Patent Docs: Federal Circuit changes the rules for biosimilar litigation

Court of Appeals for the Federal Circuit renders fractured decision construing the terms of Biologics Price Control and Innovation Act for the first time

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The Biologics Price Control and Innovation Act (BPCIA) is a part of the omnibus healthcare reform bill commonly referred to as “Obamacare” and, in July, the Court of Appeals for the Federal Circuit (which rules on all aspects of patent law) rendered a seriously fractured decision construing the terms of the law for the first time, in Amgen v. Sandoz. The appeal was from a district court decision on two aspects of the law: first, whether a biosimilar applicant must hand over a copy of its application and any relevant manufacturing information to the biologic drug maker (called the “reference product sponsor” in the bill, or RPS) and whether a biosimilar applicant can give the required 180-day notice to the RPS that she will begin commercial marketing.
The subject matter at issue was Sandoz’s Xarzio biosimilar for filgrastim (marketed by Amgen as Neupogen). The BPCIA contains a complex set of provisions governing how litigation over patents protecting biologic drugs is to be conducted, and the first step of those provisions (42 U.S.C § 262(l)(2)(A)) states that a biosimilar applicant “shall” provide its application and any relevant manufacturing information to the RPS (because it was recognized that patents related to manufacturing might be at issue between the parties):
“Not later than 20 days after the Secretary notifies the subsection (k) applicant that the application has been accepted for review, the subsection (k) applicant shall provide to the reference product sponsor a copy of the application submitted to the Secretary under subsection (k), and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application . . .” (emphasis added).
Sandoz refused to do so, taking the position that the existence of penalties or remedies in the law for such failure made disclosure optional rather than mandatory (despite the use of the word “shall,” which usually indicates that the provision must be followed). In this case that remedy was to seek an injunction in federal court, but when Amgen did so the court ruled that Sandoz’s interpretation of the law was correct and, on other grounds, that Amgen was not entitled to an injunction.
The Federal Circuit somewhat surprisingly agreed, on the basis that the statute, taken as a whole, did not make mandatory this disclosure. The court believed that the statute must be interpreted in its entirety and, by doing so, gave credence to Sandoz’s interpretation that they could properly refuse to disclose their application and manufacturing information (motivated by a fear that Amgen would learn valuable trade secrets and know-how that could be used for this or another drug).
The district court also construed the provisions of the law regarding notice of commercial marketing (42 U.S.C § 262(l)(8)(A)):
“The [biosimilar] applicant shall provide notice to the reference product sponsor not later than 180 days before the date of the first commercial marketing of the biological product licensed under [the BPCIA]” (emphasis added).
The district court ruled that Sandoz could give Amgen proper notice of its intent to market Xarzio prior to FDA approval (which in this case meant the product could launch immediately when the FDA approved the drug on March 6, 2015). Here the decision was policy-based: the court agreed with Sandoz that forcing a biosimilar applicant to wait an additional 180 days after approval gave the RPS an additional 180 days of exclusivity over the 12-year exclusivity period set forth in the statute.
The Federal Circuit did not agree, paradoxically finding that the statute stated that market entry “shall” be delayed by 180 days and thus that there was no basis for the court in substitute its policy proclivities for Congress’ as illustrated by the statutory language. The basis for this decision is that notice must be given for the licensed product, and until the FDA grants approval the biosimilar applicant cannot know what product it will actually license: it is only after licensure that “the product, its therapeutic uses, and its manufacturing processes are fixed,” according to the decision. In this case, 180 days after March 5 was Sept. 2, and Sandoz announced that it was entering the market on Sept. 4.
As a consequence of this decision there is apparently no advantage for a biosimilar applicant to disclose its application or manufacturing methods to the RPS, which creates a disadvantage in the context of the statute. Specifically, the RPS may in some instances not know which patent to assert against a biosimilar applicant, and the disclosure and other provisions of the law were intended in part for the parties to identify such patents. Under the circumstances that now exist, the patents named in an infringement lawsuit (comprising the “penalty” the district court and Federal Circuit perceived was provided by the BPCIA) will be nothing more than a guess, and thus could be the source of litigation inefficiency (for example, motions to dismiss for failure to identify the patent that is infringed) as well as liability for attorneys’ fees and other sanctions (under existing procedural rules or rules enhanced by recent Supreme Court cases or now being contemplated in Congress). In any event, Amgen has asked the Federal Circuit to reconsider, and there is a high likelihood that no matter how that request is considered the parties will each be motivated to petition the Supreme Court for review.
Kevin Noonan is a partner with the law firm McDonnell Boehnen Hulbert & Berghoff LLP and represents biotechnology and pharmaceutical companies on a myriad of issues. A former molecular biologist, he is also the founding author of the Patent Docs weblog,

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