Current Prospects For A Generic Biopharmaceutical Industry

Wednesday, December 1, 2004 - 01:00

We are at a similar crossroads today with respect to generic biopharmaceuticals as we were in 1984 with respect to traditional pharmaceuticals. This article briefly reviews the fundamentals of market exclusivity in the drug-discovery industry and a series of rapidly evolving issues related to prospects for a streamlined regulatory approval process for "follow-on" biopharmaceuticals.

The Industry

The Pharmaceutical Industry is fundamentally based on the discovery, development, FDA approval, manufacturing and sale of therapeutic entities that modulate the biological activity of proteins that mediate disease conditions in vivo. Indeed the Holy Grail of the industry is an efficacious low molecular weight compound that exhibits high bioavailability, low toxicity and a long biological half-life; is inexpensive to manufacture and is free of third-party Intellectual Property (IP) rights. Basically, the Pharmaceutical Industry is based on highly characterized small synthetic organic molecules that are highly characterized and easily reproduced.

Biopharmaceuticals

Biopharmaceuticals, in contrast, are generally complex biologically-derived entities produced by, and harvested from, engineered living cells.1 Since most biopharmaceuticals are biologically-active proteins, the primary molecular structure of the entity is generally a sequence of amino acids. However, proper three dimensional folding of the protein structure during biosynthesis, as well as post-synthesis modification by various intracellular factors, is ultimately dependent upon the biological cells employed as reaction vessels as well as the exact conditions of production.

Biopharmaceuticals account for more than $33 billion in sales (2003), or about 12% of total pharmaceutical sales.2 Patent protection of several leading FDA approved and commercially marketed biopharmaceuticals is set to expire within the next three years thereby creating apparent opportunities for competition in what is perceived to be a proximal $10 billion market for generic biopharmaceuticals. Erythropoietin (EPO) (EPOGEN and PROCRIT ) sales (2002), for example, totaled $6.5 billion.3 Furthermore, the current market for biopharmaceutical antibodies, for example, is predicted to increase from well over $6 billion in 2003 to $16.7 billion in 2008.4 REMICADE (infliximab) and RITUXAN (rituximab) (FDA approved August, 1998 and November 1997, respectively), for example, are current antibody market leaders.5

Fundamentals Of The Industry

An R&D investment of about $800 million and about 12 years is generally required to bring a new therapeutic entity to market. Generics currently represent 51% of the total prescriptions dispensed in the U.S. Corporations within the innovative sector of the industry generally rely on patent protection derived from early filings during the discovery and development of therapeutic entities to preserve an exclusive market for a limited time. The term of the right to exclude others from making, using, selling, offering for sale or importing a patented entity granted by an issued patent in the U.S., under Title 35 is 20 years from the filing date of the original application for patent. Therefore, the time required to bring a new therapeutic entity to market significantly compromises the ability to leverage value under the patent statute.

Hatch-Waxman Act

The FDA regulates pharmaceuticals under the Food, Drug & Cosmetic Act (FDCA). Congress passed the Drug Price Competition and Patent Term Restoration (Hatch-Waxman) Act in 1984 to create a balance between the brand-name and generic sectors of the Pharmaceutical Industry. The Act relieves generics from the obligation to conduct costly and time consuming clinical trials to demonstrate the safety and efficacy of proposed generic versions of currently approved pharmaceuticals. Particularly, Abbreviated New Drug Applications (ANDAs) require generic manufacturers to demonstrate bioequivalence of proposed generic products to currently marketed FDA-approved pharmaceutical compositions.6 An ANDA may be filed if certification is provided, for example, that an otherwise relevant patent listed in the FDA Orange Book is invalid, unenforceable, or not infringed.7 21 U.S.C. 355(j)(2)(A )(vii) (IV) (paragraph IV certification). However, Title 35 U.S.C. §271(e)(2) provides that it is an act of patent infringement to submit an ANDA for an FDA-approved drug otherwise claimed in a patent. The patent owner therefore usually brings a patent infringement lawsuit which, if filed within 45 days of the ANDA, starts an automatic stay of FDA approval of the ANDA. The stay is the lesser of 30 months or the amount of time required by the district court to reach a decision in the lawsuit. The FDA cannot approve the generic drug during this period unless a court rules that the patent is invalid or not infringed. If the ANDA is approved, the generic company receives a 180-day period of FDA-exclusivity to market the generic version (e.g., during appeal to the Federal Circuit).8 During the period of exclusivity no other ANDAs can be filed. Accordingly, significant incentive is presented for the generic industry to challenge the innovator industry's patents listed in the Orange Book since 6 months exclusivity for a generic product in a billion dollar market, for example, is lucrative indeed. Biopharmaceuticals, however, are approved under the Public Health Service Act (PHSA), 42 U.S.C. §262, which contains no analogous ANDA or "paper NDA" provisions.

Rapidly Evolving Prospects For Generic Biopharmaceuticals

Authority for therapeutic biologics recently shifted from the FDA Center for Biologics Evaluation and Research (CBER) to the FDA Center for Drug Evaluation and Research (CDER). The FDA, however, has made clear that it will not approve generic biopharmaceuticals under existing ANDA provisions. Accordingly, an ongoing debate between sectors in the Pharmaceutical Industry is now centered on prospective FDA regulatory pathways for approval of generic biopharmaceuticals, i.e., the feasibility of determining bioequivalence without requiring clinical trials. The Generic Pharmaceutical Association (GPhA) recently submitted legal analysis to the FDA and the Senate Judiciary Chairman Orrin G. Hatch (R-Utah) suggesting that the health and human services secretary already has the power under PHSA to establish approval requirements for generic biologics based on previously submitted NDA data including clinical trials. Significant arguments exist, however, that nothing less than a full complement of original data can possibly show the safety and efficacy of inherently variable therapeutic proteins. Since physical characteristics and biological activity of biopharmaceuticals are dependent upon the exact conditions of manufacture, the details of which are not publicly available, a credible argument exists that most currently approved biopharmaceuticals cannot be effectively reproduced. A general position of the innovative-sector is that current science does not support reasonable reliance on analytical data and information generated from one biotechnology-derived product to support approval of a product manufactured through a different process. Genentech, for example, recently submitted a Citizen Petition (April 8, 2004) to the FDA arguing that without first examining trade-secret data concerning the manufacturing processes of the innovator, the FDA cannot perform the rigorous scientific comparative assessment necessary to reach legitimate conclusions about the bioequivalence of two products.9 The bottom line of the position generally submitted from the innovative sector is that clinical trials remain a fundamental requisite for evaluating the safety and effectiveness of "follow-on" biopharmaceuticals.

The FDA Recently Solicited Public Comment

The FDA recently held a public workshop on the development of "follow-on" protein pharmaceutical products in anticipation of developing draft guidance on this topic during the coming year. Scientific Considerations Related to Developing Follow-On Protein Products, September 14-15, 2004. The topics addressed by both sectors of the Pharmaceutical Industry include manufacturing, characterization, immunogenicity issues, preclinical and clinical issues, as well as potency and surrogates for safety and efficacy. The position of the innovative sector to require clinical trials because a follow-on manufacturer can never exactly duplicate the innovator's process was generally presented. The general argument is that while analytical and other non-clinical tests are becoming increasingly sophisticated, the current state of the art remains limited in the ability to detect critical differences in biological entities that may affect clinical safety and efficacy (bioequivalence). The position of the generic sector is fundamentally that the paradigm 'biotech products are necessarily defined by the process of manufacture' is inaccurate and that the failure of pioneer manufacturers to fully characterize biopharmaceutical products (aside from secret processes of manufacture) should not impede the approval of generic biopharmaceuticals. Indeed, it is generally the position of the generic sector that a streamlined regulatory process for the comparability of proposed biopharmaceuticals to originator products can now be made and met by the industry at all relevant levels of characterization.

Tools That May Otherwise Be Available For Branded Product Life-Cycle Planning

Since specific manufacturing processes used to produce biopharmaceuticals are generally acknowledged to be of paramount importance in re producing safe and efficacious therapeutic entities, process and product by process patent claims appear to be valuable tools to further leverage exclusive markets in the biopharmaceutical industry.

The FDA recently issued final regulatory changes to the listability of patents in the Orange Book. June 18, 2003, 68 Fed. Reg. 36676. The final rule, for example, specifies that certain product-by-process patents are product patents and are, therefore, eligible for listing in the Orange Book. A product-by-process patent claims a product by describing or listing process steps to wholly or partially define the claimed product. Under the final rule, therefore, where a product-by-process patent claims a product that is the subject of an NDA, it is listable in the Orange Book.

Title 35 U.S.C. §271(g) imposes liability for infringement by importation, sale or use in the U.S. of a product made abroad by a process patented in the U.S. Moreover, in actions alleging infringement of a process patent based on the importation, if the court finds that a substantial likelihood exists that the product was made by the patented process the product shall be presumed to have been so made, and the burden of establishing that the product was not made by the process shall be on the party asserting that it was not so made. 35 U.S.C. §295. Offshore API manufacturers may not avoid the jurisdictional scope of a U.S. process patent.

Conclusion

Although an FDA regulatory process carefully tailored to authorize bioequivalent "follow-on" biopharmaceuticals may soon emerge, legal and regulatory tools which now exist may be indicative of factors soon to be creatively employed in conjunction with facts distinctive of the biopharmaceutical industry to further leverage market exclusivity.

1 The average weight of a pharmaceutical compound is around 500 daltons; whereas, a biopharmaceutical entity such as ENBREL (etanercept), for example, weighs about 150,000 daltons.
2 Testimony on behalf of the Generic Pharmaceutical Association before the United States Senate Committee on the Judiciary, June 23, 2004.
3 Aqueous formulations of recombinant human erythropoietin (EPO) glycoprotein expressed by Chinese Hamster Ovary (CHO) cells. BIOPHARMA: Biopharmaceutical Products in the U.S. Market, III e.d., Rader, R. A., ISBN: 0-9639573-3-3 (September 2004).
4 Datamonitor, 245 Fifth Avenue, NY 10016, Therapeutic Antibodies: Capitalizing on the Fully Human Wave, December 9, 2003.
5 More recently FDA approved pharmaceutical antibodies include REOPRO (abciximab) November 21, 2003; ERBITUX (cetuximab) February 12, 2004); SIMULECT (basiliximab) November 14, 2003; RAPTIVA (efalizumab) October 27, 2003; XOLAIR (omalizumab) June 20, 2003; and HERCEPTIN (trastuzumab) October 16, 2003.
6 FDCA §505(j). FDCA §505(b)(2) ("paper NDA") applications alternately permit an applicant to obtain approval of an NDA based on safety and efficacy from a previously approved NDA.
7 FDA publication of Approved Drug Products with Therapeutic Equivalence Evaluations. Current: 24th Edition (2004).
8 This provision was amended June 18, 2003, to allow multiple ANDA applicants to obtain the 180-day exclusivity period. A limitation was placed on the approval of any ANDA or 505(b)(2) application to a single 30-month stay. 68 Fed. Reg. 36676.
9 The Commissioner is petitioned to, inter alia, "... refrain from taking steps that prejudice Genentech's property rights in trade secret and confidential commercial data and information provided to the agency for the limited purpose of reviewing and approving Genentech's products."

Special Counsel in the Corporate Department of Fox Rothschild LLP in Princeton, Patrick H. Higgins' practice is in the strategic positioning of discovery assets as well as in the evaluation of legal risk in the pharmaceutical industry. He can be reached at phiggins@foxrothschild.com.