Courtside Analysis: How 2 Supreme Court decisions impact biosimilars, drug prices

Two recent decisions by the Supreme Court hold important implications for biopharmaceutical competition — and hence drug prices — for patients in this country. Both decisions affirmed the constitutionality of certain legal provisions that are critical to the growth and success of the biosimilars market, but the second created some important questions that must be resolved going forward.

The first of the two decisions announced by the Supreme Court — a 7-2 vote in California v. Texas — found that a collection of states challenging the constitutionality of the Affordable Care Act, or ACA, did not have standing to do so. 

The headline news out of that decision is that the ACA withstood another legal challenge. Yet for the biosimilars market, the most important facet is the survival of the Biologics Price Competition and Innovation Act, or BPCIA, which authorized the Food and Drug Administration to approve biosimilars and became law as part of the larger ACA.

While there was never serious doubt about the constitutionality of the BPCIA itself, each legal challenge to the larger ACA law roiled a market for biosimilars that can ill afford the headwinds. Whatever one may think about the insurance provisions of the ACA, the survival of the BPCIA should provide additional stability and momentum for the U.S. biosimilars market.

Coming on the heels of this good news for biosimilars was a decision that was more tempered. In 2011, Congress passed and then-President Barack Obama signed the bipartisan America Invents Act. This law established the inter partes review, or IPR, process that allows for streamlined challenges to patents. IPR allows the United States Patent and Trademark Office to invalidate “non-innovative” patents that likely should never have been granted in the first place.

In recent years, as some blockbuster biologics reach the end of their exclusivity periods, there has been a trend toward the creation of larger and larger patent estates through the application for tens, if not hundreds, of patents on various components and processes having to do with the manufacture of biologic drugs.

As a result, some of the best-selling biologics on the planet are the subject of more than a hundred patents. The effect of this trend is that litigation by generic and biosimilar drug developers to challenge some of these patents is often prohibitively expensive and risky. 

As a result, the monopoly periods for some blockbuster brand-name drugs can last for decades past the expiration of their original key patents. The IPR legislation was designed to streamline the process of challenging patents, thus encouraging competition while preserving true innovation.

Importantly, the Supreme Court’s decision in Arthrex v. Smith & Nephew did not disturb the constitutionality of the IPR process itself, which is a good sign for the biosimilars market. Rather, the Supreme Court’s decision in this case made IPR decisions of Administrative Patent Judges’ decisions subject to the review of the patent office director.

The court’s decisions in this term affirmed the constitutionality of key provisions that underpin the biosimilars market, which is, on the whole, a positive result. 

The Arthrex decision, however, reminds us that there is still much work to be done to ensure that anticompetitive intellectual property shenanigans do not stymie the growth of the biosimilars market going forward.