US legislative update: takeaways for European pharma
Keith A Zullow and Jenny J Zhang from Goodwin Procter examine upcoming US pharmaceutical regulation and how, if passed, it could impact European pharma/biopharma looking to access the US market.
In the current US Congressional session, Congress has focused heavily on legislation directed at reducing prescription drug prices. For example, the US recently passed the Inflation Reduction Act,1 which requires the Secretary of Health and Human Services (HHS) to negotiate prices for certain physician-administered and retail prescription drugs covered under Medicare Parts B and D. The new law will also require drug manufacturers to pay rebates to Medicare if they increase drug prices faster than consumer inflation.
There are also several pending bills that seek to lower drug costs by means other than price regulations, including:
1) deterring the delay in FDA approval of drug applications caused by sham ‘Citizen Petitions’
2) limiting the scope and number of patents asserted in litigation against proposed biosimilar entrants
3) policing anticompetitive settlements between competing drug manufacturers
4) prohibiting ‘product hopping’ and interference with generic and biosimilar substitutions
5) monitoring access to biosimilars.
European pharmaceutical companies targeting the US market should be aware of these pending bills and their potential impacts on market entry, intellectual property enforcement and payer access.
Citizen Petitions before the FDA
In the US, members of the public can request, through a Citizen Petition, that the US Food and Drug Administration (FDA) “take or refrain from taking” various administrative actions, including denying approval of generic and biosimilar drug applications.2 Submission of a Citizen Petition to the FDA obligates the regulator to address the arguments raised. Pharmaceutical manufacturers have submitted Citizen Petitions raising safety or efficacy concerns about proposed competing generic and biosimilar products, and such submissions often delay FDA approval of the proposed products while the FDA resolves the pending petitions. Three pending bills introduced in 2021 include strategies for reducing delay caused by Citizen Petitions. Senate Bill 562 (S. 562), titled Ensuring Timely Access to Generics Act of 2021, imposes requirements related to third-party petitions concerning applications for FDA approval to market a generic or biosimilar drug. Currently, the FDA may deny a Citizen Petition as an attempt at delay only if FDA finds that the petition, 1) was submitted primarily to delay the approval of the relevant application, and 2) does not on its face raise valid scientific or regulatory issues. S. 562 would permit the FDA to deny the petition if either of these factors were satisfied.3 This same bill also requires the FDA to establish procedures for referring such petitions to the US Federal Trade Commission (FTC) as an anticompetitive business practice.
Under two other pending bills – House of Representatives Bill 2883, titled Stop Stalling Access to Affordable Medications, and Senate Bill 1425, titled Stop STALLING4 Act – it would be unfair competition to submit an “objectively baseless petition” to the FDA in an attempt to interfere with a competitor’s application to market a drug. The pending bills authorise the FTC to sue an individual or company that submits a baseless Citizen Petition for civil penalties up to $50,000 per day for each day the FDA spends reviewing the petition.5
Scope of patent litigation over proposed biosimilars House of Representatives Bill 2884, titled the Affordable Prescriptions for Patients Through Improvements to Patent Litigation Act, would limit, in certain instances, how many patents a reference-listed biologic drug product manufacturer (RPM) can assert in a lawsuit under the Biologics Price Competition and Innovation Act (BPCIA) against a company seeking to sell a biosimilar. If the biosimilar manufacturer completes specified actions under the BPCIA framework, such as sharing certain product information with the RPM, the bill would limit the number of some categories of patents that the RPM may assert in a lawsuit, such as patents filed more than four years after the reference product was approved. The limit would not apply to patents claiming certain methods for using the biologic drug and the presiding court would have discretion to adjust the limits in the interest of justice.
Pending Senate Bill 1428, titled the Preserve Access to Affordable Generics and Biosimilars Act, would authorise the FTC to initiate proceedings against parties to any agreement resolving or settling a patent infringement claim in connection with the sale of a drug or biological product. The bill would overturn current antitrust standards applied under Supreme Court case law6 by creating a presumption that an agreement has anticompetitive effects if the filer of the generic drug or biosimilar application receives anything of value and agrees to limit or forego research, development, manufacturing, marketing or sales of the generic drug or biosimilar. Violating this bill could result in civil penalties (which could be trebled), injunctions, and forfeiture of the 180-day marketing exclusivity period for a generic drug.
‘Drug hopping’ and interference with substitution
Several related pending bills7 would prohibit so-called ‘product hopping’. Product hopping arises if, around when patents covering a reference drug expire, the reference drug manufacturer withdraws the reference drug or otherwise disadvantages generic competition in an attempt to convert the market to a modified version of the drug covered by later-expiring patents. The pending bills would authorise the FTC to enforce the product hopping prohibition by seeking disgorgement of a product hopper’s unjust enrichment in Federal Court.
Another pending bill, House of Representatives Bill 7473, titled the Generic Substitution Noninterference Act, would more directly prohibit attempts to interfere with the substitution of reference drug products by therapeutically equivalent generics or interchangeable biosimilars. Specifically, the pending bill would make it unlawful for a pharmaceutical manufacturer to direct or incentivise a healthcare provider to prevent substitution when generic or biosimilar substitutes are available, for example, by requesting that a drug be dispensed “as written” or “brand name only”.
Measuring and rating biosimilar access
Pending House of Representatives Bill 2855, titled Star Rating for Biosimilars Act, aims to more effectively identify barriers to biosimilar access by requiring HHS to implement a quality measure to capture patient use and access to biosimilars and evaluate Medicare Advantage plans based on those measures.
Although it is unclear which, if any, of these pending bills will be enacted before the end of the Congressional Session in January 2023, or how such pending bills may be modified before passage, the existence of these pending bills evidence the focus that the US Congress is currently placing on reducing prescription drug prices. Enactment of any of these measures could present both opportunities and challenges to European pharmaceutical manufacturers: generic and biosimilar manufacturers might find a more streamlined path to intellectual property clearance, approval, and/or payor access, while branded manufacturers may need to re-evaluate and/or modify strategies for maintaining intellectual property and regulatory based exclusivities.
- P.L. 117-169.
- 21 C.F.R. § 10.25(a) (“An interested person may petition the Commissioner to issue, amend, or revoke a regulation or order, or to take or refrain from taking any other form of administrative action.”), https://www.ecfr.gov/current/title-21/chapter-I/ subchapter-A/part-10/subpart-B/section-10.25; 21 U.S.C. § 355(q), https://www. govinfo.gov/content/pkg/USCODE-2020-title21/pdf/USCODE-2020-title21-chap9- subchapV-partA-sec355.pdf; 21 C.F.R. § 10.30(e)(2), https://www.ecfr.gov/current/ title-21/chapter-I/subchapter-A/part-10/subpart-B/section-10.30.
- S. 562, 117th Cong. § 2(1)(B)(i) (2021), https://www.congress.gov/bill/117thcongress/ senate-bill/562/text.
- STALLING is an acronym for “Significant and Time-wasting Abuse Limiting Legitimate Innovation of New Generics.”
- H.R. 2883, 117th Cong. § 2(c)(4)(B), https://www.congress.gov/bill/117th-congress/ house-bill/2883/text; S. 1425 § 2(c)(4)(B) (2021), https://www.congress.gov/ bill/117th-congress/senate-bill/1425/text.
- FTC v. Actavis, 570 U.S. 136 (2013), https://www.supremecourt.gov/ opinions/12pdf/12-416_m5n0.pdf.
- S. 1435 (“Affordable Prescriptions for Patients Act of 2021”), https://www.congress. gov/bill/117th-congress/senate-bill/1435/text; H.R. 2873 (“Affordable Prescriptions for Patients Through Promoting Competition Act of 2021”), https://www.congress. gov/bill/117th-congress/house-bill/2873/text; H.R. 2884 (“Affordable Prescriptions for Patients Through Improvements to Patent Litigation Act”), https://www.congress. gov/bill/117th-congress/house-bill/2884/text; H.R. 5237 (“Reduced Costs and Continued Cures Act of 2021”), https://www.congress.gov/bill/117th-congress/ house-bill/5237/text; H.R. 5260 (“Reduced Costs and Continued Cures Act”), https://www.congress.gov/bill/117th-congress/house-bill/5260/text.
Keith A Zullow is a US Registered Patent Attorney and a partner in Goodwin’s Intellectual Property Litigation group in New York. He focuses his practice on patent counselling and patent litigation in life sciences and other technologies.
Jenny J Zhang is a US Registered Patent Attorney and a senior associate in Goodwin’s Intellectual Property Litigation group in DC. She focuses her practice on litigation over life sciences and other technologies.