Proposed legislation for follow-on biologic pharmaceuticals in the US
Stephen B Judlowe and Brian P Murphy
Morgan, Lewis & Bockius, LLP, New York, NY
The stage is set for another intense debate among innovator pharmaceutical companies and their generic counterparts within the American biopharmaceutical sector. The debate closely resembles the one that ultimately paved the way for the enactment of the Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”), which allowed rapid market entry of small molecule generic pharmaceuticals. The current debate, however, centres around medicines referred to as follow-on or generic biologics. The technological and legal constraints of developing generic biologics that are bioequivalent to an innovator’s product are at the heart of the debate.
The Hatch-Waxman Act specifically excludes biologics, and the United States Food and Drug Administration (FDA) will not approve generic biopharmaceutical products under those provisions. To promote competition and innovation, generic pharmaceutical companies have jump-started the process by proposing new laws and regulations that would establish an efficient regulatory pathway for streamlined FDA approval of follow-on biologics. Senator Orrin Hatch has been meeting with industry executives and is expected to introduce implementing legislation for follow-on biologics early in the next congressional session.
Today there are over 150 biopharmaceutical products on the market, 30 of which were approved in the last year alone. Hundreds of biologics are in the pipeline, and many are being reviewed daily by the FDA. Sales of biologics totalled approximately US$22 billion in 2003 and are expected to grow rapidly in the coming years, reaching US$100 billion annually by 2010 as biopharmaceutical treatments for cancer, cystic fibrosis, haemophilia and AIDS come online. What is whetting the appetites of the generic companies is the ever-expanding list of biopharmaceutical products losing patent protection. Patents covering Epogen® (US$5.8 billion in sales in 2001), Humulin® (more than US$1 billion in sales in 2001), Avonex® (US$972 million in sales in 2001), Intron® A (US$700 million in sales in 2001), Novolin® (US$1.8 billion in sales in 2001) and Neupogen® (US$1.5 billion in sales in 2001) either have expired or will expire in the coming years.
The time has come for Congress and the FDA to address the issue of whether an abbreviated regulatory pathway for follow-on biologics is necessary and appropriate. The legal framework on which to base such a decision will require meticulous review of the Federal, Food, Drug and Cosmetic Act (FDCA), the Hatch-Waxman Act, the Public Health Service Act (PHS) and the United States Constitution. This chapter will discuss the technical and legal issues facing both innovator and generic biopharmaceutical companies as they grapple with the potential enactment of follow-on biologics legislation.
Innovator point of view
The scientific and technical challenges of follow-on biologics
Innovators reason that complex biological proteins and glycoproteins (proteins with carbohydrate chains attached), unlike synthetic, small molecule drugs, are incapable of generic, bioequivalent duplication. The science underlying this argument is compelling. Biological medicines derive from living cells. They are significantly different from traditional, small molecule drugs in size, structure and complexity. Biologics are typically proteins comprised of long amino acid chains with or without side chains attached to them. Characteristic properties of biologics include a very high molecular weight and high structural complexity, a heterogeneous molecular make-up, varying levels of hard-to-remove biological impurities (bacteria, viruses and the like) and a high degree of sensitivity to environmental conditions.
The vast differences between biologics and small molecule drugs are largely due to their respective manufacturing processes. Traditional organic synthesis of a small molecule drug in a commercial manufacturing environment is eminently predictable and controllable. In contrast, manufacturing biologics requires the nourishment and support of living host cells transfected with genetically engineered DNA to code for the desired biological protein that is expressed by the host cells. A master cell bank must be established, and host cells are cultured and fermented in large-scale bioreactors to produce commercial quantities of the desired protein.
Biological proteins expressed from host cells contain a wealth of contaminants and require very extensive purification. The purification process is carefully designed to rid product of impurities while maximising the desired protein yield. The desired proteins are then tested for uniformity using various analytical tools, and the final formulation of the protein completes the manufacturing process. To illustrate the complexity, it has been said that when manufacturing biologics the product is the process because the process figures so prominently in the safety and efficacy profile of the biological protein.
Biopharmaceutical innovators argue that a streamlined regulatory process for follow-on biologics, modelled on the Hatch-Waxman Act governing small molecule drugs, cannot work because bioequivalence is impossible to achieve. In his testimony before the Senate Judiciary Committee on 23rd June 2004, Mr David Beier, a global government relations representative for Amgen, Inc, summarised this exact point: “Hatch-Waxman is based on chemical sameness – the idea that one manufacturer can make an exact chemical copy of another manufacturer’s active ingredient. With complex substances…we simply do not have the assurances we need to establish the safety and effectiveness of a proposed generic product.”
The FDA has also recognised this issue. Acting commissioner Dr Lester Crawford has noted that “because protein drug products are large, complex molecules, derived from biological sources, generally it has not been possible to assess relative sameness with a high degree of confidence”. The innovators insist that the science has not been developed to allow generic companies to characterise complex proteins fully and to give meaningful assurances of bioequivalence. The only alternative is for the FDA to require full-scale clinical studies to establish safety and efficacy, with the attendant time and cost involved, prior to obtaining FDA marketing approval.
The scientific hurdles for follow-on biologics do not end with the intricacies involved in the development of host cell lines, cell media, and fermentation and purification methods. Cellular metabolism, the biological processes of the host cells themselves that are ultimately responsible for producing the desired protein, is a highly sensitive and variable phenomenon. Even slight variations in cell conditions may produce vastly different end-products. As Mr Beier puts it: “Given that the process depends on cellular metabolism, and that metabolism is sensitive to environmental factors, it is impossible for two manufacturers to produce identical protein products.”
Immunogenicity, the ability of a biologic medicine to stimulate unintended immune responses in the body, also impacts a biologic’s safety and efficacy profile. For example, a biologic may stimulate an unwanted autoimmune response in the patient that can either neutralise the biologic’s efficacy or cause a life-threatening condition in the patient. These scientific and technological challenges cannot be easily dismissed.
Intellectual property protection
The protection of intellectual property rights and the need to incentivise innovative research and development are also of paramount concern to the innovators. By way of general comparison, when the Hatch-Waxman Act was enacted in 1984, there were thousands of small molecule drugs already on the market, while today there are approximately 150 biopharmaceutical products that have received FDA marketing approval. Getting a biopharmaceutical product to the market requires vast amounts of time and financial and intellectual capital. Intellectual property protection is a critical incentive to continued investment in biologics.
Trade secret protection is an intellectual property right that provides a continuing safeguard for an innovator’s proprietary data package on file with the FDA. Innovators argue that effective trade secret protection strongly supports the benefits associated with good public health policy. In the context of biopharmaceuticals, trade secrets protect the all-important manufacturing techniques used to generate the biological proteins. Manufacturing processes may not qualify for patent protection (or the manufacturer may decide to eschew patent protection in favour of maintaining secrecy), but confidential manufacturing processes are protectable trade secrets of vital commercial importance to their owners.
The FDA historically has respected the trade secrets of all pharmaceutical manufacturers. FDA regulations are consistent with trade secret standards, and the FDCA explicitly prohibits misappropriation of trade secrets (FDCA § 301(j)). Most states have also adopted versions of the Uniform Trade Secrets Act to protect confidential and proprietary trade secret information. Innovators believe that the FDA has, and should continue, to apply to biologics the same strict standards outlawing misappropriation of trade secrets.
The proposed reliance by the FDA on an innovator’s proprietary manufacturing processes, as part of an abbreviated regulatory pathway for follow-on biologics, raises the concern of inherent disclosure of innovator trade secrets. The information and technology utilised in an abbreviated regulatory approval process and relied upon by the FDA in assessing the application of a follow-on biologic must come from the innovator. Any guidance provided by the FDA on the issue of bioequivalence creates the same apprehension of inherent disclosure because of the FDA’s reliance on proprietary trade secrets derived from the innovator. Trade secrets must be respected and protected. Compensatory damages are an insufficient remedy for the misappropriation of trade secrets.
Generic point of view
The generic biopharmaceutical sector responds with a certainty borne from success. Advocating the benefits to the consumer-patient, and with favourable political winds filling their sails, generic biopharmaceutical companies highlight the socio-economic and technological necessity for establishing a streamlined regulatory pathway. Their core concept hinges on the established scientific and manufacturing capability to allow FDA approval of at least some follow-on biologics. The abbreviated regulatory pathway will provide the incentive to develop more complex follow-on products and manufacturing systems and lead to further innovation in the industry.
The scientific and technological capability
The feasibility of an abbreviated regulatory pathway ultimately rests on the question of whether follow-on biologics manufacturers have the scientific and technological capacity to execute and maintain high-quality manufacturing processes. Generic biotech companies do not hesitate to answer this query with a resounding “yes!” Advancement in the field of analytical and comparability testing over the last two decades has allowed generic biotech companies to characterise and re-create innovator biologics, while maintaining a consistent similarity between the innovator and follow-on biopharmaceutical products. With some exceptions, due to vastly greater complexity, the generic biotech community posits that most of the brand-name biologics may be fully characterised using present-day analytical techniques. Mr William Schultz, testifying before the Senate Judiciary Committee on behalf of the Generic Pharmaceutical Association (GPhA), put it simply: “generic firms approach safety, purity, potency, quality, and manufacturing using the same scientific principles and standards as those relied upon by the brand sector.”
The generic biotech companies also argue that the growing market for biologics compels the establishment of an abbreviated regulatory pathway. It is estimated that more than 60 biopharmaceutical products are currently in phase II or III clinical trials and that biologics applications are growing at a much faster rate than the overall pharmaceutical sector. Nearly 40 per cent of the products currently in phase III studies are biologics. The biopharmaceutical market has grown at an average annual rate of 16 per cent since 1989 and is projected to eclipse the US$100 billion mark by 2010. Given that more than a dozen biologic products already are off-patent, the market will demand access to follow-on biologics to ensure competition and to foster more innovation.
The generics stress that the need for generic competition in the United States’ biopharmaceutical industry is reflected in the enormous cost to patients receiving biopharmaceutical treatment. The Senate Judiciary Committee has heard, on more than one occasion, that the treatment cost of the top three biologics, Neupogen, Epogen and Intron A, is approximately US$15,000, US$10,000 and US$22,000 per patient, per year, respectively. The biologic Cerezyme, used to treat enzyme deficiencies, rings up at an annual cost of US$170,000 per patient. Without generic competition, these prices will remain unjustifiably inflated. The entrance of follow-on biologics will not only save consumers money, but will reduce the United States’ overall healthcare expenditures.
The argument that the time has arrived for follow-on biologics and that modern science can support it finds additional backing from other countries that already have instituted abbreviated regulatory schemes for biologics. Last year the European Parliament approved legislation which set out a legal framework for biosimilar drugs, although the European Medicines Agency (EMEA) has yet to publish implementing regulations. Generic drug manufacturers have begun producing follow-on biologics in markets such as Mexico, China, Korea, India, Argentina, Egypt, Peru, Brazil and various Eastern European nations. Dr Carole Ben-Maimon of Barr Laboratories recently testified before the Senate Judiciary Committee: “The marketing of generic biotech products in other countries clearly demonstrates that the products are comparable and that safety is not an issue. The exposure of thousands of patients, without untoward effects, clearly demonstrates that these products are not only effective, but safe. With the necessary regulatory oversight, safety will be appropriately addressed and thus will not be an issue in the United States either.”
The established legal precedent
Generic biotech companies point to established legal precedent, particularly the FDCA and the PHS, as support for the enactment of an abbreviated regulatory pathway for follow-on biologics. Some natural source proteins, such as insulin and natural hormones, have been regulated as drugs under the FDCA. Generic biotech companies argue that these biologics are subject to the Hatch-Waxman Act provisions and qualify for FDA approval under section 505(b)(2). Under this section of the Hatch-Waxman Act, the FDA can rely on its approval of the innovators’ brand name product, but also require supplemental clinical data to confirm the safety and efficacy of a proposed generic drug product. 21 USC § 355(b)(2). Innovators, of course, reject this interpretation.
Precedent also exists for the approval of follow-on biologics relying on limited pre-clinical and clinical data under the PHS. Biologics, including Hepatitis B vaccines and allergenic extracts, have been approved by the FDA under the PHS. This approval process analyses data taken from narrowly tailored and relatively limited pre-clinical and clinical testing sponsored by the applicant. Favourable action by the FDA under the PHS supports the notion that scientific comparability between at least some innovator and follow-on biologics can be justified based on streamlined, pre-clinical and clinical testing of follow-on biologics.
Conclusion
The participants in the United States biopharmaceutical industry are engaged in a debate that could dramatically change the industry, much like the enactment of the Hatch-Waxman Act did 20 years ago. This time the stakes are just as high for both the innovators and their generic counterparts. Congress and the FDA will lead the public debate, which should look to achieve the goals not only of optimising patient care and ensuring vigorous competition in the marketplace, but also of incentivising continued research and innovation by staunchly supporting the intellectual property rights of all innovators in the biopharmaceutical industry.