06.01.2007 Creating a Statutory Pathway for FDA Approval of Generic Biotech Drugs
06. 2007Biotech drugs represent the fastest-growing segment of health care spending.1 In 2006, sales of biotech drugs reached $40 billion, an increase of more than 20% since 2005.2 Comparatively, traditional pharmaceutical drug sales increase annually at an average of 5.4%.3 Biotech drugs effectively treat some of the worst diseases afflicting mankind and promise to provide even more needed treatments in the future. However, these drugs come at an increasingly staggering cost to patients and the government. Yet, at present, there is no generic approval process to lower the cost of biotech drugs as there is for traditional drugs, even though the biotech industry is roughly 30 years old and the patents on many biotech drugs are rapidly expiring. By 2010, the patents of more than $10 billion worth of biotech drugs are expected to expire.4
With no generic biotech drugs to lower the cost, patients with drug insurance can pay tens of thousands of dollars each year for biotech drugs, while the yearly cost for the average individual without insurance may be hundreds of thousands of dollars. For example, Genentech’s promising new biotech drug to fight breast and lung cancer, Avastin, will cost about $100,000 annually.5 Cerezyme, a drug used to treat Gaucher Disease manufactured by the Genezyme Corporation, can cost up to $300,000 annually.6 Enbrel, a biotech drug made by Amgen to treat rheumatoid arthritis and psoriasis, costs the average patient $16,000 annually.7 Biotech drugs used to treat multiple sclerosis can cost patients between $16,000 and $25,000 a year.8
The cost of biotech drugs takes an enormous toll on the budgets of both federal and state governments. The largest drug expenditure for the Centers for Medicare and Medicaid Services is Epogen, a biotech drug used to treat anemia.9 The top two biotech drugs to treat anemia for fiscal year 2005 comprised 17% of all Medicare Part B carrier drug spending.10 Biotech drugs used to treat rheumatoid arthritis and cancer accounted for another 13% of Medicare Part B carrier drug spending.11 State government expenditures on biotech drugs also are exorbitant. For example, biotech drug spending in fiscal year 2006 for current and retired state employees cost the State of Illinois over $30 million12 and the State of California over $83 million.13
To provide a solution to the increasing economical toll biotech drugs are taking on patients and the government, Representative Henry A. Waxman (D-CA) introduced the Access to Life-Saving Medicine Act (the “Act”) on February 13, 2007.14 The Act would provide statutory authority for the U.S. Food and Drug Administration (“FDA”) to approve generic versions of biotech drugs under an abbreviated approval process similar to the approval process for generic versions of traditional drugs. Generic versions of traditional drugs are estimated to save patients between $8 and $10 billion annually at retail pharmacies.15 For example, in 2004 the average price of a name brand traditional drug was $96.01.16 The average price for a generic traditional drug was $28.74.17
On March 26, 2007, the House Committee on Oversight and Government Reform held a hearing to discuss the scientific and legal obstacles to creating a statutory approval process for generic biotech drugs.18 FDA Deputy Commissioner Janet Woodcock, M.D. testified that the FDA has significant experience reviewing biotech drugs for safety and effectiveness and could build upon this experience in an approval process for generic biotech drugs.19 While some biotech drug manufacturers have expressed concern that science and technology have not advanced enough to ensure comparability between a name brand and generic biotech drug, many other biotech drug manufacturers believe the science and technology are currently available to ensure the creation of safe generic biotech drugs.20
This article analyzes the scientific and legal differences between traditional and biotech drugs and reviews the proposed abbreviated approval process for generic biotech drugs under Act. Provided the science and technology exist to ensure the safe release of generic biotech drugs into the market, a statutory pathway for generic biotech drugs is essential to ensure that these drugs are economically available to the patients who need them.
I. Distinguishing Biotech Drugs from Traditional Drugs
Most biotech drugs are approved by the FDA under the Public Health Service Act (“PHSA”) as biological products. The PHSA defines a “biological product” as “a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative of arsphenamine (or any other trivalent organic arsenic compound), applicable to the prevention, treatment, or cure of a disease or condition of human beings.”21 Biotech drugs approved as biological products under the PHSA include protein-based products used to treat rheumatoid arthritis and Crohn’s disease, anemia, various types of cancer, AIDS, diabetes and Alzheimer’s disease and blood factors used to treat hemophilia.22
Some biotech drugs are approved by the FDA under the Food, Drug and Cosmetic Act (“FDCA”). Under the FDCA, a “drug” is defined as “articles recognized in the United States Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of them,” “articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals,” and “articles (other than food) intended to affect the structure or any function of the body of man or other animals.”23 The definition of a drug under the FDCA is broader than the definition of a biological product under the PHSA and thus encompasses most biological products. In fact, the FDA currently regulates some biological products, such as insulin, hyaluronidase, menotropins and human growth hormones, as traditional drugs under the FDCA.24
The FDCA was amended in 1984 by the Hatch-Waxman Act to create an abbreviated drug application process that allows the FDA quickly to approve generic versions of drugs that were approved under the FDCA and whose patents have expired. However, there is no abbreviated approval process in place under the PHSA for generic versions of biotech drugs whose patents have expired.25 However, there is no abbreviated approval process in place under the PHSA for generic versions of biotech drugs whose patents have expired.
II. The Approval Process for Traditional Drugs and Biotech Drugs
A. New Drug Applications and Abbreviated New Drug Applications under the FDCA
A traditional drug must be proven safe and effective for its intended use before it can receive market approval from the Center for Drug Evaluation and Research at the FDA.26 Under the Hatch-Waxman Act, a generic drug applicant can submit an Abbreviated New Drug Application (“ANDA”) in which the applicant may rely on the safety and efficacy studies previously performed by the brand name applicant provided certain statutory requirements are met.27 For an ANDA to be approved, the generic drug applicant must show that the proposed generic drug is bioequivalent to the name brand drug currently on the market.28
To prove bioequivalence, there must be an “absence of a significant difference in the rate and extent to which the active ingredient or active moiety in pharmaceutical equivalents or pharmaceutical alternatives becomes available at the site of drug action when administered at the same molar dose under similar conditions in an appropriately designed study.”29 An ANDA applicant can easily demonstrate bioequivalence because of the way traditional drugs are produced. Traditional drugs are created from molecular compounds that are synthesized chemically.30 As such, the molecular compounds and chemical synthesis used to create traditional drugs can be replicated to create generic versions.
B. Biological Products License Applications under the PHSA
As noted above, most biotech drugs are approved under the PHSA as biological products. The PHSA requires all biological products to be licensed by the Center for Biologics Evaluation and Research at the FDA.31 As in the drug approval process, a biological product must be proven safe and effective in its intended use before it can be licensed.32 Additionally, a biological product may be subject to certain lot release requirements after licensure.33
Unlike traditional drugs, there is no abbreviated application for generic biotech drugs regulated as biological products under the PHSA because of the way biotech drugs are created. Biotech drugs are derived from unique living organisms that cannot be replicated. As such, generic biotech drugs will never be exact copies of brand name biotech drugs.
III. Access to Life-Saving Medicine Act
The Act would amend section 351 of the PHSA to allow FDA approval of abbreviated biological product applications similar to the ANDA process without the strict bioequivalence requirement. This would allow for the creation of generic biotech drugs, as most biotech drugs are regulated as biological products under the PHSA. Instead of proving bioequivalence as required for an ANDA, abbreviated biological product applicants would be required to show that the proposed generic biological product is “comparable to or interchangeable with the reference product” and “contain[s] highly similar principal molecular structural features.”34
To prove that a generic biological product is comparable to the originally approved biological product, the applicant must show an “absence of clinically meaningful differences between the biological product and the reference product” through data from non-clinical or clinical studies.35 The Act gives the FDA discretion to determine the type and quantity of studies necessary for a proposed generic biological product to meet the comparability requirements of an approved biological product.36
As an alternative to proving comparability, an applicant can prove interchangeability and receive a period of market exclusivity. To prove that a generic biological product is interchangeable with an already approved biological product, the applicant must show that the proposed generic biological product is “comparable to the reference product” and is “expected to produce the same clinical result as the reference product in any given patient.”37 As with studies demonstrating comparability, the Act gives the FDA discretion to determine the type and quantity of studies necessary for a proposed generic biological product to meet the interchangeability requirements of an approved biological product.38
Unlike an abbreviated biological product application based on comparability, the first applicant to receive approval based on interchangeability would receive a period of market exclusivity in which no other interchangeable version of the biological product may be approved.39 Proving interchangeability requires more costly research, thus biological products approved based on interchangeability receive a period of market exclusivity to offset costs. The market exclusivity period lasts until the earlier of: (1) 180 days after the first commercial marketing of the biological product, (2) one year after either the final court decision or dismissal on all patent suits against the interchangeable biological product, or (3) either “36 months after approval of the first interchangeable comparable biological product if the applicant has been sued” for patent infringement and litigation is still on-going, or “one year after approval in the event that the first approved interchangeable comparable applicant has not been sued.”40
There are certain advantages for a generic biotech drug to receive FDA market approval based on comparability and interchangeability. Proving comparability involves less costly research and development. As such, an applicant is more likely to recoup its research and development costs once the generic biotech drug goes to market. However, the first generic biotech drug approved based on interchangeability receives a period of market exclusivity. Thus, although the research and development costs are greater for an interchangeable generic biotech drug, the period of market exclusivity provides an enormous financial incentive to those applicants who first receive market approval based on interchangeability. Biotech drug manufacturers interested in producing generic biotech drugs should begin considering currently available biotech drugs with expired and expiring patents and assess the advantages and likelihood of creating a generic version based on comparability and interchangeability.
C. Patent Infringement
The Act also limits patent infringement suits and remedies that may be brought against abbreviated biological product applicants. Applicants may request a list of all patents related to the originally approved biological product from the patent holder.41 The patent holder must respond to the request within 60 days and can charge the applicant up to $1,000 for the cost involved in responding to such request.42 At any time within the two years following the initial request for patents, the patent holder must send the applicant information regarding newly acquired patents within 30 days of the patent being issued.43
The applicant may notify the patent holder that it intends to file an application that will challenge one of the patents for the originally approved biological product.44 The notice must “include a detailed statement of the factual and legal basis for the applicant’s belief that the patents included in the notice are invalid, are unenforceable, or will not be infringed by the commercial sale of the product” and must “identify 1 or more judicial districts in which the applicant consents” to be sued.45
The Act amends the patent laws by prohibiting a patent holder for an approved biological product from bringing suit for patent infringement if the patent holder did not provide notice of the patent in response to the applicant’s request.46 If notice of the patent was provided to the applicant, the patent holder must file suit within 45 days of the patent holder’s receipt of the request for patents related to the biological product and is limited to filing suit in the judicial district in which the applicant has consented.47 The Act also amends 35 U.S.C. § 271(e) to provide that for any patent infringement action brought by the patent holder either (1) 45 days after the patent holder’s receipt of the request for such patent or (2) within 45 days if the action was dismissed without prejudice or was not maintained through final judgment, then the patent holder’s remedies to enforce the patent are limited to reasonable royalties.48
The high cost of biotech drugs to both patients and the government requires careful consideration of a statutory approval process for generic biotech drugs. The Access to Life-Saving Medicine Act offers a statutory pathway for market entry of generic biotech drugs based on comparability or interchangeability. For applicants that pursue approval based on interchangeability, the Act provides a period of market exclusivity. Biotech drug manufacturers should start considering their capability to produce comparable or interchangeable generic biotech drugs so they can maximize the market incentives once a statutory approval process for generic biotech drugs is passed.
1. Robert Pear, Congress Seeks Compromise on Generic Drugs, N. Y. TIMES, (April 8, 2007) (available online at
http://select.nytimes.com/gst/abstract.html?res=F00614FF3F5B0C7B8CDDAD0894DF404482 (accessed April 12, 2007).
3. Linda Loyd, Opening a Path for Biotech Generics, PHILADELPHIA INQUIRER (Sept. 19, 2006) (available online at www.philly.com/mld/philly/business/15551714.htm) (accessed April 14, 2007).
5. Alex Berenson, A Cancer Drug Shows Promise, At a Price that Many Can’t Pay, N.Y. TIMES (Feb. 15, 2006) (available online at www.nytimes.com/2006/02/15/business/15drug.html
ex=1297659600&en=bc6aaf25acffa44&ei=5088) (accessed April 17, 2007).
6. Safe and Affordable Biotech Drugs -The Need for a Generic Pathway: Hearing Before the House Committee on Oversight and Government Reform, 110th Cong. 1 (2007) [hereinafter “Hearing”] (statement of Mary Nathan). Cerezyme is administered in doses that correlate to a patient’s weight. For a 130 pound woman, Cerezyme costs about $12,600 per treatment and over $300,000 annually for the necessary twenty-four treatments.
7. Pear, supra note 1.
9. Government Accountability Office, Report to the Chairman, Committee on Ways and Means, House of Representatives: End Stage Renal Disease Building Medicare’s Payments for Drugs with Payments for All ESRD Services Would Promote Efficiency and Clinical Flexibility (Nov. 2006) (available online at www.gao.gov./new.items/d077.pdf) (accessed April 17, 2007).
10. Herb B. Kuhn, Director, Centers for Medicare and Medicaid Services, U.S. Department of Health and Human Services, Testimony before the Subcommittee on Health of the House Committee on Ways and Means (July 13, 2006) (available online at http://waysandmeans.house.gov/hearings.asp?formmode=view&id=5108)
(accessed April 16, 2007).
12. See Hearing, (statement of Scott McKibbin, Special Advocate for Prescription Drugs, State of Illinois). The Illinois state Medicaid agency spent over $200 million on biotech drugs in fiscal year 2006.
13. See Hearing, supra note 6 (statement of Priya Mathur, Vice Chair, Health Benefits, Board of Administration, California Public Employees’ Retirement System).
14. Access to Life-Saving Medicine Act, H.R. 1038, 110th Cong. (2007).
15. Congressional Budget Office, How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry (July 1998) (savings estimated for 1994 alone).
16. U.S. Food and Drug Administration, Improving Generic Drug Review Performance (available online at http://www.fda.gov/oc/oms/ofm/budget/2008/BIB/PDF/8Improving
GenericBCP(POM.pdf) (accessed April 17, 2007).
18. Hearing, supra note 6 (statement of Rep. Henry A. Waxman, Chairman, Committee on Oversight and Government Reform).
19. Hearing, supra note 6 (statement of Janet Woodcock, M.D., Deputy Commissioner, Chief Medical Officer, Food and Drug Administration).
20. See Marc Kaufman, Biotech Drugs’ Generic Future Debated, WASH. POST, A01 (Feb. 10, 2005). Brand name traditional drug manufacturers expressed similar concerns regarding the safety of generic drugs prior to passage of the Hatch-Watchman Act in 1984 which gave the FDA statutory authority to approve generic versions of traditional drugs. Hearing, supra note 6 (statement of Rep. Henry A. Waxman, Chairman, Committee on Oversight and Government Reform).
21. Public Health Service Act § 351(i), 42 U.S.C. § 262(i).
22. See Hearing, supra note 6 (statement of Janet Woodcock, M.D., Deputy Commissioner, Chief Medical Officer, Food and Drug Administration); Kaufman, supra note 20; Pear, supra note 1.
23. Food Drug and Cosmetic Act § 201(g)(1), 21 U.S.C. § 201(g)(1).
24. See Hearing, supra note 6 (statement of Janet Woodcock, M.D., Deputy Commissioner, Chief Medical Officer, Food and Drug Administration). The FDA approved certain biological products as drugs under the FDCA out of “historical practice.” The approval was not “supported by any scientific rationale.” Andrew Wasson, Taking Biologics for Granted? Takings, Trade Secrets, and Off-Patent Biological Products, 2005 DUKE L. & TECH. REV.0004, ¶ 9 (2005).
25. Food Drug and Cosmetic Act § 505(j); 21 U.S.C. 351(j).
26. 21 U.S.C. § 355(b)(1); 21 C.F.R. § 310.6.
27. 21 U.S.C. § 355(j).
28. Id. at (j)(2)(a)(4); 21 C.F.R. § 320.21(b).
29. 21 C.F.R. § 320.1(e).
30. Id. at § 355(j).
31. Id. at § 601.2.
32. 42 USC § 262(b); 21 C.F.R. § 601.2. The PHSA requires biological products to be safe, pure and potent. However, the Center for Biological Evaluation and Research at the FDA interprets this to require safety and efficacy similar to the drug approval process. See Center for Biological Evaluation and Research, Frequently Asked Questions (available online at http://www.fda.gov/cber/faq.htm#7) (accessed April 14, 2007).
33. See id.
34. Access to Life-Saving Medicine Act, H.R. 1038, 110th Cong. (2007), § 3(a)(2).
35. Id. at § 2(a)(2).
36. Id. at § 3(a)(2).
37. Id. at § 2(a)(2).
38. Id. at § 3(a)(2).
39. Id. at § 3(a)(2).
48. Id.at § 3(b)(1).
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