The Constitutional Protection of Trade Secrets and Patents under the Biologics Price Competition and Innovation Act of 2009

August 2011

The Biologics Price Competition and Innovation Act of 2009 introduced an elaborate statutory bargain under which FDA may approve biosimilars that are "highly similar" to a "reference product" that has been approved by FDA through a full biologics license application. In exchange for this partial taking of its trade secrets, the reference product sponsor receives a 12-year exclusivity period and the opportunity for pre-market patent litigation. This statutory bargain is protected by strong constitutional constraints. In particular, the doctrine of
unconstitutional conditions prevents Congress from simply announcing that FDA may take the pioneer's trade secrets. Moreover, the statutory quid pro quo serves as the just compensation for the partial taking. Accordingly, FDA must use caution in implementing the Biosimilars Act so as to preserve this delicate balance. For example, biosimilar applicants cannot bypass the mandatory patent exchange process, and FDA should create procedures ensuring that the taking of the pioneer's trade secrets does not exceed what is envisioned by the Act. The bargain also raises serious constitutional concerns if it is applied retroactively to pre-enactment products. In any event, FDA may not approve biosimilars of pre-enactment products given the lack of clear Congressional intent for a retroactive effect.


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