Follow-on Biologics – Update for Clients

There is a significant chance that legislation will pass this fall that will enable follow-on biologics (FOBs) to be approved by the Food and Drug Administration.

Several members of Congress have expressed interest in attaching FOB legislation to the bills used to reauthorize user-fees for the FDA. Both the House and Senate have passed bills reauthorizing FDA user-fees. The House has passed the Food and Drug Administration Amendments of 2007 (HR 2900), and the Senate has passed the Food and Drug Administration Revitalization Act (S 1082). Neither bill includes specific FOB authorization language, but Section 504 of the Senate bill states that Congress should pass legislation authorizing FOBs. There will soon be a House and Senate conference on the two bills to resolve differences before the final version is sent to the president.

Senate Health, Education, Labor and Pensions Chairman Edward Kennedy has said he would like to insert FOB authorization language into the final bill in conference. Currently, there has been a delay in naming the conferees to the congressional conference who will create the final user-fee reauthorization bill, and part of the delay has been disagreements over whether FOB legislation should make it into the final version. Once the conferees have been named, this will be a good indicator that the issue of FOB legislation has been politically resolved.

The reauthorization of user-fees legislation must pass soon because the user-fee provisions expire at the end of September. User-fees, associated with submitting certain applications for review and approval to the FDA, are expected to account for approximately $400 million of the FDA's budget in 2008. 

The Senate Health, Education, Labor and Pensions Committee has already passed a bill, the Biologic Price Competition and Innovation Act, S 1695, that would authorize FOBs. This bill was a bipartisan compromise by Democrats Edward Kennedy (Massachusetts) and Hillary Clinton (New York), and Republicans Orrin Hatch (Utah) and Michael Enzi (Wyoming). The FOB authorization language from that bill appears to be the most likely language to make it into the final user-fee reauthorization act.

Under the current provisions of the Biologic Price Competition and Innovation Act, the FDA would have authority to approve FOBs under a two-tiered system. The first tier would be a finding by the FDA that a FOB was "biosimilar" to the innovator biologic, which would allow the FOB to be sold in the United States. The second tier would be a finding by the FDA that the FOB is "interchangeable" with the innovator biologic. If a product were found to be interchangeable, then pharmacies would be able to substitute a prescription for a innovator biologic with the interchangeable FOB without the need for intervention by a health care provider. If  an FOB were interchangeable with an innovator biologic, the manufacturer of the FOB would save marketing costs and would have to compete with the innovator biologic only on price, since people would invariably substitute the cheapest drugs.

Additionally, the bill would grant 12 years of market exclusivity for an innovator biologic and provide one year of market exclusivity for the first interchangeable FOB to be approved. These exclusivity terms are much longer than the current exclusivities provided to drug manufacturers and should reduce the amount of patent litigation related to biologics, since the exclusivity extended by the FDA would be almost as long as the patents on a product that had gone through the FDA approval process.