Biosimilar sponsors won a partial victory in the battle over the meaning of the biosimilars statute as an appeals court found that the patent exchange process laid out in the law is optional. But avoiding the patent dance opens them up to litigation over a larger number of patents, which could be problematic for biosimilars of newer biologics.

In a July 21 decision, a three-judge panel of the U.S. Court of Appeals for the Federal Circuit agreed with Sandoz Inc.’s interpretation of the Biologics Price Competition and Innovation Act (BPCIA) with respect to the patent dance. However, it found that biosimilar sponsors must wait until after FDA approval to provide reference product sponsors 180-day notice of commercial launch, which could give innovators a de facto extra six months of exclusivity.

As a result of the notice requirement, the court said Sandoz could not begin marketing Zarxio (filgrastim-sndz), its biosimilar to Amgen Inc.’s Neupogen (filgrastim), until Sept. 2, 180 days after the product’s March 6 approval. Neupogen, used to help reduce infection due to low blood cell count during chemotherapy, had worldwide sales of $1.2 billion in 2014.

“We welcome the Federal Circuit’s finding that the BPCIA’s patent dance is optional,” Sandoz said. “We look forward to launching Zarxio on September 2 as the first U.S. biosimilar.”

Amgen said it did not have a comment on its “next steps on appeal” or further actions in its pending patent infringement suit against Sandoz. The Federal Circuit remanded the case for the district court to consider Amgen’s infringement claim relating to its method of use patent and Sandoz’s counterclaims “and any other patents properly brought into the district court action.”

BPCIA is “a riddle wrapped in a mystery inside an enigma,” Federal Circuit says.

One or both parties are expected to seek review by the full court, which the Federal Circuit is likely to grant given the division within the panel. Two of the judges issued separate opinions concurring in part and dissenting in part from the ruling.

Judge Pauline Newman disagreed with the finding that engaging in the patent dance is not mandatory while Judge Raymond Chen disagreed with the panel’s decision on notice of commercial marketing.

In a footnote, the panel indicated the difficulty in interpreting the statute. Quoting Winston Churchill’s description of Russia, the panel said the BPCIA is “a riddle wrapped in a mystery inside an enigma.”

Patent Dance Is Not Mandatory Since Innovators Can Sue

Amgen filed suit against Sandoz in October alleging that Sandoz’s failure to follow the BPCIA’s information exchange provisions for its biosimilar version of Neupogen constitutes unfair competition. It also challenged Sandoz’s contention that it did not have to wait until obtaining FDA approval to provide the reference product sponsor notice of commercial marketing. A district court ruled for Sandoz on both issues ([A#14150319004]).

The Federal Circuit had seemed skeptical of Sandoz’s position during oral arguments, questioning why Congress would have crafted such a complex and detailed process for exchange of information between the parties if they had intended that the process could be skipped ([A#14150603002]).

But the court concluded that the provision that a biosimilar applicant “shall provide” its application and manufacturing information to the reference product sponsor within 20 days after FDA’s acceptance of its application for review “cannot be read in isolation.”

In other provisions the statute “explicitly contemplates” that an applicant might fail to disclose required information by the statutory deadline, the ruling notes, and provides a consequence for the failure: the reference product sponsor may file an infringement action.

The ruling says the reference product sponsor (RPS) may bring a declaratory judgment action on “any patent that claims the biological product or a use of the biological product” but the biosimilar applicant cannot do so.

The court referred to a biosimilar application as an abbreviated biologics license application, or aBLA, a term that is not used in the statute.

“Because Sandoz took a path expressly contemplated by the BPCIA, it did not violate the BPCIA by not disclosing its aBLA and the manufacturing information by the statutory deadline,” the opinion states.

Extra Exclusivity May Not Be The Norm

As for the commercial launch notification, the panel said it believed Congress intended the notice to follow licensure, “at which time the product, its therapeutic uses, and its manufacturing processes are fixed.” It noted that FDA could request changes to the product during the review process or approve some but not all the sought-for uses.

“If a notice of commercial marketing could be given at any time before FDA licensure, the RPS would be left to guess the scope of the approved license and when commercial marketing would actually begin,” the ruling states.

The panel said that in this case Amgen will have an additional 180 days of market exclusivity since Sandoz filed its application 23 years after Amgen obtained approval of Neupogen and its 12 years of exclusivity have expired. But the panel said that the “extra 180 days will not likely be the usual case, as aBLAs will often be filed during the 12-year exclusivity period for other products.”

Donald Ware, a partner at Foley Hoag, said that for newer biologics for which the 12 years of exclusivity has not run out, the ruling will give biosimilar applicants a strong incentive to move up the time to complete a data package and submit a BLA so the reference product sponsors do not get the extra six months of exclusivity.

And even though the ruling on the patent dance represents a big win for the biosimilars industry, there are still many circumstances where sponsors may opt to follow the complicated notification procedures (see related story,[A#14150721007]).

Biosimilar Sponsors Can Avoid Patent Dance, But Innovators Win Extra Exclusivity

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