FDA’s BPCIA “Deemed to be a License” Guidance Provides Practical Help with Development, But Limits Exclusivity

By James C. Shehan & Kurt R. Karst –

On March 10, 2016, FDA released a draft guidance interpreting the “deemed to be a license” provision of the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”).  This provision, at BPCIA § 7002(e)(4), is one of a broader series of transition provisions in BPCIA § 7002(e), and, as FDA notes in the draft guidance, is “[t]he linchpin of the transition scheme described in section 7002(e).”  The “deemed to be a license” provision, which FDA notes Congress was silent on implementation when it passed the BPCIA, transitions certain products that FDA has historically regulated as drugs into biologics on March 23, 2020.  (Shortly thereafter, FDA archly quotes a Supreme Court opinion for the proposition that the Affordable Care Act – of which the BPCIA is part – “contains more than a few examples of inartful drafting.”)  Specifically, BPCIA § 7002(e) states:

(e) PRODUCTS PREVIOUSLY APPROVED UNDER SECTION 505.—

(1) REQUIREMENT TO FOLLOW SECTION 351.—Except as provided in paragraph (2), an application for a biological product shall be submitted under [PHS Act § 351] (as amended by this Act).

(2) EXCEPTION.—An application for a biological product may be submitted under section [FDC Act § 505] —

(A) such biological product is in a product class for which a biological product in such product class is the subject of an application approved under such section 505 not later than the date of enactment of this Act; and

(B) such application—

(i) has been submitted to the Secretary of Health and Human Services (referred to in this subtitle as the “Secretary”) before the date of enactment of this Act; or

(ii) is submitted to the Secretary not later than the date that is 10 years after the date of enactment of this Act.

(3) LIMITATION.—Notwithstanding paragraph (2), an application for a biological product may not be submitted under [FDC Act § 505] if there is another biological product approved under [PHS Act § 351(a)] that could be a reference product with respect to such application (within the meaning of such section 351) if such application were submitted under [PHS Act § 351(k)].

(4) DEEMED APPROVED UNDER SECTION 351.—An approved application for a biological product under [FDC Act § 505] shall be deemed to be a license for the biological product under such section 351 on the date that is 10 years after the date of enactment of this Act.

The draft guidance deals with four major topics: (1) what happens to approved applications for such transitional products on March 23, 2020; (2) what happens to pending applications on that date; (3) how sponsors of pending applications should prepare for the effects of the transition; and (4) how exclusivity will be affected by the transition. FDA’s position on the last topic is sure to generate the most commentary and controversy, because FDA proposes to interpret the law such that transitional products get less exclusivity than either traditional drugs or biologics.   

Some background on these transition products and the BPCIA is necessary to understand the guidance.  Although most products that fit the statutory definition of “biologic” have been licensed and regulated by FDA under Section 351 of the Public Health Service Act (“PHS Act”), some protein products historically have been approved and regulated as drugs under FDC Act § 505.  The draft guidance provides examples of such products, including insulins, hyaluronidases, thyrotropin alfas and human growth hormones.  Although such products seem to fit the pre-enactment definition of biologic, the BPCIA removed any doubt, amending the definition of “biologic” in the PHS Act to include “protein[s] (except any chemically synthesized polypeptide).”  The BPCIA also requires, with certain exceptions, that a marketing application for a biologic be submitted as a BLA and not as an NDA.  And lastly, BPCIA § 7002(e)(4) provides that, on March 23, 2020, a marketing application for a biologic that has been approved as an NDA shall be “deemed to be a license” for a biologic under PHS Act § 351; that is, NDAs for transitional products become BLAs. 

Regarding approved applications, FDA simply states that, on March 23, 2020, applications for biologics approved under FDC Act § 505 “will no longer exist” as NDAs or ANDAs and “will be replaced by approved” Section 351(a) “full” BLAs or Section 351(k) “abbreviated” BLAs (“ABLAs”), “as appropriate.”  In a footnote, FDA states that the Agency intends to provide further guidance on the issue of which transitional products will become Section 351(a) full BLAs and which will become Section 351(k) ABLAs.  This further guidance will also address issues such as user fees and BLA numbers.  FDA also states that these products will be removed from the Orange Book, but the Agency is silent as to whether they will then appear in one of the two lists that comprise the Purple Book.

Regarding pending applications, the draft guidance interprets the statute rather strictly.  FDA states that the BPCIA “does not provide a mechanism to transition an approved application under section 505 to an approved BLA under the PHS Act prior to March 23, 2020, or after March 23, 2020.  Therefore, FDA “will not approve” any pending or tentatively approved application for a transitional product.  FDA recommends that such an application be “withdrawn and resubmitted under section 351(a) or 351(k).”

Recognizing the potential “significant impact” of such a policy on development programs, FDA later in the guidance offers sponsors more detailed advice.  The soundest and most basic piece of advice is that sponsors developing transitional products should evaluate whether a planned 505 submission would allow adequate time for approval of an NDA or ANDA prior to March 23, 2020, considering, among other things, “whether the submission may require a second cycle of review and, for certain types of applications, whether unexpired patents or exclusivity may delay final approval.”  FDA recommends that sponsors of full NDAs consider submitting a full BLA instead.  Noting that the PHS Act has no analogy to a Section 505(b)(2) NDA, FDA recommends that sponsors of these applications for transitional products consider submitting them as full BLAs or treat them as biosimilars and submit ABLAs.

Regarding the existing exclusivity of transitional products, FDA, with very little preamble, states that “any unexpired period of exclusivity” for a transitional product, “e.g., 5-year exclusivity, 3-year exclusivity, or pediatric exclusivity … would cease to have any effect, and any patents listed in the Orange Book would no longer be relevant for purposes of determining the timing of approval of a 505(b)(2) application (or ANDA).”  A single sentence provides the rationale for this decision: “the exclusivity provisions of the FD&C Act serve to limit the submission or approval of applications under section 505 of the FD&C Act, but not under section 351 of the PHS Act.”  FDA makes one crucial exception: because orphan drug exclusivity is available to both drugs and biologics, “any unexpired period of orphan drug exclusivity would continue to apply to the drug for the protected use after March 23, 2020.”  FDA is silent with respect to the applicability of previously earned pediatric exclusivity to extend a period of orphan drug exclusivity for a transitioned product, but it would seem to make sense to apply pediatric exclusivity for such a product given that the BPCIA, at Section 7002(m), attaches pediatric exclusivity to orphan drug exclusivity.

Turning to the question of whether transitional products will be eligible for biologics exclusivity come March 23, 2020,  FDA explains that the BPCIA grants such exclusivity to products “first licensed under” PHS Act § 351(a).  Because transitional products are only “deemed” to be licensed under Section 351(a), FDA does not regard them as eligible for exclusivity.  In support of this determination, FDA states that “[n]othing in the [BPCIA] suggests that Congress intended to grant biological products approved under [FDC Act § 505] – some of which were approved decades ago – a period of exclusivity upon being deemed to have a license under the PHS Act that would impede biosimilar or interchangeable product competition in several product classes until the year 2032.”  

FDA’s statement implies that the Agency’s only option was to grant all transitional products 12 years of exclusivity starting on March 23, 2020.  But it seems that same statutory language relied upon by the Agency could support a number of alternative positions on transitional product exclusivity, including awarding a 12 year period from the date of FDC Act § 505 approval.  It remains to be seen whether interested parties, perhaps including Congress, will support those alternatives.  In 2015, Congress did express some interest in the BPCIA’s transition provisions.  Specifically, the “Generic Complex Drugs Safety and Effectiveness for Patients Act of 2015” (H.R. 1576) would have the Government Accountability Office study some of the unique challenges presented by FDA’s evaluation of generic versions of complex drug products in the context of BPCIA § 7002(e) (see our previous post here).

Reminder: Register now for the May 3, 2016 Virginia Tech and HP&M Conference on Effective Documentation.  Information on the conference is available here.