Constitutionality of Biosimilars Regulations Called Into Question

Guest Commentary

By Ry Ellison, a 2012 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

On April 2, 2012, Abbott Laboratories (“Abbott”) filed a Citizen Petition (“Petition”) with the U.S. Food and Drug Administration (“FDA”) to protect trade secrets associated with the drug Humira® — a successful rheumatoid arthritis therapy drug.  The law at issue in Abbott’s Petition is the Biologics Price Competition and Innovation Act (“BPCIA”), enacted as part of the Patient Protection and Affordable Health Care Act (“PPACA”).

The BPCIA regulates the licensure and production of so-called “biosimilar” drugs.  FDA refers to biosimilar drugs as “biologic products that are marketed after expiration of patents, which are claimed to have similar properties to existing biologic products  FDA also notes, “[t]he [BPCIA] creates an abbreviated licensure pathway for biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed biological reference product.”

Abbott is challenging the retroactive application of the BPCIA.  In its Petition, Abbott urges FDA to “confirm that it will not accept for filing, file, approve, or discuss with any company, or otherwise take any action indicating that the agency will consider, any application or any investigational new drug application (IND) for a biosimilar” which cites Humira® or any other any other biosimilar product whose license was submitted prior to the enactment of the BPCIA.

Abbott argues that FDA’s retroactive application of its rules would constitute a regulatory taking in violation of the Fifth Amendment.  Specifically, Abbott objects to the FDA’s use of its patented Humira® trade secrets as a basis for expedited approval of a biosimilar drug.  Such use, Abbott argues, amounts to a regulatory taking under the Supreme Court’s Penn Central test,  which considers, inter alia, whether the government action “interferes with distinct investment-backed expectations”—a factor which can be dispositive on the issue of whether or not a compensable taking occurred.  Further, Abbott’s argument relies heavily on the Supreme Court’s decision in Monsanto, which affirmed the use of the Penn Central factors in the context of trade secrets submitted for the purpose of obtaining a government license.

Ultimately, the issue boils down to whether a company has a constitutionally protected property right in its trade secrets (as WLF will argue in a comment to FDA on Abbott’s petition), or, alternatively, whether FDA can use one company’s intellectual property as a basis for expedited approval of another company’s “copycat” drug.  On one hand, BPCIA opponents argue that allowing the FDA to use its trade secrets would infringe on their Fifth Amendment right to just compensation for governmental use of private property, and that the retroactive application of the law would violate the well-established doctrine of unconstitutional conditions.  On the other hand, BPCIA supporters argue that Abbott’s position is “anti-competitive,” “anti-consumer,” and generally against the PPACA’s purported policy of lowering the cost of healthcare.  Now that the Supreme Court has held the PPACA constitutional, the ball is in FDA’s court, and a response to Abbott’s Petition is expected no later than October 2, 2012.

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