Introduction to Patent and Market Exclusivity in Life Sciences
In the life sciences industry, patents and regulatory exclusivities are tools that protect new therapies from competitors. A patent is an intellectual property right granted by the U.S. Patent and Trademark Office that allows the inventor to exclude others from making, using, or selling an invention for a limited time (generally 20 years from the patent application filing date.[1] The patent can include the development period.
Separately, market exclusivity is a protection administered by the Food and Drug Administration (FDA) upon a drug’s approval.[2] Exclusivity gives the sponsor exclusive marketing rights for a certain period and bars the FDA from accepting or approving competing applications (generics or biosimilars) for the same product during that period.[3] Unlike patents, FDA-granted exclusivity attaches upon product approval and is not added onto the patent term.[4] These two mechanisms often run simultaneously.
Understanding Market Exclusivity and Its Role
Market exclusivity refers to the period after a drug’s approval during which the FDA will not approve applications from competitors that rely on the original product’s data.[5] The purpose of market exclusivity was to encourage pharmaceutical investments by further protecting the product from competitors. Once the exclusivity expires, competitors can enter to reduce costs and increase patient access. The length of exclusivity varies depending on the type of product:
- Orphan Drug Exclusivity (ODE) – 7 years: Granted for drugs or biologics that treat rare diseases (affecting fewer than 200,000 patients in the U.S., or more if no hope of recovering costs). This bars FDA approval of any other application for the same drug and use for seven years.[6] Orphan exclusivity is established by the Orphan Drug Act and FDA regulations.[7]
- New Chemical Entity (NCE) Exclusivity – 5 years: Awarded to an innovative drug that contains an active moiety never before approved by the FDA. During this 5-year window (starting from NDA approval), the FDA will not accept any Abbreviated New Drug Application (ANDA) or 505(b)(2) application for a generic or modified version that references the innovator’s drug.[8] This means no generic can even be filed with the FDA for the first 5 years (unless a patent challenge is file ).[9] This exclusivity is outlined in Hatch-Waxman provisions.
- “Other” Exclusivity – 3 years: Applies to certain changes to already approved drugs (e.g., new formulations or new indications) when supported by new clinical investigations. It prevents the FDA from approving a competitor’s application for the same change for three years.[10] This often covers new uses or new formulations of existing drugs.
- Pediatric Exclusivity – 6 months extension: Not a standalone exclusivity, but rather an additional 6-month extension that adds on to existing patent or exclusivity periods when the sponsor conducts FDA-requested pediatric studies.[11] This incentive is explained in the Best Pharmaceuticals for Children Actrewards companies for studying drugs in children by extending whatever protections (patent or exclusivity) the product already has.
After market exclusivity and patent protections expire, competition can enter the market. [12]
Biosimilars and the Biologics Price Competition and Innovation Act (BPCIA)
The Biologics Price Competition and Innovation Act (BPCIA), enacted in 2010 as part of the Affordable Care Act, changed the regulatory landscape for biologics. Signed into law in March 2010, the BPCIA created for the first time an abbreviated pathway for biosimilar and interchangeable biologic products.[13] Prior to the BPCIA, there was no clear mechanism for approval of “generic” biologics in the U.S., meaning all biologic therapies would have to complete a full BLA, even if it was substantially similar to the reference product. Congress modeled this legislation after the Hatch-Waxman Act (which governs small-molecule generic drugs). BPCIA was designed encourage competition and innovation in the biologics space.[14]
Key Provisions of the BPCIA
- Abbreviated Approval Pathway: The BPCIA amended the PHSA to add section 351(k), allowing a biosimilar applicant to rely on the reference product’s existing data to demonstrate that its product is highly similar and has no clinically meaningful differences.[15] The 351(k) pathway significantly reduces the amount of new clinical data to obtain a product approval (which makes the development of biosimilars more feasible and cost-effective). The statute also introduced definitions:
- A “biosimilar” or “biosimilarity” means the product is highly similar to the reference product, notwithstanding minor differences in inactive components, and that there are no clinically meaningful differences in safety, purity, or potency.[16]
- An “interchangeable” biologic is one that meets additional requirements to allow pharmacy substitution without prescriber approval.[17]
- Exclusivity for Innovator (Reference) Biologics: To maintain incentives for companies to invest in developing new biologics, the BPCIA grants each new biologic a period of reference product exclusivity. The FDA cannot make effective the licensure of any biosimilar under 351(k) until 12 years after the date on which the reference product was first licensed.[18] Additionally, a biosimilar application cannot even be submitted until 4 years after the reference product’s approval.[19]
- Patent Dispute Resolution Process (the “Patent Dance”): The BPCIA established a new mechanism in 42 U.S.C. § 262(l) to address patents.[20] This is often called the “patent dance”, a structured exchange of information between the biosimilar applicant and the reference product sponsor (RPS) intended to identify and resolve patent disputes in an orderly way.[21]
Biosimilar Market Entry
The process is initiated once the FDA accepts a biosimilar application: the biosimilar applicant provides the reference product sponsor (RPS) with its application and manufacturing information, and in return, the RPS provides a list of patents it believes could be asserted.[22] The parties then negotiate which patents will be litigated (first-wave litigation) and which might be addressed later. Finally, the biosimilar applicant must provide a notice of commercial marketing 180 days before launching the product, which gives the RPS the opportunity to seek a preliminary injunction on any remaining patents.[23]
The first U.S. biosimilar (Sandoz’s Zarxio reference product was Neupogen) was approved in 2015 under this pathway.[24] In the decade since BPCIA’s passage, dozens of biosimilars have been approved, though their market uptake has varied. The BPCIA’s patent provisions have also led to a new body of litigation.
Market Dynamics and Patent Considerations for Biosimilars
One important dynamic is that patents can extend protection beyond the 12-year FDA exclusivity period. A reference biologic typically has multiple patents: not only on the active protein itself, but often on cell lines, manufacturing processes, formulations, methods of use, and delivery devices. Even if the reference product’s market exclusivity has expired, a still-valid patent can block the biosimilar from launching in the market. This has led some companies to accumulate large portfolios of patents (sometimes called “patent thickets”) around blockbuster biologics to delay biosimilar competition.[25]
For example, one lawsuit noted that although the primary patent on Humira® (adalimumab) expired in 2016, the sponsor AbbVie had applied for hundreds of additional patents and secured over 100 patents “designed solely to insulate Humira from any biosimilar competition in the U.S”.[26] Humira (adalimumab) is a monoclonal antibody for autoimmune diseases and was for years the world’s top-selling drug. It was licensed in 2002 via a full BLA (351(a) pathway). Abbvie reached a settles allowing Amgen to launch the biosimilar AMJEVITA despite Abbvie having current patents on the reference product Humira. By settling the suit, AbbVie was able to control when biosimilars entered the market, prevented the invalidation of some of their “patent thickets” patents which have not expired, and secured licensing fees and royalties from the biosimilar competitors and gave Abbvie time to transition their patients to their other products.
Similarly, other companies like Samsung Bioepis (partnered with Organon/Merck for Hadlima™), Pfizer (Abrilada™), and Boehringer Ingelheim (Cyltezo™) settled their patent disputes, all aligning on 2023 U.S. entry dates for their adalimumab biosimilars.
Remicade was approved in 1998, so by the time the BPCIA came into effect (2010), its 12-year reference product exclusivity was already satisfied. The first U.S. biosimilar for infliximab was Inflectra (developed by Celltrion and marketed by Pfizer), approved in April 2016. Celltrion did not provide its application and manufacturing info to Janssen (the sponsor of Remicade) within 20 days of FDA acceptance and did not pursue the patent dance. Janssen sued Celltrion for patent infringement under BPCIA. Remicade’s original patents on the infliximab antibody had expired, so the focus was on secondary patents. The key disputed patent was covered the specific cell culture media used to manufacture the antibody which Celltrion was producing the biosimilar in a way that Janssen.
While the lawsuit was pending, Celltrion actually started marketing Inflectra in 2017 (known as a “at-risks” launch. The strategy worked for Celltrion and portions of Janssen’s patent claims were invalidated or dismissed.
[1] See 35 U.S.C. § 154(a)(2)
[2] See 21 C.F.R. § 314.108(a).
[3] New Drug Applications (NDAs) relevant statutes are 21 U.S.C. § 355(c)(3)(E), (j)(5)(F) (Hatch-Waxman Act provisions)
For Biologics License Applications (BLAs) the relevant statutes are 42 U.S.C. § 262(k)(7) (Biologics Price Competition and Innovation Act provisions).
[4] https://www.fda.gov/media/92548/download#:~:text=Exclusivity,Note%20that%20exclusivity%20is%20not
[5] https://www.fda.gov/media/92548/download#:~:text=Exclusivity,Note%20that%20exclusivity%20is%20not
[6] Id.
[7] (21 C.F.R. § 316.31).
[8] (21 C.F.R. § 314.108).
[9] 21 C.F.R. § 314.108.
[10] https://www.fda.gov/media/92548/download#:~:text=,certification%20to%20a%20listed%20patent
[11] https://www.fda.gov/media/92548/download#:~:text=,certification%20to%20a%20listed%20patent
[12]https://www.fda.gov/media/92548/download#:~:text=,certification%20to%20a%20listed%20patenthttps://www.govinfo.gov/content/pkg/USCODE-2016-title42/pdf/USCODE-2016-title42-chap6A-subchapII-partF-subpart1-sec262.pdf#:~:text=,or%20condition%20of%20human%20beings
[13] 42 U.S.C. § 262(k)
[14] Id.
[15] 42 U.S.C. § 262(k)
[16] 42 U.S.C. § 262(i)(2)
[17] 42 U.S.C. § 262(k)(4)
[18] 42 U.S.C. § 262(k)(7)(A)
[19] (42 U.S.C. § 262(k)(7)(B)
[20] 42 U.S.C. § 262(l)
[21] 42 U.S.C. § 262(l)
[22] 42 U.S.C. § 262(l)
[23] 42 U.S.C. § 262(l)