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Focus on Competition in U.S. Biosimilars Market Heats Up in Summer of 2018

August 31, 2018

Focus on Competition in U.S. Biosimilars Market Heats Up in Summer of 2018

August 31, 2018

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The summer of 2018 has brought a renewed focus on the U.S. biosimilars market. The market to date has been, in the words of FDA Commissioner Scott Gottlieb, “anemic”: there are only 4 biosimilars on the U.S. market, and they have generally failed to gain significant market share or appreciably reduce health care costs. For example, Johnson & Johnson (“J&J”) still maintains 94% of the Remicade® market, despite the fact that two Remicade® biosimilars (Pfizer’s Inflectra® and Samsung Bioepis’s Renflexis®) are competing with Remicade® at discounts up to 35% off the Remicade® list price. But private parties, courts, legislators, and the FDA have all recently taken steps to help the emerging U.S. biosimilars market succeed.

Biosimilar developers and other private parties have stepped up their attacks on reference product sponsors (RPSs) who they see as unlawfully stymieing the U.S. biosimilars market. Back in September 2017, Pfizer sued J&J and its subsidiary Janssen in the Eastern District of Pennsylvania, alleging antitrust violations that allegedly prevented the market success of Inflectra®. Pfizer alleged that J&J and Janssen maintained their Remicade® market share through “exclusionary contracts that foreclose Pfizer’s access to an overwhelming share of consumers, coupled with anticompetitive bundling and coercive rebate policies designed to block both insurers from reimbursing, and hospitals and clinics from purchasing, Inflectra or other biosimilars of Remicade despite their lower pricing.” (Pfizer, Inc. v. Johnson & Johnson and Janssen Biotech, Inc., No. 2:17-cv-04180-JCJ (Sept. 20, 2017) (“Pfizer v. J&J”), Dkt. 1 at 2.) A series of class action lawsuits followed with comparable allegations. The cases garnered renewed attention when, on June 6, 2018, pharmacy giants Walgreen Co. and The Kroger Co. joined the fray, filing a complaint in the same district court that similarly alleges that J&J and Janssen engaged in “unlawful exclusion of biosimilar competition to the brand-name drug Remicade” through an “exclusionary scheme” of “exclusionary contracts and bundled discounts that have effectively suppressed competition….” (Walgreen Co. et al. v. Johnson & Johnson et al., No. 2:18-cv-02357-JCJ (June 6, 2018), Dkt. 1 at 1-2.)

Then, on August 8, 2018, the Eastern District of Pennsylvania issued a long-awaited decision denying J&J and Janssen’s motion to dismiss the initial lawsuit filed by Pfizer. (Pfizer v. J&J, Dkt. 58.) The court is now positioned to provide important insight into what constitutes fair competition when it comes to the biosimilar market—and help eradicate any unfair practices to the extent they exist. Indeed, the Biosimilars Council, a non-profit trade association representing generic and biosimilar companies, has stated that the Pfizer case “presents critical issues regarding the degree to which biosimilars—and the still nascent industry focused on affordable biologic medicines—will be allowed to compete on fair terms with higher-priced branded biologic medicines.” (Pfizer v. J&J, Dkt. 45-1 at 2.)

Pfizer also targeted J&J, Janssen, and other RPSs in an August 22, 2018, Citizen’s Petition. In its petition, Pfizer asked the FDA to clarify how drug sponsors may communicate about biosimilars. The petition states that “[j]ust as there is a need for policies that support innovation, there is also a need for policies that ensure that patients and physicians have truthful and non-misleading information that encourages appropriate uptake of biosimilars so that biosimilars can reach their full potential for patients.” (Pfizer Citizen Petition, at 1.) Pfizer’s petition claims RPSs, including Genentech, Janssen, and Amgen, have issued misleading communications about biosimilars, for instance by emphasizing that biosimilars are not “identical” to the reference product, but failing to state that an approved biosimilar must have “no clinically meaningful differences.” (Id. at 7-8.) Pfizer is encouraging the FDA to issue a guidance document that addresses these concerns.

Boehringer Ingelheim (“BI”), developer of a Humira® (adalimumab) biosimilar, has also targeted RPSs’ allegedly unfair practices. AbbVie sued BI for patent infringement under the Biologics Price Competition and Innovation Act (“BPCIA”), and BI alleged in response that AbbVie’s patents covering Humira® are unenforceable due to AbbVie’s “unclean hands.” Specifically, BI alleged that AbbVie engaged in a “global effort to improperly delay competition with respect to adalimumab” by developing a “patent thicket” that uses “the patenting process itself … as a means to delay competition.” (AbbVie et al., v. Boehringer Ingelheim et al., No. 17-cv-01065-MSG-RL (August 2, 2017) (“AbbVie v. BI”), Dkt. 20 at 44-47, Dkt. 81 at 3.) On June 4, 2018, the District of Delaware granted BI’s motion to compel discovery from AbbVie on this defense, paving the way for BI to fully adjudicate the merits of its defense. (AbbVie v. BI, Dkt. 112.)

Legislators have also showed renewed interest in supporting the biosimilars market. On June 22, 2018, U.S. Senators Chuck Grassley (R-Iowa) and Amy Klobuchar (D-Minn.) sent a letter to the Federal Trade Commission (“FTC”) asking it to examine whether RPSs are using “pay for delay” strategies to hinder biosimilars from entering the market. The Senators urged the FTC “to examine global patent settlements relating to biosimilars to ensure they are not in violation of the antitrust laws,” specifically calling out AbbVie’s global settlements with Amgen and Samsung Bioepis relating to Humira® biosimilars. Similarly, on July 23, 2018, Representative John Sarbanes (D-Md.) introduced a bipartisan bill, the Biosimilars Competition Act of 2018, meant to curb “pay-for-delay” agreements entered into by biologic and biosimilar drug manufacturers. The bill would require biologic and biosimilar drug manufacturers to report to the Department of Justice and the FTC whenever they enter agreements that may keep lower-cost drugs from reaching consumers.

The FDA, too, has turned its focus to the biosimilars market. As we discussed here, on July 18, 2018, the FDA released its “Biosimilars Action Plan” (“BAP”) for balancing innovation and competition, accompanied by a press release from FDA Commissioner Gottlieb. With the BAP, the FDA has sought to improve the biosimilar review process by educating the public about biosimilars and reducing “gaming” of FDA requirements that may delay competition. The FDA also announced that on September 4, 2018, it will hold a public hearing on the FDA’s approach to enhancing competition and innovation in the biological products marketplace, including by facilitating greater availability of biosimilar and interchangeable products.

Despite the recent boon for those interested in expanding the biosimilar market, RPSs’ interests have not been overlooked. On June 13, 2018, as we discussed here, Senator Orrin Hatch (R-UT) introduced the “Hatch-Waxman Integrity Act of 2018,” seeking to “restore the careful balance the Hatch-Waxman Act struck to incentivize generic drug development.” If passed, a biosimilar developer that takes advantage of the abbreviated regulatory pathway laid out in the BPCIA would not be able to challenge an RPS’s patents to the corresponding biologic via inter partes review (“IPR”). Further, despite the FDA’s push to bring about biosimilar competition, Commissioner Gottlieb was careful to emphasize that “[b]iologic manufacturers have a right to defend their legitimate intellectual property interests.” That is, the FDA is not attempting to undermine an RPS’s proper assertion of patents. The FDA’s announcement regarding the September 4th hearing echoed this sentiment, noting that the FDA is seeking to “facilitate greater availability of biosimilar and interchangeable products while retaining the balance between competition and innovation that Congress intended to achieve under the BPCI Act.” (Emphasis added.)

As discussed above, all eyes are now focused on the emerging U.S. biosimilar market. We will continue to monitor developments and update accordingly.

Authors: Jenny Shmuel, Tasha Francis

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.

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Jenny Shmuel, Ph.D. | Principal

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...