert and when to assert them.”

GETTING IN AND OUT OF STEP, DEPENDING ON TIMING

What about option 3—no dance at all? The attorneys on the panel believe that decision again hinges on the timing of the 12-year exclusivity. Matthew Pearson, Partner at Akins Gump Strauss Hauer & Feld, pointed out that avoiding the patent dance altogether may be a good choice if, for instance, the applicant is not the first biosimilar for the innovator drug. “You may think you already know what patents will be asserted by the innovator.” In this scenario, the biosimilar applicant can keep its manufacturing information from the innovator company for some time.

Another important factor in deciding whether to engage in the patent dance relates to the new biosimilar maker’s belief as to whether it will infringe the innovator’s patents. If the biosimilar manufacturer believes it they will not infringe, and it does not have the first biosimilar for a particular biologic, he thinks it may make sense to avoid the patent dance completely.  

What of the scenario when the opposite is true, where the biosimilar maker is faced with 70 patents and expects to infringe on some? The patent dance can then limit the number of patents that can be litigated. In the case of fewer potential patents at issue, the attorneys on the panel believe that the launch timing will play a role (along with the biosimilar maker’s willingness to accept risk). If sufficient time exists before potential launch, proceeding to the dance floor would make sense, they said.

Finally, in the case where the applicant knows only partially which patents will be asserted, but assumes it will not infringe upon any of these. Then, beginning the patent dance makes sense; the biosimilar maker can obtain the list of patents to be defended by the reference drug maker. It might then also make sense to stop the dance after confirming the patent list. Overall, they claim, the patent dance does present some benefits for biosimilar developers. The Supreme Court’s opinion did not strike down the process, only the fact that it was not mandatory. Based on the opinions of these experts in the process, it make still help smooth a still rough path through the litigation process.

The FTC and Patent Thickets: A Conversation With Kevin M. Nelson, Esq., Partner, Schiff Hardin LLP, Chicago

On May 7, the Senate Judiciary Committee held hearings on how to clear the patent thickets obstructing access to lower-cost biosimilars. One of the key avenues raised during the hearings was moving the Federal Trade Commission (FTC) directly into the fray. We asked Kevin M. Nelson, our go-to expert on intellectual property issues, for his take on this possibility.

Biosimilars Review & Report: Kevin, thanks for trying to help us sort out these issues! Let’s set the stage first: Has the FTC dipped their toes into intellectual property (IP) and patent issues in the past?

Kevin Nelson, Esq: The way you phrased the question is appropriate. Yes, they have dipped their toes into patent issues a little bit. It’s sort of a dicey field for the FTC.

FTC and Patent Thickets
Kevin M. Nelson

To provide a bit of background, two matters come to mind. The first, Federal Trade Commission v. AbbVie, had to do with Androgel®, where the FTC alleged violations of section 5 of the FTC Act and sham litigation. This is usually a civil cause of action brought by generic companies. (Sham litigation is a form of anticompetitive litigation that is “baseless or otherwise without any legitimate foundation.” It is usually a delaying tactic to prevent product competition for extended periods of time). Antitrust violations can be difficult to prove, so sham litigation, which can also be a high hurdle, is sometimes alleged. Interestingly, in the Androgel matter, the FTC’s decision did make it past the District Court level, but I believe it is currently on appeal. But there was a large disgorgement ordered by the District Court in the $500 million range. One of the primary things the Commission said was that the lawsuits filed delay competition, and those lawsuits were objectively and subjectively baseless. So the FTC did wade into the patent issue.

The second was Federal Trade Commission v. Bristol-Myers Squibb, which involved BuSpar®. In its investigation, the FTC found that there was not only false listing in the Orange Book but false statements to the US Patent Office by Bristol-Myers Squibb, and also baseless allegations of patent infringement.

So the FTC has dipped its toes in the water in evaluating the patent issues and the merits of patents as part of its jurisdiction of looking at whether there is anticompetitive injury. The focus has been more in the FTC Act versus one of the traditional antitrust acts.

THE FTC’S AUTHORITY IN PATENT DISPUTES

BR&R: Will legislation be necessary to provide the FTC the necessary authority to investigate patent filings that hinder competition?

Nelson: The FTC already does have the authority to bring causes of action where there has been unlawful use of patent rights in order to delay or harm competition. That’s the FTC’s mission—to protect competition. If there is any action to harm competition, the FTC has the tools to address that right now. The Androgel matter is a perfect example. The FTC used the FTC Act, not the Antitrust Act, but the result was the same—a significant disgorgement of profits, which is the penalty that we as consumers would want to occur if someone was abusing their patent rights.

BR&R: One way the FTC may intervene in the biosimilar patent thickets is to focus solely on the expiration of the composition-of-matter patents when deciding on the timing of a biosimilar launch. Might this start us on a slippery slope? In this case, the Commission would disregard patents involving new formulations, new manufacturing processes, new indications, etc, as a separate, less-essential group. We’re not talking necessarily about invalid or obfuscating patents per se.

Nelson: It will be interesting to see exactly what the legislative proposal will say. Right now, it’s a bit unclear.

The first problem that we’re seeing, is that the FTC has the tools to act, but these tools can only be used after the fact, or after competition has been harmed.

Problem 2 then becomes, if we try to do something before the competition is harmed (or to prevent this harm) and we allow some patents to be asserted, we will be getting into constitutional concerns. If you bring lawsuits based on patents, is that a violation of Takings Clause? [Editor’s Note: The Takings Clause is found in the Fifth Amendment of the Constitution, and prohibits the government from taking personal property without just compensation.] A product may be protected by subsequent, legitimate patents; we can’t prejudge that.

The Constitution prohibits the government, at least right now, from saying that “you cannot assert these patents.” That also relates to a petitioning or free speech issue. If I file a lawsuit because I have a patent, and the FTC says I can’t file that lawsuit, does that interfere with my free speech rights? The answer is yes, unless your lawsuit was objectively and subjectively baseless.

That’s where we get into FTC’s dilemma now. It will be very interesting to see the remedies that will be proposed, especially since there may be better avenues out there.

DOES THE FTC NEED NEW LEGISLATION TO ACT?

BR&R: It sounds like the FTC doesn’t lack the authority, but legislation would have to be passed to further define how it can enforce this authority.

Nelson: I don’t know that we need new legislation to further define the FTC’s authority, rather there needs to be direction in terms of their priorities. The FTC could enforce these issues, but that has been low on its priorities.

For example, the Commission have been very active in the pay-for-delay area. A lot of their actions are the result of anticompetitive acts that took place in the early 2000s. We’re not seeing much action today where the government is trying to punish companies for wielding an unfair number of patents—where many of them are improperly issued or should not be enforced at all. That needs to be more of a policy focus or objective of the FTC.

BR&R: Assuming the FTC does get involved more proactively in policing anticompetitive patents, do you think that might affect drug manufacturers who intend to seek new formulation/manufacturing patents and others in the future?

Nelson: The hope is that innovator companies would be careful in the types of patents that they pursue and try to enforce against potential competitors. Because there hasn’t been much enforcement in this area, we are seeing these 100-patent assertion cases, which put a strain on resources. In some companies, we are seeing less emphasis on a strategy of innovation and more on creating these patent thickets to delay competition. In several open forums, the FTC has actually expressed this view. And that’s not what we should be focusing on as a society. They should be focusing on the next generation of life-saving therapies, not putting a protective wall around older agents.

If the FTC is more willing to go after companies that are enforcing a lot of these improper patents, the manufacturers may actually start to refocus on innovation.

BR&R: When do you think the rubber will meet the road? Will the FTC be pushed in this direction?

Nelson: I think we will see that legislative proposal. The better focus is on things that have an impact on consumers, innovation, and competition. We do need legislation that limits or prohibits product hopping or product shifting; that’s a real concern and can be addressed. We can limit use of products that are “second-generation” and have no additional clinical benefit to patients over the original product. If there is no clinical benefit to the patient, then we shouldn’t be giving them exclusivity. That takes companies away from the incentive to protect old products and move them toward creating new innovative products.

I think a policy shift for the FTC, rather than a legislative shift, will encounter fewer obstacles.

More Adalimumab News: Abbvie Signs a Licensing Deal With Coherus, Coherus Sues Amgen for Patent Infringement

The multitude of companies that have lined up to sign 2023 licensing agreements with Abbvie on sales of Humira® biosimilars has grown again. The latest biosimilar maker added to the list is Coherus Biosciences.

Coherus adalimumab biosimilar

Coherus has an investigational adalimumab biosimilar that completed a phase 3 trial in 2017 in patients with plaque psoriasis and psoriatic arthritis. CHS-1420 was found to yield similar clinical outcomes compared with the reference product.

According to the press release from Coherus announcing the deal, the biosimilar will be available for marketing December 15, 2023. This will make it the eighth biosimilar version of adalimumab to enter the market, with Amgen entering first, in January of that year. As with the other deals signed by Abbvie, this signing concludes any patent litigation between the parties and Coherus will pay royalties to Abbvie on the sales of its biosimilar.

Coherus is expected to file a submission with the European Medicines Agency, though the timing of this filing has not been disclosed. Furthermore, it has not yet signed a deal with a marketing partner. In past conference calls, the biosimilar maker has indicated that it will not focus its resources on sales of its products outside the US.  

COHERUS SUES AMGEN OVER ADALIMUMAB PATENTS

To complicate matters a bit more, Coherus has launched a patent infringement suit against Amgen, believed to be the first of a biosimilar maker against another. Amgen’s Amjevita® was approved by the Food and Drug Administration in 2016, and has been for sale in the EU. Coherus intends to file for FDA approval in Q4 2019. Coherus contends that Amgen’s manufacture of Amjevita violates Coherus’ US patents 10,155,039; 10,159,732; and 10,159,733. These patents involve the creation of stable aqueous formulations of adalimumab.

Coherus seeks “damages adequate to compensate for past, present, and future infringement,” which could have implications for revenues from the European sales of Amgen’s biosimilar, because of its manufacture in the US. In addition, Coherus seeks an injunction from the court that permanently enjoins Amgen from engaging in further alleged infringement.  

Coherus President and CEO Denny Lanfear said in its January 25th press release, “Coherus recognized early on the central role intellectual property would play in advancing biosimilars to market. One important element of our IP strategy for advancing [CHS-1420] is reflected in the success we’ve achieved in patenting our innovations in the field of adalimumab formulation. We believe in the strength of our IP and we intend to protect it.”

Although generic manufacturers engaging in patent suits with competitors has occasionally occurred, this may be a first in the biosimilar community. I suppose it was only a matter of time.

Samsung Bioepis Scores FDA Approval of Ontruzant, the Third Biosimilar Trastuzumab

The US Food and Drug Administration (FDA) announced on January 18, 2019 the approval of a new biosimilar version of trastuzumab. Produced by Samsung Bioepis, this agent was dubbed Ontruzant (trastuzumab-dttb).

This is the third trastuzumab biosimilar approved by the FDA, following those by Mylan and Biocon in December 2017 (Ogivri®) and Teva and Celltrion last month (Herzuma®). As with biosimilars other than Herzuma and the reference biologic Herceptin®, this agent is approved for use in the treatment of HER2-overexpressing breast cancer and the treatment of HER2-overexpressing metastatic gastric or gastroesophageal junction adenocarcinoma. Herzuma is not approved for the latter indication.

As with Renflexis®, Samsung Bioepis’ first FDA-approved biosimilar, Merck will market the product in the US when launched. No launch date has yet been revealed.

Mylan and Biocon had signed a licensing agreement with Roche, the manufacturer of Herceptin, which ended their patent fight, but which delayed launch. Teva and Celltrion have not yet disclosed whether a similar deal has been reached with Roche. Pfizer has an investigational trastuzumab biosimilar, and they too have signed a licensing agreement with Roche.

Pfizer Signs Licensing Agreement With Roche on Trastuzumab Biosimilar

With Pfizer expecting to hear back on its 351(k) resubmission on a trastuzumab biosimilar in early 2019, Genentech and its parent, Roche, may have been getting nervous about their competitor’s intentions. After all, Pfizer was willing to launch at risk with its marketing of Inflectra®, the infliximab biosimilar manufactured by partner Celltrion. In fact, it is the only biosimilar manufacturer that has gambled on an at-risk biosimilar launch.

According to a report in the Pink Sheet, a district court filing on December 4 noted that the two parties signed a settlement that will put an end to their patent litigation, and presumably allow Pfizer to market its biosimilar trastuzumab in the US at a future date. As in previous agreements signed by Roche, the terms are confidential, and launch dates and licensing fees are unknown.

trastuzumab biosimilar

A similar confidential agreement was completed between Mylan and Roche, for Mylan and partner Biocon’s Ogivri®, the first trastuzumab biosimilar approved by the Food and Drug Administration (FDA) in April 2017.

Three other trastuzumab biosimilars are also trying to reach the market. Amgen and Allergan received a complete response letter in June 2018, and have not yet announced when it might resubmit its 351(k) application. Samsung Bioepis is awaiting its initial decision on its trastuzumab biosimilar, filed in January 2018. Teva and Celltrion seem to be on the cusp of an FDA decision, after receiving their initial rejection in July 2017.

Roche has it covered, though. It filed patient litigation against Samsung Bioepis in September 2018 and partners Celltrion and Teva as well.

This is the very situation that the federal government, payers, and patients want to try to avoid, however. Licensing fees paid to the reference manufacturers may work to significantly inflate the drug’s price to the health system. The lack of transparency characterizing these agreements and the associated delays in launch are being decried by those patients and entities who can benefit from access to biosimilar competition. Herceptin was first approved in 1998. No one envisioned Genentech having 20+ years of marketing exclusivity.

In other biosimilarnews… MomentaPharmaceuticals, which signed an Abbvie licensing agreement for its biosimilar adalimumab, said in a statement that it will delay FDA filing M923 beyond 2019, which will help reduce its corporate expenditures. This delay should not impact the expected commercial launch date of November 20, 2023, according to the company.

Celltrion announced that it has filed an application for European Medicines Agency approval for its subcutaneous form of its infliximab biosimilar Remsima (US brand name, Inflectra®). This would provide the first subcutaneous injection formulation of infliximab.

Pfizer’s Anticompetitive Suit: A Slippery Slope to Competitive Bidding?

When Pfizer first announced its lawsuit against Janssen’s parent Johnson & Johnson in September 2017, it pointed to exclusionary contracting, “anticompetitive” behavior of Remicade®’s maker as the reason for its very limited market access.

The lawsuit claimed that Janssen has withheld or threatened to withhold rebates if payers do not keep Remicade in an exclusive preferred position. The degree to which health plans knuckled under to these demands may only be inferred from the 3% marketshare Pfizer’s Inflectra® now holds. For these drugs, which are still typically covered under the medical benefit, “nonpreferred positioning” usually means no coverage. For drugs covered under the pharmacy benefit, this is not the case.

In August, the Eastern Court of Pennsylvania ruled against J&J in its request that the lawsuit be dismissed. While discovery in the case may be ongoing, we could not find mention of a resolution date for the suit.exclusionary contracting

For the sake of argument, let’s say that the Eastern Court of Pennsylvania rules in favor of Janssen. In other words, exclusionary contracting was not an anticompetitive behavior. That means the status quo is intact, but some factors may affect this situation going forward. These include the Center for Medicare and Medicaid Services’ desire to move part B drugs (the medical benefit) to part D (the pharmacy benefit) for Medicare beneficiaries.

The scrutiny on rebate contracting coming from several sectors, and lack of transparency, may also independently influence future use of these pharmaceutical company tactics. I helped conduct a market research project recently on a nonspecialty drug. As part of these interviews, we were asked by the client to inquire about the range of rebates they were receiving from competitor manufacturers. Their responses were requested as a range (e.g., 20% to 30%), not specific contract details, and we had no intention of providing reports of individual payer deals, only anonymous, aggregate information. We expected little to no response to that query, and that is exclusionary contractingexactly what we received.

Let’s discuss the other potential outcome, in which the Court rules in favor of Pfizer. That implies that this exclusionary contracting practice is indeed anticompetitive. If this is the case, we may be on a very slippery slope. What is the difference between payers and pharma companies engaging in a “1 of 1” contract when there are multiple potential products and a “1 of 2” contract? In both cases, drug makers are committing payers to anticompetitive behavior (as perhaps defined by the Court’s new precedent).

The preferred drug tier (whether preferred generics, preferred brands or whatever) is supposed to be for products with proven clinical, patient care, or economic advantages. Truthfully, payers rarely place medications in the preferred tier for reasons other than net costs or rebate contracting, which is based on marketshare.

Now add in the potential effects of the Administration’s desired shift to part D, where pharmacy benefit rules can be applied. That exposes injectable products that were shielded under Medicare part B to commonly applied formulary placement practices.

To be complete, Janssen’s strategy was not solely based on Remicade. It may be found to have bundled Remicade with other agents in deals to exclude Pfizer’s products. The Court may also react specifically to Janssen’s contract stipulation that threatens to withhold rebates connected to future use of the product, to increase its leverage.

However, if the Court determines that 1 of 1 or exclusionary contracting with rebates are the root of the anticompetitive behavior, why should 1 of 2 or even 1 of 3 contracts in a drug category with 5 similar agents be less so? This is the slippery slope that could undo rebate contracting, and push us towards a system that more resembles a competitive bidding process like in Europe. Alternatively, it could accelerate the move towards outcomes- and value-based contracting. The result could be a system-wide revamping of the drug formulary and the pharmacy–drug maker relationship.

In other biosimilar news…Sandoz has signed a licensing agreement with Abbvie, allowing it to market its biosimilar version of Humira in 2023. The agreement, as with Abbvie’s settlements with other biosimilar makers, halts all patent litigation with Sandoz in exchange for a licensing royalty paid to Abbvie.

Would Biosimilar Approvals With Limited Indications Alter the IP Discussion?

Over the next couple of weeks, I’ll be issuing a series of posts to further analyze some of the Food and Drug Administration’s (FDA’s) new Biosimilars Action Plan.

The Biosimilars Action Plan contains several important components. One of the more interesting items FDA Commissioner Scott Gottlieb mentioned in his remarks at the Brookings Institution webinar on Wednesday, July 18, involved modifying the intellectual property (IP) discussion with biosimilar approval for limited indications.

Originator drug makers have erected a so-called patent maze or patent wall over time to protect their IP and thus their marketing exclusivity as far into the future as possible. Patents can be filed for product composition, manufacturing techniques, new formulations, delivery systems, and indications. Often, the biologic products facing potential biosimilar competition have several indications. Adalimumab, for instance, is approved for use in nine unique conditions (I’ve included Crohn’s disease and pediatric Crohn’s as one disease state).

Dr. Gottlieb said that the FDA will be “updating guidance to provide additional clarity on how biosimilar manufacturers can carve out indications from their labels where a branded drug maker might still maintain some IP.” He continued, “And we’re going to describe how these indications can be efficiently added into a biosimilar label once that IP on the branded alternative has lapsed.”

This component was not spelled out in the Biosimilars Action Plan. Limited indications may indeed be an avenue to work with originator manufacturers to help reduce patent litigation that is barring patient access to biosimilars. One would assume that it would take some level of negotiation with the manufacturer of the originator. However, biosimilars with limited indications may be a hornets’ nest for reference manufacturers like AbbVie.

This gets back to the entire issue of extrapolation. From the outset, patients and providers recoiled at the notion of approving a biosimilar product for use in a disease state in which no clinical studies were done. The FDA has been pretty liberal in granting extrapolation to several or all indications for the 11 approved biosimilars. If FDA explored this option as a mechanism for getting biosimilars to the market sooner, it would be sending a new message. That is, the biosimilar drug may be expected to yield similar outcomes compared with the reference drug based on the totality of the evidence, but we’re unwilling for other reasons to give it our approval for those other indications.

Biosimilar Indications Laws or regulations do not exit to prevent doctors from prescribing a biosimilar for a nonapproved indication. Furthermore, health plans and insurers have consistently reported in our own market research that they would not discourage use of a biosimilar for other indications for which only the originator biologic was approved. This assumes the biosimilar is sufficiently less expensive than the originator. As a result, drug makers like AbbVie may be very wary of the limited-indication approach to improve biosimilar access.

Still, some way must be found to break the logjam of litigation on IP. This is a specific target of Commissioner Gottlieb’s. He may take even more creative approaches.

 

 

 

 

 

 

How Will Biosimilars Be Affected by Trump’s Drug Price Reform Measures?

Trump on BiosimilarsWhen President Trump announced the broad strokes of his drug price reform initiative, some of these measures seemed on target to benefit the biosimilars industry. However long awaited, makers of originator biologics seemed not to be worried about its implications. The President may not be able to effect much change, without causing unintended adverse consequences.

According to its blueprint, the Trump Administration “believes it is time to realign the system in four ways: increasing competition, improving government negotiation tools, creating incentives for lower list prices, and bringing down out-of-pocket costs for consumers.”

Increasing competition is critical to improving biosimilar access. But this cannot be achieved with one action. Several areas—some addressed and others not by the blueprint—are key.

 

Reining in Drug Patent Abuse

Aimed squarely at drug makers who try to extend exclusivity through multiple patent filings, this is the one action that could improve biosimilar prospects. Limited biosimilar access is caused by the inability to market these drugs after Food and Drug Administration (FDA) approval. Patent litigation is the number 1 issue here. The President said, “Our patent system will reward innovation, but it will not be used as a shield to protect unfair monopolies.”

Trump Drug Cost Reform BiosimilarsWithout significant overhaul of the drug patent system (or the system for ruling on the validity of patents), this is unlikely to benefit biosimilar manufacturers in the near term. This effort could take many years and may have negative effects on the protection of legitimate intellectual property.

This is likely to result in little relief for the biosimilar industry.

 

Price Disclosures in Consumer Advertising

The fact that originator specialty biologics—the medications targeted for biosimilar competition—cost thousands of dollars may be a revelation to consumers who pay fixed copays for them. President Trump’s plan would require manufacturers to disclose the cost of the drug on direct-to-consumer advertisements.

Biosimilars The assumption is that this would be required across the board, including biosimilars. Would consumers recognize that their Renflexis® biosimilar costs thousands less than Remicade® in terms of wholesale acquisition cost? Not likely. In terms of net cost to the payer (not the patient generally), the price differential is far less. Even if the true costs were posted on consumer advertising, Mr. and Mrs. Smith would still hear or see that Renflexis costs thousands of dollars. They may even be further confused, because their out-of-pocket cost will likely be far less, unless a deductible applies.

 

An Emphasis on Value-Based Purchasing

The Obama Administration was committed to expansion of value-based purchasing. The present administration wants to further explore the potential of this policy, but it has not spelled out any specifics. It could be a boon to biosimilars based on the implications of value-based purchasing itself. After all, biosimilars are in existence to provide better value. More details are needed on its extent and whether implementation will occur through Health and Human Services or through Congress before useful opinions can be rendered.

 

Lower Drug Prices in US, Higher Elsewhere

The United States has very little ability to compel drug prices to rise for health systems in Europe, Canada, or Mexico, for instance, and as a result, lower them in this country. Pharmaceutical companies charge what the market will bear. Unless the Trump Administration can somehow convince the UK to pay more for Rituxan®/MabThera®, Humira®, or Enbrel®, these drug prices will not be altered.

There are reasons these countries pay the prices they do. It is related to their bidding or tender systems and the fact that other countries will exclude coverage at higher prices.

Trump Drug Cost Reform Consider another practical issue—why does a price increase in Germany mean a price decrease in the US (and for whom—Medicare, Medicaid, 340b facilities, commercial plans)? If such a move could be achieved, how does the Administration convince drug makers to apply those greater revenues obtained globally to greater discounts or rebates to Americans? It is more likely that the pharmaceutical industry will pass the increased profits to shareholders.

If these specialty drugs were forced to lower their price in the US, would that apply to biosimilars as well? That may not work towards long-term viability of the industry, depending on the measures taken.

 

Removing Rebates and Improving the Value of Biosimilars

One thing can actually improve cost transparency and possibly force pharmacy benefit managers (PBMs) to change their value model. If the Congress decides that drug rebates run afoul of laws against kickbacks, this could compel far lower wholesale acquisition costs (WACs). It would also have the effect of lowering patients’ cost sharing. Co-insurance is commonly based on the WAC not the net cost of the drug to the payer or PBM.

In this case, biosimilar manufacturers’ true WAC discounts can be applied directly and drive the “rebate trap” out of existence.

Applying this rule to commercial plans, Medicare Advantage, and part D providers would be a direct improvement in the current situation and could lower system-wide health costs. That assumes that manufacturers don’t sense an opportunity to raise prices by say 8% when they no longer have to pay 15% rebates.

 

Missed Opportunity: Using the Negotiating Power of Medicare

If the Administration was interested in reining in drug costs, the first serious step would be to let the Medicare program negotiate with manufacturers. This large purchaser getting its best deals from the natural competitive marketplace. It may require some adjustments in Medicaid “best price” assumptions, however.

It does seem that biosimilar makers could benefit from several of the policy changes proposed by the Trump Administration. However, the blueprint released is just that—weak on details and not specific to avoiding unintended consequences. Furthermore, it does not anticipate the reactive responses of the stakeholders involved. I guarantee there will be much more discussion as the government’s actions are announced.

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.