To dance or not to dance: biosimilar strategies post Amgen v Sandoz
The Biologics Price Competition and Innovation Act (BPCIA) is a landmark piece of legislation signed into law by the Obama administration in 2009. The BPCIA provides for a regulatory approval pathway for biosimilar products, which are like generic pharmaceuticals in that they are based on already approved ‘name brand’ biologics.
Until this year, the Food and Drug Administration (FDA) had not approved any biosimilar applications. The first biosimilar application to be approved was Sandoz’s Zarxio in March. When Sandoz filed its biosimilar application with the FDA, it indicated that Zarxio was a biosimilar version of Amgen’s Neupogen (filgrastim).
Amgen was designated as the reference product sponsor (RPS), and under the BPCIA Sandoz was supposed to provide Amgen with a copy of Sandoz’s submission to the FDA. Sandoz instead decided against providing a copy to Amgen, but did provide a 180-day advance notice of commercial marketing to Amgen. Both actions by Sandoz became the subject matter of the underlying dispute in Amgen v Sandoz, which the US Court of Appeals for the Federal Circuit resolved on July 21, 2015.
The federal circuit held the following: 1) participation in the patent list exchange process (‘patent dance’) by the biosimilar applicant is completely voluntary; and 2) the 180-day notice of commercial marketing may not be provided before FDA approval of the biosimilar.
Because the federal circuit’s ruling in Amgen made it clear that participation in the patent list exchange process is entirely voluntary, biosimilar applicants will inevitably be faced with the following proposition: opt in or out of the process. Although the ruling may be clear, the practical considerations regarding whether to participate in the exchange process are less certain. Despite such uncertainties, this article attempts to provide a preliminary overview of the strategic considerations involved.
In its opinion, the federal circuit reasoned that because the BPCIA provided certain remedies to the RPS for failure by the biosimilar applicant to participate in the patent list exchange process, the biosimilar applicant’s participation must be completely voluntary—despite the statutory language of “shall provide”. However, this does not mean that the biosimilar applicant may ultimately withhold its biosimilar application from the RPS. One needs to look no further than the Amgen case to see that the biosimilar’s application may (and probably will) ultimately end up being produced to the RPS through discovery.
This then leads to the question—what are the benefits, if any, of choosing to opt out of the patent list exchange process? And what are the potential drawbacks? After Amgen it is clear that the ball is in the biosimilar applicant’s court, and the choice is either ‘to dance’ or ‘not to dance’. To that end, the following analysis summarises potential pros and cons of participating in the patent list exchange process under subsection (l) of the BPCIA from the viewpoint of the biosimilar applicant.
To dance
There are a number of strategic considerations that may favour voluntary engagement in the exchange process from the perspective of the biosimilar applicant. The biggest drawback is self-evident: voluntary participation in the process is premised on the biosimilar applicant revealing to the RPS the biosimilar application within 20 days of gaining FDA acceptance of a review of the application.
Under the statutory framework, this revelation occurs before any patents are exchanged, before any good faith negotiations and licensing attempts are mandated, and before any litigation even commences, as litigation under the framework does not commence until up to 30 days after the exchange of patent lists. Although the statutory framework expressly provides for a number of fairly strict confidentiality requirements, biosimilar applicants may ultimately not wish to reveal the contents of their biosimilar application to the RPS so early in the litigation process.
There are a number of potential benefits to the biosimilar applicant for voluntary participation in the patent list exchange process. One potential benefit is that voluntary participation by the biosimilar applicant potentially allows the applicant to restrict the total number of patents on the ‘patent list’ to a single patent, chosen by the RPS.
The RPS may file only an initial suit, including seeking injunctive and declaratory relief, against those patent(s) on the list that the parties agree to. If no agreement is reached then the RPS may file suit only against one patent from the list. For strategic reasons, a biosimilar applicant may wish to resolve all potential patent claims at once, or may wish to limit the number of potential patents.
This is unless the biosimilar applicant seeks to market its biosimilar right away. The BPCIA provides for a mandatory 180-day advance notice of commercial marketing to the RPS, at which point the RPS may seek a preliminary injunction on certain ‘non-list’ patents—specifically, those patents which the RPS initially included on the list provided to the biosimilar applicant, but which did not make it to the final ‘patent list’.
The RPS may not seek declaratory relief against these non-list patents. Notably, according to the Amgen ruling, biosimilar applicants may not provide the 180-day notice of commercial marketing to the RPS until first gaining FDA approval. Failure to provide this 180-day notice to the RPS results in the RPS being able to seek declaratory judgment, in addition to injunctive relief, on non-list patents.
The other potential benefit for the biosimilar applicant in opting to dance comes in the form of greater regulatory exclusivity. As a preliminary matter, the FDA will grant regulatory exclusivity only for the first interchangeable biosimilar with respect to any one particular reference product. Therefore, if a biosimilar is not deemed the first interchangeable biosimilar with respect to a reference product, this potential benefit is eliminated. For reference, Sandoz’s Zarxio was not deemed interchangeable with Neupogen, so Sandoz would not have achieved any regulatory exclusivity with respect to Zarxio. The FDA has yet to approve a biosimilar as interchangeable.
Assuming that a biosimilar is approved as the first interchangeable biosimilar with respect to a reference product, for those biosimilar applicants that choose to dance regulatory exclusivity can last up to whichever of the following is shortest: 1) 42 months after FDA approval; 2) 18 months after a final court decision, including dismissal with or without prejudice; or 3) one year after firstcommercial marketing. Given the length of most patent infringement lawsuits, the most likely circumstance is that of 42 months after FDA approval.
‘Not to dance’
Like the decision to dance, there are a number of strategic considerations that may favour a biosimilar applicant’s non-participation in the patent list exchange process. The primary benefit in opting out of the process is, like the primary drawback of opting in, self-evident. Opting out of the exchange allows the biosimilar applicant to, at least initially, withhold from the RPS the confidential information contained within its submission to the FDA.
As shown in Amgen, the biosimilar application will probably end up being revealed to the RPS through discovery if litigation proceeds far enough along, thus negating a significant amount of this potential benefit in the long run, but there are some additional considerations that may favour not participating in the process. Participation can delay the onset of litigation for eight months or more, and a biosimilar applicant that is not seeking regulatory exclusivity may wish to simply circumvent the process and go to suit right away.
It is also conceivable that a biosimilar applicant may ultimately settle with an RPS before a court order mandating that the applicant must reveal its FDA submission to the RPS, although the likelihood of a court dismissing an action before the RPS has access to the submission is subject to question.
“Biosimilar applicants may ultimately not wish to reveal the contents of their biosimilar application to the RPS so early in the litigation process.”
The drawbacks of opting out of the exchange process are fairly straightforward. By opting out, the RPS is able to bring suit immediately, including seeking declaratory judgment on “any patent that claims the biological product or a use of the biological product”. This is potentially broader than the remedy that the BPCIA provides to the RPS (declaratory judgment on certain ‘non-list’ patents) for the biosimilar applicant’s failure to follow the exchange process once initiated, including failure to provide the 180-day commercial notice. It is also significantly broader than the preliminary injunctive relief afforded to the RPS for certain ‘non-list’ patents following the 180-day commercial notice, if one is provided.
If regulatory exclusivity is a potential issue, for those biosimilar applicants that opt out of the patent list exchange process regulatory exclusivity can last up to whichever is shorter: 1) 18 months from FDA approval; or 2) one year after the first commercial marketing. This is significantly shorter than the time potentially afforded to biosimilar applicants that participate in the exchange process, but this must be taken in light of the probability of the biosimilar being approved as the first ‘interchangeable’ biosimilar with respect to a particular reference product.
Although Amgen made it clear that participation in the process is entirely voluntary, the decision to dance or not is one that may ultimately rely on a number of strategic considerations beyond those discussed in this article, as each biosimilar applicant will find itself in a factually unique situation. Entities that are considering submitting a biosimilar application to the FDA should work closely with legal counsel in order to ensure that the route chosen best fits the entity’s needs.
One final mention is that although the federal circuit has denied a rehearing en banc, the Supreme Court may take up the case if either of the parties files a petition for certiorari, which is conceivable as the federal circuit ruled in favour of Sandoz regarding the voluntariness of participation in the exchange process and in favour of Amgen regarding when the 180-day notice period may be given.
Parties that are interested should continue to monitor this case and the area closely. Another case to potentially follow is Amgen v Apotex at the US District Court for the Southern District of Florida (0:15-cv-62081), which represents the first patent infringement suit where both parties fully engaged in the exchange process.
Table 1 helps to summarise the various potential pros and cons of opting in or out of the patent list exchange process from the perspective of the biosimilar applicant, and although not exhaustive, provides a good general overview.
Gerard Norton is partner and chair of the intellectual property litigation group at Fox Rothschild. He can be contacted at: gnorton@foxrothschild.com
Michael Montgomery is an associate at Fox Rothschild. He can be contacted at: mmontgomery@foxrothschild.com
