Patent Docs: Federal Circuit construes patent litigation provisions of biosimilars law

Last month, the Court of Appeals for the Federal Circuit (which has national jurisdiction over U.S. patent law) interpreted the provisions of the Biologics Price Control and Innovation Act (BPCIA) in the case of Amgen v. Sandoz. In doing so, the court limited the information available to biologic drugmakers regarding a competitor’s application for a biosimilar product (adopting Sandoz’s argument). On the other hand, the decision extended the statutory exclusivity period enjoyed by innovator biologic drug makers relating to when the biosimilar applicant can enter the marketplace (as Amgen argued).

The BPCIA is a component of the Patient Protection and Affordable Care Act (commonly known as Obamacare) and provides for the first time in the U.S. an abbreviated pathway for FDA approval of so-called “biosimilar” drugs—generic versions of biologic drugs. The act contains complicated litigation provisions that have come to be termed the “patent dance” that prescribe how the parties (termed the “reference product sponsor” and the “biosimilar applicant”) decide which patents will be litigated during the time prior to FDA approval.

The case arose over Amgen’s drug Neupogen (filgrastim) that was the subject of a biosimilar application by Sandoz. At issue was Sandoz’s decision not to comply with one provision of the law [42 U.S.C § 262(l)(2)(A)], which states that the biosimilar applicant “shall” provide to the innovator biologic drug maker (called the “reference product sponsor” or “RPS”) a copy of its application and also manufacturing information (because it was recognized that patents related to manufacturing might be at issue between the parties). Sandoz contended that despite using the word “shall,” Congress did not intend to make these disclosures mandatory because the law also provided remedies for reference product sponsors faced with nondisclosure from the biosimilar applicant. The District Court sided with Sandoz in its interpretation of the law, that these remedy provisions indicate that, taken as a whole, the law does not force the biosimilar applicant to make these disclosures.

Sandoz’s reasons for its noncompliance stemmed from fear of having to disclose proprietary information (such as relevant manufacturing methods) to a competitor. Such methods frequently involve trade secrets; as written, the BPCIA permits one “in-house” attorney from the RPS (albeit not one involved in patent prosecution) to review this disclosure. Sandoz, perhaps reasonably, was loath to disclose such trade secrets to its competitor, because such disclosure has implications not only for its filgrastim product but for any other recombinant protein-based biologic drug made in future.

Also at issue was interpretation of another provision of the law, that the biosimilar applicant provide 180-day notice to the reference product sponsor that it intended to enter the marketplace [42 U.S.C § 262(l)(8)(A)]. Sandoz provided this notice prior to obtaining FDA approval, and the Federal Circuit held this was ineffective. Sandoz’s biosimilar, under the brand name Zarxio, obtained FDA approval on March 5, 2015, and under the Federal Circuit’s interpretation of the statute, Sandoz was not free to enter the marketplace until 180 days later (Sept. 2, 2015).

The Federal Circuit opinion held that Sandoz was correct that the disclosure provisions [42 U.S.C § 262(l) et seq] of the BPCIA were optional, in view of the remedial provisions [42 U.S.C § 262(l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii)] in the law that provided the RPS with a remedy (i.e., filing a patent infringement lawsuit). Although the court recognized that, “read in isolation,” the use of the word “shall” regarding the biosimilar applicant’s disclosure appeared to be mandatory, this portion of the statute could not be read in isolation, and that in the context of the entirety of the statute, disclosure was optional. (The court reached this conclusion despite other portions of the law, not at issue, where Congress chose to use the word “shall.” [Including 42 U.S.C. § 262(l)(1)(B)(i), (l)(9)(A), (l)(9)(C); 35 U.S.C. § 271(e)(2)(C)(ii))) and, in particular, 42 U.S.C. § 262 (l)(1)(B)(i)])

Regardless of the correctness of this interpretation, as a consequence, it may be more difficult for the RPS to identify which of its patents the biosimilar applicant may be infringing. One evident purpose of the patent dance was to identify such patent or patents, and by making disclosure optional, the court shifted the burden onto the RPS (who may have the best grasp of its patent portfolio but may often be completely ignorant of what infringing acts are associated with bringing a biosimilar drug to market) of choosing a patent or patents to litigate. Indeed, it sets up a situation where the biosimilar applicant can move to dismiss an infringement action based on an allegation that the complaint is insufficient because it has not identified the correct patent(s).

While this is likely under current rules, legislation before Congress aimed at so-called “patent trolls” may make these rules even stricter and make even bringing a patent infringement suit against a nondisclosing biosimilar applicant even more difficult. Such a situation puts the lie to the blithe reassurance in the opinion that “[o]nce the RPS brings an infringement suit under those two provisions, it can access the required information through discovery.”

The court also held that a biosimilar applicant cannot give the required 180-day notice of an intent to market a biosimilar until it has obtained FDA approval. This prevents a biosimilar applicant from giving such notice when its biosimilar application is filed (as Sandoz did here) so that it may enter the marketplace immediately upon approval.

In a telling footnote in the majority opinion, Judge Lourie quoted Winston Churchill’s famous aphorism that Russia was “a riddle wrapped in a mystery inside an enigma” to explain his appreciation of the BPCIA. He noted that in this opinion, the Court has done its “best to unravel the riddle, solve the mystery and comprehend the enigma.” This view of the task of construing the BPCIA indicates that Congress may need to revisit the language to ensure that its purposes are met in balancing RPS patent rights and biosimilar applicants’ legitimate concerns for protecting trade secrets and other proprietary information.

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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, http://patentdocs.typepad.com/.