Biosimilars: Twisting and turning

“I’ve given up predicting what the court is going to do,” says one lawyer commenting on the latest ‘patent dance’ ruling.

Although not often associated with high-stakes litigation, the term ‘dance’ has recently become widely used in the US biopharmaceutical industry. In July one of the biggest disputes surrounding the patent dance was resolved when the US Court of Appeals for the Federal Circuit ruled in Amgen v Sandoz.

But several months later, there seems to be plenty of confusion around key aspects of the ruling.

In 2010 US President Barack Obama signed into law the Biologics Price Competition and Innovation Act (BPCIA). With the act came a shortened regulatory pathway for biosimilar drugs.

A biosimilar, like a generic in the pharmaceutical industry, is a drug with similar properties to an existing branded product, in this case a biologic.

Crucially, the act also created a mechanism that allows parties to address any patent infringement claims while the proposed biosimilar drug is being reviewed.

That mechanism has become better known as the patent dance.

Sandoz, the generics arm of pharmaceutical multinational Novartis, notified Amgen in July 2014 that it had filed an application with the US Food and Drug Administration (FDA) to sell a biosimilar version—called Zarxio—of
Amgen’s anti-cancer drug Neupogen (filgrastim).

The application was granted on March 6, making Zarxio the first biosimilar to be approved in the US.

But Amgen claimed that, as required by the BPCIA, Sandoz should have gone a step further than simply notifying Amgen of its intention to sell the product. According to Amgen, Sandoz should have either provided a copy of the application submitted to the FDA, or alternatively submitted any other information that described the process or processes used to manufacture Zarxio.

Sandoz, on the other hand, said it did not provide the information because it was not mandatory to do so.

Affronted that it had been prevented from instigating the dance, Amgen sued Sandoz at the US District Court for the Northern District of California last October, accusing it of unlawfully refusing to engage in the practice.

The California district court, in March this year, and the federal circuit, in a July 21 ruling, both said that the patent dance is not mandatory. In its ruling the federal circuit added that although the dance itself is not compulsory, biosimilar applicants must give the original drug maker 180 days’ notice of their intent to sell their biosimilar product after it has been approved.

The federal circuit’s ruling was passed in a 3-0 majority by Judges Alan Lourie, Raymond Chen and Pauline Newman, although Chen and Newman both dissented in part.

More twists expected

According to Kurt Karst, a director at law firm Hyman, Phelps & McNamara, the decision may result in an en banc review and more twists and turns are expected, although he admits that he has given up second-guessing the federal circuit.

“The decision was not unanimous and was actually quite fractured,” he tells LSIPR.

“This is exactly the type of situation where you would expect them to review it, perhaps on both issues [the notice period and whether the dance itself is mandatory].

“In fact, I wouldn’t be surprised if somebody eventually petitions the Supreme Court.”

Karst adds that the decision is the latest in a line of federal circuit rulings that have gone against what some in the industry had expected.

“Many people thought that the federal circuit would come out with the opposite ruling and say that the patent dance is mandatory but the notice period is not. So what the court might decide en banc is anyone’s guess.”

At the time of writing the federal circuit had yet to decide whether to grant an en banc review.

Karst says: “In the long run, some older biological companies and products which may not have a very robust patent estate may decide to opt out of the patent dance process.

“Many people thought that the federal circuit would come out with the opposite ruling and say that the patent dance is mandatory but the notice period is not.

“The newer biological products that have a more robust patent estate may want to go down the patent dance route. Ten years from now there may be very few, if any, applicants who decide not to implement the patent dance.

“But, as it stands, the 180-day notice provision will still be mandatory, which has long-term consequences.”

Karst says that he doesn’t understand why the federal circuit implemented the 180-day notice period.

“The decision to give an equivalent of six months’ exclusivity by providing notice after the application is approved will, if it stands, have the biggest effect on biosimilars going forward,” he predicts, because the 180-day period will still stand even for those who have entered into the patent dance and possibly resolved any dispute.

Chen’s opinion suggested that the 180-day period gives a reference product sponsor a “windfall” by in effect extending the 12-year period of market exclusivity by an additional six months.

Karst adds that the federal circuit also failed to clear up a question posed by Abbott Laboratories in 2012.

Abbott submitted a petition to the FDA asking it to not accept, or discuss with any company, a biosimilar application that references a product for which a biologics licence application was submitted before the BPCIA was enacted.

“Exactly who is subject to this ruling and what the expectation is has not been cleared up,” Karst says.

Lynn Tyler, partner at law firm Barnes & Thornburg, says that biosimilar applicants might be more comfortable about not having to disclose an application and be inclined to take part in the patent dance.

“All biosimilar-related litigation so far has been about trying to avoid the dance,” he says, adding that the Amgen case only “scratches the service” of the BPCIA’s ambiguities.

However, Tyler says he is not convinced that the ruling will have a long-term effect on biosimilars, as a lot of the biologics targeted by biosimilars are shortly coming off patent protection.

“I’m not sure in the bigger picture it will have that much of an impact,” he says.

Following the steps

In explaining the requirements of the patent dance, the BPCIA outlines the steps needed to complete the process.

After the optional notification, the dance continues with both companies exchanging a list of patents and disagreements over validity and infringement. There are then further negotiations before the biologic company selects the final patents that will be litigated. That company is required to assert the patents. There is a last-chance opportunity for the biologic maker to assert additional patents following the issuance of the 180-days’ notice (after the product has been approved).

But Tyler adds that there is still “plenty of confusion”, particularly surrounding which patents can be litigated during the dance.

“The opinion went into, and cleared up, whether the patent dance is mandatory, but there is an issue remaining about whether the list of patents that parties litigate is exclusive and final,” he says.

“One of the main issues after parties decide on the first list of patents to be litigated is whether that first list is exclusive. What if further down the road a company wants to assert a different patent?”

He adds that, as it stands, a biosimilar applicant “can control what is on the list to a certain extent”.

“If the applicant doesn’t name any patents then the branded drug owner can name only one. If they have four or five patents but can assert only one, what happens to the rest of them?”

Despite this contentious issue, Karst suspects that Congress “does not have the appetite” for attempting to provide some clarity.

Tyler adds that although it would be a lot simpler if Congress addressed the ambiguities in the BPCIA, there would have to be a lot more litigation surrounding biosimilars “to the point of public outcry” before it got involved.

Unlike with the disputes concerning non-practising entities, it seems Congress is unlikely to get involved with biosimilars just yet.

It’s probable, then, that much more litigation will have to follow before we see any firm government moves to clear up the BPCIA.

Tyler adds that it’s an “important and high-dollar” issue, which would suggest that “there will be further court reviews”.

If a report by business intelligence service GBI Research is anything to go by, the value of the biosimilars market will only increase.

In its “CBR Pharma” report, published in June, GBI Research said that the market value for biosimilars around the world could reach $20 billion by the end of 2015 and that the figure could nearly triple to $55 billion by 2020.

With figures like that you would be brave to bet against more litigation and reviews to follow.