While a best-selling small molecule drug could be covered by up to five patents, biologic drugs (large chemical compounds produced by living cells) are covered by hundreds of patents. A primary purpose of patents is to give a limited monopoly to inventors to incentivize innovation, but this monopoly comes at a cost to consumers. For example, Humira (a rheumatoid arthritis medication) has 134 active patents and AbbVie Inc. charges consumers $6,500 per month for treatment. Most of these patents are “secondary patents” of questionable validity, covering things like dosage, drug formulations, and methods of using the drug to treat a new condition.
To combat these exorbitant prices, companies have been using biologic drugs as templates to produce biosimilars—therapeutically equivalent molecules. Without the extensive research and development costs associated with producing a novel biologic drug, biosimilars are brought to market and sold for less—around 90% less. Returning to the previous example, the biosimilar for Humira cost as little as $650 per month—just a tenth of the $6,500 monthly payment for the brand-name biologic.
The price of biosimilars could become even more affordable due to a recent announcement from the U.S. Food and Drug Administration (FDA) that it would be simplifying the process by which companies could bring biosimilar drugs to market. Now, the FDA will allow biosimilar manufacturers to circumvent expensive clinical testing in exchange for analytical testing. The manufacturer must show that their biosimilar does not have any clinically meaningful differences from the brand-name biologic drug (which has undergone clinical testing). The FDA used to require biosimilars to conduct “switching” clinical tests where patients would be treated first with the biosimilar drug then with the biologic drug (or vice versa) to determine any difference in responses to the drugs. If no meaningful differences were found, then the biosimilar was given “interchangeable” status, allowing pharmacists to prescribe the cheaper biosimilar instead of the brand-name biologic.
However, generic drug companies face another issue: challenging the validity of patents on a brand-name biologic drug. The web of patents protecting a single biologic drug makes it difficult for generic drug companies to enter the market because they must first demonstrate all the existing patents are invalid or not infringed by their product. Litigating these patents in a district court is expensive, complicated, and time-consuming.
Inter partes review (IPR) exists as an easier way for generic drug companies to clear out the patent thicket created by brand-name biologic drug manufacturers. However, the U.S. Patent and Trademark Office (USPTO) proposed a rule shortly before the FDA’s announcement, limiting the ability of biosimilar manufacturers to challenge the numerous patents filed on brand-name biologics. Previously, biosimilar manufacturers often used IPR through the Patent Trial and Appeal Board to challenge the validity of patents on brand-name biologic drugs. Now, IPR will not be available when “a petitioner intends to pursue invalidity challenges under §§ 102 [novelty requirements] or 103 [non-obviousness requirements] in other venues, such as district court or the U.S. International Trade Commission.” The USPTO frames this amendment as a way to “promote fairness and efficiency by channeling similar patent challenges to a single forum” and ensuring that IPRs are, not used in addition to, but as a complete substitute for, at least a phase of litigation. This has the effect of eliminating IPR as an avenue for biosimilar drugs to challenge the validity of broadly-drafted patents restricting their entry to the market, and thus increasing the cost of determining whether the numerous brand-name biologic drug patents are valid.
Allowing biosimilar manufacturers to use IPR as an avenue for challenging brand-name patent validity is important for two main reasons: lower costs and accelerated market entry. First, only 5% of prescription drugs are biologic drugs, but they account for $300 billion dollars in national total spending on medications. Thus, by creating therapeutic equivalents to patented biologics—biosimilars—which can compete with brand-name biologic drugs, prices will drop closer to the marginal cost of production and become more affordable to regular Americans. Second, legal battles between biologic manufacturers and brand-name biologics manufacturers can last years, delaying the arrival of affordable alternatives to consumers. Returning again to Humira as an example, it took seven years in court before the patent issues were resolved and the biosimilar could reach the market.
Although patents are meant to incentivize innovation by providing a limited monopoly, they are also meant to increase public access to cutting edge, socially beneficial technology, such as biologic and biosimilar drugs. By making it more difficult for biosimilar manufacturers to challenge validity of biologic drug patents, inventors and their monopoly are protected, but the USPTO has forgotten the public which patent law also seeks to protect.