Reform Legislation Includes Regulatory Pathway for Follow-on Biologics

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Citing the success of generic drugs in lowering prescription drug costs, health reform advocates have long argued for an abbreviated FDA approval process for “follow-on” or “biosimilar” versions of biologic products. Biologics, which are derived from living materials, involve highly complex molecular structures that are difficult to manufacture and virtually impossible to copy exactly. Thus, unlike generic versions of pioneer chemical drugs, a follow-on version of a biologic will almost certainly not be identical to the pioneer product it imitates. FDA has, therefore, taken the position that the existing abbreviated approval pathway for generic drugs is not appropriate for follow-on biologics. Although lawmakers’ past attempts to create a new regulatory approval pathway for biosimilars have not succeeded, it now appears such a measure may be approved as part of comprehensive health care reform legislation.

Earlier this year, several competing bills that would establish a regulatory pathway for follow-on biologics were introduced in Congress. In July, two of them were approved as part of committee-passed reform bills. On July 13, the Senate Health, Education, Labor and Pensions Committee voted 16-7 in favor of adding biosimilars legislation co-sponsored by Sens. Orrin Hatch (R-UT), Michael Enzi (R-WY) and Kay Hagan (D-NC) as an amendment to its health reform bill (“Hatch Amendment”). Two weeks later, the House Energy and Commerce Committee voted 41-11 to adopt a similar amendment introduced by Rep. Anna Eshoo (D-CA) to its comprehensive health reform package (H.R. 3200) (“Eshoo Amendment”). Both votes are widely regarded as not only a win for the brand-drug industry, but also a defeat for competing bills proposed by Sen. Sherrod Brown (D-Ohio) (the “Brown Bill”) and Rep. Henry Waxman (D-CA) (the “Waxman Bill”), which were more favorable to the manufacturers of follow-on biologics. Below is a summary of the Hatch and Eshoo Amendments’ positioning on key issues in the follow-on biologics debate.

FDA Approval Requirements. The Hatch and Eshoo Amendments require makers of follow-on biologics to prove that their products have a sufficient degree of similarity to an approved pioneer biologic product (“reference product”) to obtain FDA approval. Specifically, evidence from analytic studies, animal studies and at least one human clinical study must show that the reference product and the follow-on biologic utilize the same known mechanisms of action, and that the administration, dosage and strength are the same for both products. Following the approval of the Hatch Amendment, Eshoo dropped a provision from her bill requiring FDA to issue product-class specific guidance documents setting forth the criteria it would use to determine biosimilarity prior to accepting applications. As currently drafted, both amendments permit, but do not require, FDA to issue guidance establishing requirements for specific biologic product classes, such as a requirement to withhold all approvals of follow-on biologics in certain product classes until warranted by “science and experience.”

Exclusivity for Pioneer Products. The most hotly-contested issue in the debate over follow-on biologics concerns the duration of “non-patent exclusivity”—i.e., the time period after approval of an innovator biologic during which FDA is barred from approving a follow-on biologic that references the innovator biologic—that should be granted to pioneer biologic drugs. The Obama administration and Federal Trade Commission have suggested that seven years of exclusivity strikes the proper balance between encouraging innovation and development of pioneer biologics and allowing lower-cost follow-on biologics to enter the market. The defeated Waxman and Brown Bills advocated five and seven years of data exclusivity, respectively. In contrast, the Hatch and Eshoo Amendments would grant pioneer biologics twelve years of non-patent exclusivity. The Eshoo Amendment also offers a six month extension for certain pediatric studies, and an identical provision has been proposed for the Hatch Amendment. Both Amendments would deny exclusivity to a pioneer biologic drug manufacturer seeking to “evergreen” a pioneer drug’s exclusivity period by filing a new application for a minor change to the product. While critics claim that the longer exclusivity period granted by the Eshoo and Hatch Amendments will unnecessarily slow the entry of low-cost alternatives to the biologics market, others see the twelve-year term as necessary to preserve incentives for innovation and development of these complex, cutting-edge products.

Exclusivity for “Interchangeable” Products. The Hatch and Eshoo Amendments also grant limited exclusivity to certain first-to-market follow-on biologics with respect to later-developed follow-on biologics. Specifically, follow-on biologics that FDA first determines are “interchangeable” with a reference product will have an exclusivity period of 12 to 42 months with respect to later-developed biosimilars that are interchangeable with the same reference product. The Eshoo and Hatch Amendments define a product as “interchangeable” with a reference product if: (1) it is biosimilar to a reference product; (2) the products are expected to produce the “same clinical result” in a patient; and (3) the risk of alternating or switching from the reference product to the interchangeable product is no greater than the risk of continuing to use the reference product. It is still unclear, however, how this “interchangeability” standard would differ in practice from standards for determining biosimilarity.

Patent Dispute Resolution. Both Amendments encourage the resolution of patent disputes between pioneer biologic drug sponsors and follow-on biologic drug sponsors by requiring the parties to exchange written information about their products when a follow-on biologic sponsor applies for FDA approval. Under the Eshoo Amendment, within 30 days of applying for approval of a follow-on biologic, the applicant must provide the pioneer product sponsor with a copy of the application. The pioneer product sponsor must respond with a list of patents in which it holds an interest that may be infringed by the follow-on biologic, and the follow-on product applicant must reply to each listed item either by stating that it will not commence marketing of the follow-on biologic until the expiration of the patent, or by explaining why the patent is not infringed or is invalid or unenforceable. While similar, the Hatch Amendment provides a more rigorous and comprehensive framework for patent dispute resolution that is more favorable to follow-on product sponsors than the Eshoo Amendment. For example, pioneer product sponsors must provide follow-on product sponsors with information about patents that may be infringed within 60 days after the follow-on product application is filed. Following this initial exchange the parties would continue to exchange detailed statements describing “on a claim by claim basis” why each patent is or is not infringed by the follow-on biologic drug. The parties are also obligated to engage in “good faith negotiations” (or, if negotiations fail, a prearranged dispute resolution process) to agree on which items will be the subject of an infringement suit. Under both Amendments, if the pioneer drug sponsor’s patent infringement suit succeeds, FDA will not approve the follow-on biologic product until the relevant patent expires.