Pharma’s Cutting Edge

It’s been a while coming, but 2006 has finally seen the introduction of legislation to the U.S. Senate that, if passed, would create a statutory pathway for FDA review and approval of genuine generic biologic drugs.  The Act, which the sponsors have asked be called “Access to Life-Saving Medicines Act,” was read into Congress yesterday.  The Senate version has No. S.4016 and has been referred to the Senate Health, Education, Pensions and Labor Committee (Chaired by Sen. Enzi ) for review and debate.

The U.S. generic manufacturers trade association, the GPhA, immediately announced its strong support for the legislation, while PhRMA and BIO, the innovators’ trade groups remained silent.  It’s likely that GPhA personnel played a prominent role in crafting this legislation, which has been speculated to have been in the works for over a year.

The text of the Senate bill is still at the printing office, but Rep. Waxman, who will be sponsoring the unnumbered House version, published the bill’s text on his website.  As there is a reasonable chance that the version that will eventually emerge from Committee will conserve some elements of the bill as published, and as there is also a chance that a competing bill (supported by innovators) will soon be introduced, I’ve decided to devote some of my time outlining it here.  For those of you would would like to read the official summary, Rep. Waxman has published that as well.

Just a bit of background for readers who may not regularly read my blog (have a look at the generics category for related posts).  This new bill is intended to amend the Public Health Service Act.  Biologic drug products are regulated primarily by Sec. 262 of the PHS Act.  “Traditional” small-molecule drug products are not regulated by the PHS Act, but rather are covered by the Food, Drug and Cosmetics Act.  Of particular importance to this discussion is Sec. 505 subsection (b) and Sec. 505 subsection (j) of FDCA, which provide for the major pathways by which new drugs gain introduction to the U.S. market. 

Although an accelerated development/approval pathway that relies on predecessor biologic drugs per se is not found within Sec. 505 (b) or (j) of FDCA, Sec. 505 (b)(2) does provide for accelerated development/approval of new drugs that rely on another sponsor’s investigations, when the original sponsor’s patent(s) and marketing exclusivity have expired.  FDA has published a draft guidance (2001) for how and when such investigations may be used to gain marketing approval for a new drug.  As one of the examples for types of applications that would be covered in 505(b)(2), FDA wrote the following:

Naturally derived or recombinant active ingredient. An application for a drug product containing an active ingredient(s) derived from animal or botanical sources or recombinant technology [my emphasis] where clinical investigations are necessary to show that the active ingredient is the same as an active ingredient in a listed drug.

Time does not permit me to review the debate–and lawsuits–that have surrounded FDA’s application of 505(b)(2) provisions.  Suffice to say, that innovators have generally opposed use of this pathway and that generic manufacturers have generally supported it.  No surprise there.  Nevertheless, prior to 2006 quite a few drugs, including several peptides and four recombinantly made proteins, have been approved using the 505(b)(2) pathway.  Read the rest of this entry »

Well, as you’ll read some action is happening in the US Senate to address the authorized generics conundrum. You’ll recall that the issue has sparked consternation among major generics makers–and some lawmakers–who compete for 180-day exclusivity under Hatch-Waxman. The authorized generic effectively undermines the first-to-file generic house from enjoying the 6-month monopoly aimed at encouraging challenges to innovator patents and thus earliet possible generic entries. However, Merck’s recent tactic of undercutting the price of a first-to-file generic (Teva) with their brand drug (Zocor) would not be affected by pending legislation that seeks to limit authorized generics until after the 180-day exclusivity period has expired.

It remains to be seen how effective Merck’s Zocor strategy will be relative to (1) the no-generic (i.e. “usual”) approach and (2) the authorized-generic approach, and whether it will be imitated by other innovators. In particular, analysts will be looking at whether low Zocor prices return the same profit to Merck as does Merck’s authorized generic simvastatin sold by Dr. Reddy’s. As pricing for Zocor will be likely be more variable than the pricing for the authorized generic, with little local-market overlap between the two, apples to apples comparisons will be difficult. Was Merck anticipating legislation limiting AGs, and did anticipation lead to their bold pricing experiment with Zocor? If they were, they haven’t said so publicly.

BioPartners failed to impress the CHMP with its biosimilar application for Alpheon, a biosimilar to Roferon A. Had Alpheon been approved, it would have marked the first non-GH biosimilar approval in Europe. This case demsnstrates some of the technical hurdles that must be cleared to receive EU approval. I would expect that similar issues would be raised by FDA for a Roferon-A biosimilar in the U.S. submitted via the 505(b)(2) path. If anything, FDA is likely to be stricter than the CHMP. I’ve followed the biosimilar story closely for the past three years and will continue to keep you updated on its evolution. If your firm sells recombinant products, there is no single issue more likely to change your firm’s long-term prospects than this one.

For July’s main-page post, I’m pleased to offer an editorial from a guest writer, Mr. Gregory Glass, editor and principle contributor and analyst for the Paragraph Four Report. Mr. Glass, by virtue of his post-graduate training in both law and business as well as his extensive experience working in and for the pharmaceutical industry, is uniquely qualified to provide insights into this precedent-setting legal case and its implications for future settlements of Paragraph Four challenges to innovator-product patents.

FJC
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As many had predicted, on June 26, 2006 the US Supreme Court denied the FTC’s Petition for a Writ of Certiorari when it attempted to appeal the decision of FTC vs. Schering-Plough. As you might know, the 11th Circuit Court of Appeals ruled against FTC when it tried to challenge two settlements involving K-Dur®. In short, the FTC took the position that settlement of a challenge to an innovator brand’s patents (i.e. a Paragraph IV challenge) which includes payment to the generic company along with a possible delay in generic product market entry violates antitrust law.

The Court of Appeals for the 11th Circuit rejected this position and chided the FTC, pointing out that the law should favor settlements and should consider the strength of the patents challenged. In addition, the Court reminded the FTC that there are many reasons why parties settle cases, including spent emotions, and, therefore, that the context of the settlement is an important consideration. FTC attempted to appeal the decision to the Supreme Court. These types of appeals are not a “right” but are discretionary, so the Supreme Court decided not to hear the case, allowing the 11th Circuit decision to stand.

What the Supreme Court decision might mean for pending patent-challenge cases

In 2002, the FTC issued a Report, which studied Paragraph IV cases. The FTC noted that about 40% of these cases were settled, and that many of the settlements were arguably suspect. One recommendation of the Study was that the FTC should review and scrutinize all of the pending settlements. As one might imagine, this report—and the subsequent requirement that settlements pass FTC muster—led to fewer settlements of patent cases. According to ParagraphFour.com, the percentage of cases that settled declined to about 20%. So, parties were willing to proceed with the court case and forego settlement as they had in the past.

However, after the 11th Circuit issued its initial opinion of Schering-Plough v. FTC in March 2005, settlements seem to have increased again. While it may be too early to call an increase in settlements since March 2005 a “trend,” several high-profile patent challenges have resulted in settlements, including Plavix®(clopidogrel), Effexor XR®(venlafaxine), and Provigil®(modafanil). So, what does the Supreme Court action suggest for pending cases? Well, it suggests that if there is a trend towards settlements, it will continue, as the affected parties view the Supreme Court indifference as a green light to settle.

However, before we walk away satisfied with this conclusion, we must factor in the antitrust lawyers and their partners, the class action lawyers. Two days after the announcement of the Plavix settlement, the parties involved (Sanofi-Aventis and Apotex) were sued by The Kroger Co. (a supermarket chain) on antitrust grounds. This was followed by at least ten lawsuits trying to block the settlement on the grounds that “Apotex would have won its case.”

The legitimacy of these suits are questionable on many different grounds, such as: How do the plaintiffs know Apotex would have won its patent challenge? and How do the plaintiffs know that Apotex could supply the generic drug, when it would have done so, and at what price? and When would other generics appear on the market?”

While we can wonder about how strong these settlement-challenge cases are—remember, the law encourages settlements—they serve as a reminder that interested parties will use all available legal means to redress what they perceive as high prices for brand drugs.