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The Importance of Umbrella Exclusivity for Biologics

The Importance of Umbrella Exclusivity for Biologics

Should the exclusivity of the original product protect biologics enhancements? That was one of several questions raised in a recent FDA hearing on Facilitating Price Competition and Innovation in the Biological Products Marketplace held September 4 at the Silver Spring, Maryland campus.

Biosimilars have yet to make a big impression on the U.S. market, despite the idea that they offer low-cost competition to popular selling biologics. So far, the FDA has approved just 18 biosimilars under the Public Health Service Act (PHS) §351(k), with only five or so currently available to US consumers.

In ongoing efforts to facilitate the development of biologics, ensure timely market entry and reduce barriers to competition, the FDA has been asking for industry input as to whether changes or enhancements to an original product that aren’t offered their own exclusivity should be covered by the remaining exclusivity for the reference product, a concept known as “umbrella exclusivity.”

Most feel that offering umbrella exclusivity to subsequent and supplementary applications for biologicals enhancements could help shield certain biologics from biosimilar competition and facilitate patient access.

But some argue that granting exclusivity to enhancements of biological products on top of first licensures would give reference product sponsors more opportunity to “game the system.”

FDA’s Biosimilar Action Plan

In July, FDA Commissioner Dr. Scott Gottlieb reported that American’s could have saved $4.5 billion in 2017 had they been able to purchase “successfully marketed, FDA-approved biosimilar prescription drugs.”

Dr. Gottlieb described the biosimilars industry as “anemic” and “rigged,” explaining that “consolidation across the supply chain has made it more attractive for manufacturers, Pharmacy Benefit Managers, Group Purchasing Organizations and distributors to split monopoly profits through lucrative volume-based rebates on reference biologics—or on bundles of biologics and other products—rather than embrace biosimilar competition and lower prices.”

On July 18, the FDA released its Biosimilars Action Plan (BAP) to help “facilitate the efficient development and approval” of biosimilars.

The FDA’s BAP aims to:

What is Umbrella Exclusivity?

Umbrella exclusivity has historically been used for small molecule drugs to ensure that all drug applications get the same period of protection (five years) from generics under the Hatch-Waxman Amendments.

Approval of new dosages and other adaptations does not affect exclusivity. Umbrella exclusivity includes all types of active moiety, not just that of the specific approved drug product. Approval of a new dosage form or other types of changes does not destroy exclusivity.

In contrast to small molecules, new biologics get 12 years of exclusivity from the date of approval under PHS §351(k)(7)(A) reference product exclusivity provisions.

But under PHS §351(k)(7)(C), subsequent and supplementary applications for new varieties of a biological filed by the same innovator are excluded from this protection, including applications for new indications, strengths, administration routes, dosage forms, dosing schedules and delivery systems and devices.

Currently, the FDA cannot approve biosimilar applications based on a biologic at any time within that 12-year window.

If the FDA applied umbrella exclusivity, supplemental and subsequent applications would get exclusivity for the time left under the original reference product application’s 12 years. If there are seven years left, the new application would get seven years exclusivity.

Biologics Industry Voices Umbrella Exclusivity Opinions

In July, the FDA requested industry input on whether umbrella exclusivity would help shield certain biologics that are not otherwise eligible for exclusivity, saying “FDA is hoping to hear arguments in favor and against umbrella exclusivity with a robust discussion of its impact on innovation and market entry.”

On September 4, the FDA held a hearing to further discuss the issue along with other topics relating to the BAP and the Biologics Price Competition and Innovation Act of 2009 (BPCIA).

The overall consensus was that umbrella exclusivity is critical for biologics. Many feel that a continued lack of protection would discourage innovation.

According to The Pharmaceutical Research and Manufacturers of America (PhRMA), applying umbrella exclusivity prevents biosimilar applicants from immediately obtaining approval for altered products or new uses before they get approval of a biosimilar of the original reference product.

“This would effectively eviscerate the exclusivity for the first-licensed product,” says PhRMA. “In this way, the lack of an umbrella policy would discourage additional R&D investments for new indications and otherwise improved biological products and expanded treatment options for patients.”

Janssen Pharmaceutical Companies / Johnson & Johnson stated that umbrella exclusivity could help deflect “unintended consequences" in areas like oncology.

In therapeutic areas like cancer treatment, the FDA will often accelerate initial licensure approval for patients who have failed treatment, with a confirmatory trial to advance first-line treatment. [Federal Food, Drug, and Cosmetic Act (FDCA) §506(c)]

According to Janssen, if umbrella exclusivity doesn’t apply, sponsors might decide to forego accelerated approval and confirmatory trials in exchange for standard, initial licensure approval, delaying patient access to potentially effective treatment.

“Denying umbrella exclusivity to reference products for new indications and other changes that do not gamer a new 12 years under the statute would disregard and upset the balance between innovation (and protections for it) and competition that Congress struck in the BPCIA,” said Janssen.

Takeda Pharmaceuticals U.S.A., Inc. argues that Congress intended the PHS exclusivity provisions to be interpreted in ‘pari materia’ with the FDCA.

Under the FDCA, approved new drug applications get new chemical entity (NCE) exclusivity when no active ingredients have been approved in any other application. For NCEs, umbrella exclusivity gives products with the same active ingredient protection under the remainder of the original’s five-year exclusivity window.

Takeda cites the Food and Drug Administration Modernization Act (FDAMA) of 1997 which directs the FDA to "minimize differences in the review and approval of products required to have approved biologics license applications under §351 of the PHS Act and products required to have approved new drug applications under §505(b)(1) of the Federal Food, Drug, and Cosmetic Act."

According to Takeda, “Recognizing umbrella exclusivity under one statute but not the other would be a significant difference that disregards this Congressional directive.”

Takeda also feels that interpreting the term “reference product” in the PHS as Hatch-Waxman defines “active ingredient” in its patent term extension provisions would offer consistency between the exclusivity provisions of the PHS, FDCA, and Hatch-Waxman.

In contrast, the Association for Accessible Medicines (AAM) (representing the U.S. generic pharmaceutical sector) and Biosimilars Council reject the application of umbrella exclusivity, saying there are differences between BPCIA and Hatch-Waxman regarding the role of patents and non-patent exclusivity.

AAM feels Congress aimed to incentivize initial licensures of new biological products, not subsequent enhancements, and that the specific statutory language of the BPCIA “explicitly forecloses” umbrella exclusivity application to biologicals.

AAM said an umbrella policy would “provide undue opportunities for reference product sponsors to ‘game the system’ through product-hopping and other anti-competitive tactics, contrary to the intent of Congress.”

Regarding the difference in role played by patents and non-patent exclusivity to incentivize innovation, AAM says Hatch-Waxman “protects innovation by a variety of carefully calibrated exclusivity and patent protections designed to ensure that all innovative enhancements receive an appropriate level of protection – not too much and not too little.”

Under Hatch-Waxman, new molecules get five years of NCE exclusivity, changes to molecules get three years if new clinical studies were required for approval, and innovative features covered by patents are given up to 30 months.

But under BPCIA, Congress specified a single, unprecedented 12 year period, with no gradient for subsequent enhancements.

According to AAM, these differences suggest that Congress wished to incentivize the “first licensure” of new biological products but not subsequent product enhancements or new indications.

Also, AAM says that by the BPCIA defining “reference product” to mean product rather than active moiety as in Hatch-Waxman, Congress is offering reference product exclusivity only to the first licensed version of the biological product.

“Because a 351(k) application must be evaluated not just against the RP’s active ingredient or active moiety but against the entire biological product – it must have the same route of administration, dosage form, strength and conditions of use as the RP – the term “reference product” clearly refers to the biological product, not the active moiety,” says AAM.

AAM members include, among others, 3M Drug Delivery Systems, Apotex Corporation, Baxter Healthcare Corporation, Cipla USA, Mylan, Sun Pharmaceuticals, Amerisource Bergen Corp. Novum Pharmaceutical Research Services and West Pharmaceutical Services, Inc.

At the hearing, questions about umbrella exclusivity seemed to confuse the relationship of exclusivity to patents.  Accordingly, some of the comments include pointed statements that the two are different.

Most industry participants agreed that the umbrella exclusivity issue was unrelated to patent issues.

“Further, the BPCIA patent provisions are irrelevant to whether umbrella exclusivity applies, as Congress intended reference product exclusivity to run concurrently with patent protection, not for one to substitute for the other,” said PhRMA. “We believe that umbrella exclusivity is necessary for policy reasons, dictated by the statute and legislative intent, and unrelated to patent issues.”

Janssen also feels the exclusivity question is irrelevant to patents. “Under the BCPIA biosimilar approval is not linked to the status of any patents for the reference product nor are patents required to be listed with FDA under the statute (which is different than the approach Congress used for small molecule drugs under the Hatch-Waxman Act).”

Procedural issues will need further refining should the FDA adopt the policy. For example, will reference product sponsors have to prove their eligibility for umbrella exclusivity or will §351(k)(7) automatically presume it?

Reference product exclusivity has a significant impact on the biologicals market, both in biosimilar competition and incentive for innovation. It will be interesting to see how the issue unfolds as the FDA continues to refine the BAP.


Gregory J. Glover MD JD is a patent attorney and non-practicing physician. A noted expert on developments and emerging conflicts in the pharmaceutical industry, Greg is an expert on regulatory IP issues.

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