In Amgen v. Sandoz, Fed. Cir., No. 15-1499 (July 21, 2015), a divided panel of the Federal Circuit issued its first decision interpreting the Biologics Price Competition and Innovation Act (BPCIA), and did so in a manner that favors biosimilar applicants in one respect while favoring reference product sponsors (e.g., owners of original biologic products) in another. On the issue of whether biosimilar applicants are required to share their applications with reference product sponsors, the court ruled in favor of Sandoz, finding that they do not have to share their applications or engage in the patent dispute resolution procedures of the BPCIA. On the issue of whether and when biosimilar applicants are required to give pre-marketing notice to reference product sponsors, the court ruled in favor of Amgen, finding that the 180 days’ pre-marketing notice is a “standalone requirement” that cannot be given until the biosimilar product is approved. With two dissenting opinions presenting alternative interpretations of the BPCIA, the decision may raise at least as many questions as it answers, including whether the full Federal Circuit may grant rehearing en banc. Stakeholders in this area also should keep in mind the potential availability of inter partes review and post-grant review proceedings to address patent validity issues wholly outside of the BPCIA.

The Biosimilar Framework

Since 1991, Amgen has marketed filgrastim, a recombinantly produced, human granulocyte colony-stimulating factor protein (C-CSF) under the brand name Neupogen®. Neupogen® is used in patients at risk of infection such as those receiving chemotherapy. In May of 2014, Sandoz sought FDA approval of a biosimilar of Neupogen® (filgrasim-sndz or Zarxio™) under the BPCIA, by filing an abbreviated pathway application created by the BPCIA (an “aBLA” or “subsection (k) application”).

Similar to the Hatch-Waxman Act that governs traditional generic drugs, the BPCIA allows a biosimilar applicant to rely on the FDA’s previous approval of the reference product (e.g., the original biologic product), such that the biosimilar applicant does not need to provide clinical data demonstrating the safety and efficacy of its product, as long as it submits information demonstrating that its product is “biosimilar” or, alternately, “interchangeable,” with the reference product. As noted by the Federal Circuit, the BPCIA seeks to balance the innovator’s investment in developing the reference product with the price competition a generic will bring to the market by providing that the biosimilar application cannot be filed until the reference product has been approved for at least four years, and that a biosimilar application cannot be approved until the reference product has been approved for at least 12 years. However, since Amgen’s Neupogen® product had been approved for more than 12 years before the BPCIA was enacted, these time periods were not relevant in this case.

The Biosimilar Patent Dance

Like the Hatch-Waxman Act, the BPCIA includes patent dispute resolution procedures, but the similarity ends there. The BPCIA lays out a “unique and elaborate” process that commences when the biosimilar applicant shares its biosimilar application with the reference product sponsor, continues with exchanges of patent lists, and validity/infringement contentions and negotiations of the patents to be litigated, requires the reference product sponsor to assert the negotiated patents to avoid limitations on remedies, and culminates with a last-chance opportunity to assert additional patents after the biosimilar applicant provides 180 days’ pre-marketing notice.

The Neupogen®/Zarxio™ Biosimilar Dispute

Sandoz notified Amgen of its biosimilar application, but did not provide a copy to Amgen and did not follow any of the other patent dispute resolution procedures of the statute. As to pre-marketing notice, Sandoz first notified Amgen of its intent to commercially market Zarxio™ in July of 2014, before it was approved, and gave notice again when it became the first approved biosimilar product on March 6, 2015.

Amgen sued Sandoz in the United States District Court for the Northern District of California alleging, among other things, violation of California’s unfair competition laws and conversion based on Sandoz’ alleged failure to comply with the BPCIA. The district court sided with Sandoz, and found no violation of the BPCIA to support Amgen’s state law claims.

The Federal Circuit Decision

The Federal Circuit decision was authored by Judge Lourie. Judge Chen joined the portion of the decision that found the application sharing and patent dispute resolution procedures to be optional. Judge Newman joined the portion of the decision that found that the 180 days’ pre-marketing notice was required and could not be given until after approval.

In her dissenting opinion, Judge Newman expressed her views that the court’s ruling on the application sharing provisions upset the BPCIA’s carefully crafted balance between the reference product sponsor and biosimilar applicant:

The BPCIA reflects an explicit balance of obligations and benefits. When a beneficiary of the statute withholds compliance with provisions enacted to benefit others, the withholder violates that balance. The consequences of the majority’s ruling are significant, for the structure of the BPCIA requires that the subsection (k) applicant comply with the information exchange provisions, as a threshold to resolution of the Sponsor’s patent rights.

In his dissenting opinion, Judge Chen expressed his views that the court’s ruling on the pre-marketing notice provisions grants reference product sponsors a windfall of an additional period of exclusivity beyond the 12 years expressly provided in the statute:

The practical consequence of the majority’s interpretation is that (l)(8)(A) provides an inherent right to an automatic 180-day injunction. The majority provides no basis in the statutory language to support this automatic injunction.

What’s Next for Biosimilars?

Under this decision, biosimilar applicants can choose whether to follow the patent dispute resolutions of the BPCIA or leave it to the reference product sponsor to bring a declaratory judgment action asserting patent infringement. Will biosimilar applicants be willing to share their confidential applications in order to resolve the patent issues early in the approval process, or will they want to defer patent litigation costs until they know their product has been approved? Or, will biosimilar applicants use inter partes review and post-grant review proceedings, as applicable, to invalidate potentially relevant patents? Will reference product sponsors who learn of a biosimilar application assert their patents early, or wait until they receive pre-marketing notice? These questions will have to be answered on a case-by-case basis, depending on the products and patents at issue, and carefully weighing the potential risks and benefits.