March 6, 2015 was a turning point for the emerging U.S. biosimilars market. The U.S. Food and Drug Administration (FDA) approved Sandoz’s application to market Zarxio®, the first biosimilar drug in the U.S. Zarxio® (approved as “filgrastim- sndz”) is a biosimilar of Amgen’s Neupogen®, a drug with 2013 sales of $1.4bn. Zarxio® is currently on the market in Europe (as Zarzio®), and is now approved in the U.S. as a 0.5 ml and a 0.8 ml injectable for all five of the indications on the Neupogen® label, including the treatment of patients with various cancers, and the treatment of patients with various forms of neutropenia (white blood cell disorders).

Biologics Price Competition and Innovation Act (BPCIA)

Zarxio® was approved under provisions of the Biologics Price Competition and Innovation Act of 2009 (BPCIA), which was enacted on March 23, 2010 as part of legislative reforms related to the Patient Protection and Affordable Care Act. Among other things, the BPCIA provides data protection and market exclusivity periods for biologic drugs, an expedited FDA approval pathway for biosimilar versions of biologics (“biosimilars”), and a patent dispute resolution procedure for biosimilars.

“Biologics” and “Biosimilars”

Biologics are generally made using living cells and are often prepared by genetic engineering. Biologics include viruses, vaccines, blood components or derivatives, antibodies, and non-chemically synthesized proteins, that are used to prevent, treat or cure a human disease or condition. 42 U.S.C. § 262(i)(1).

A “biosimilar” is “highly similar” to an FDA-approved biologic, allowing for “minor differences in clinically inactive components,” but with “no clinically meaningful differences … in terms of safety, purity, and potency.” 42 U.S.C. § 262(i)(2).

To obtain marketing approval, a biosimilar applicant must submit in vitro, animal and clinical data to the FDA, and must show, among other things, that the biosimilar “utilize[s] the same mechanism or mechanisms of action” as the biologic, has the same “route of administration,” “dosage form,” and “strength,” and is manufactured, processed and handled in facilities that meet “standards designed to assure that the [biosimilar] continues to be safe, pure, and potent.” 42 U.S.C. § 262(k)(2).

Exclusivity and the “Patent Dance”

In some respects, the BPCIA provides a framework for biosimilars that is similar to that provided for generic small molecule drugs under the Hatch-Waxman Act (the Drug Price Competition and Patent Term Restoration Act of 1984). However, there are significant differences. For example, while an innovator biologic drug (like an innovator small molecule drug) is afforded various exclusivity periods—generally, four years of data exclusivity, followed by eight years of market exclusivity (42 U.S.C. § 262(k)(7)) —unlike under the Hatch-Waxman Act, the BPCIA does not provide a market exclusivity period for the first biosimilar filer. Also, under the BPCIA, there is no stay of FDA approval if the innovator biologic license holder files a patent infringement action, and there is no provision preventing FDA approval if the biosimilar applicant indicates that it will wait for relevant innovator patents to expire before it enters the market.

For biologics, there is also no equivalent of the “Orange Book” (an FDA publication that lists the patents owned by the innovator that purport to cover the innovator’s approved small molecule drugs). Instead, the BPCIA sets out an elaborate scheme under which the biosimilar applicant must submit certain information regarding its application (under conditions of confidentiality) to the innovator biologic license holder, which in turn triggers a succession of periods during which the parties exchange lists of patents they allege will be infringed by the biosimilar and/or are invalid and/or unenforceable, together with any offers to license those patents. 42 U.S.C. § 262(l)(2)-(3). This process has been referred to as a “patent dance.” It requires both parties to send detailed statements to the other, describing “on a claim by claim basis, the factual and legal basis” of their patent infringement, validity and unenforceability contentions. 42 U.S.C. § 262(l)(3). This is followed by a short period during which the parties must negotiate in good faith in an attempt to agree on a list of patents to litigate. 42 U.S.C. § 262(l)(4).

Separately, the biosimilar applicant must also give the innovator biologic license holder at least 180 days’ advance notice of the date on which it intends to first commercially market the biosimilar. On receipt, the license holder may then seek a preliminary injunction. 42 U.S.C. § 262(l)(8). The BPCIA also contains provisions limiting declaratory judgment actions. 42 U.S.C. § 262(l)(9).

Whether or not, and the extent to which the parties must respect the procedure set out in the BPCIA before filing proceedings in District Court has been the subject of various litigations, including Sandoz Inc. v. Amgen Inc., Civ. No. 3:13-cv-02904 (N.D. Cal.), Amgen Inc. v. Sandoz Inc., Civ. No. 3:14-cv-04741 (N.D. Cal.), and Janssen Biotech, Inc. v. Celltrion Healthcare Co., Ltd., Civ. No. 1:15-cv-10698 (D.Ma.), all of which are ongoing.

In the meantime, while Sandoz now has the FDA’s approval to market Zarxio®, it has agreed not to launch in the U.S. until the earlier of April 10, 2015, or a favorable ruling on Amgen’s motion for a preliminary injunction in Amgen Inc. v. Sandoz Inc., Civ. No. 3:14-cv-04741 (N.D. Cal.) (Id. at D.I. 64).

Pending Biosimilar Applications and Next Steps

Last month the FDA accepted Hospira’s application to market a biosimilar of Janssen’s biologic Remicade® (infliximab). This application is the subject of Janssen Biotech, Inc. v. Celltrion Healthcare Co., Ltd., Civ. No. 1:15-cv-10698 (D. Ma.). In addition, Apotex has filed applications to market biosimilars of Amgen’s Neupogen® and Neulasta® (pegfilgrastim).

Sandoz’s Zarxio® application was approved within seven months. Given that timing, it is likely that Hospira’s and Apotex’s biosimilar applications may be approved in   the near future.

Now that Zarxio® has opened the door to other biosimilar approvals, it may be prudent for intellectual property owners in the biologics industry to begin identifying relevant patents and conducting due diligence to prepare not only for patent litigation, but also potentially for Inter Partes Review (IPR) proceedings before the U.S. Patent and Trademark Office. More than 70 IPR petitions have been filed on biopharmaceutical and biotechnology patents to date, and it is likely that biosimilar applicants will explore IPR as a way to limit the number or scope of patents that may have to be litigated in district court.