A New Patent Dance: The

Biologics Price Competition

and Innovation ActJ. Eric Thies

David M. Conca

Jeffrey A. Wolfson

Jeffrey L. Kopacz

Michael K. Kirschner

2

J. Eric Thies

Assistant Counsel, Intellectual

Property Group at Merck

• Rahway, NJ

Chair, IPO Pharmaceutical

Issues Committee

3

David M. Conca

Partner, Litigation Department

at Paul, Hastings, Janofsky &

Walker, LLP

• New York, NY

Chair of IPO Pharmaceutical

Issues Subcommittee on

Healthcare Legislation

Moderator

4

Jeffrey A. Wolfson

Partner at Haynes and Boone,

LLP

• Washington, DC

Vice-Chair of IPO

Pharmaceutical Issues

Subcommittee on Healthcare

Legislation

Panelist

5

Jeffrey L. Kopacz

Senior Patent Counsel at

Alnylam Pharmaceuticals

• Cambridge, MA

Panelist

6

Michael K. Kirschner

Hillis Clark Martin & Peterson,

P.S.

• Seattle, WA

Panelist

7

Presentation Outline

Part 1: Overview of New Legislation

Part 2: Hypothetical Patent Information

Exchange

Part 3: Resulting Litigation

Part 4: FDA Regulatory Implementation

8

Part 1: Overview

Title: Biologics Price Competition and Innovation Act of 2009

• Effective date: March 23, 2010

Amends Section 351 of the Public Health Service Act to provide for abbreviated pathway for biosimilars based on regulatory data previously submitted for reference product

42 U.S.C. 262 (2010)

9

Part 1: Overview

Data exclusivity for reference products,

including pediatric exclusivity extension

Regulatory pathway for biosimilars,

including interchangeability incentives

New patent litigation procedures with

obligations on each side to disclose

information

10

Part 1: Overview

A follow on biologic can still be approved under 21 U.S.C. 355(b)(2) (505(b)(2)) if:

• The follow on biologic is in the same product class as the original biologic

• The original biologic was approved under section 505(b)(1) Not later than March 23, 2010

• The follow on biologic application is submitted before March 23, 2020

42 U.S.C. 262 Note: PL 111-148 7002(e)(1)-(e)(2)

11

Part 1: Overview (cont.)

Exception: a follow on biologic application may not be submitted under 21 U.S.C. 355 if:

• Another biologic is approved under 42 U.S.C. 262 that could be a reference product for the follow on biologic application if submitted under that section

42 U.S.C. 262 Note: PL 111-148 7002(e)(4)

12

Part 1: Overview (cont.)

Phase Out: an approved application

for a biologic under 21 U.S.C. 355

will be deemed a license for the

biologic under 42 U.S.C. 262 on

March 23, 2020

42 U.S.C. 262; PL 111-148 7002(e)(4)

13

Deemed a

“License…under such section 351”

An approved application under Section 505 (21 U.S.C. 355) “shall be deemed to be a license for the biological product under such section 351” on March 23, 2020.

Exclusivity under 351 is for “12 years after the date on which the reference product was first licensed under subsection (a)”

PL 111-148 7002(e)(4); 42 U.S.C. 262(k)(7)(A)

14

Part 2: Hypothetical Exchange

Reference product sponsor Real Pharmaceutical

Sciences, Inc. (RPS) files a biologics license application

(BLA) under 351 for its drug Humorex, a biologic used to

treat ipthealgia, a disease that produces uncontrollable,

deadly laughter. RPS has obtained patents on the drug

and processes of making it. RPS receives FDA approval

for Humorex.

15

Part 2: What does that get RPS?

Humorex is then entitled to 12 years of regulatory exclusivity

Biosimilar applications cannot be filed less than 4 years after the date Humorex is approved

42 U.S.C. 262(k)(7)(A)-(B), (m)(3)-(4)

Discussion: What does regulatory exclusivity really mean? Compare Hatch-Waxman? Four year date?

RPS appro

val

4 years

12 years

Data E

xclusiv

ity E

xpires

No Bio

simila

rs

16

Part 2: Pediatric Exclusivity?

Pediatric exclusivity nets reference

product sponsor an extra 6 months of

regulatory exclusivity:

• Initial follow on biosimilar applications and

their approval delayed 6 months, but

• Only if appropriate pediatric studies done and

submitted and accepted under 505A at least 9

months before expiration of relevant period

42 U.S.C. 262(k)(7)(A)-(B), (m)(3)-(4)

17

Result of Pediatric Exclusivity

4 years

12 years

6 months6 months

Discussion: File for pediatrics late to extend twelve year term late rather than early?

18

Part 2: RPS can’t get data exclusivity on…

A supplement to the original Humorex BLA; or

A subsequent application (by RPS or a related entity) for• Change (not structural) resulting in new indication,

route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength; or

• Structural modification that does not result in change in safety, purity, or potency

42 U.S.C. 262(k)(7)(C)

Discussion: Compare prior data necessary to get NCE. Is there guidance on threshold data required to show safety, purity, potency?

19

Part 2: Four Years Into Data Exclusivity

4 years after Humorex’s approval, Biosimilar Aspirations,

Ltd. (BA) files with the FDA an application for Funni, a

biosimilar that claims Humorex as the reference biologic.

BA also is called the subsection (k) applicant or sub(k)

applicant.

RPS appro

val

4 years

12 years

Data E

xclusiv

ity E

xpires

BA can a

pply

20

Part 2: FDA Guidance for BA

FDA may issue guidance for approval of biosimilars, but it doesn’t have to do so

Guidance documents may state that FDA will notcurrently license a biosimilar for a certain product or class because science and experience currently does not allow it.

But issuance or non-issuance of guidance shall not preclude FDA from reviewing or acting on an application• FDA can later reverse or modify its position

42 U.S.C. 262(k)(8)

Discussion: How/whether FDA guidance will affect follow-on biologic development.

21

Part 2: FDA Guidance for BA

Product Class-Specific Guidance

• If issued, it must include criteria to determine

both “highly similar” and “interchangeable”

• Public comment period

42 U.S.C. 262(k)(8)(D)

Discussion: How/whether class-specific guidance will affect follow-on biologic development.

22

Part 2: What does BA have to show?

For the FDA to approve Funni, BA has to prove that it is• Biosimilar

• “Optionally”, BA can try to show that it is interchangeable

Also, BA must show that the facility where Funni is manufactured, processed, packed, or held meets standards to ensure safety, purity, and potency

42 U.S.C. 262(k)(2)(A)(i), (k)(2)(B)

Discussion: Investing/developing manufacturing facilities very early in biosimilar product’s life cycle

23

Part 2: What is biosimilarity?

1. Highly similar to reference product

notwithstanding minor differences in

clinically inactive components; and

2. No clinically meaningful differences with

regard to safety, purity, and potency

42 U.S.C. 262(i)(2) (as amended)

Discussion: What showing will BA have to make for “highly similar”?”

24

Part 2: Biosimilarity Studies

I. Biosimilarity must be shown by: a) Analytical studies demonstrating that Funni is highly similar

to Humorex notwithstanding minor differences in clinically active components;

b) Animal studies (including assessment of toxicity);

c) Clinical studies that demonstrate safety, purity, and potency in one or more conditions of use for which Humorex is licensed and intended to be used and for which licensure is sought

But FDA can waive one or more biosimilarity studies

42 U.S.C. 262(k)(2)(A)(i)(I)-(II), (k)(2)(A)(ii)

Discussion: What will FDA waive? Compare to Hatch-Waxman (bioequivalence studies) and European biosimilar pathway.

25

Part 2: What Else is Required for BA

Licensure?

II. Demonstration of the same mechanism or mechanisms of action, to the extent mechanisms of action are known to RPS

III. Used for the same indications

IV. Same route of administration, dosage form, and dosage strength as reference product; and

V. Manufactured under FDA standards

Discussion: Doctrine of Equivalents?

26

Part 2: Interchangeability

BA must demonstrate that Funni is biosimilar to Humorex and

• Expected to produce the same clinical results; and

• If administered more than once to an individual, the risk of altering or switching is not greater than risk of using the reference product without alteration or switch

42 U.S.C. 262(k)(4)

Discussion: Clinical studies necessary for switching? What are the risks?

27

Part 2: Interchangeability

A determination of “interchangeability”

would mean that Funni could be

substituted for Humorex without the

intervention of the health care provider

that prescribed Humorex

42 U.S.C. 262(i)(3) (as amended)

Discussion: How will this affect TE codes? What will be the market impact of biosimilar vs. interchangeable designation?

28

Part 2: Incentives to Prove

Interchangeability, but…

If FDA determines that Funni is interchangeable with Humorex, BA gets data exclusivity against any other potential interchangeable biologics

To the earlier of:• 1 year after first commercial marketing of first interchangeable

product;

• 18 months after a final court decision on all patents in suit in an action under this section against the first approved interchangeable product, or dismissal of an action under this section against first interchangeable product;

42 U.S.C. 262(k)(6)

Discussion: BA only gets exclusivity as against other interchangeables.

29

Part 2: Incentives to Prove

Interchangeability, but…

• 42 months after approval of first interchangeable product if applicant has been sued under this section and litigation is still ongoing within the 42 month period; or

• 18 months after approval of first interchangeable product if applicant has not been sued under this section

42 U.S.C. 262(k)(6)

Discussion: Impact on settling these cases?

30

Part 2: What else is in BA’s application?

Publicly-available information regarding the previous determination that reference product Humorex is safe, pure, and potent

BA may include any other information to support the application, including publicly-available information about Humorex or another biological product

However, BA’s Funni application will not be evaluated for biosimilarity against more than one reference product

42 USC 262(k)(2)(iii); (k)(5)

Discussion: What would you include if you were BA?

31

Part 2: After BA sends its application to FDA

Once BA sends its biosimilar application to FDA with Humorex as its reference product, the FDA will notify it that the application was accepted for review. BA then has an obligation to notify RPS.

42 USC 262(l)(2)

32

Part 2: What Obligations Does BA have to

RPS?

Within 20 days after notification by the FDA, BA must provide RPS’s counsel (under confidentiality provisions)• A copy of its application for Funni

• Information about its manufacturing process

BA may also provide: • Any other information RPS requests and BA thinks

appropriate to provide

42 USC 262(l)(2)

Discussion: What would appropriate information be? Should BA include such information?

33

Part 2: Confidentiality Provisions for the

Exchange of Information

BA does not need to negotiate a protective order because confidentiality provisions are in the statute

BA may not deny access to its biosimilar application (and other information exchanged between BA and RPS) to:• RPS Outside counsel: one or more attorneys (if they do not

engage “formally or informally” in “relevant or related” patent prosecution)

• RPS In-house counsel: one attorney with the same patent prosecution bar

42 U.S.C. 262(l)(1)(A)-(B)

Discussion: Will parties need to negotiate the meaning of “relevant” patent prosecution for inside counsel?

34

Part 2: Confidentiality Provisions

(cont.)

BA may also not deny access to:• A representative of a patent owner, where patent is

exclusively licensed to RPS and right to sue has been retained, so long as owner agrees to be bound by the confidentiality provisions

No disclosure to any other person without BA’s consent• But cannot be “unreasonably” withheld

RPS and BA can negotiate a different protective order

42 U.S.C. 262(l)(1)(A)-(C)

Discussion: Who else? Experts? Internal RPS employees?

35

Part 2: Exchange of Patent Information and

Lists (The Dance)

First Step: BA Provides Application to RPS

Then during this exchange, RPS and BA each identify

patents they think are relevant.BA provides

application

to RPS

Day

1

RPS

provides

patent list

Day

61

BA

responds

with

reasoning

Day

121

Patent List

Negotiation

?

RPS

responds

with

reasoning

Day

181

36

Part 2: Second Step

RPS Provides Its List to BA

Within 60 days of receipt of information

from BA, RPS must provide:

• List of all patents for which RPS believes a

claim of patent infringement could reasonably

be asserted

• Which of those patents it is prepared to

license to BA42 U.S.C. 262(l)(3)(A)

Discussion: pre-suit investigations?

37

Part 2: Second Step

RPS’s Initial List to BA

RPS: Humorex is covered by 6 patents which we believe will be infringed by Funni: • ’001

• ’002

• ’003

• ’004

• ’005

• ’006

We are willing to license the ’005 patent.

Discussion: With short deadlines, what should BA do to prepare for this exchange?

38

Part 2: Third Step

BA Responds to RPS’s Initial List

BA must respond within 60 days:• Factual and legal basis for belief each patent is

invalid, unenforceable, or will not be infringed; or

• Will not begin commercial marketing until patent expires; and

• Response to each patent RPS will license What does the response need to be?

• BA can include its own list of patents on which it believes a claim of infringement could reasonably be asserted

42 U.S.C. 262(l)(3)(B)

Discussion: What if there are several patents? What about 20?

39

Part 2: Third Step

BA’s Response to RPS’s Initial List

We will not infringe ’001. The ’002, ’003,

’004 and ’006 are invalid or unenforceable.

We do not need to license ’005 because

we also think it is invalid or unenforceable.

These patents are not infringed, invalid,

and/or unenforceable because…

Note that BA must provide a response to

an offer to license42 U.S.C. 262 (3)(B)(iii)

40

Part 2: Fourth Step

RPS Responds to BA

RPS must respond within 60 days

• Detailed statement describing factual and

legal basis for belief that the patent will be

infringed

• Response to statement concerning validity

and enforceability

42 U.S.C. 262(l)(3)(C)

Discussion: Response to validity and enforceability.

41

Part 2: Fourth Step

RPS’s Response to BA

You will infringe patents ’001-’006. They

are all valid and enforceable for the

following reasons…

RPS must provide its reasons for

infringement, validity, and enforceability,

showing its position to BA

42

Part 2: Fifth Step

Patent List Negotiations

RPS and BA must engage in good faith

negotiations regarding which patents will be

subject of the immediate infringement action

42 U.S.C. 262(l)(4)(A)

Discussion: When should those negotiations begin? What do BA and RPS need to do to show good faith?

43

Part 2: Sixth Step

Final Patent Lists

What if RPS and BA fail to reach agreement on

which patents to litigate within 15 days?

• They must then exchange final patent lists that will

determine which patents will be litigated immediately42 U.S.C. 262(l)(4)(B)

44

Part 2: Sixth Step

Final Patent Lists

BA notifies RPS of the number of patents that

should be the subject of the infringement action

Within 5 days parties simultaneously exchange

lists of patents that should be the subject of the

infringement action

RPS cannot list more patents than the number

proposed by BA (except if BA does not list any

patent, then RPS can list one)

42 U.S.C. 262(l)(5)

45

Part 2: What Will RPS and BA Do in This

Exchange?

BA: “We believe that 3 patents should be

the subject of immediate litigation.”

RPS: “We choose patents ’002, ’003, and

’004.”

BA: “We choose ’002, ’003, and ’006.”

They still haven’t come to agreement

Discussion: Strategies for dealing with this?

46

Part 3: Litigation

If the parties agree on a list • RPS must commence action with respect to each patent on the list

within 30 days of the agreement

If the parties do not agree on a list• RPS must commence action with respect to each patent on either list

within 30 days of the exchange of the lists of patents during negotiations

42 U.S.C. 262(l)(6)

47

Part 3: RPS Must Sue on Four Patents

Because RPS and BA didn’t agree, RPS must

commence litigation on patents ’002, ’003, ’004

and ’006 within 30 days of the exchange of final

patent lists

BA must notify FDA of the litigation

If RPS and BA had agreed, only 3 patents would

be litigated immediately

Discussion: Is it more advantageous to agree or disagree? Is it okay to preview lists to ensure agreement/disagreement?

48

Part 3: Bringing an Action for Infringement:

Limitations

Bringing action after the 30 days has expired or bringing action then dismissing it without prejudice • Sole remedy in any subsequent infringement action of

that patent will be reasonable royalty

Failure to disclose relevant patent• Action for patent infringement under “this section” can

never be brought

No provision prohibiting settlement35 U.S.C. 271(e)(6)

Discussion: Does “this section” mean 271(e) or 271?

49

Part 3: Notice of Commercial Marketing and

Preliminary Injunction

Notice of intent to market

• BA must provide at least 180 days notice of intention

to market, regardless of existence of patents

Preliminary injunction

• RPS can seek a preliminary injunction after receiving

BA’s notice

To prevent marketing until court decides infringement,

validity, and enforceability42 U.S.C. 262(l)(8)

Discussion: Will there be substantial PI practice?

50

Part 3: Preliminary Injunction

(Cont.)

Eligible patents

• Patents in the original list of either of the parties, or in a newly issued patents list, but that are not included in the final lists (after negotiations)

Parties must reasonably cooperate to expedite further discovery as needed for preliminary injunction

42 U.S.C. 262(l)(8)

51

Part 4: FDA Implementation

FDA is given substantial discretion under the statute

Unclear how FDA will implement the statute

If FDA issues guidance on a case-by-case basis, an approval pathway will be difficult to predict for other biosimilar applicants

Unclear what studies FDA will require, which could affect decisions by biosimilar applicants of which products to develop

Discussion: What do you guys think?

52

Part 4: Recent FDA Actions

The agency is in the early stages of deciding on an approval pathway

A working group comprised of officials from CDER, CBER, and the Office of the Chief Counsel has been established by FDA to implement the statute

Leah Christi has been tapped as the Office of New Drugs’ Associate Director of Biosimilars

What else?

Washington Drug Letter, Vol. 42 No. 25, “Biosimilar Developers Told to Wait as FDA Crafts Regulatory Guidance,” June 21, 2010; “The Pink Sheet” Daily, “FDA Creates Biosimilars Overseer in Drug Office; Internal Panel to Advice Application Reviewers,” May 20, 2010.