The Biologics Price Competition and Innovation Act (BPCIA) was enacted to maintain incentives for biologic innovation while increasing competition to stem soaring healthcare costs—but, nine years after enactment, commentators have begun questioning its effectiveness. Over the past several months, a war of words has been raging between some who believe it is time to “throw in the towel” on biosimilars, and others who believe the system is just gaining traction. Against this backdrop, U.S. district courts remain key gatekeepers to biosimilar market entry and their decisions, including several this past summer, may end up influencing the debate.
As compared to the European market, biosimilars have been slow to gain market share in the U.S. FDA has approved 23 biosimilars, but none of these are interchangeables that may inure the benefits of automatic substitution (depending on state). Only 9 biosimilars have launched as of August 2019, and available data indicates that most of these have not gained significant market share. (See, e.g., IQVIA data from February 2019 here.) About a year ago, in July 2018, then-FDA commissioner Scott Gottlieb characterized the U.S. biosimilars market as “anemic.” (Full remarks here.) It has grown since then, but the pace is slow.
The current debate over biosimilars kicked off on April 15 2019, when a group of policy thinkers, including Dr. Peter Bach, Director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes, published a two-part article arguing that the U.S. should do away with biosimilars. (See Part 1 here and Part 2 here.) They opined that “biosimilars do not create effective competition” and proposed an alternative approach based on “post-exclusivity price regulations on innovator biologics.” Their theory was that generics work to bring down the costs of branded small molecule drugs because the barriers to entry are “artificial” – a product of government policies such as regulatory exclusivity—and a “typical generic drug takes firms 1-3 years, $1-$5 million, and no human clinical trials to introduce.” The BPCIA’s similar strategy for biologics does not work, in their opinion, because a biologic’s monopoly is “natural:” “innovative biologic therapies possess intrinsic scientific uncertainties that make creating replicas difficult, costly, slow, and risky” and biosimilars lack easy market entry since “the entire biosimilar development process has been projected to span 8-10 years and cost upwards of $100 million.” They also pointed to further “barriers to adoption” such as physicians’ perceptions that biosimilars are “less safe and less effective.” They suggest “requiring innovator biologic manufacturers to lower their prices after their period of market exclusivity,” along with compensating good-faith biosimilar developers for their past investments during the transition period.
Shortly thereafter, proponents of the BPCIA system weighed in. In April, then Commissioner Gottlieb disagreed with Dr. Bach and his cohort, arguing “[i]t’s far too early to throw in the towel on biosimilars” because “[i]mpediments to [biosimilar] uptake remain commercial barriers that will erode.” Dr. Bach and a colleague published an editorial in the Wall Street Journal on August 21, 2019—titled “Time to Throw in the Towel on Biosimilars”—reiterating their earlier positions. Former Commissioner Gottlieb rebutted with his own editorial in the Wall Street Journal a few days later, asking Congress to help biosimilars succeed. (See “Don’t Give up on Biosimilars—Congress can Give Them a Boost,” August 25, 2019, WSJ.) And, on August 28, 2019, Richard Saynor, CEO of Sandoz, argued that U.S. biosimilars are just now gaining traction and exuded optimism about the future of the market. (See article here.) Mr. Saynor also had a few choice words for Dr. Bach: “no, it is not time to throw in the towel on biosimilars; if anything (as the British love to say) it’s time to ‘stop the towels blocking the deckchairs’ and ‘allow the competition onto the beach.’”
Interestingly, this debate has taken place against a backdrop of recent activity at the courts, where courts have acted as the gatekeepers of new biosimilar market entrants and therefore impacted the success of the market.
For example, in July 2019, the District of Delaware denied a series of emergency motions filed by Genentech seeking to block Amgen’s Mvasi® (a biosimilar of Avastin®) and Amgen’s Kanjinti® (a biosimilar of Herceptin®) from entering the market:
Genentech had argued that Amgen could not launch Mvasi® (bevacizumab-awwb) until it provided new Notice of Commercial Marketing under 42 U.S.C. 262(l)(8)(A) of the BPCIA. Although Amgen had given Notice back in 2017 for Mvasi®, it subsequently filed a series of supplemental applications with FDA designating a new manufacturing facility and label changes. (Genentech v. Immunex, 1:19-cv-602 (D.Del.), Dkt. 47 (Memorandum Opinion).) The Court held that an earlier Notice of Commercial Marketing was sufficient to satisfy the statute since the supplemental applications were not for a “different biological product” that would require new notice. (Id.) On August 16, 2019, with little analysis, the Federal Circuit denied Genentech’s appeal for an injunction pending appeal. (CAFC 2019-2155.)
With respect to Kanjinti® (trastuzumab-anns), Genentech argued that Amgen could not launch until the Court rendered a decision on the merits of Genentech’s patent infringement claims. (Genentech v. Amgen, 1:18cv924 (D.Del.), Dkt. 315.) The court found that Genentech waited too long to file its motion (“fourteen months after receiving the Notice of Commercial Marketing, three months after receiving a fairly specific launch date, and almost one month after Amgen had FDA approval to launch Kanjinti”). () The Court determined that Genentech’s undue delay was sufficient to deny its motion, but also that Genentech would not suffer irreparable harm due to its previous licensing of certain asserted patents. (Id.) An appeal is ongoing. (CAFC 2019-2156.)
In reaching both of these decisions, the District of Delaware paid homage to the underlying policy debates, acknowledging the public interest in “affordable access” to drugs that “prolong and save lives.”
In light of the district court opinions, Amgen launched both Mvasi® and Kanjinti® in July 2019 at 15% off the list price of their reference drugs. It is too early to determine their impact, but these are the first Avastin® and Herceptin® biosimilars to be marketed in the U.S. and their uptake will provide important additional data points in the ongoing biosimilars debate.
Sandoz had a different experience with its Enbrel® biosimilar: an August 9, 2019 opinion from the District of New Jersey found that Sandoz failed to prove Amgen’s asserted patents were invalid. (Immunex v. Sandoz, 2:16-cv-1118 (D.N.J.), Dkt. 689.) Sandoz had not contested infringement of its Enbrel® biosimilar, Erelzi® (etanercept-szzs). Sandoz issued a press release stating it will appeal the decision, but that the decision currently “prevents us from launching [Erelzi®].” (See press release here.) Sandoz claims that its biosimilar Zarxio® (filgrastim-sndz) saved the U.S. healthcare system $500 million in less than two years and estimates that an etanercept biosimilar could save the U.S. healthcare system around $1 billion a year. (Id.) But, given the district court’s opinion, market participants will have to wait to see if those cost savings materialize.
Thus, U.S. courts are playing an important part in the emerging biosimilars industry and having a real impact on the products that are available. This will likely, in turn, influence ongoing policy arguments. Courts will continue to impact the industry as they weigh in on the litany of antitrust suits alleging that reference product sponsors are improperly stymieing the U.S. biosimilars market through, e.g., improper rebates and bundling, pay-for-delay settlements, and patent thickets. (See, e.g.,In re: Humira (Adalimumab) Antitrust Litigation (1:19-cv-1873, N.D.Ill.); Pfizer v. Johnson & Johnson (17-cv-04180, E.D.Pa).) The courts’ decisions in these and other cases may end up playing a large role in determining the fate of biosimilars in the U.S.
The opinions expressed are those of the authors on the date noted above and do not necessarily reflect the views of Fish & Richardson P.C., any other of its lawyers, its clients, or any of its or their respective affiliates. This post is for general information purposes only and is not intended to be and should not be taken as legal advice. No attorney-client relationship is formed.
Jenny Shmuel, Ph.D., represents clients on a range of intellectual property matters, with an emphasis on medical device and pharmaceutical technologies. She has extensive experience in pre-suit diligence, case management, expert and fact discovery, and brief writing, and has examined and cross-examined witnesses at trial.
Over the last several...