Biosimilar Litigation Considerations: Economic Factors in Intellectual Property and Antitrust Cases

Emerging biosimilar litigation trends point to a need for litigants to be aware of potentially unique economic considerations for biologics and biosimilars that may impact legal strategies and arguments.

The competitive landscape for biosimilars has evolved since the introduction of the Biologics Price Competition and Innovation Act (BPCIA) of 2009. With this evolution, several kinds of litigation focused on intellectual property (IP) and antitrust issues can arise when a new biosimilar product is being developed, is approaching entry, or has launched and is actively competing with biologics or other biosimilars.

Over the past decade, litigation involving these products has increased and is expected to intensify in the coming years, especially as new legislation is introduced that has the potential to further enhance biosimilar competition and profitability. An example of such legislation is the revised guidance set forth by the US Food and Drug Administration (FDA) in 2024 on additional pathways to support the interchangeability of a biosimilar with a biologic reference product, which could lead to an increase in the number of biosimilars being deemed interchangeable with their biologic counterparts.

As biologics lose exclusivity, the extent of litigation involving biosimilars can be expected to increase. Additionally, the number of biologics slated to lose exclusivity in the coming years is expected to be markedly higher than in prior years. (See Figure 1.)

Given the increase in biosimilar litigation on the horizon, parties and legal practitioners will have increasing opportunities to draw on data from prior cases involving similar issues with which to tailor their arguments and legal strategies. To support their claims, they could leverage analytical tools and economic expertise around the specific drugs at issue, the particular IP that is being asserted or challenged, the extent of competition in the relevant therapeutic landscape, unique features of the relevant market, or other contextual considerations that became salient in prior cases. Such considerations could include, but are not limited to, interchangeability (or lack thereof) among at-issue drugs, associated marketing efforts, and rebating strategies employed by drug manufacturers or pharmacy benefit managers (PBMs).

This need to adapt litigation strategies arises partly from the varied and nonuniform uptake and price dynamics observed among currently available biologics and their biosimilars following biosimilar entry. It also surfaces due to several differences between IP litigation involving biosimilars and IP litigation involving small-molecule drugs. Litigation involving pharmaceutical products involves inquiries into the asserted patents and uptake and pricing of products. Given some unique features of biologics and biosimilars, investigations into facts and data specific to this marketplace can benefit parties and practitioners in all stages of a dispute. Inquiries like these may include questions such as “What are the potential drivers of biosimilar pricing and uptake trends?”

As an example, we conducted a preliminary empirical analysis of patient uptake among Humira (adalimumab) biosimilar patients in commercial and Medicaid/Medicare plans, using a large, nationally representative insurance claims database. (See Figure 2.) This analysis shows that biosimilars are experiencing larger uptake among commercially insured patients (for whom cost-sharing incentives and formulary management may more strongly encourage biosimilar adoption), as compared to Medicaid or Medicare Advantage patients (for whom reimbursement structures and patient cost exposures may be more fixed or less sensitive to biosimilar pricing).

Given that data-driven inquiries into questions like these specifically for biologics and biosimilars could influence the strength of economic arguments presented before a court, it is crucial to have access to analytics, tools, and data that are helpful in answering such questions.

Below, we examine two types of litigation involving biosimilars – IP and antitrust litigation – and types of inquiries and considerations that may aid in the formation and strengthening of economic arguments presented to courts.

IP Litigation

What we’ve seen: The vast majority of biologics with approved biosimilars have been involved in IP litigation. The economics of biosimilar IP litigation has much in common with the economics of IP litigation involving generic pharmaceutical drugs, but the regulatory frameworks for biosimilar IP litigation differ, for example, in that biosimilar IP litigation follows the BPCIA “patent dance” and the exclusivity period is longer for biologics. Manufacturing patents are relatively more likely to be asserted in biosimilar IP litigation given that manufacturing processes are important for consistently producing safe and effective biologics and biosimilars, biologic manufacturing processes tend to be covered by many patents and a wide array of IP, and the Orange Book for pharmaceutical drugs does not include manufacturing patents. To date, most biosimilar IP litigation has involved manufacturing patents.

Frequent questions:

• What is the legal challenge being made, who is making it (i.e., the biosimilar manufacturer or the biologic manufacturer), and how have courts previously responded to that kind of challenge?
• Could manufacturing processes that affect the safety, tolerability, and efficacy of the biologic/biosimilar be protected by patents and trade secrets, and how numerous are the patents and trade secrets being asserted?
• What will be the price of the biosimilar, and will it be priced such that a biosimilar manufacturer could pay damages, should a court later determine that the biosimilar infringes on IP held by the reference product biologic manufacturer?
• What share of biologic sales will be made by a biosimilar competitor, and are there other biosimilars that are also competing in the same therapeutic area?
• Is there a likelihood of irreparable harm if a biosimilar launches “at-risk,” that is, prior to the expiration of biologic IP protection? Is there a nexus between that harm and the asserted IP?

Economic considerations: Those encountering IP challenges related to biosimilars must account for the unique IP at issue and the value of that IP to biologic manufacturers, biosimilar manufacturers, and consumers. While allegations of irreparable harm may be routinely brought, courts are not likely to take a uniform approach to each case given that both the existence of harm and its irreparability are contextually dependent.

Similarly, analyses of the commercial success of a drug or damages resulting from alleged infringement of that drug’s IP are likely to depend on an intensive inquiry of the facts of a case. A rigorous analysis of sales data, forecasts, market trends, and consumer preferences combined with an expert’s opinion will be necessary to examine the merits of a commercial success claim or accurately quantify damages.

Antitrust and Competition Litigation

What we’ve seen: Litigants have advanced claims of anticompetitive effects related to the timing and extent of biosimilar entry. Some of these claims are similar to those from litigation concerning competition between branded and generic small-molecule drugs, while other claims are specific to biologics and biosimilars. Fact-based inquiries and evidence can inform legal strategies and strengthen economic arguments before courts.

Frequent questions:

• Does the branded biologic belong to a market that encompasses other branded biologics, and potentially their biosimilar competitors?
• How rapid is the uptake of currently available biosimilars, and should we expect uptake for new biosimilars to occur more rapidly or more slowly than those currently available?
• Are there many patents alleged to be impacting biosimilar entry or uptake, and how have agencies and courts reacted to allegations of any such “patent thickets” or improperly listed patents?
• How do rebates, discounts, and other pricing arrangements for biologics and biosimilars contribute to variation in the prices paid by end payers and direct purchasers?

Economic considerations: In the context of antitrust litigation involving pharmaceutical manufacturers, market conditions can be a critical element in determining whether a manufacturer’s alleged actions could result in higher prices in a relevant antitrust market. In a similar vein, parties and legal practitioners contending with class certification claims might rely on experts to evaluate the merits of claims of ascertainability, representativeness, and common impact. Pharmaceutical companies facing class action often need to scrutinize factors such as the heterogeneity across members of the purported class or whether the same methods could be used to show class injury for all alleged members, among other factors. Similar questions could arise in evaluating allegations of price discrimination. Pharmaceutical manufacturer defendants in such matters could strengthen their position by conducting a more rigorous and comprehensive evaluation of pricing data and factors that impact pricing, some of which may be unique to biologics and biosimilars.

Conclusion

Emerging trends in biosimilar litigation underscore the importance of a nuanced understanding of the unique economic dynamics present in biologics and biosimilars markets. As regulatory developments, such as the FDA’s revised interchangeability guidance, pave the way for increased biosimilar adoption, parties involved in biosimilar litigation must remain vigilant in adapting their legal strategies to these evolving conditions. Leveraging detailed analytical tools, empirical data, and economic expertise specific to biologics and biosimilars can significantly enhance the precision and effectiveness of arguments presented in both IP and antitrust cases. By thoroughly examining factors such as manufacturing patents, market competition, pricing structures, and patient uptake patterns, parties can better anticipate and navigate the complexities of biosimilar litigation, ultimately positioning themselves for favorable outcomes in a rapidly shifting legal landscape.

Pavel Darling, Managing Principal
Andrée-Anne Fournier, Managing Principal
Michael Carson, Vice President
Andrea Hugill, Vice President