Biologics, Biosimilars and Looking Into the Abyss

  • June 20, 2012

The double-edged aspect, and certainly the more negative side, of being protected by a patent comes at the end of that protection. Patent cliffs have become part of the pharmaceutical industry’s vernacular in that a company’s revenues can appear to be falling off a cliff when a product comes off patent; when the patent term runs out and generic competitors enter the marketplace. In this situation a blockbuster drug can disappear from an IMS top-selling drug list from one year to the next. Patent cliffs are well known in the small molecule drug arena where generic competition can take over 90-95% of the market within a few years after gaining their own approval. Although the same patent terms and conditions apply to biologic drugs, the lack of a clear regulatory path for biosimilars provided biologics an additional layer of protection. Although a patent may run out twenty years after its filing, protection against competition continued as long as there was no regulatory path to file a biosimilar application. Because of the considerable cost to develop a biosimilar and, in turn, the potential for an enormous return on this investment coupled with the erosion of highly profitable revenue streams enjoyed by innovator companies, The Biologics Price Competition and Innovation Act of 2009 (BPCIA) has become a focus of attention for innovators and biosimilar wannabes alike.

For innovators, the passage of BPCIA in 2009 essentially removed that additional layer of protection, although there is still some work at the Agency level to define exactly what that pathway will look like. Considering the 12 year exclusivity term conferred to ‘innovator’ biologic products by BPCIA, approximately 40% of biologics housed within CDER could be considered lame ducks if no active patents remain. But innovators aren’t being passive and they certainly aren’t accepting the invitation to jump off the steep and unprofitable patent cliff that biosimilar companies hope to create for them.

In an effort to protect their revenues, innovator companies have started to partner with generic manufacturers as a means to enter the biosimilar market and possibly cannibalize their own products. The edge here is with the innovator; they know the product and their partner should know the generic marketing model. A more direct and more definitive strategy taken is the April 2, 2012 filing of a Citizen’s Petition (CP) by Abbott asking that all biologics approved before the passage of BPCIA receive grandfathered protection against biosimilars. In this Citizen’s Petition it is argued that, “Under well-established Supreme Court jurisprudence, FDA’s use of the trade secrets in (Abbott’s) Biologics License Applications to support approval of competitor products would frustrate (its) investment-backed expectation regarding their property and would constitute a taking under the Fifth Amendment to the US Constitution that requires just compensation.” The CP concludes that the “FDA should…interpret the BPCIA as applying only to post-enactment reference products, thereby avoiding both significant constitutional questions and significant government liability.” This move is extremely meaningful as it has the potential to delay the introduction of biosimilars into the marketplace by a decade or more.

Despite the stakes, not everyone is flocking to the biosimilar market. There are still uncertainties in what will be required for approval of an abbreviated BLA and concern over the protection of intellectual property as a biosimilar dossier would become publically available upon approval (a distinction from BLA legislation). These issues dampen some of the enthusiasm for pursuing biosimilar development.

Where there are no risks there will likely be no benefits. The biologics/biosimilar world fits this old adage perfectly. For the biosimilar company the risks lie in the uncertainty of the scope of development and the newness of the regulatory process. But, if successful, the reward may well be a highly profitable new product to compete with exciting medical products making a real and positive impact on patient health. For the innovator of new biologics the benefit will be a 12-year period of exclusivity. The downside will be the loss of this protection and the ultimate view of the abyss and the fall from the cliff. Navigating life-cycle management and jumping from patent cliffs for biologics products may well become the pharmaceutical industry’s newest extreme sport.

Posted by Joel Falk, Executive Vice President and Theresa Allio at The Weinberg Group, the world’s leading food and drug consulting firm. If you have any questions or thoughts on this blog post or others, please contact us.