Preparing for Competitive Challenges to Biologics with Expiring Market Exclusivity

Over the next five years, the twelve-year market exclusivity of many of the approximately 500 biologics licensed in the U.S. will expire. These products are likely to be attractive targets for biosimilar drug manufacturers. The only way innovators can maintain their exclusivity beyond the twelve-year market exclusivity period is through the assertion of patents. However, the assertion of patents to extend the exclusivity of a biologic product can lead to antitrust claims by competitors or the Federal Trade Commission (FTC). This article provides guidelines on how innovators can assert patents to protect their products’ exclusivity while avoiding claims from competitors and the FTC that their conduct runs afoul of U.S. antitrust law. 

According to EvaluatePharma World Preview 2019, Outlook to 2024, biologics are expected to account for 50% of worldwide sales among the top 100 pharmaceutical products by 2024. Competition from biosimilars is expected to have a big impact in this market. The rate of biosimilar approvals in the U.S. has steadily increased since the first approval-Sandoz Inc.’s Zarxio, in 2015-from three in 2016, five in 2017, seven in 2018, to 10 in 2019. 

U.S. law provides innovator biologic products with twelve years of market exclusivity commencing on the date of their first approval. Although ABLAs seeking FDA approval of biosimilar versions of the innovator product may be filed as early as four years after the innovator product’s first approval, ABLAs cannot be made effective until the twelve-year market exclusivity period has expired. Accordingly, the likelihood of ABLAs being filed increases as the market exclusivity period nears its end.  

Innovator companies must rely on patents if they wish to maintain their exclusivity beyond the twelve-year period. Twenty of the twenty-six biosimilars that have been approved to date in the U.S., and an additional five unapproved biosimilars, have been the subject of patent litigation under the U.S. biosimilars law called the Biologics Price Competition and Innovation Act (BPCIA). Over the next five years, the twelve-year exclusivity for many of the approximately 500 biologics licensed in the U.S. will expire.* The owners of innovator products approaching the end of their twelve-year exclusivity period should therefore be prepared to assert their patents against ABLA filers.

Biologic drugs are typically protected by a large number of patents, generally many more that the typical small molecule drug. In addition to patents claiming the active molecule (e.g., the antibody, protein, or receptor), most innovators have a broad range of secondary patents claiming formulations, dosage forms, and manufacturing processes. These types of secondary patents may provide valuable protection but must be carefully reviewed prior to assertion. Innovator companies have faced accusations by competitors, the FTC, state attorneys general, or consumer groups of improperly impeding generic competition through the maintenance of a “patent thicket” or “sham litigation” involving the assertion of patents that clearly were not infringed. Settlements of litigation in which a brand company pays a biosimilar maker to delay entry into the market can also give rise to liability but are not addressed here because in those cases, it is the payment, not the scope, strength, or term of the asserted patent, that is the focus of the FTC’s interest. 

If the number of secondary patents covering formulations, manufacturing methods, and the like is too large, the very existence of the patents may give rise to an antitrust claim. The large patent portfolios protecting certain biologics were the inspiration for legislation recently introduced in the U.S. Senate to discourage so-called “patent thickets.” The Affordable Prescriptions for Patients Act of 2019 would make it a violation of the FTC Act for an innovator to obtain any patent claiming a small molecule drug or biologic product, a form of the drug or biologic product, or methods of using or making them, if the patent’s effective filing date is later than the filing date of the NDA or BLA for the product and the patent could present an obstacle to a generic or biosimilar version of the product. In other words, any patent relevant to a product that the innovator obtains after the original filing date of the NDA or BLA could potentially subject the innovator to antitrust liability. Regardless of whether this proposed legislation is enacted into law, it should at least serve as a warning that seeking to enforce an unusually large patent portfolio with respect to any given product may invite scrutiny from the FTC or private antitrust plaintiffs.

Moreover, because such secondary patents might not be infringed by the biosimilar, their assertion prior to a thorough investigation of the biosimilar’s formulation or manufacturing process could subject the patent owner to antitrust claims for sham litigation under the theory that no reasonable patent owner could have realistically believed that the patent was valid and/or infringed. For example, antitrust claims based on sham litigation have survived motions to dismiss in cases involving Biovail’s Wellbutrin XL, Warner-Lambert’s Neurontin, and Nabi Biopharmaceuticals’ PhosLo.

A careful due diligence review of an innovator’s patent portfolio can avoid and/or minimize the risk of liability for such claims. We recommend that the innovator undertake the following steps in sufficient time prior to exclusivity expiration. Preparing well before ABLAs are filed has several benefits, including providing an opportunity to identify problems with patents that might be corrected through various procedures before the United States Patent & Trademark Office (USPTO); ensuring that all relevant patents are included in the initial list of patents provided by the innovator in the first step of the elaborate procedure of the BPCIA (often called the “patent dance” because it involves so many back-and-forth exchanges of patent information between the innovator and biosimilar applicant); and providing management with a clearer assessment of the strengths and weaknesses of the patents and the threat to exclusivity.

Identifying the relevant patents is the first and most important step. Innovators should be aware that many patents beyond the obvious ones claiming the active molecule or methods of treatment using the active molecule may provide valuable protection. For example, in a recent case in which the authors represented a major brand pharmaceutical company against an ANDA filer, we discovered a patent covering the process for manufacturing the drug that the client was unaware that it owned, which was infringed by the generic company and expired several years later than the patents covering the drug itself. Asserting that patent provided great benefits to the client. 

Once the relevant patents are identified, it is important to review their prosecution file history records showing how the patents were obtained from the USPTO. For example, the court in one case where the innovator was found liable for sham litigation found that statements made by the patentee during prosecution made its assertion of infringement untenable. The prosecution histories should also be reviewed for issues involving inventorship, assignment, double patenting, priority date, and whether all pertinent prior art was disclosed. Any declarations by the inventors or outside experts should be carefully reviewed along with any underlying data they rely upon. Further, it is good practice to review the prosecution histories of the patents’ foreign counterparts, which may contain arguments that are inconsistent with positions taken in the USPTO and relevant art that was not cited in the USPTO.

The BLA, NDA, IND, and any other submissions to the FDA regarding the product should also be reviewed. It is important to ensure that those filings, which are often prepared years after the initial patent applications on the product, do not contain data or statements that are inconsistent with the patents or their prosecution histories. Any publications and public presentations by the inventors related to the subject matter of the invention should be reviewed for the same reason.

Interviewing the named inventors is another critical exercise, if they are available. Attorneys should review the inventors’ laboratory notebooks, internal memos, team meeting notes, and correspondence relevant to the claimed subject matter. Discussing these materials with the inventors will allow the attorneys to understand each inventor’s role in the invention, whether they were properly named as inventors, and the story of how the invention was made. It will also allow an assessment of which of the inventors will make a good trial witness or be a problematic witness in discovery. If an inventor is no longer employed by the patent owner, it is often helpful to retain him or her as a consultant for the upcoming litigation. At the very least, inventors and prosecution counsel who are no longer employed by the patent owner should be represented by and contacted only through outside litigation counsel.

Carrying out the foregoing due diligence steps in sufficient time before ABLAs are filed allows for the possibility that if any problems with the patents are uncovered, they can be corrected, as mentioned above, in procedures before the USPTO , e.g., by certificate of correction; supplemental examination to address newly discovered prior art or enforceability issues; reissue; disclaimer of certain claims; correction of inventorship; correction of assignment; and correction of patent term extension or adjustment. Moreover, if problems with respect to any given patent cannot be corrected, counsel can make an informed decision as to whether the patent should be asserted. Either way, the due diligence recommended here will greatly reduce the likelihood of antitrust claims for the assertion of patents that are invalid, unenforceable, or not infringed.

*This includes certain biologic products, such as insulin analogues, that were approved through NDAs under the FD&C Act but will be deemed to have been approved through BLAs under the BPCIA on March 23, 2020, and will be subject to biosimilar competition at that time.    

Tony Pezzano is a partner in the IPT group DLA Piper US LLP. He can be reached at: tony.pezzano@dlapiper.com; Michael Dougherty is a partner in the IPT group DLA Piper US LLP. He can be reached at: michael.doughtery@dlapiper.com.