Biologics, Biosimilars, and Generics
Emerging Issues in Litigation
As the FDA establishes a pathway for the expedited approval and market introduction of biosimilar competitors, brand manufacturers will consider and pursue various strategies to maintain the integrity of their investments in therapeutic categories and their associated revenue streams. Given the nature of the pharmaceutical industry in general and the underlying science of biologic products in particular, the strategies pursued by brand manufacturers may be vulnerable to a variety of legal challenges.
Biologic products are highly complex compounds that are manufactured through relatively unstable processes. Minor differences in production materials and processes can create significant variability in the physical structure, medical effectiveness, and safety profile of the drug. Because biosimilar products are not exact replicates of innovator biologics, the resulting differences in the products’ safety and efficacy profiles may expose the entire therapeutic category to litigation or otherwise unwanted stigma. Brand biologic manufacturers, therefore, may seek to protect themselves from any safety-related product liability suits, or other similar threats to their products’ revenue streams and reputations, attributable to biosimilar products.
President Pierre Cremieux, who has provided expert analysis and testimony in several pharmaceutical antitrust cases, notes that “any strategy pursued by brand manufacturers that could result in delaying the market entry of a biosimilar product – even those seeking to defend the integrity of a therapeutic category – is ripe for legal challenge, as parties may claim that brand manufacturers are seeking to illegally maintain a monopoly or engaging in other unfair business practices.”
Addressing anticompetitive claims in matters involving generic entry frequently requires consideration of intellectual property issues as well – and the introduction of biosimilars is likely to make this already complicated turf even more challenging to navigate for players on both sides.
The production of biologics relies on numerous patented compounds and manufacturing processes. Because the quality and structure of the biologic drug is so dependent on extremely narrow specifications in the manufacturing process, pharmaceutical companies typically hold numerous and overlapping patents to protect the production of the biologic. The resulting “patent thicket” increases substantially the likelihood of intellectual property-related litigation and adds considerable complexity to the valuation of particular patents in isolation. An important current issue in patent damages analysis is “apportionment,” i.e., isolating the contribution of a particular patent of interest from overall product value. This issue has arisen frequently in the high-tech industry, characterized by complex products resulting from the combination of multiple patented technologies.
Managing Principal Carla Mulhern, who has testified in numerous intellectual property matters, notes that “the presence of multiple, overlapping patent rights embodied in biologics gives rise to issues of ‘royalty-stacking,’ particularly when the relevant royalty base is overall product revenue.”
In a recent CAFC decision, Lucent Technologies, Inc. v. Gateway, Inc., the court emphasized that “[t]here is nothing inherently wrong with using the market value of the entire product [as a base] ... so long as the multiplier accounts for the proportion of the base represented by the infringing component or feature.” Similarly, a goal of current patent reform efforts is to ensure that damages methodologies adhere to economic principles, ensuring that damages awards are commensurate with the value contributed by the specific patent or patents at issue. Furthermore, given the scientific differences between and among biologics and biosimilar products, the complexities of the products and their patents will complicate the liability questions of alleged infringement or a challenge to the validity of any given patent. ■
“If biosimilarity, as opposed to bioequivalence, makes state-mandated substitution less likely at pharmacies, the expected savings in the drug budget associated with the availability of biosimilars will not be as great as has been the case with generics.”
- Paul Greenberg, Managing Principal