Status Update: Implementation of the Patent Dispute Resolution Provisions of the Biologics Price Competition and Innovation Act

Patent Dispute Resolution Under the Bpcia

The BPCIA created a process for resolving patent disputes between branded and biosimilar manufacturers that—to some extent—parallels the patent dispute resolution processes provided under the Hatch-Waxman Act for traditional, small-molecule drugs. For example, the BPCIA amended the Patent Act to create an artificial “act of infringement” and to allow infringement suits based on a biosimilar application prior to Food and Drug Administration (FDA) approval and prior to marketing of the biosimilar product. ⁴

There are, however, significant differences between the BPCIA and Hatch-Waxman patent resolution provisions, owing in part to the greater complexity of biologics and the processes used in manufacturing biologics. For example, there is no publicly available list of patents associated with biologics covered by the BPCIA, i.e., no analog for the Orange Book. ⁵ Instead, the BPCIA creates a complex process of information exchange designed to elicit information that will identify relevant patents, sometimes referred to as the BPCIA “patent dance.” ⁶

The dance is quite complex, but essentially the biosimilar applicant is required to provide the branded company, referred to in the statute as the reference product sponsor (RPS), with confidential access to its abbreviated Biologic License Application (aBLA), including manufacturing information, no later than 20 days after FDA accepts its application for review. ⁷ The parties then exchange a list of patents which they believe could reasonably be asserted by the RPS, along with their respective positions on infringement, validity, and enforceability of those patents. ⁸ Following the exchange, the parties are instructed to negotiate and formulate a list of patents (“listed patents”) that would be the subject of an immediate infringement action, at which point the RPS is to sue the biosimilar applicant within 30 days. ⁹ The drafters of the BPCIA created the patent dance as a means to identify relevant patents early, and hopefully thereby streamline litigation, but the complexity and ambiguity of the dance has itself proven a fertile ground for litigation. During a recent oral argument before the Federal Circuit, Judge Lourie caused some laughter when he observed that if the purpose of the patent dance was to avoid litigation, “it has obviously failed.” ¹⁰

The BPCIA also specifies that the biosimilar applicant must give notice of commercial marketing to the RPS at least 180 days prior to commercial marketing of the biosimilar product. ¹¹ According to the Federal Circuit, this notice of commercial marketing provides the RPS with time to seek a preliminary injunction based on patents that the parties initially identified during the information exchange, but which were not selected for the immediate infringement action, as well as any newly issued or licensed patents (collectively, “non-listed patents”). ¹² Finally, the Act provides that if the applicant complies with the patent dance requirement, then neither the RPS nor the applicant may bring a declaratory judgment action based on non-listed patents prior to the date on which the RPS receives the notice of commercial marketing. ¹³ The RPS is, however, permitted to seek declaratory relief in the event that the applicant fails to comply with the requirements of the patent dance. ¹⁴

Applicants Must Participate in the Patent Dance Prior to Filing a Declaratory Judgment Action

One important question raised by the BPCIA is whether a biosimilar applicant is required to participate in the “patent dance.”

This issue came to the surface in Sandoz v. Amgen, which appears to be the first patent litigation filed in connection with the BPCIA. ¹⁵ Sandoz sought a declaratory judgment that two Amgen patents which, according to Amgen, cover its biologic product Enbrel (etanercept), were invalid, unenforceable, and would not be infringed by Sandoz's biosimilar version of the drug. Sandoz did not participate in the patent dance, arguing that it was not required to do so because it had initiated the lawsuit prior to filing its aBLA. The judge dismissed the case, citing Sandoz's: (1) failure to establish an Article III “case or controversy,” and (2) failure to engage in the patent dance. In particular, the court held that a biosimilar developer cannot file a declaratory judgment action “unless and until” it has fulfilled its information disclosure obligations under the BPCIA.

On appeal, the Federal Circuit affirmed solely on the basis of Article III, noting that the proposed biosimilar was still undergoing Phase III clinical trials, and might be subject to change prior to filing an application for approval as a biosimilar, thus rendering the case too speculative to constitute a justiciable case or controversy. ¹⁶ Notably, the Federal Circuit did not address Sandoz's failure to participate in the patent dance, an issue rendered moot by the Article III ruling.

Days before the Federal Circuit issued its decision in Sandoz v. Amgen, a district court judge sitting in the Southern District of New York issued a pair of decisions which also concluded that a biosimilar applicant is required to engage in the patent dance. ¹⁷ Based on this interpretation of the BPCIA, the court dismissed declaratory judgment actions filed by biosimilar manufacturers Celltrion and Hospira against the reference product sponsor, Janssen Biotech, and against the Kennedy Trust for Rheumatology Research, owner and licensor of the patents relating to the biologic Remicade. ¹⁸

Participation in the Patent Dance Is Not Required for Fda Approval of a Biosimilar

While district courts have held that biosimilar applicants are not permitted to bring declaratory judgment actions unless they have complied with the requirements of the patent dance, the Federal Circuit recently held in Amgen v. Sandoz that applicants are not required to participate in the dance in order to obtain FDA approval to market their biosimilar product. ¹⁹ The lawsuit was the result of Sandoz's filing of an aBLA seeking FDA approval of a biosimilar version of filgrastim, which is marketed by Amgen under the trade name Neupogen. Sandoz informed Amgen that it had opted not to provide Amgen with its biosimilar application or manufacturing information.

Amgen sued Sandoz, alleging that Sandoz had violated the BPCIA by failing to disclose the required information, and asked for an injunction blocking FDA from approving the marketing of the biosimilar product. Amgen's argument hinged largely on the language of the statute, which states that the biosimilar “applicant shall provide to the reference product sponsor a copy of the [aBLA] application.” According to Amgen, the use of the word “shall” indicates that Congress intended the patent dance to be mandatory for applicants seeking FDA approval of a biosimilar product.

The Federal Circuit, however, disagreed, and held that a biosimilar applicant is not required to participate in the dance, and can withhold its aBLA and manufacturing information from the RPS. According to the court, the only recourse available to the RPS is a declaratory judgment action filed pursuant to 42 U.S.C. § 262(l)(9)(C). The court acknowledged that, “read in isolation, the ‘shall’ provision in paragraph (l)(2)(A) appears to mean that a subsection (k) applicant is required to disclose its aBLA and manufacturing information to the RPS by the deadline specified in the statute.” ²⁰ However, the court went on to conclude that:

[T]he “shall” provision in paragraph (l)(2)(A) cannot be read in isolation. In other provisions, the BPCIA explicitly contemplates that a subsection (k) applicant might fail to disclose the required information by the statutory deadline. It specifically sets forth the consequence for such failure: the RPS may bring an infringement action under 42 U.S.C. § 262(l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii). Those latter provisions indicate that “shall” in paragraph (l)(2)(A) does not mean “must.” And the BPCIA has no other provision that grants a procedural right to compel compliance with the disclosure requirement of paragraph (l)(2)(A). ²¹

As a consequence, failure to participate in the patent dance does not preclude FDA approval to market a biosimilar product. The only form of relief available to the RPS is to seek a declaratory judgment or to sue for an artificial “act of infringement” under § 271(e)(2).

Limitations On the Enforcement of Process Patents

In Amgen v. Sandoz the Federal Circuit suggested in a footnote that declaratory relief under § 262(l)(9)(C) might be unavailable with respect to process patents, i.e., patents directed towards a process for manufacturing a biologic, because § 262(l)(9)(C) “premises the declaration judgment action on ‘any patent that claims the biological product or a use of the biological product’ (emphasis added), which does not appear to include process patents.” ²² However, the court went on to point out that “35 U.S.C. § 271(e)(2)(C)(ii) does contemplate an infringement action based on ‘a patent that could be identified pursuant to [paragraph] (l)(3)(A)(i)’ (emphasis added), which does not exclude process patents.”

The problem is, in a situation where the biosimilar applicant refuses to disclose its manufacturing information to the RPS, it could prove difficult for the RPS to know whether a process patent has been infringed. Anticipating this concern, the Federal Circuit implied that the RPS might be able to benefit from a presumption that process patents relating to the manufacture of a reference product are infringed by the manufacture of a biosimilar, shifting the burden to the biosimilar applicant to prove otherwise. This presumption does not appear explicitly in the BPCIA, but in Amgen v. Sandoz the court “note[d] the existence of a rebuttable presumption in actions alleging infringement of a process patent under 35 U.S.C. § 271(g) relating to importation of products made abroad by a patented process. See, e.g., Creative Compounds, LLC v. Starmark Labs., 651 F.3d 1303, 1314 (Fed.Cir.2011) (citing 35 U.S.C. § 295).” ²³

Creative Compounds, the case cited by the Federal Circuit in support of the proposition that a rebuttable presumption of infringement can be imposed under circumstances in which it is difficult for an owner of a process patent to prove infringement, held that:

While the burden typically rests with the patentee to prove infringement, the law makes exceptions. In actions alleging infringement of a process claim under § 271(g), there is a rebuttable presumption that the imported product was made from the patented process if the court finds: “(1) that a substantial likelihood exists that the product was made by the patented process, and (2) that the plaintiff has made a reasonable effort to determine the process actually used in the production of the product and was unable to so determine.” 35 U.S.C. § 295. If both conditions are met, “the product shall be presumed to have been so made, and the burden of establishing that the product was not made by the process shall be on the party asserting that it was not so made.” Id. Because the accused infringer is in a far better position to determine the actual manufacturing process than the patentee, fairness dictates that the accused, likely the only party able to obtain this information, reveal this process or face the presumption of infringement. ²⁴

Biosimilar Applicant Must Wait for Fda Approval Before Giving 180-Day Notice of Commercial Marketing

Section 262(l)(8)(A) specifies that the biosimilar applicant “shall provide notice to the reference product sponsor not later than 180 days before the date of the first commercial marketing” of the biosimilar product. Sandoz notified Amgen that it had filed a biosimilar application referencing Neupogen on July 8, 2014, which was only one day after it had received notification from FDA that FDA had accepted Sandoz's application for review. ²⁵ In its notification, Sandoz informed Amgen that it intended to launch its biosimilar product immediately upon FDA approval, which it anticipated receiving in “Q1/2 of 2015.” Amgen objected, arguing that the BPCIA required 180 days of notice after approval of the product, and that Sandoz's notice of commercial marketing given before approval was premature and ineffective. In other words, under Sandoz's interpretation of the statute, it could bring its biosimilar to market immediately upon FDA approval, while under Amgen's interpretation marketing would be delayed by 180 days.

On this point, the Federal Circuit sided with Amgen holding that a biosimilar applicant may only give effective notice of commercial marketing after FDA licenses the product. According to the court, the “statutory language compels such an interpretation.” The court also based its interpretation of the statute on perceived congressional intent, opining that:

Congress intended the notice to follow licensure, at which time the product, its therapeutic uses, and its manufacturing processes are fixed. When a subsection (k) applicant files its aBLA, it likely does not know for certain when, or if, it will obtain FDA licensure. The FDA could request changes to the product during the review process, or it could approve some but not all 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. ²⁶

In an interesting twist, Apotex (a developer of biosimilars) has reportedly taken the position that a biosimilar applicant that has participated in the patent dance is not required to provide 180-day notice of commercial marketing. This is according to a complaint recently filed by Amgen in the Southern District of Florida. ²⁷ The lawsuit was precipitated by Apotex filing an aBLA to market a biosimilar version of filgrastim (Neupogen).

Unlike Sandoz, Apotex did participate in the patent dance, which resulted in the identification of two Amgen patents that are the subject of the lawsuit. However, according to the complaint, Apotex has taken the position that “because Apotex followed the pathway and provided Amgen with its application and manufacturing information, providing a notice of commercial marketing is not mandatory.” Amgen is seeking a declaratory judgment that Apotex is required under Amgen v. Sandoz to provide 180 days of notice after approval of its biosimilar product. No doubt this will not be the last case in which the courts are asked to interpret the complex patent dispute resolution provisions of the BPCIA.