US Challenges For Biotech In 2015 – An Interview With BIO’s Hans Sauer

The biotechnology industry is closely watching developments in the United States that could impact the industry in 2015. These include the regulatory framework for biosimilars, possible patent legislation, post-grant review procedure, and the consequences of the recent Supreme Court ruling banning the patenting of human genes. Hans Sauer, Deputy General Counsel for Intellectual Property at the Biotechnology Industry Organization (BIO), recently spoke with Intellectual Property Watch’s Catherine Saez.

Sauer was asked to lay out the main developments to watch in the coming year.

Biosimilars

HANS SAUER: For a couple of years since 2010 we have had a law in the United States that provides a regulatory and legal framework for biosimilar or follow-on biologic products (Biologics Price Competition and Innovation Act [BPCI Act]). Biosimilars are not generic drugs but they are biosimilar versions of biologic drugs. This framework regulates the approval of biosimilar versions of established biologic drug products. 2015 will be the first year where actual applications will be reviewed by the Food and Drug Administration [FDA].

I think 2015 will be very interesting for the industry, as it might show the first Court opinions that interpret the dispute resolution provision of the BPCI Act. The BPCI Act has patent resolution and information exchange requirements, laying out a certain a process that takes place between the innovator and the biosimilar applicant. For the last couple of years we have been talking about the law and its ambiguity on the issue. People were not quite sure how the law would operate. We expect that in 2015 Court decisions will explain the operation of this dispute resolution and the information exchange pathway in the law.

(Asked if biosimilars can be developed while the patent is still active): Biosimilars can be developed while the patent is still active, as long as they are not commercialised. When the development work is over and the applicant applies to the FDA, the information exchange and the dispute resolution process should start. That must be done with the innovator before the product is launched. Clarification is needed on how information is going to be exchanged and what do the parties need to do before their can file a patent law suit. Those issues are detailed in the law but they are also subject to a lot of questions. The first court cases will provide important guidance for large biotech companies on both sides of the issue as many companies actually make both innovator products and are interested in making biosimilar products of somebody else’s drugs.

It is also important from the public policy perspective, as the first biosimilar products will be going through the FDA and there are a lot of expectations. In particular, people are interested to know what biosimilar products will look like, and how similar will they be to the original product. From a medical practice and public health perspective, if you approve a drug that has not been fully tested in humans, and the approval relies on a previous approval for some other drug, then it is really important that this new drug be a very close copy of the original.

The dispute resolution process will be very interesting to watch in 2015. There is a dispute going on right now between Amgen and Sandoz [Novartis]. [Complaint for patent infringement, conversion, and unfair competition. Amgen alleges that Sandoz is trying to get approval from the FDA for their biosimilar product under an abbreviated approval pathway to sell a copy of one of Amgen’s “most successful therapeutic products,” according to the complaint. Amgen says Sandoz has not followed the statutory requirement].

(Asked what the advantages of biosimilars are): Expectations are that biosimilar provide cheaper versions of existing innovator products, although they will not cost 10 percent of the original product, but a meaningful price decrease, more like between 20 and 40 percent.

Biosimilars are not like generics. In the United States, generics are required to be exact copies of the original medicine. With biosimilars it is not possible to make exact copies. So the FDA requires much more information for their approval. It requires for example clinical studies showing that the biosimilar products have quite comparable effects, so biosimilars are more expensive to develop than generics.

Where that is possible, generics are the obvious choice to make cheaper versions of original drugs, but biologic drugs are not made through chemical processes. It is like making wine or beer, with a fermentation process. Biologic drugs belong to new types of drugs, which are very complex and derived from living systems. They cannot be compared with traditional drugs.

Patent Legislation

The US Congress will have more renewed initiatives on patent legislation, and that will be important for the biotech industry. These legislative initiatives have been made at the request of some segments of the US high-tech and e-commerce industries who say they are encountering problems with the patent system and patent litigation system, which need legislative reform. A reform initiative last year stalled in Congress. The biotech industry is very concerned with those initiatives because even though they are requested by US e-commerce companies, we fear the proposed reform would affect biotech companies as they operate under a very different business model.

The main concern is that in order to make the system work better for high-tech and e-commerce companies it would hamper biotech companies’ ability to use patents the way they need to use them under their business model. In 2015 this topic should continue to unfold. There are many ideas on the table and a lot of dialogue will be required. We don’t want to stand in the way of high-tech companies but we cannot have a legislation that would just benefit only certain sectors of the US economy. We want a uniform patent system that works the same way for all. We will have to stay vigilant and engaged and spend a lot of time addressing legislative proposals so they do not harm the biotech industry.

Inter Partes Review and Post Grant Review

The third thing that will be interesting to follow in the coming year is the beginning wave of IPR (inter partes review) and PGR (post grant review). The US patent office created new administrative patent challenge proceedings. In the case that somebody believes that a patent was wrongly issued, for a number of reasons, there are three ways to deal with that problem. Either approach the patent owner and discuss licensing conditions, or if that is not possible, go to litigation at great expense.

Another way is going to the USPTO and request that the patent office takes another look at this particular patent through either an IPR or a PGR. A case needs to be built and a request for a trial inside the USPTO should be lodged.

These proceedings are relatively new, a little over two years, and there have been a lot more requests than expected, currently over 2,000. We have noted that the procedure for these proceedings is probably weighted against patent owners. A lot of patents have been invalidated and there has been a lot of concern that the procedures under which these proceedings are conducted should be amended so that they are fairer to patent owners.

These proceedings are fast-tracked and have to be completed in one year. Decisions can be appealed at the Court of Appeals for the Federal Circuit. What we expect to happen this year is that we will see the beginning of the wave of judicial appeals from these proceedings to the court. Many hundreds of cases are foreseen to be brought to court, adding a significant workload to the judges. The court will have to make important decisions and that should be an important development to watch.

Instability in the US Patent Law; Gene Patentability Decision

Also of concern is the instability in US patent law relating to patentable subject matter. Following the Supreme Court decision in the Myriad case, the USPTO has begun rejecting patent applications on antibiotic substances, antibodies, vaccine compositions, industrial enzymes used for laundry detergents and a range of things that have nothing to do with human genes. Many biotech companies have been surprised and alarmed by this development.

After the Supreme Court said human genes are not patentable, even isolated, that they remain a product of nature, the patent office started rejecting a surprisingly broad range of patent applications, and that has become a problem for some biotech companies.

For example, an entrepreneur licensed several patent applications from a European Union research institution. The patent applications were about a medicinal substance from snake venom that would be useful for pain treatment. The entrepreneur had a $14 million dollar deal with investors. They were going to start a company and hire scientists to develop the pain treatment. However, the patent applications got rejected by the patent office as the consequence of the Supreme Court decision. Subsequently, investors put the deal on hold, and the company could not be set up. It is very frustrating to see a very important medicinal substance that will not be developed. In the US at the moment we have a very unstable legal situation creating uncertainty in some areas of biotechnology. This is an ongoing development. This has nothing to do with the patentability of genes, this has to do with the patentability of all kinds of industrial and medicinal substances that are developed from a naturally occurring substance.

This is not a problem in the EU. Under European patent law it is very clear what is patentable and there are no obstacles to patenting such substances. US law has become in this area of biotech a huge anomaly that does not exist in our major trading partners, such as Japan, the EU, Canada and Australia.

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