By Kevin E. Noonan --
Last week, Eli Lilly & Co. sponsored a "Super Session" at the BIO 2009 International Conference entitled "Biotechnology Intellectual Property at the Crossroads." The session was moderated by John Lechleiter, President and Chief Executive Officer at Lilly, for a panel consisting of Robert Armitage, Lilly's General Counsel; Gregory Glover of the Pharmaceutical Law Group; and H. Thomas Watkins, President and Chief Executive Officer of Human Genome Sciences, Inc.
In his opening remarks, Dr. Lechleiter (at left) called this a "historic moment" for the biotechnology and pharmaceutical industries, noting that the swine flu "crisis" might be focusing the public on the importance to them personally of the research done by these industries. He reminded the audience that new drugs for fighting old diseases had played a major role in increasing life expectancy in the last century (from 47 years to 78 years) and that two proposals in Congress -- patent "reform" and follow-on biologics legislation -- put intellectual property and companies that relied on it under threat. And he reminded the audience of Eli Lilly's credibility in the biotechnology area, from its introduction of human insulin in the 1980's to the fact that 40% of the drugs in the company's pipeline are biologics or the products of biotechnology, and that Lilly's sales of such drugs made it the fifth largest biotechnology company in the country.
Dr. Watkins spoke next and provided a biotechnology company's perspective. He recounted briefly HGS's involvement in the Human Genome Project and patenting numerous human genes, and how over the past 10 years or so the company has evolved into a new drug development company. In these efforts, he said patents were "critical" and "essential" in making business decisions, based in part on the great costs of developing new drugs. He highlighted the importance of market exclusivity and freedom to operate as being a major (but not the only) components of this analysis, and said that his scientists and researchers worked "hand in glove" in protecting HGS inventions through patenting.
Dr. Glover's presentation focused on the interaction between patent protection and regulatory (almost exclusively FDA) requirements, and how the differing "exclusivities" can interact in ways that protect innovation sufficiently or not. The Hatch-Waxman regime is the paradigm, according to Dr. Glover, who presented a "Cliff's Notes®" version of some of those provisions, including the abbreviated approval pathway permitting a generic company to use the innovator's safety and efficacy data, the data exclusivity period, and patent litigation provisions (specifically, the 30-month stay) that extend innovator protection. He applied this scheme to follow-on biologics, highlighting the differences between small molecule drugs and biologics:
• Most conventional drugs are small molecules with defined structures that can be easily copied once the structure is known; consequently, they are not dependent on production process.
• Biologics, on the other hand, are very large molecules with less defined structures, due to, inter alia, the effects of post-translational modifications such as glycosylation. These differences make biologic drugs much more complicated and "nearly impossible to copy" exactly. Moreover, the nature and properties of biologic drugs are very dependent on manufacturing process, introducing another level of difficulty for copying.
Turning to the current proposals for follow-on biologics (FOB) legislation, he noted three specific provisions and the differences regarding these provisions in the three FOB bills introduced in Congress to date: H.R. 1548 (Congresswoman Eschoo, principle sponsor), H.R. 1427 (Congressman Waxman, principle sponsor), and S. 726 (Senator Schumer, principle sponsor). These provisions are first, what kinds of products will be considered "biosimilar"; second, are the biosimilar and innovator biologic interchangeable"; and third, what is the period of data exclusivity? What constitutes a "biosimilar" can differ widely in definition, accommodating differences in primary amino acid sequence, post-translational modifications, level of impurities, the mechanism of action, and the mode of administration. The goal is to have the biosimilar have no clinically-meaningful differences in safety, purity, or potency, but the complexities of biologic drugs leave significant room for variability in FOBs that may be considered "biosimilar."
With regard to interchangeability, Dr. Glover said that the goal is that there would be no increased risk of an adverse event if the biosimilar is substituted for the innovator biologic drug, or if the patient is switched between the two versions (this property of small molecule generic drugs is the basis for pharmacies providing generic versions of drugs unless the doctor affirmatively contravenes them, rather than having to obtain the physician's permission to substitute.) Each of the bills has provisions for assessing whether the FOB is interchangeable with the innovator, but the complexities of these molecules increases the difficulties of achieving the interchangeability goal. Finally, Dr. Glover mentioned the differing periods of data exclusivity in the bills, ranging from 14 years in the Eschoo bill to 5 years in the Waxman bill.
These considerations led to a discussion of what Dr. Glover termed the RS/PS anomaly, i.e., the difference between the scope of regulatory protection (such as data exclusivity) and the scope of patent protection available for small molecule drugs as compared with biologics drugs. For small molecules, RS and PS "align," according to Dr. Glover, whereas for FOBs they do not. He illustrated this situation by reviewing the periods of data exclusivity for small molecule drugs, where new chemical entities (NCEs) have a 5-year period in which the FDA will not accept an application for generic version of an approved drug, coupled with the 30-month stay in approving a generic drug that is imposed when an innovator files suit in response to a Paragraph IV certification from the generic drugmaker than an Orange Book-listed patent on the innovator's approved drug is invalid or unenforceable.
These timelines line up well with the timeline for a new drug according to Dr. Glover's hypothetical. An innovator company files a provisional patent application followed by a utility application that issues within 3 years. The company also filed an IND followed by a NDA, which is approved by the FDA within 5 years of the IND filing date. For an NCE, the Hatch-Waxman Act provides 5 years of data protection, independent of patent protection. In addition, the innovator has up to 5 years of patent term extension.
Moving to follow-on biologics, however, the situation is very different. First, the regulatory standard is much more loosely applied for FOBs, since they are not required to be identical; the regulatory standard for small molecules is "sameness" whereas the standard for FOBs is "similarity," as a result of the complexities Dr. Glover discussed earlier in his talk. This results in the regulatory scope being restricted to about the same extent as the patent scope for traditional small molecule drugs: the innovator's safety and efficacy data available to the generic drugmaker is restricted to molecules that are substantially identical; similarly, the innovator's patent protection is limited to substantially identical molecules. Thus, Dr. Glover showed that the extent of regulatory protection (RS) was about equal to the extent of patent protection (PS) for small molecule drugs.
For biologics, the regulatory scope is much broader, Dr. Glover said, because it includes not only substantially identical molecules but also bio-"similars." The patents, on the other hand, remain restricted to molecules that are substantially identical to the innovators biologic drug. (Indeed, considering how the U.S. Patent and Trademark Office, and the courts, have interpreted the written description requirement, protein-based biologic drugs having even conservative substitutions are likely not within the literal scope of most patent claims.)
Dr. Glover diagramed the concrete consequences of this anomaly, and in doing so showed dramatically the significance of data exclusivity periods as proposed in the various competing FOB bills in Congress. Because FOB legislation permits biosimilar as well as bioidentical compounds to obtain regulatory approval, the possibility exists for a generic competitor to use the innovator's safety and efficacy data to obtain approval of a biosimilar drug that does not infringe the innovator's patent protection.
Bob Armitage (at right) gave the last talk, and his presentation was more pointed and passionate than the other presentations. He first addressed patent reform, which he called a "life and death" issue for the biotech and pharma industry. He cited the competing public policy pressures of providing the best medicines while at the same time providing the least expensive medicines, a situation that has put the industry at risk. He reminded the audience that patent reform proposals have been considered over the past three sessions of Congress, and that the initial impetus for reform stemmed from a National Academy of Sciences report from 2004. That report called for greater objectivity and greater predictability for both patent procurement and litigation. He contrasted this with the approach advocated forcefully by the Coalition for Patent Fairness, which contends that the patent system has been "hijacked by trolls" and that litigation by such non-practicing entities is "antithetical" to the ability of those who make things to conduct their businesses properly. This is not just a policy difference, according to Mr. Armitage, but rather is a crossroads, and one having a component not always considered in the debate: he reminded the audience that "the rest of the world will be watching" how this policy debate turns out, and that there are "many people in the drug copying business who would be delighted at the double victory" of weakened patent protection and insufficient data exclusivity for follow-on biologic drugs. (A parallel situation existed prior to strengthening the U.S. patent system in the 1980's by creation of the Federal Circuit and permitting universities to patent their inventions under the provisions of the Bayh-Dole Act.)
While Mr. Armitage mentioned that there were "dozens" of views on how to reform the patent system, he said that for BIO member companies the choice was between "putting a stake in the ground" and "putting a stake through the heart of the patent system" -- a position he ascribes to the Coalition for Patent Fairness and their member companies and organizations. In making this point he named names, identifying universities, labor unions, the National Association of Manufacturers, the Coalition for 21st Century Patent Reform, BIO, and PhRMA as favoring "stake in the ground" patent reform, and various CPF groups, including the Business Software Alliance, the Financial Services Roundtable, and dozens of "high tech" companies as favoring "stake in the heart" reform.
He stressed the concept of balance of competing interests, illustrated by the 2004 NAS report. He characterized the balance advocated by the Academy as requiring greater harmonization of patent law (such as adopting a "first to file" system), greater transparency (patent application publication at 18 months), increased public participation (wherein the public could provide prior art to an examiner during prosecution and have an avenue for challenging a patent shortly after grant), and better and more consistent funding of the Patent Office. With regard to litigation, Mr. Armitage stated that the Academy did not find fault in that there was an advantage for either patentees or accused infringers, but that there were too many subjective aspects (such as best mode and willfulness provisions in the law) that contributed to the expense and complexity of patent litigation. These are the kinds of provisions that the Coalition for 21st Century Patent Reform argue should be passed into law.
The agenda of the CPF is quite different, Mr. Armitage said -- this group argues that the issues are all related to patent litigation and abuses of such litigation. Their most sought-after goal is to change how compensatory patent damages are calculated by using an apportionment calculus, the consequences of which Mr. Armitage illustrated using Bell's telephone patent (something he said the CPF uses as one of their own examples.) In looking at the damages that should have been available to Bell if his patent were infringed, the CPF would "subtract" the components of the device that were "old" in the art, such as wires, and amplifiers, and speakers, and microphones. Having done that, Mr. Armitage characterized the CPF's position to be that there wouldn't be much left in damages for Mr. Bell, since after all he hadn't contributed much. (Mr. Armitage noted that this position has been "widely condemned," specifically by labor unions that recognize that maintaining a strong patent system is "a jobs issue.") In addition to the apportionment scheme for damages, Mr. Armitage mentioned that the CPF wanted to weaken injunctions (something accomplished for them by eBay v. MercExchange) and limit the availability of enhanced damages for willful infringement (something the Federal Circuit has done by the In re Seagate decision).
In his final remarks on patent reform, Mr. Armitage voiced the hope that the bill recently voted out of the Judiciary Committee (S. 515) on a 15-4 vote might be the "end of the beginning" of Congressional patent reform, and mentioned that even the CPF (whose concerns are "not illegitimate") have reacted favorably to the bill, giving it "high marks." The views of the Coalition for 21st Century Patent Reform on the bill can be found on the group's website.
Turning to follow-on biologics legislation, Mr. Armitage posed the question of whether reformed patent protection could be "enough" to promote and protect innovation in the biotech and pharma industries. Without expressly answering this question in the negative, he pointed out that data protection (a carefully considered semantic distinction from "data exclusivity," as it turned out) was "the big enchilada," characterizing these provisions as providing the term where a copier cannot copy the innovator "for free." The "exclusivity" in "data exclusivity" is not the same as the exclusivity provided by patent protection for example, Mr. Armitage explained. Nothing in the proposals for data exclusivity would prevent or preclude a generic competitor from "facing the same challenges" that the innovator did, and incurring the same costs. If a generic (or FOB) competitor is willing to incur these costs, then they can show the FDA that their biosimilar products are safe and efficacious just as the innovator did.
As for the appropriate term for data exclusivity, Mr. Armitage cited a report by Dr. Grabowski that showed that a term of between 12.8 and 16.2 years is needed for an innovator drug company to earn back the investment required to bring a new drug to market. Like Dr. Glover, Mr. Armitage aligned this term with the "modern patent term" -- 20 years from filing + any patent term extension available due to regulatory delay -- and found that most drug patents will have a term of from 8-12 years, and that only between one-third and 40% of drug patents will have 14 years in their term. Using these statistics, Mr. Armitage argued that patent protection would not be enough to protect innovation in the industry, a problem he characterized as involving the "survivability" of the industry. He said that this illustrated "the real problem" that the patent system was not designed to be the sole means for protecting medicines from copying. This is because there was no direct correlation between drugs that fulfilled the requirements for patentability -- new, useful and non-obvious -- and drugs that were safe and efficacious. There were many patentable molecules that could not be approved by the FDA, and many FDA-approved medicines that could not satisfy patentability requirements. Indeed, he said, there were many biotechnology-based medicines that had come to market with no patent protection at all. This model was viable so long as there were no FOB provisions in the law.
The final topic Mr. Armitage raised with regard to FOBs was what he called the "unkindest part of all" -- the "perversity" that results in medicines that take the longest time to get to market have the shortest patent term. But these drugs are just the ones that are likely to be pioneering or to have novel mechanisms of action or address the most intractable diseases (such as Alzheimer's disease). He used the example of a medicine for a toothache as one where the clinical trials would take "a couple of days" and that would encounter the fewest hurdles for FDA approval. In contrast, Mr. Armitage said he "would be a fool" to try to develop a drug for Alzheimer's disease. As a consequence of this situation, Mr. Armitage contended that it was just those drugs most needed by the public -- drugs for chronic diseases or disease prevention -- that have been disfavored under the current patent regime, and that would be most negatively impacted by an insufficient period of data exclusivity. He also mentioned that early generic entry discourages after-market research, for example to identify additional cancer targets for an anticancer drug, or to identify patient populations most (or least) responsive to a drug.
Mr. Armitage finished his talk with a plea for audience members to "get involved" in the debate, and remind their representatives of the consequences of making the wrong decisions regarding both patent reform and follow-on biologics legislation.
About
Court Report: Each week we will report briefly on recently filed
biotech and pharma cases, and a few interesting cases will be selected
for periodic monitoring.
June 16-17, 2009 - 
