US vs China: Goodwin Attorneys Discuss Patent Hurdles and Adalimumab Marketing

The Center for Biosimilars® (CfB): Hello, I'm Matthew Gavidia. Today on the MJH Life Sciences™ Medical World News, The Center for Biosimilars® is pleased to welcome Huiya Wu, JD, an expert with 20 years of intellectual property litigation experience based in Goodwin Procter's New York office, and Freddy Yip, PhD, PCLL, a molecular biologist and specialist in product licensing, [initial public offerings], and mergers and acquisitions who is based at Goodwin Procter's Hong Kong office. Great to have you both on.

CfB: Can you just introduce yourselves and tell us a little bit about your work?

Wu: Sure. My name is Huiya Wu. As you mentioned, I've been in this field for about 20 years specializing in both small molecule and also biologics litigations and also advising clients on this matter. Most of my clients are overseas so what I like to tell people I do is help clients launch products in the US market.

Yip: I am an associate in Goodwin Procter's Hong Kong office. I represent my clients in lots of licensing and cross-border US-China transactions. We represent lots of clients in many biologics and small molecule-related transactions.

CfB: Focusing first on marketing and distribution. Can you describe how biosimilars are distributed in China vs in the United States?

Yip: So, in China, drugs are mainly distributed via distributors. One thing I would like to point out is that in 2018, China launched the National Drug Centralized Procurement Pilot Scheme, with the aim to lower generic drug prices and encourage the consolidation of a fragmented system for procuring generic drugs in the country, starting with 11 major cities. Under this scheme, the government awards the tender for a generic drug to the lowest bidder, who will be guaranteed a sales volume of about 60% to 70% of the total market for a year, across 11 major cities, including Beijing and Shanghai. So, under this scheme, the originators will likely lose most drug tendering opportunities because of the price difference. This scheme is likely to accelerate the replacement of originator drugs with generics.

CfB: How does China handle the availability of multiple biosimilars for the same biologic?

Yip: So, I understand that in the United States, if a biologic is not on the formulary, it's not going to be approved [prescribed]. But in China, there's no such restriction. As long as a biosimilar meets all the regulatory requirements, it will be approved [prescribed].

CfB: Building on that, China already has 4 or 5 adalimumab biosimilars (approved). Are all of these marketed?

Yip: Well, at least 3 adalimumabs have been marketed. They [include] Henlius' adalimumab, Bio-Thera's adalimumab, and also Innovent Biologics’ adalimumab.

CfB: What about for etanercept [Enbrel]? Are there any differences here?

Yip: Well, a biosimilar etanercept was first launched in China in 2006. That's even before the NMPA [the National Medical Products Association], China's regulatory agency, released the biosimilars guidelines in 2015. But the biosimilar guidelines define what constitutes a biosimilar (ie, a drug that is similar in quality, safety and efficacy with the reference drug). So, biosimilar etanercepts fall within that definition and, accordingly, 3 preexisting etanercept biosimilars were developed in China. So, they actually already existed before there was a biosimilar regulatory pathway in China.

CfB: Can you describe the difficulties of entering China's biologics market for foreign companies?

Yip: From a business perspective, one of the difficulties is identifying an appropriate market entry model and the right partners. Effective entry strategy work should be geared around the company's overall strategic plan and commercial objectives, which are unique for each firm. For example, bigger [biopharmaceutical companies] may choose to acquire local companies with established infrastructures, supply chains, or commercial portfolios. Companies with novel drug therapies often choose to out-license their products, which requires a lower investment, but the companies will only have limited control over the products. Some [biopharmaceutical companies] choose the JV [joint venture] models, in which they will have slightly more control over the products, but in that case, the partner selection is critical. Further, some companies will prefer to invest directly either with internal capital or [private capital]. In any event, once a company identifies the appropriate market entry model, it needs to identify the right partners. So, they will have to consider their capabilities including R&D [research and development], expertise, product pipeline, clinical trial experience, and distribution network. This is what I believe to be one of the major difficulties.

Wu: An additional difficulty with entering the market is to try and figure out what this new proposed linkage system is about from an IP [intellectual property] standpoint. It brings a lot of wrinkles as to how litigations will play out, how settlements might play out and, of course, how all that will impact entry of products onto the market. So, it remains to be seen how all of the new legislation will be implemented and used.

CfB: And building on what you just said, transitioning to more legal content, how do patent exclusivities work for originator products in China?

Yip: The patent term now in China is 20 years. China's fourth amendment to the patent law, which will become effective from June 1, 2021, introduces the patent term adjustment [PTA] and also extension. So, for patent term adjustment, the amendment outlines that the term of a patent may be extended in order to compensate a patent proprietor for the time taken to review and approve a new drug for marketing in China. And the law will allow for the term of the patent directed to the new drug, which has received marketing approval in China, to be extended for up to 5 years, with the overall pattern term not exceeding 14 years from the date of the marketing authorization. For patent term extension [PTE], the amendment also outlines that for a patent that granted 4 years after its filing date and 3 years after the date of requesting substantive examination, the Chinese Patent Office will compensate the patent applicant for unreasonable delays in examination by adjusting the terms of the patent. In terms of data exclusivity, the latest patent law still doesn't involve data exclusivity.

Wu: I guess in comparison to the United States, I think the PTEs and PTAs are pretty similar. I think there are slight details in exactly when you have to apply and the deadlines for applying, but I think in terms of the policy and the length of times for the adjustments or extensions, they're comparable.

CfB: Is there a patent dance in China? And how do patent battles play out there compared with in the United States?

Yip: No, there isn't a patent dance in China. According to the draft amendment to the Chinese patent law, the agency will establish a listed drug patent information registration platform for patentees and drug manufacturers to register drug-related patent information in China. The listable patents included for biologics are sequence structure patents only. In the United States, the reference patent sponsor does not need to provide patent information to the patient. However, during the patent dance, it must disclose all the patents it may assert, and they include composition patents, methods of treatment patents, and also manufacturing process-related patterns.

Wu: Hopefully, we'll get a little bit of a leg up soon with the new rule about having the [patent disclosure] lists being published by the FDA. But it seems to me, Freddy, that China's going to have its own issues. I was very surprised to see, for example, that in terms of litigations with regard to both small molecules and biologics that there really is no notice to the originator [manufacturer]. That's a very big difference. Here, we have either the Orange Book for small molecules or we have the patent dance, and over there, the burden is all on the originator to pay attention.

CfB: How do biosimilar developers find out what patterns are likely to be an issue?

Yip: So, biosimilar developers need to monitor the original product's patents and track new applications or patents of the originators and other companies.

CfB: Can you describe the type of vigilance that originator companies need to exercise to protect their patents?

Yip: Yes. So, an originator company needs to watch the public listing of new biosimilar applications diligently. According to the draft amendments, the NMPA will publish the biosimilar drug application and a corresponding certification statement, and within 45 days after certification publication, a patentee or interested party can file a lawsuit. For biologics, the NMPA will not state the approval decision but will proceed with the approval process. So, if the litigation concludes favorably for the patentee before the generic approval has been made, the NMPA can still continue the approval process, but will indicate that such drug should not enter the market until the listed patent expires.

Wu: I think that's similar to the United States, where there's no stay for biosimilars litigation, but it's quite different in terms of the patent dance and it’s really a stick for the BLA [biologics license application] holder to assert everything they can possibly assert. So, I'm very curious to see how it's going to play out, because currently it's only the [sequence structure patents], which you mentioned, Freddy, and not listing for other patents that could be asserted. So, it'll be interesting to see kind of how other patents come into play as a result of the biologics patent linkage amendments.

CfB: And building on that, is it a level playing field for non-Chinese biosimilar companies looking to market their products in China?

Yip: Well, in terms of bringing biosimilars to the Chinese market, I'm not aware of any existing policies, laws, or regulations that particularly favor local companies over foreign companies. But given the US-China geopolitical tensions, it may change in the future.

Wu: It seems to me like with, certainly, language barriers and what you were saying earlier about market entry that local companies surely have a leg up in getting their products on the market and distributed. So, we'll see how that plays out, but it seems like there's a lot to learn if you're a foreign company getting into the China biosimilars market.