In the middle of July, FDA announced a public hearing on facilitating competition and innovation in the biologics marketplace.  Following the hearing, September 4, comments were accepted in the docket (FDA-2018-N-2689) until last Friday, September 21.

The agency’s Federal Register notice listed a series of questions, but one of them struck me — at the time — as surprising.  FDA asked for comment on the “potential application” of “umbrella exclusivity” for biologics.  Why surprising?  Because I would not have thought it controversial.  More than five dozen comments have been filed, though, and at least one company (Mylan) has argued that the statute doesn’t permit the umbrella.

So it seems like it might be timely to back up and explain this.

FDA adopted umbrella exclusivity for drugs (i.e., drugs approved under new drug applications, submitted under the FDCA) in the 1980s.  As far as I know it has not been controversial.  This has nothing to do with the debate about companies “evergreening” their drugs by making improvements and earning new (later expiring) exclusivities.  It was just about making sure that if a company has more than one application for its newly discovered moiety, the applications all get the same five years of protection (expiring on exactly the same day, for every application) from generic copies.

First, here is how the basic data exclusivity period works.

Suppose FDA approves a new drug application (NDA) for a product that contains a new chemical entity (NCE).  If this is the first time FDA has approved the NCE, another company may not submit an generic application (ANDA) referencing the product for five years.  In most cases, there’s a patent dispute, in which case the ANDA can be submitted at the 4-year mark but (generally) it cannot be approved before the 7.5 year mark.

Sometimes, though, innovators have more than one application, and sometimes the applications don’t all get approved at the same time.

Suppose the company discovered an NCE and figured out that it would treat Disease A.  Suppose it also discovered that with a different formulation and route of administration, the NCE would also treat Disease B.  FDA would require separate the company to file separate NDAs, and it might approve the NDAs on different days.  Or the second application and use could simply be a year or two behind the first.

Or suppose the company submitted one NDA for its new chemical entity and four indications (Diseases A through D).  I have seen FDA split an application like this into separate NDAs because the indications needed to be reviewed by different Divisions.  Suppose the applications for Disease A through C were ready for approval at the same time, but Disease D required additional analysis and ended up being approved a year later.

The data exclusivity provision would apply to only the first approval . . . 

In these situations, the first NDA to be approved will benefit from the five years of data exclusivity that I just described.  But the statute says a drug gets five-year exclusivity only if it represents the first approval of the new chemical entity . . .  so the second NDA will not get five years of exclusivity (of its own).

Which leads to a bizarre result . . .

A generic company could cite the second application right away in a generic application.  There would be no longer be a bar on submission of an ANDA proposing the new chemical entity.  To be fair, approval of the ANDA would likely be blocked for three years under a different provision of the statute.  But this approval could be much earlier than approval of a generic citing the first application.

… which prompted FDA to adopt “umbrella” exclusivity.

In 1989, the agency considered precisely this problem and decided that the exclusivity must attach to the active moiety itself.   As it explained at the time, the alternative approach to exclusivity “would seriously undermine its value, reducing the incentives for research and innovation in the pharmaceutical industry.”  (This discussion is in the Federal Register, 54 Fed. Reg. at 28897.)  The entire passage bears excerpting:

• “For example, if FDA adopted the narrower interpretation that exclusivity covers only a specific drug product and does not prevent ANDAs from copying subsequent versions of the innovative product, a manufacturer of a new chemical entity (entitled to 5 years of exclusivity), could not make improvements in the drug, e.g., by making a new dosage form of the drug, without destroying the value of its exclusivity. Approval of a new dosage form, and certain other changes in approved drugs, require the submission of a new drug application; once approved, the new dosage form would become a new drug product that an ANDA application could copy, without being subject to the exclusivity covering the original drug product.”
• “For the same reasons, an innovator whose drug was entitled to exclusivity could not license another company to make a copy of the pioneer drug without losing the value of its exclusivity. Under the narrow theory of exclusivity, once the licensed company’s product was approved, ANDA applicants could copy the licensed product, without regard to the innovator’s exclusivity.”
• “The agency does not believe that Congress intended the exclusivity provisions to discourage innovators from making improvements in their drug products nor from authorizing the marketing of competitive products.”

But understand how it works … why it’s called an umbrella.

When the new chemical entity is approved (purple dot), the five-year clock starts to tick. That’s the blue arrow.  It ends at the five-year mark.

If the same NCE appears in other new drug applications (red dots), they simply get swept under the umbrella of the 5-year exclusivity.  When it’s over (at the green line), it’s over.

And what would it mean in the biologics context?

Broadly speaking, the same thing.  But the statute is written a little differently; exclusivity is application by application rather than chemical entity by chemical entity.

Under section 351(k)(7)(A) of the Public Health Service Act, a biologics license application (BLA) gets 12 years of exclusivity — that is, a biosimilar application citing that BLA cannot be approved for 12 years.  But under (k)(7)(C), supplemental applications (which are a type of application) don’t get a 12-year period, and some freestanding applications (such as applications for new indications or new routes of administration) don’t get a 12-year period.

Here’s how this works:

• A company develops a new biologic and secures approval of a BLA .  Under subsection (k)(7)(A), no biosimilar application citing that BLA can be approved for 12 years.
• Now imagine the company supplements the BLA, perhaps with a manufacturing change or new indication.  Under subsection (k)(7)(C), this supplement does not get 12 years of exclusivity from the date of its approval.
• Or suppose FDA requires a separate BLA for the new indication.  Or suppose the company develops a different route of administration, which FDA requires in a separate BLA.  Under subsection (k)(7)(C), these applications do not get 12 years of exclusivity from the date of their approval.
• But what do they get?
• Umbrella exclusivity would mean these applications would nevertheless be protected — meaning no biosimilar applications could be approved — until the 12 years on the initial application expired.

The alternative would be very strange.  If these applications did not fall under the umbrella of the first licensed product, it seems a biosimilar application citing those applications could be approved immediately.

This would have exactly the same effect in the biologics context as it would in the drug context.  I can’t see any reason why the agency’s comments from 1989 do not apply with the same force, which is why the Federal Register notice surprised me.

What’s Mylan’s argument?

Mylan has a curious statutory argument.  The company writes that “the statute explicitly states that the … 12-year exclusivity period … covering the reference product ‘shall not apply’ to …” these other applications.

But that’s not what the statute says.  You can look at section 351(k)(7)(C) for yourself.

• (k)(7)(A) says that approval of a biosimilar application cannot be effective until 12 years after the reference product was first licensed.
• (k)(7)(C) — which is entitled “first licensure” — says that subparagraph (A) does not apply to a license for or approval of certain subsequent applications from the innovator.

In other words, it says that subparagraph (A) doesn’t apply to the applications, not that the 12-year period for the first licensed product doesn’t apply to the applications.  I have always interpreted that to mean that — as I wrote above — the applications don’t get 12 year periods.

Bottom line

I have not read all the comments in the docket (yet) so perhaps there will be more to say on this issue.  But FDA’s question surprised me.  Perhaps it is just trying to make sure it addresses all of the potential interpretive issues conceivable.  It would still genuinely surprise me if the agency took a different approach here.