Unfinished Business in Congress on Drug Patents and Competition

Before leaving for an extended recess period ahead of the November general election, Congress left unfinished several proposals with ramifications for generic and biosimilar drug competition. This client alert summarizes some of that legislation and possible next steps in the “lame duck” period before the end of the year.

Biosimilar Patent Thickets

On July 11, the United States Senate passed S. 150, the “Affordable Prescriptions for Patients Act of 2023,” bipartisan legislation aimed at reducing “patent thickets” held by reference product sponsors for biologic drugs. The bill acts by limiting the number of patents a sponsor can assert in a patent infringement lawsuit against a potential biosimilar competitor.

“Patent thickets” refer to the practice of securing multiple, overlapping patents for a single product. These thickets are usually composed of numerous secondary drug patents obtained via continuation patent applications that claim priority to one or more common parent applications that were filed many years earlier. Patent thickets often result in a dense web of patents that are difficult to navigate for biosimilar developers, and add considerable time and complexity to the patent disputes necessary for bringing biosimilar products to market.

Under S. 150, biologic patent holders may not assert more than 20 qualifying patents in infringement actions against biosimilar patent competitors. Patents are only counted against the 20-patent limit if they (1) claim exclusive rights to the reference biologic, a use of the product, or a method or product used in the manufacture of the product; and (2) the patent was filed more than 4 years after the reference biologic was approved, or the patent claims exclusive rights to a method of manufacture not used by the sponsor of the reference biologic.

If enacted, S. 150 will likely lead to a moderate reduction in litigation barriers for biosimilar manufacturers, which may mean more competition on the market. The House has not yet taken up the bill, and was initially scheduled to consider this legislation the week of September 23. However, the bill was never called up. It remains to be seen whether the bill will make it back onto the House legislative agenda before the 118^thCongress ends on January 3, 2025.

Biosimilar Interchangeability Reform

Unlike small molecule generic drugs, which generally can be substituted for brand drug prescriptions at the pharmacy counter in all 50 states, most state laws prohibit a pharmacist from unrestricted substitution of a biosimilar for its biologic reference product.  For example, the pharmacist often is required to obtain authorization from the prescribing physician before substituting a biosimilar. However, if a biosimilar product is approved by FDA as an “interchangeable biosimilar,” most states permit substitution without these same restrictions.

To be approved as an interchangeable biosimilar, FDA must determine the product produces the same clinical outcome as the reference product in any given patient, and switching to the interchangeable biosimilar will not reduce efficacy or lead to a greater risk of adverse events. To demonstrate these characteristics, FDA historically required those seeking interchangeability approval to conduct “switching studies,” which are clinical studies that test the safety and efficacy of biosimilar products when switching from brand biologic to biosimilar.

The expense and burden of switching studies has contributed to a relatively low number of approved interchangeable biosimilars—the first interchangeable biosimilar was not approved until 2021 – over 10 years after the inception of the Biologics Price Competition and Innovation Act of 2009. Earlier this year, however, FDA formally updated its thinking, stating in draft guidance that evidence has shown that these switching studies are no longer necessary to determine safety and efficacy, and instead the agency would allow sponsors to show that their product is interchangeable through an assessment of data already included in the biosimilar application.

The Senate Health, Education, Labor, and Pensions (HELP) Committee is considering whether to simplify this process further. Prior to the October recess, the committee had noticed its intent to markup S. 2305, the “Biosimilar Red Tape Elimination Act,” a bipartisan bill which would automatically deem all approved biosimilar products interchangeable with their reference product and would eliminate additional requirements for determining interchangeability for biosimilar products going forward. By making all biosimilars interchangeable, S. 2305 is intended to increase the availability and use of biosimilars while reducing costs to patients and the health system. It is unclear when the bill will be taken up by the committee or the full Senate, but the bill has broad bipartisan support and may still be considered before the end of 2024.

Quantitative and Qualitative (Q1/Q2) Information in Generic Drug Applications

In December 2023, the House of Representatives passed H.R. 5378, the Lower Costs, More Transparency Act, which as the name implies, included a broad array of provisions intended to reduce health costs and improve transparency throughout the health system. Section 201 of the bill aims to reduce costs by requiring FDA to notify generic drug applicants whether the inactive ingredients in a generic drug application are qualitatively the same (i.e., the same inactive ingredients) and quantitatively the same (i.e., in the same concentration) as the listed brand drug. Qualitative and qualitative sameness, often referred to as “Q1/Q2,” is required for certain generic drug applications to be approved such as parenteral drugs. If the generic drug is not qualitatively or quantitatively the same as the listed drug, the bill would require FDA not just to respond with a “no, it’s not Q1/Q2” but to also disclose the ingredient(s) that cause the drug to miss the mark on qualitative sameness, and where there is a quantitative deviation, the amount of that deviation. Additionally, Section 301 requires FDA to issue or update guidance describing how the agency will determine qualitative and quantitative sameness.

This provision is intended to reduce the development time for generic drugs by cutting down on back-and-forth controlled correspondence between generic drug applicants and FDA. Each round of controlled correspondence may add several months onto the review and approval process for a generic drug. The legislation’s intent is to reduce this review time, bringing generic drugs to market more quickly.

The bill previously passed the House in the 117th Congress as part of the Food and Drug Amendments of 2022, but it was not signed into law before the end of the Congress. While the full Senate has not yet taken up this legislation, the Senate HELP Committee included this provision in S. 1114, the Expanding Access to Low-Cost Generics Act, which passed through the committee with a bipartisan vote in May 2023.

What’s Next for Congress

The post-election lame duck period will be crunch time for Congress and for advocates who wish to see their legislation pass this year. The House and Senate are scheduled to return from recess on November 12, one week after the general election, with a list of must-pass legislation on the docket, most notably legislation to continue funding the government before December 20 and the annual National Defense Authorization Act. Additionally, health programs with bipartisan support, including community health centers, the National Health Service Corps, and certain Medicare telehealth coverage will expire at the end of this year unless Congress funds additional extensions. Because the Congressional Budget Office (CBO) generally projects that legislation bringing more generic drugs to market will lead to budget savings, there may be an incentive for Congress to come together to pass one or more bills easing generic drug market entry in order to help pay for program extensions.

Bills that don’t make it to the President Biden’s desk by January 3 will die upon the 118^thCongress’s adjournment. However, given the bipartisan nature of this legislation, stakeholders should expect advocates to reintroduce any passed-over bills next year and begin the push anew. Interested stakeholders should also continue to monitor for policy developments in this area and align their government affairs and legal strategies to prepare for Congressional action.