A 2023 Review of Legislation Aimed at Increasing Generic and Biosimilar Competition
2023; Mary Ann Liebert, Inc.; Volume: 42; Issue: 2 Linguagem: Inglês
10.1089/blr.2023.29303.cmh
ISSN1557-8704
Autores Tópico(s)Biomedical Ethics and Regulation
ResumoBiotechnology Law ReportVol. 42, No. 2 The Holman ReportFree AccessA 2023 Review of Legislation Aimed at Increasing Generic and Biosimilar CompetitionBy Christopher M. HolmanBy Christopher M. HolmanChristopher M. Holman is a Professor of Law at the University of Missouri–Kansas City School of Law; a Senior Scholar at the Center for the Protection of Intellectual Property at the Antonin Scalia Law School, George Mason University; and the Executive Editor of Biotechnology Law Report.Search for more papers by this authorPublished Online:6 Apr 2023https://doi.org/10.1089/blr.2023.29303.cmhAboutSectionsPDF/EPUB Permissions & CitationsPermissionsDownload CitationsTrack CitationsAdd to favorites Back To Publication ShareShare onFacebookTwitterLinked InRedditEmail In 2019 and 2020, I published a couple of article that walked through some legislative proposals aimed at the perceived problem of pharmaceutical companies essentially gaming the system to unduly delay generic competition.1 The proposed legislation targeted a variety of practices thought to contribute to excessive drug prices, including so-called "pay-for-delay agreements" or "reverse payment settlements" between branded and generic pharmaceutical companies, alleged abuse of the U.S. Food and Drug Administration (FDA) citizen's petition process, and the alleged withholding of equivalent drug samples from potential generic competitors. Much of the discussion, and some of the proposed legislation, was aimed particularly at the oft-stated claim that drug companies are "evergreening" the patent protection on their products, for example by engaging in "product hopping" and "patent thicketing," thereby delaying generic market entry and the drop in drug price that is assumed to occur with generic competition.2For example, the Affordable Prescriptions for Patients Act of 2019, S. 1416, would have targeted product hopping and patent thicketing by making certain actions taken by branded drug companies prima facie antitrust violations. With respect to product hopping, the actions that would result in a presumption that an antitrust relation had occurred were to either (1) cause FDA to discontinue or withdraw the "reference drug's" application (or announce the discontinuance of or withdrawal of the application) during a period of time beginning on the date on which the manufacturer of the reference product receive notice that an applicant had submitted an abbreviated new drug application (ANDA) or biosimilar biologics license application (BLA) and ending on the date that is hundred 80 days after that date on which that generic drug about similar product first enters, or could enter, the market, or is denied; or (2) markets or sells a follow-on product during a period of time refer to as the "competition window." With respect to an Orange Book-listed drug, the term 'competition window' is defined as the period between: (1) the date that is the earlier of (a) 8 years before any patent or marketing exclusivity granted with respect to such listed drug expires; and (b) the date on which the first ANDA that references such listed drug is filed; and (2) the date that is the later of (a) 180 days after the ANDA that references such listed drug is filed; and (b) 1 year after the date on which the generic drug that is the subject of the ANDA enters the marketplace.With respect to patent thicketing, the presumption of an antitrust violation would be triggered by any action taken to limit competition by a patentee with respect to an approved drug in which the following three conditions are met: (1) the patentee obtains "additional" patents with respect to which either (a) the effective filing date does not precede the date on which a New Drug Application (NDA) or BLA was filed, or the underlying composition of matter patent is found invalid; (2) an abbreviated ANDA (or biosimilar BLA) referencing the approved drug could not be marketed without practicing one or more of the inventions claimed in the additional patents; and (3) the FTC determines that the patentee improperly limited competition by obtaining the additional patents.The Terminating the Extension of Rights Misappropriated Act, H.R. 3199, was aimed at a perception that pharmaceutical companies were "double patenting" their inventions, by adding a subsection to 35 U.S.C. § 253 that would have created a presumption that in any patent enforcement action brought with respect to an ANDA under the Hatch-Waxman Act, or a biosimilar BLA under the BPCIA, wherein the validity of a patent is challenged, "the patentee shall be presumed to have disclaimed the patent term for each of the listed patents after the date on which the term the first patent expires."The Competitive DRUGS Act of 2019, H.R. 1344, and the Preserve Access to Affordable Generics and Biosimilars Act, H.R. 2375, would have addressed reverse payment settlements. The Competitive DRUGS Act, for example would have effectively overturned the Supreme Court's decision in FTC v. Actavis3 by creating a strong legal presumption that a reverse payment settlement violates the antitrust laws unless it can be demonstrated by clear and convincing evidence that either the payment is not given in return for delayed market entry by a generic competitor, but is instead compensation solely for other goods or services, or that procompetitive benefits of the agreement outweigh anticompetitive effect.For the most part, the proposed legislation has yet to be enacted.4 But the proponents of this type of legislation have not given up, and there are a number of bills currently pending in Congress addressing the same or similar concerns. Some of them are quite similar to bills that were pending at the time I wrote my earlier articles, with some changes of varying degrees of substantiality. The present article summarizes some of the significant provisions of four of these bills which are pending in the Senate at the time this article is being written.The Interagency Patent Coordination and Improvement Act, S. 79On January 26, 2023, U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, on behalf of himself and U.S. Senators Thom Tillis (R-NC), Chris Coons (D-DE), and Chuck Grassley (R-IA), introduced legislation that would establish a task force between the United States Patent and Trademark Office (PTO) and the Food and Drug Administration (FDA) to improve communication and coordination in implementing each agency's activities related to patents. The Interagency Patent Coordination and Improvement Act, S. 79, passed out of the Senate Judiciary Committee in the 117th Congress by voice vote.5In a press release, Senator Durbin states: Establishing clear avenues for collaboration between USPTO and FDA is essential for both agencies to operate smoothly and do their jobs effectively," said Durbin. "By incentivizing coordination, we can empower patent examiners and in turn boost competition, including for prescription drugs. Our government operates best when we work together, and I thank Senators Tillis, Coons, and Grassley for joining me in this bipartisan effort.6Senator Tillis agreed that: By improving coordination between the USPTO and FDA, Congress will ensure that patent examiners have access to all of the relevant information that they need to help them make a sound determination regarding patentability[.] This bill is a simple good-government measure that will protect the strength of the patent system, improve patent quality, and cut down on unnecessary bureaucracy.Similarly, Senator Coons believes that: Improving communication between the FDA and the USPTO will help incentivize innovation and ensure our continued leadership on the global stage[.] Fostering efficiency and reducing bureaucracy among these agencies will benefit consumers and manufacturers alike, and I'm proud to join a bipartisan group of Senate colleagues in this effort.Grassley concurred, stating that: When government agencies fail to coordinate effectively, taxpayers are the ones who pay the price. The USPTO and the FDA would benefit from improved communication and cooperation. Our proposed task force will encourage enhanced collaboration between the agencies, in turn helping taxpayers by increasing competition and trimming bureaucratic red tape[.]The press releases states that the legislation is endorsed by AARP and Patients for Affordable Drugs Now.As to the specifics of the proposed law, it would amend the Patent Act (title 35, United States Code) to establish an interagency task force between the United States Patent and Trademark Office and the Food and Drug Administration for purposes of sharing information and providing technical assistance with respect to patents, and for other purposes.S. 79 begins by listing the following findings of Congress: (1)Decisions by the United States Patent and Trademark Office relating to patents may implicate, or have relevance to, information housed at or involving other Federal agencies.(2)Entities submitting patent applications to the United States Patent and Trademark Office may also submit information to, or share information with, other Federal agencies, necessitating accuracy and consistency in those representations.(3)Research has shown that patent examiners may benefit from additional information that is housed at, or is available to, Federal agencies other than the United States Patent and Trademark Office in order to assess prior art and the state of science and technology.(4)The Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (this is a single induvial serving dual roles, currently it is Kathi Vidal) is encouraged to work with other Federal agencies.The bill would amend Chapter 1 of title 35, adding a new Section 15 entitled "Interagency Task Force on Patents." Section 15 would establish an interagency task force, to be known as the Interagency Task Force on Patents (i.e., the "task force"), to coordinate efforts between the Director of the PTO and the Commissioner of Food and Drugs to improve communication about, evaluation of, and effective implementation of the activities of the PTO and the FDA with respect to patents, and decisions or actions involving patents (as defined in section 2(c)(6)(B)), for human drugs and biological products.Section 15 would further provide that the Director and the Commissioner shall enter into a memorandum of understanding, or update an existing memorandum of understanding, for the purposes of implementing and carrying out the duties of the task force. The task force would be comprised of PTO employees (to be appointed by the Director) and FDA employees (to be appointed by the Commissioner) who have appropriate expertise and decision-making authority regarding operational, administrative, technical, medical, pharmacological, clinical, and scientific matters to carry out the functions of the task force. The task force would carry out the following functions regarding interagency coordination to promote reciprocal access of information: (1)Sharing information on the general processes of the PTO and the FDA, what each such agency considers in its respective review of applications, and how each such agency evaluates those applications, which may be undertaken through routine and ongoing meetings, workshops, and training sessions.(2)Sharing information on new approvals of patents, human drugs and biological products, new technologies and prior art (as appropriate on a case-by-case basis), and scientific trends and developments.(3)Establishing a process that requires—(A) the PTO Director to request from the FDA Commissioner (and the Commissioner to provide to the Director, upon receiving such a request)— (i)appropriate information for use by patent examiners regarding when certain information relating to a human drug or biological product approval, which may include updates to a label or newly approved indications, is made publicly available, including when such information is posted online; and (ii)appropriate access for patent examiners to relevant sources of product application, approval, patent, and labeling information or communications between the FDA and the human drug or biological product sponsors that may not currently be subject to public disclosure, as appropriate and only to the extent necessary for the PTO to carry out the responsibilities of the PTO, such as ensuring accurate representations and access to information on whether the claimed invention that would be the subject of the patent was on sale before the effective filing date of the claimed invention, as described in section 102(a)(1); and(B) the PTO to assist the FDA in its ministerial role of listing patents.(4)Establishing a process to ensure that, in appropriate circumstances, at the request of the Director, the Commissioner shall consult with or otherwise furnish specific, available information to the PTO with respect to certain applications, responses, or affidavits after rejections in order to assist patent examiners in carrying out the duties of those patent examiners.S. 79 would also require the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office to submit to the Committee on the Judiciary of the Senate and the Committee on the Judiciary of the House of Representatives a report that contains: (1)a description of the frequency with which information is provided by the FDA to the PTO through the Task Force, or under processes established by the Task Force; and the frequency with which this information is used in patent examinations;(2)an identification of which methods of providing information and types of shared information are most useful to patent examiners;(3)any recommendations for changes to be made by Congress to the mandate, funding, or operations of the Task Force; and(4)an identification of other Federal agencies with which the Under Secretary of Commerce for Intellectual Property and PTO Director should explore opportunities for coordination that are similar to those undertaken with the FDA through the activities of the Task Force.The bill explicitly provides that the provisions requiring the PTO to assist the FDA in its ministerial role of listing patents shall not be construed as:(1)directing the PTO to interfere with, delay, or supersede the ministerial function of the FDA of listing patents;(2)indicating the position of the PTO regarding the ability to assert a patent in infringement litigation; or(3)changing the ministerial function of the FDA of listing patents.S. 79 further provides that the agencies may share confidential information in furtherance of the activities authorized by the bill. This information is to remain subject to such protections as if the information were held by the FDA. The task force shall establish appropriate protocols to safeguard confidentiality and prevent the inappropriate disclosure of information when sharing information between the PTO and the FDA. These protocols shall provide that:(i)before any information is shared, the sponsor of the human drug or biological product to which that information relates shall be provided notice of that sharing by the applicable agency and with a period of 30 days to consult with the agency sharing that information; and(ii)the Director shall, in order to protect against the inadvertent disclosure of information, maintain any information shared with the Director by the Commissioner separate from pending patent applications and establish procedures for the identification of confidential information.In establishing these protocols, the task force shall identify appropriate remedies for any potential injury suffered when confidential information is made available, including inadvertently, through the sharing of information described in this subsection. The bill would explicitly provide that its provisions may not be construed as superseding any other remedy available for the unauthorized disclosure of confidential information.The Preserve Access to Affordable Generics and Biosimilars, S.142On January 30, 2023, U.S. Senator Amy Klobuchar (D-MN), Chairwoman of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, on behalf of herself and U.S. Senators Chuck Grassley (R-IA), Dick Durbin (R-IL), Kevin Cramer (R-ND), Richard Blumenthal (D-CT), Mark Kelly (D-AZ), Chris Van Hollen (D-MD), and Cory Booker (D-NJ) reintroduced S. 142, the Preserving Access to Affordable Generics and Biosimilars Act. The bill was referred to the Judiciary Committee.According to Klobuchar, the legislation is aimed at end what she refers to as "industry practices that undermine competition and delay the approval of more affordable drugs."7 "While this is just one piece of the puzzle to improve access to affordable medications, it's a good start." The bill is intended to limit "anticompetitive 'pay-for-delay deals' that prevent or delay the introduction of affordable follow-on versions of branded pharmaceuticals. … The legislation covers pay-for-delay deals affecting biosimilar and interchangeable biologics in addition to generic drugs."S. 142 begins by listing the following findings of Congress:(1)In 1984, the Drug Price Competition and Patent Term Restoration Act (i.e., the Hatch-Waxman Act, referred to in S. 142 as the "1984 Act"), was enacted with the intent of facilitating the early entry of generic drugs while preserving incentives for innovation.(2)Prescription drugs make up approximately 10 percent of the national health care spending.(3)Initially, the 1984 Act was successful in facilitating generic competition to the benefit of consumers and health care payers, although 88 percent of all prescriptions dispensed in the United States are generic drugs, they account for only 28 percent of all expenditures.(4)Generic drugs cost substantially less than brand name drugs, with discounts off the brand price averaging 80 to 85 percent.(5)Federal dollars currently account for over 40 percent of the $325,000,000,000 spent on retail prescription drugs, and this share is expected to rise to 47 percent by 2025.(6)In recent years, the intent of the 1984 Act has been subverted by certain settlement agreements in which brand name companies transfer value to their potential generic competitors to settle claims that the generic company is infringing the branded company's patents. These "reverse payment" settlement agreements: (i) allow a branded company to share its monopoly profits with the generic company as a way to protect the branded company's monopoly; and (ii) have unduly delayed the marketing of low-cost generic drugs contrary to free competition, the interests of consumers, and the principles underlying antitrust law. Because of the price disparity between brand name and generic drugs, such agreements are more profitable for both the brand and generic manufacturers than competition and will become increasingly common unless prohibited. These agreements result in consumers losing the benefits that the 1984 Act was intended to provide.(7)In 2010, the Biologics Price Competition and Innovation Act (referred to in S. 142 as the "BPCIA"), was enacted with the intent of facilitating the early entry of biosimilar and interchangeable follow-on versions of branded biological products while preserving incentives for innovation.(8)Biological drugs play an important role in treating many serious illnesses, from cancers to genetic disorders. They are also expensive, representing more than 40 percent of all prescription drug spending.(9)Competition from biosimilar and interchangeable biological products promises to lower drug costs and increase patient access to biological medicines. But "reverse payment" settlement agreements also threaten to delay the entry of biosimilar and interchangeable biological products, which would undermine the goals of BPCIA.S. 142 states that its purposes are:(1)to enhance competition in the pharmaceutical market by stopping anticompetitive agreements between brand name and generic drug and biosimilar biological product manufacturers that limit, delay, or otherwise prevent competition from generic drugs and biosimilar biological products; and(2)to support the purpose and intent of antitrust law by prohibiting anticompetitive practices in the pharmaceutical industry that harm consumers.The bill would amend the Federal Trade Commission Act (15 U.S.C. 44 et seq.) by introducing at new Section 27 entitled "Preserving Access to Affordable Generics and Biosimilars."This new Section 27 would authorize the Commission to initiate a proceeding to enforce the provisions of the section against the parties to any agreement resolving or settling, on a final or interim basis, a patent claim [sic, presumably this is referring to a "patent infringement claim"], in connection with the sale of a drug product or biological product. Section 27(a)(2)(A) provides that in such a proceeding, an agreement shall be presumed to have anticompetitive effects and shall be a violation of this section if:(i)an ANDA filer or a biosimilar biological product application filer receives anything of value, including an exclusive license; and(ii)the ANDA filer or biosimilar biological product application filer agrees to limit or forgo research, development, manufacturing, marketing, or sales of the ANDA product or biosimilar biological product, as applicable, for any period of time.8Section 27(a)(2)(B) creates an exception to the foregoing, providing that it shall not apply if the parties to such agreement demonstrate by clear and convincing evidence that: (i)the value described in subparagraph (A)(i) is compensation solely for other goods or services that the ANDA filer or biosimilar biological product application filer has promised to provide; or(ii)the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.In determining whether the settling parties have met their burden under 27(a)(2)(B), the fact finder shall not presume: (1)that entry would not have occurred until the expiration of the relevant patent or statutory exclusivity; or(2)that the agreement's provision for entry of the ANDA product or biosimilar biological product prior to the expiration of the relevant patent or statutory exclusivity means that the agreement is procompetitive.9Section 27(c) provides that nothing in Section 27 shall prohibit a resolution or settlement of a patent infringement claim in which the consideration that the ANDA filer or biosimilar biological product application filer, respectively, receives as part of the resolution or settlement includes only one or more of the following: (1) The right to market and secure final approval in the United States for the ANDA product or biosimilar biological product at a date, whether certain or contingent, prior to the expiration of—(A) any patent that is the basis for the patent infringement claim; or(B) any patent right or other statutory exclusivity that would prevent the marketing of such ANDA product or biosimilar biological product.(2)A payment for reasonable litigation expenses not to exceed—(A) for calendar year 2023, $7,500,000; or(B) for calendar year 2024 and each subsequent calendar year, the amount determined for the preceding calendar year adjusted to reflect the percentage increase (if any) in the Producer Price Index for Legal Services published by the Bureau of Labor Statistics of the Department of Labor for the most recent calendar year.(3)A covenant not to sue on any claim that the ANDA product or biosimilar biological product infringes a United States patent.Section 27(d) provides that a violation of this section shall be treated as an unfair method of competition under section 5(a)(1). It further provides that party that is subject to a final order of the Commission, issued in an administrative adjudicative proceeding under the authority of 27(a)(1), may, within 30 days of the issuance of such order, petition for review of such order in:(i)the United States Court of Appeals for the District of Columbia Circuit;(ii)the United States Court of Appeals for the circuit in which the ultimate parent entity, or any successor thereto, of the NDA holder or biological product license holder is incorporated as of the date that the NDA or biological product license application, as applicable, is filed with the Commissioner of Food and Drugs; or(iii)the United States Court of Appeals for the circuit in which the ultimate parent entity of the ANDA filer or biosimilar biological product application filer is incorporated as of the date that the ANDA or biosimilar biological product application is filed with the Commissioner of Food and Drugs.In a proceeding for judicial review of a final order of the Commission, Section 27(d) provides that the findings of the Commission as to the facts, if supported by evidence, shall be conclusive.Section 27(e) provides that nothing in Section 27 would modify, impair, limit, or supersede the applicability of the antitrust laws as defined in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), and of section 5 of the Federal Trade Commission Act to the extent that section 5 applies to unfair methods of competition. Furthermore, nothing in Section 27would modify, impair, limit, or supersede the right of an ANDA filer or biosimilar biological product application filer to assert claims or counterclaims against any person, under the antitrust laws or other laws relating to unfair competition.Section 27(f) sets forth penalties for violations of the provisions of Section 2. In particular, pursuant to 27(f)(1), each party that violates or assists in the violation of Section 27 shall forfeit and pay to the United States a civil penalty sufficient to deter violations of this section, but in no event greater than 3 times the value received by the party that is reasonably attributable to the violation of this section. If no such value has been received by the NDA holder, the biological product license holder, the ANDA filer, or the biosimilar biological product application filer, the penalty to the NDA holder, the biological product license holder, the ANDA filer, or the biosimilar biological product application filer shall be sufficient to deter violations, but in no event shall be greater than 3 times the value given to an ANDA filer or biosimilar biological product application filer reasonably attributable to the violation of this section. Such penalty shall accrue to the United States and may be recovered in a civil action brought by the Commission, in its own name by any of its attorneys designated by it for such purpose, in a district court of the United States against any party that violates this section. In such actions, the United States district courts are empowered to grant mandatory injunctions and such other and further equitable relief as they deem appropriate.Section 27(f)(2) provides that if the Commission has issued a cease and desist order with respect to a party in an administrative adjudicative proceeding under the authority of subsection (a)(1), an action brought pursuant to paragraph (1) may be commenced against such party at any time before the expiration of 1 year after such order becomes final pursuant to section 5(g). In such an action, the findings of the Commission as to the material facts in the administrative adjudicative proceeding with respect to the violation of this section by a party shall be conclusive unless:(i)the terms of such cease and desist order expressly provide that the Commission's findings shall not be conclusive; or(ii)the order became final by reason of section 5(g)(1), in which case such finding shall be conclusive if supported by evidence.Section 27(f)(3) provides that in determining the amount of the civil penalty described in this section, the court shall take into account:(A) the nature, circumstances, extent, and gravity of the violation;(B) with respect to the violator, the degree of culpability, any history of violations, the ability to pay, any effect on the ability to continue doing business, profits earned by the NDA holder, the biological product license holder, the ANDA filer, or the biosimilar biological product application filer, compensation received by the ANDA filer or biosimilar biological product application filer, and the amount of commerce affected; and(C) other matters that justice requires.Section 27(f)(4) provides that remedies provided in this subsection are in addition to, and not in lieu of, any other remedy provided by Federal law. Nothing in this paragraph shall be construed to affect any authority of the Commission under any other provision of law.If enacted, Section 27 provides that it shall apply to all agreements described in section 27(a)(1) entered into on or after the date of its enactment.S. 142 would also amend Section 1112 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (21 U.S.C. 355 note) by adding a new subsection(d) entitled "Certification."Current subsections (a)-(c) require that, in cases in which a generic drug applicant and a brand name drug company, or two generic applicants that have filed ANDAs containing a certification under section 505(j)(2)(A)(vii)(IV) (i.e., a paragraph IV certification) with respect to the same listed drug, enter into an agreement, the text of the agreement must be filed with the Assistant Attorney General and the FTC. This requirement applies to agreements regarding:(A) the manufacture, marketing or sale of the brand name drug that is the listed drug in the ANDA involved;(B) the manufacture, marketing, or sale of the generic drug for which the ANDA was submitted; or(C) the 180-day period referred to in section 505(j)(5)(B)(iv) of the Federal Food, Drug, and Cosmetic Act as it applies to
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