When reforming healthcare earlier this year, the U.S. opened the door to increased competition for protein therapeutics. The Biologics Price Competition and Innovation Act provides a new mechanism for approving a biological product that is biosimilar to a previously approved (reference) product. Previously, biological products could only be approved after a complete battery of clinical trials. Now, an easier path to approval is available for a biosimilar, a biological product that is highly similar to a reference product and whose safety, purity, and potency show no clinically meaningful differences with the reference product.
As patents expire on existing, billion-dollar biologics, biosimilars offer a tantalizing opportunity for companies ready to jump in and compete for that market share. As an extra sweetener, certain biosimilars can be designated as “interchangeable” with a reference product if the biosimilar can be expected to produce the same result as the reference product in any given patient. For biological products that are administered repeatedly, a biosimilar is only interchangeable if switching between the biosimilar and the reference product is as safe and effective as repeatedly using the reference product.
Interchangeable products have an important advantage in the marketplace. As with generic pharmaceuticals, pharmacies can substitute an interchangeable biosimilar for the reference product without involving the doctor who originally prescribed it. In this way, interchangeable biosimilars offered at reduced prices may quickly grab market share.
To balance the benefits of competition and innovation, Congress included a period of at least 12 years of data exclusivity for a reference product, that is, a 12-year period before the FDA has authority to approve through the expedited pathway a corresponding biosimilar. The exclusivity period begins to run from the date the reference product is first approved. No biosimilar application can even be filed until four years after the approval of the reference product. In contrast, the FDA typically gives traditional pharmaceuticals (new chemical entities) about five years of regulatory exclusivity.
If biologics receive 12 years of exclusivity from the FDA, what additional protection do patents offer?
The First 12 Years
First, during that 12-year window, patents play the same role they always have: preventing others from developing and marketing a competing product requiring a traditional FDA approval process. The 12-year FDA exclusivity blocks only the new, abbreviated biosimilar approval process. Competitors willing to invest in a full set of clinical trials can seek FDA approval through the traditional pathway for biologics, without waiting 12 years. Against such motivated competition, patents offer the only protection.
For example, the U.S. market for erythropoietin is about $3 billion annually, a market in which Amgen and its licensees are the only players. In the past, multiple companies have sought to challenge Amgen’s position by offering a competing product, despite the absence of any biosimilar pathway for FDA approval. Amgen thwarted each would-be competitor, not through exclusivity from the FDA, but through patent protection.