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Friday, November 12, 2010

Follow-On Biologics: The Law and Intellectual Property Issues

Wendy H. Schacht
Specialist in Science and Technology Policy

John R. Thomas
Visiting Scholar

The term “biologics” refers to a category of medical preparations derived from a living organism. These medicines have added notable therapeutic options for many diseases and impacted fields such as oncology and rheumatology. The biologics industry invests extensively in R&D and contributes to a rapidly expanding market for these treatments. Biologics are often costly, however, in part due to the sophistication of the technologies and the manufacturing techniques needed to make them.

Some commentators have also observed that, in contrast to the generic drugs available in traditional pharmaceutical markets, few “follow-on” biologics compete with the original, brandname product. The lack of competition in the biologics markets is perceived to be a consequence of the complexity of biologics in comparison with small-molecule, chemical-based pharmaceuticals. As a result, previously existing accelerated marketing provisions for traditional generic drugs provided under the Federal Food, Drug, and Cosmetic Act do not comfortably apply to biologics.

The 111
th Congress turned to these concerns when it enacted the Biologics Price Competition and Innovation Act (BPCIA) of 2009. The BPCIA was incorporated into Title VII of the Patient Protection and Affordable Care Act. The BPCIA included three significant components. First, the BPCIA established a licensure pathway for competing versions of previously marketed biologics. In particular, the legislation established a regulatory regime for two sorts of follow-on biologics, termed “biosimilar” and “interchangeable” biologics. The Food and Drug Administration (FDA) was afforded a prominent role in determining the particular standards for biosimilarity and interchangeability for individual products.

Second, the BPCIA created FDA-administered periods of data protection and marketing exclusivity for certain brand-name drugs and follow-on products. Brand-name biologic products receive 4 years of marketing exclusivity and 12 years of data protection. The BPCIA also provides for a term of marketing exclusivity for the applicant that is the first to establish that its product is interchangeable with the brand-name product. Finally, the BPCIA created a patent dispute resolution procedure for use by brand-name and follow-on biologic manufacturers.

A core issue concerning the BPCIA is its ability to preserve innovation while also stimulating competition in the biologics market. Some observers believe that due to the unique nature of biologics and their manufacture, the follow-on biologics market may not yield the same level of savings seen with small-molecule generic drugs. In contrast with traditional generic drugs, more clinical trials may be required, manufacturing methods may be more difficult to replicate in distinct facilities, and follow-on firms may be exposed to higher marketing costs. Whether industry will make extensive use of the BPCIA’s follow-on approval pathway is also not yet certain.

Resolution of the scientific and legal issues that the BPCIA raises will likely engage the courts and the FDA for many years to come. It may also take some time for members of the biologics industry to develop a working familiarity and appropriate strategies within the BPCIA framework. As a result, marketplace availability of significant numbers of follow-on biologics may not be a short-term proposition.

Date of Report: October 26, 2010
Number of Pages: 23
Order Number: R41483
Price: $29.95

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