Patent Dance Insights: A Q&A on Reducing Legal Battles in the Biosimilar Landscape

In an interview with The Center for Biosimilars^®, Ha Kung Wong, JD, an intellectual property attorney and partner at Venable LLC, provided an overview of the patent legal system biosimilars must navigate under the Biologics Price Competition and Innovation Act (BPCIA) of 2009. He explained that the BPCIA establishes an optional framework for information exchange between biosimilar developers and reference product sponsors, commonly known as the "patent dance."

This process helps narrow down patent disputes before litigation, potentially reducing the number of patents involved and promoting early settlements. Wong highlighted the benefits of this system, noting that it can streamline the approval process for biosimilars, save resources, and lead to favorable outcomes for both parties. Additionally, he discussed ongoing legislative efforts that could impact the biosimilar sector, including potential reforms to patent laws and scrutiny of pharmacy benefit managers (PBMs).

Can you explain the patent legal system biosimilars are required to undergo and why this process is important to their development?

Wong: Sure, so for biosimilars, there's the BPCIA or the Biologics Price Competition and Innovation Act of 2009, which is actually an optional framework of information exchanges between biosimilars and the reference product sponsor, or what we call the RPS, prior to filing an infringement lawsuit.

The BPCIA allows for 2 phases of litigation. One, following the biosimilars aBLA [abbreviated biologics license application] submission and the second phase triggered by the biosimilars notice of commercial marketing. Now, the idea is that the most important patents can be dealt with while the biosimilar application is under FDA review. That gives the possibility of resolving the lawsuit after only litigating a small subset of patents, instead of the RPS' entire portfolio. That can be quite large and sometimes in the hundreds.

So, to start this first phase exchange of materials, which is often referred to as the patent dance, the biosimilar notifies the RPS that the FDA has accepted its biosimilar application within 20 days of that acceptance and provides the RPS with its aBLA and "other manufacturing information".

That starts off this kind of exchange of information regarding the patents that might be infringed by the biosimilar and which they think might be likely to be licensed whether the biosimilar feels like there is an infringement, validity, or enforceability problem or not. Ultimately, what happens in the first round of litigation is that you narrow the number of patents that you actually litigate right away. If the parties can't agree, the BPCIA gives a provision for determining the list of patents that can be litigated in the first phase and the remainder gets litigated in the second phase.

For most BPCIA litigations that most parties have participated in at least some part of the dance and as I mentioned before, it was after the statute came out it was decided by the courts that this was optional.

A lot of people said, "Well, why would anybody go through this?" It turns out, it helps both sides, right? The biosimilar gets that chance to narrow it down to the patents that are most important so they're not expending an enormous amount of resources litigating hundreds of patents, and the RPS gets a chance to really zone in on the patents that are most important to them and try to protect them first, then try to seek licenses on those that can be some sort of settlement. So 24 of the litigations that have occurred, have completed this entire patent dance, 19 participated in some portion of it and didn't finish, but only 9 didn't participate.

You can see that even though it's optional, a lot of parties find some benefit to going through this process. Now, the interesting thing about it is that when it came out, I thought this is the most half-baked process ever.

That's still true, but it's better than nothing is what I think is happening. Most of the BPCIA litigations are actually ending in settlements. Thirty-one of 46, or 67%, of terminated BPCIA litigations ended in settlement or stipulated voluntary dismissals.

Very few cases have gotten the verdict, which is actually part of what we want. I think this statistic that I'm raising is demonstrating that the primary benefit of the BPCIA process is being met. That was to resolve any patent related disputes early, prior to impact on the market, thus allowing both parties to direct resources appropriately to their respective products and avoid the need to address potential damages.

In many ways, this is similar to what the Hatch-Waxman process was meant to address for small molecules. So far, it appears to be working for biologics and biosimilars, and really helping in development on both sides.

Do you foresee any potential shifts or reforms in patent law that could positively or negatively impact the biosimilars sector in the near future?

Wong: Predicting whether there will be statutory shifts or reform in patent law is like trying to predict what will happen in the next Fast & Furious movie—you have no idea what specifically is going to happen but it's probably going to have some explosions that ultimately, will not be applicable to the real world. That being said, there are a few things I think that we might want to keep an eye on. I say "very few" only because we've seen a lot of things introduced and not a lot of follow through. There's a lot of good intentions out there, but there's not a lot of follow through. That being said, here it is.

First of all, Senators [Peter] Welch [D, Vermont], [Mike] Braun [R, Indiana], and [Amy] Klobuchar [D, Minnesota] introduced legislation in the Senate, and Representative [Jodey] Arrington [R, Texas] in the House in January 2024 that would limit the number of patents that could be asserted in a patent litigation. If this were to proceed, this may or may not have a practical effect because we've seen that most Bundled Payments for Care Improvement (BPCI) lawsuits that have been asserted are asserted on 10 or less patents. So, having an artificial limit may not make it any better. But it might. Who knows? It is certainly something to keep an eye on.

The Biosimilar Red Tape Elimination Act was introduced in July 2023 by Senators [Mike] Lee [R, Utah], [Ben Ray] Lujân [D, New Mexico], Braun, and [J.D.] Vance [R, Ohio]. That bill would eliminate the 2 separate designations of biosimilars and interchangables, which we know, exist in the US and we are the only country that does that. Every other country in the world only has 1 level of biosimilarity. It's possible if the interchangability requirement was removed, there could be greater uptake of biosimilars due to the possibility of automatic substitution at the pharmacy level, like we see with generic drugs. There may be increased confidence in biosimilars because they would be seen as perhaps closer to the reference product.

The problem is that when people hear there's a "biosimilar" but there's a higher level called "interchangable", their automatic reaction is, "Well that means biosimilars are garbage, why would I want that? I want an interchangeable. Oh, there's no interchangable? Then I don't want that product."

I think it will help with consumer confidence, patient confidence, and will help with health care provider confidence because a lot of doctors just don't know the difference.

In June 2023, Senators [Thom] Tillis [R, North Carolina] and [Chris] Coons [D, Delaware] reintroduced the Patent Eligibility and Restoration Act of 2023 to reform patentability requirements under Section 101. There, the bill seeks to clarify which inventions are eligible for patenting in the US. If that bill were to be passed, it would overturn Supreme Court decisions in Mayo, Alice, and Myriad, which we've all been talking about for 10 years. It would be really interesting to see how that would impact the pharmaceutical and biologics industry in particular.

Finally, there's been this increased congressional scrutiny of pharmacy benefit managers or PBMs. Congress has launched various investigations into PBM practices and while this isn't directly related to patent law reform, it could have a significant impact on biosimilar uptake given the preferential formulary coverage of biosimilars and how that plays a big role in whether biosimilars are used and whether cost savings are realized or not.

I've been on record saying this for a long time now. PBMs are middlemen that don't need to really be there, but at the end of the day, they end up increasing the cost for patients and it would be interesting to see if all this congressional scrutiny will lead to better cost savings for patients.

Recently, CareFirst BlueCross BlueShield filed a lawsuit against J&J alleging that the company is “scheming” to delay ustekinumab biosimilar competition. How do you expect this case to play out and what impact could it have on the overall biosimilar industry?

Wong: This is not the first antitrust suit to be filed related to a biosimilar and biosimilar competition, particularly on drugs that are costly so it really isn't surprising to see another antitrust suit.

As a side note, talking about antitrust always reminds me of the 2001 movie Antitrust starring Ryan Phillippe and Rachael Leigh Cook, but I digress.

Previous antitrust suits, you know that I think we want to think about in conjunction with this one would be the Remicade exclusionary contracting class action lawsuit. That actually was settled by consumers, third party payers for $25 million.

There was the Remicade exclusionary contracting lawsuit by Inflectra biosimilar manufacturer, Pfizer. There was an undisclosed settlement agreement there.

Then the Humira lawsuit, which found that filing numerous patent applications was a form of petitioning the government, qualified for Noerr-Pennington immunity and that protects the filing under the First Amendment petition and free speech clause.

Even if the petition is anticompetitive, it's immune from antitrust action. I bring those up because so far, the biosimilar antitrust suits may have had some positive impact on decreasing the usage of exclusionary contracts to prevent biosimilar formulary coverage.

However, it's yet to be seen maybe debatable how steep of a deterrent something like a $25 million settlement is on a drug similar to Remicade, which is making over $6 billion a year.

It’s unclear whether another antitrust lawsuit will have a significant impact on biosimilars going forward or not. But certainly, something that we should keep an eye on and certainly something we should be vigilant about.

What are the key objectives of the patent dance, and how does it contribute to streamlining the exchange of information while reducing the potential for wasteful litigation?

Wong: The patent dance allows for an early assessment of infringement and validity patient positions, even before the filing of a litigation and that can help parties reach an early settlement.

Part of the process here is don't slow down biosimilar approval process, don't subject them to damages from launching at risk. Let's resolve all the patent issues in advance or at the time in which you're looking to get approval, such so that you can get it resolved at the time you get approval.

If you don’t have a problem with the patents, then you can launch without any risk and you're okay. If you do, let's sort that out.

I think that's really exactly what the Hatch-Waxman does for small molecules and that's what this BPCIA patent dance does for biosimilars and it's been really effective.

I think it’s led to a great number of settlements, very few of them go to trial, which means we're not wasting resources on litigation. As much as I do litigation, so I like to have litigation, I think for my clients, it's a win-win all the way around.

Also, the case management mechanisms have been very effective at limiting the size of the litigations. For example, in the recently decided Regeneron v. Mylan case relating to Eylea, despite 24 patents initially being asserted, the case was initially narrowed to set 6 patents, and then further narrowed to 3 patents for an expedited trial that provided the companies with resolution.

One patent was found valid and infringed without having to litigate all the asserted patents. I think, by and large, it’s working to really save resources for all parties involved. If it has to go to litigation, it goes but it also is resulting in favorable settlements in which everybody wins.

How are “patent thickets” formed, why are companies allowed to create them, and what needs to be done to ensure that the supplemental patent system does not block biosimilar competition and disincentivize innovation?

Wong: I think that what we're talking about here when we say "patent thickets" are larger patent portfolios that have significantly overlapping patent rights that make it more challenging for competitors to design around than for instance, a single patent. Now, for biologics, these may be created by obtaining a number of different types of patents that cover a product.

For example, there may be patents that cover the antibody, then the formulations of the antibody, methods of using the drug, ways that drugs are manufactured, devices for administration of the drug, a lot of times biologics require injections so that's oftentimes important or even ways of packaging the drug.

Now, because 1 or more patents can be obtained within each of these patent types, different aspects of a drug and its manufacturer can end up being covered by a number of different patents. Therefore, you have this grouping of patents but keep in mind that often in development of biologics products, it's unclear early on what the commercial product will be.

Since patents are first to file in the United States, biologics innovators typically file composition of matter patents early, because they have to reserve their rights. That's usually way before they have an idea of what the specific active moiety will be that goes into clinic and certainly before knowing what the active moiety will be in the product that's made available to patients.

Additional patents are typically filed later in the development process, when the moiety becomes clear and when the formulation and method of treatment are developed, which could be way after the initial drug discovery is completed.

Interestingly, a recent study, I believe it was the University of Colorado, noted that the effective patent life for a patent and a product is about 12 years.

The effective patent life is essentially the time from drug approval to expiration, not the time that you file it. So, you notice that that's not the 20 years you normally get from a patent, it's much less. If a biologic innovator wants patent protection that exceeds the BLA regulatory exclusivity from the FDA, which is itself 12 years, they typically file later patents that cover other aspects of their product beyond simple composition of matter.

There's certainly some balance that has to be struck here, as we also don't want to unduly inhibit the ability of biosimilars to reach the market and potentially increase accessibility to patients. I think we have to be kind of vigilant about that kind of give and take. There are already some systems in place to prevent unfairly blocking competition, such as the use of terminal disclaimers and skinny labeling, which allows biosimilars to enter the market for some unpatented indications while removing the patented indications from their labels.

In addition, the FDA and USPTO [United States Patent and Trademark Office], have collaborated a lot and discuss about how to make sure only good patents are allowed. I think that also the use of PGRs [post-grant reviews] and IPRs [inter partes reviews] by biosimilar manufacturers have kept a lot of innovators honest in terms of the patents that they seek to procure. So, there's a number of things that are in place but we have to be vigilant about it.