Thursday, July 23, 2015

The Latest on Biosimilars: The Federal Circuit Holds that the "Patent Dance" Is Optional

In a previous post, I discussed a district court decision holding that the process for resolving patent disputes under the Biologics Price Competition and Innovation Act (BPCIA) is optional. That post contains extensive background on the BPCIA and its purpose of providing an abbreviated pathway for “biosimilar” drugs to get to market and compete with their branded analogs, resulting in lower prices for consumers. The bottom line is that, under the BPCIA, makers of biosimilar products can rely on the clinical trial data developed for the branded (or “reference”) product in order to accelerate FDA approval. Nevertheless, the BPCIA provides 12 years of data exclusivity to the manufacturer of the reference product. And beyond that period, even if the biosimilar garners FDA approval, the brand owner can try to continue to keep it out of the market by asserting claims of patent infringement. The BPCIA provides for a procedure involving pre-suit information exchange between the brand and biosimilar makers—the so-called “patent dance”—that is intended to apprise the brand of the biosimilar’s manufacturing process and narrow down the number of patents to be be asserted. But the district court, and now the Federal Circuit on appeal, have held that the biosimilar can lawfully refuse to participate in the patent dance.

Of course, Amgen, the brand owner in this case, can still pursue patent infringement claims against Sandoz, the biolisimilar maker, on remand at the district court. But it appears that, given its eagerness to skip the patent dance in this case, Sandoz is confident it can win the patent infringement battle and is poised to launch its competing product as soon as possible. How soon is that? Sandoz has already obtained FDA approval, but it cannot launch just yet. This is because of the second holding of the Federal Circuit in this case, which is that the biosimilar’s notice to the brand of its intent to market its competing product within 180 days, as provided by the statute, can only be given after the biosimilar obtains FDA approval. In this case, Sandoz’s product was approved on March 6, 2015, and, per the Federal Circuit’s decision, that was the first day that Sandoz could give Amgen a notice under the BPCIA. In other words, any previous notices were not effective because they predated FDA approval. Accordingly, September 2, 2015 (which is 180 days from March 6) is the first day that Sandoz can launch. As I reported earlier, the Federal Circuit entered an injunction pending appeal preventing Sandoz from launching its biosimilar product. Barring further developments in this case, this injunction will be lifted on September 2.

As for the Federal Circuit’s reasoning, the court largely adopted the district court’s analysis (which I covered in a previous post) in affirming its conclusion that the patent dance was not mandatory. Thus, in spite of the word “shall” in the statute in reference to the disclosure of the bioismilar’s FDA application to the brand—which would include the description a manufacturing process that might be covered by one or more of the brand’s patents—the Federal Circuit held that the dance-initiating disclosure was not mandatory. Looking at the structure of the statute as a whole, the Federal Circuit concluded that the various patent-dance procedures become mandatory only if the biosimilar maker opts into the scheme in the first place. The Federal Circuit recognized that this interpretation contradicts the plain language of 42 U.S.C. § 262(l)(1)(B)(i), which precedes the patent-dance paragraph, (l)(2), and states in no uncertain terms that “[w]hen a subsection (k) applicant [i.e., a biosimilar maker attempting to take advantage of the abbreviated pathway] submits an application under subsection (k), such applicant shall provide to the persons described in clause (ii) [i.e., the brand manufacturer], subject to the terms of this paragraph, confidential access to the information required to be produced pursuant to paragraph (2) . . . ” In a sense, the Federal Circuit’s conclusion appears to mean that “shall” means “shall,” and the procedures become required, only if the biosimilar maker decides that they are required.

So how did the Federal Circuit get around this problem? It concluded that, because the only remedy provided in the statute for the biosimilar maker’s failure to disclose its application is an all-out (i.e., unrestricted by the patent-dance negotiations) patent infringement suit, Congress must have meant that the disclosure is optional. In other words, because “the BPCIA has no other provision [i.e., other than a patent infringement suit] that grants a procedural right to compel compliance with the disclosure requirement” (or as the court reiterated, because “the BPCIA does not specify any non-patent-based remedies for a failure to comply” with this requirement), “shall” really means “may.” Perhaps this is mere semantics, but one way to avoid this unsatisfying result would have been to hold that “shall” really does mean “shall,” but that the remedy of the patent infringement suit preempts all other possible remedies (such as state law causes of action under which Amgen attempted to enforce this apparent procedural violation). The court hinted at this when it cited the “only remedies” phrase in 35 U.S.C. § 271(e)(4), which in turn references the language in 35 U.S.C. § 271(e)(2)(C)(ii) that failure to comply with the disclosure requirement as described in 42 U.S.C. § 262(l)(2)(A) is an act of infringement (confused yet?), but ultimately avoided any preemption analysis because, as it noted in footnote 5 of the opinion, Sandoz did not raise preemption at the district court. As a result, there is odd internal tension in the Federal Circuit’s opinion. The court appeared to conclude that “shall” means “may,” and Amgen doesn’t have the right to see Sandoz’s application, based on the maxim that there is no right without a remedy. But it then recognized that there is in fact a remedy—the “no holds barred” patent infringement suit. Perhaps, one way to avoid this problem would have been to hold Sandoz to its waiver and then resolve the problem through preemption analysis in a subsequent case. But maybe one can’t really fault the Federal Circuit for finessing the waiver problem in order to get to a result that it thought was ultimately right. Judge Newman, by the way, dissented on the issue of whether the patent dance is mandatory. She would have held that, by opting into the abbreviated pathway, Sandoz committed itself to follow the disclosure and dance procedure. She argued that “[w]hen a beneficiary of the statute withholds compliance with provisions enacted to benefit others, the withholder violates that balance.”

As discussed above, the other point of contention in this case was the 180-day notice period. A different majority of Judges Lourie and Newman, with Judge Chen dissenting from this portion of the opinion, concluded that effective notice can be given only when, per 42 U.S.C. § 262(l)(8)(A), the biosimilar product is “licensed under subsection (k)”—i.e., approved by the FDA. Judge Chen would have held that the notice provision does not apply when the parties elect not to participate in the patent dance. Arguing that the result he favored was the logical consequence of the panel’s other holding, he concluded that the majority mistakenly recognized “an inherent right to an automatic 180-day injunction” for the brand owner. And the 180-day delay does matter in this case because Amgen’s 12-year exclusivity period has expired. But if cases arise in the future where the biosimilar manufacturer obtains approval well before the 12-year exclusivity period, the 180-day delay won’t make a difference. As the majority noted, “[t]hat extra 180 days will not likely be the usual case.” Judge Chen did agree in principle with the majority’s observation in footnote 1 that, like Russia, the BPCIA is “a riddle wrapped in a mystery inside an enigma.” He explained that “[t]o fulfill our judicial obligation ‘to say what the law is,’ we must choose from a series of imperfect choices.”

Note: Cross-posted on the Center for Law and the Biosciences Blog

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