Abstract
Summary
This article reports on the recent decision by the Court of Appeals for the Federal Circuit (“Federal Circuit”) in Amgen v. Sandoz on remand from the U.S. Supreme Court. The Supreme Court held that a biosimilar applicant cannot be compelled under federal law to provide a copy of its abbreviated biologics license application (“aBLA”) and manufacturing information to the reference product sponsor (“RPS”) as required by the Biologics Price Competition and Innovation Act (“BPCIA”). The Supreme Court remanded the case to the Federal Circuit to determine whether there was any remedy under California state law available to Amgen, and if so, whether such remedy is preempted by the BPCIA. The Federal Circuit held that the BPCIA preempts state law remedies for a biosimilar applicant’s failure to comply with the BPCIA.
This article also briefly discusses three other recent cases involving situations where the biosimilar applicant initiates the BPCIA information exchange process but provides only partial or no manufacturing information to the RPS or fails to complete the process by opting out at some later stage of the process.
US Legal and Regulatory Update
Compiled and written by Greenblum & Bernstein PLC
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The BPCIA
The Hatch-Waxman Act of 1984 provided abbreviated regulatory approval for generics of small molecule drugs. An equivalent pathway for biologics was conspicuously absent until the BPCIA was enacted in 2010. The BPCIA created an abbreviated pathway for regulatory approval of a biologic therapeutic. Under this abbreviated pathway, the biosimilar applicant files an aBLA that demonstrates that its proposed product is “biosimilar” to or “interchangeable” with an original biologic that has already been approved by the Food and Drug Administration (FDA). By doing so, an aBLA does not require the full complement of preclinical and clinical data required by the original biologic’s license application, such as safety and efficacy data. 42 U.S.C. §§262(k)(2)–(5).
The BPCIA provides a four-year and a 12-year exclusivity period to an original biologic (“reference product”), both of which begin on the date the reference product is first licensed. That is, an aBLA may not be filed until four years after the reference product was first licensed, and cannot be approved by the FDA until 12 years after the reference product was licensed. §262(k)(7). Hence, the RPS receives up to 12 years of exclusivity against follow-on products, regardless of patent protection.
The BPCIA also provides first-filing biosimilar applicants with an exclusivity period that bars the FDA from approving a subsequent aBLA for the same reference product until the earlier of: (i) 12 months after first commercial marketing of the first-filed aBLA product; (ii) 18 months after a “final court decision” in any litigation over patents that are the subject of the aBLA product, or the dismissal of such an action; (iii) 18 months after submitting the aBLA to the RPS and the RPS fails to sue the biosimilar applicant; and (iv) 42 months after FDA approval of the aBLA product that is still the subject of litigation. §262(k)(6).
Although there are some similarities between the BPCIA and the Hatch-Waxman Act, such as creating a potential artificial act of patent infringement triggered by the filing of an abbreviated licensing application, the scheme for resolving patent disputes under the BPCIA is much more complicated. For example, the BPCIA provides the potential of two different phases of litigation, each phase being triggered by different events.
The first phase of litigation is tied to an information exchange process set forth in the BPCIA, which process is often referred to as the “patent dance.” Under the first step of this information exchange process, the BPCIA requires that within 20 days after the FDA accepts the aBLA for review, the biosimilar applicant “shall” provide the RPS with a copy of the aBLA and information that describes the process or processes used to manufacture the biosimilar. §262(l)(2)(A), herein referred to as “the initial disclosure requirement.” Subsequently, the parties are required to exchange lists of patents for which each believes a claim of patent infringement could reasonably be asserted by the RPS; exchange their respective positions on infringement, validity, and enforceability; and negotiate regarding the patents for which an “immediate” infringement action may be brought by the RPS (“listed patents”). §§262(l)(3)–(5). Additional steps are provided if the parties cannot agree on which patents are to be listed. §§262(l)(4)(B), (l)(5).
Upon completion of the information exchange process, the RPS has 30 days to bring an action for patent infringement with respect to each listed patent. §§262(l)(6)(A), (B). Although an infringement action may be filed for a listed patent after expiration of this 30-day period, the BPCIA stipulates that the sole and exclusive remedy that may be granted by the court is a reasonable royalty. 35 U.S.C. §271(e)(6)(B). An infringement action under the BPCIA may not be brought for a “patent that should have been included in the list…but was not timely included.” 35 U.S.C. §271(e)(6)(C).
The BPCIA provides the RPS with certain remedies if the biosimilar applicant refuses to comply with the initial disclosure requirement, or if the biosimilar applicant initiates but fails to complete the information exchange process. If the biosimilar applicant triggers the information exchange process by complying with the initial disclosure requirement, but then fails to comply with or complete one of the later steps in the process, the BPCIA permits the RPS to bring a declaratory-judgment action against the biosimilar applicant with respect to any patent identified on the initial list the RPS provided to the biosimilar applicant in response to the initial disclosure, and any newly issued or licensed patent subsequently supplemented to that list by the RPS. 42 U.S.C. §262(l)(9)(B). However, if a biosimilar applicant fails to comply with the initial disclosure requirement, the BCPIA provides that the RPS may bring a declaratory-judgment action for any patent that claims the biological product or a use of the biological product. §262(l)(9)(C). In both cases, the biosimilar applicant is prohibited from seeking a declaratory-judgment action against the RPS. §§262(l)(9)(B), (C).
The second phase of litigation is triggered when the biosimilar applicant provides notice to the RPS that it intends to begin commercial marketing of its biosimilar product. The BPCIA requires the biosimilar applicant to provide notice to the RPS “not later than 180 days before the date of the first commercial marketing of the biological product licensed under subsection (k).” §262(l)(8)(A) (emphasis added). The BPCIA provides that after receiving this notice, but before the date of the first commercial marketing, the RPS may seek a preliminary injunction based on patents the parties initially identified during the information exchange process, but which were not among the patents listed for an immediate infringement action, as well as any newly issued or licensed patents. §§262(l)(7), (8).
Amgen v. Sandoz
Background
In 1991, the FDA approved Amgen’s license application to market filgrastim under the brand name NEUPOGEN®. In 2014, Sandoz was the first company to take advantage of the BPCIA by filing an aBLA for a biosimilar version of Amgen’s NEUPOGEN®. Sandoz timely notified Amgen that the FDA had accepted the aBLA for review. However, Sandoz opted not to provide Amgen with a copy of the aBLA and the manufacturing information required by the BPCIA, and instead stated that Amgen could file a declaratory-judgment action as provided for by the BPCIA. At that same time, Sandoz notified Amgen that it would launch its biosimilar product immediately upon FDA approval. After the FDA approved the biosimilar, Sandoz again notified Amgen of its intent to commercially market its biosimilar.
Amgen filed suit in the United States District Court for the Northern District of California, asserting claims of (1) unfair competition under California law based on Sandoz’s failure to comply with the information exchange provisions of the BPCIA, and for prematurely providing the required notice of commercial marketing before FDA approval of the aBLA, which allegedly was also in violation of the BPCIA; (2) unlawful conversion under California law of Amgen’s FDA-approved license for NEUPOGEN®; and (3) infringement of an Amgen patent claiming a method of using filgrastim. Among other requested relief, Amgen requested a preliminary injunction to prevent Sandoz from entering the market. Sandoz counterclaimed for declaratory judgments that the asserted patent was invalid and not infringed and that it had not violated the BPCIA.
The district court dismissed Amgen’s unfair competition and conversion claims under California law with prejudice, holding that (i) the BPCIA permits a biosimilar applicant to not provide a copy of the aBLA and manufacturing information to the RPS, subject only to the consequences set forth in the BPCIA for opting out of the information exchange process; and (ii) an applicant may give the notice of commercial marketing required under the BPCIA before it receives FDA approval. The district court also granted judgment on the pleadings to Sandoz on its counterclaims seeking a declaratory judgment that it correctly interpreted the BPCIA; and (3) denied Amgen’s motion for a preliminary injunction based on its state law claims. Amgen Inc. v. Sandoz Inc., 2015 U.S. Dist. LEXIS 34537, at *34–35 (N.D. Cal. Mar. 19, 2015).
On appeal, the Federal Circuit held that Sandoz did not violate the BPCIA in failing to disclose its application and manufacturing information, and that the remedies contained in the BPCIA are the exclusive remedies for an applicant’s failure to disclose this information. Amgen Inc. v. Sandoz Inc., 794 F.3d 1347, 1357 (Fed. Cir. 2015). The Federal Circuit reversed the district court on the notice of commercial marketing issue, concluding that the notice of commercial marketing can only be effectively given after the FDA has approved the biosimilar product. Id. at 1358. It thus enjoined Sandoz from marketing its biosimilar product until 180 days after the date it provided its second notice to Amgen. Id. at 1360.
The Supreme Court granted Sandoz’s petition for certiorari and Amgen’s conditional cross-petition for certiorari and consolidated the cases. Sandoz Inc. v. Amgen Inc., 137 S. Ct. 1664, 1673–74 (2017). The Supreme Court held that an injunction is not available under federal law to compel compliance with the initial disclosure requirement of the BPCIA and that a biosimilar applicant may provide the notice of commercial marketing required by the BPCIA either before or after receiving FDA approval. Id. at 1674, 1677.
The Supreme Court remanded the case for further proceedings consistent with its opinion, directing the Federal Circuit to determine whether California law would treat noncompliance with the BPCIA’s initial disclosure requirement as “unlawful” and if so, whether the BPCIA preempts any additional remedy under state law for a biosimilar applicant’s failure to comply with the BPCIA’s initial disclosure requirement, and whether Sandoz had forfeited any preemption defense. The Supreme Court further stipulated that the Federal Circuit was free to address the preemption question first by assuming that a remedy under state law exists. Id. at 1676–77.
Federal Circuit’s decision on remand
Holding 2. Analysis a) Waiver
On remand from the Supreme Court, the Federal Circuit affirmed the district court’s dismissal of Amgen’s state law claims, holding that: (1) Sandoz did not forfeit its preemption defense, and (2) the BPCIA preempts state law remedies for a biosimilar applicant’s failure to comply with the BPCIA’s initial disclosure requirement. Amgen, 877 F.3d at 1320, 1325, 1326.
Amgen argued that: (1) Sandoz waived its preemption defense by not arguing it before the district court, (2) the Federal Circuit previously declined to address preemption in this case, and (3) the issue of preemption should not be remanded to the district court. In response, Sandoz argued that the Federal Circuit had discretion to address Sandoz’s preemption defense, that the case was of great importance and preemption would have been fully briefed and was a pure matter of law, and that Amgen would not be prejudiced by the Federal Circuit’s consideration of preemption because Sandoz can assert preemption in the district court later, as it preserved the defense in its answer. Id. at 1324.
The Federal Circuit agreed with Sandoz that it had discretion to address the preemption issue and that it should exercise that discretion, pointing out that the Supreme Court “expressly invited us to do so.” The Federal Circuit found that Sandoz had not waived its preemption defense because it pleaded the defense in its answer in the district court litigation. The Federal Circuit stated that preemption was a legal question that the parties had fully briefed and that it was a significant issue of general impact or of great public concern in considering whether state law claims may play a role in enforcing compliance with the BPCIA’s initial disclosure requirement. Finally, the Federal Circuit pointed out that even if it declined to reach preemption now, Sandoz could raise the defense on remand before the district court, and thus it discerned no prejudice to Amgen by resolving the preemption issue now. Id. at 1324–25.
b) Preemption Field Preemption
The Supremacy Clause of the Constitution (U.S. Const. art. VI, cl. 2), provides that federal law “shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” Preemption can be by express preemption, field preemption, or conflict preemption. The Federal Circuit explained that fundamentally, preemption is a question of congressional intent. The BPCIA did not expressly preempt state law, so the Federal Circuit addressed field and conflict preemption. Id. at 1326.
Field preemption occurs when Congress intended the Federal Government to exclusively occupy a particular field. Congressional intent may be inferred from a scheme of federal regulation that is so pervasive that Congress left no room for the States to supplement it, or where an Act of Congress is directed to a field in which the federal interest is so dominant that the federal system is assumed to preclude enforcement of state laws on the same subject. There is, however, a presumption against preemption in a field in which states have historically legislated. Id.
The Federal Circuit found no presumption against preemption for biosimilar patent litigation because it is not a field that the States have traditionally occupied. The Federal Circuit pointed out that patents are inherently federal in character, Congress has granted federal courts exclusive jurisdiction over patent cases, and the FDA has exclusive authority to license biosimilars. Id. at 1327.
Moreover, the Federal Circuit noted that the scheme under the BPCIA is comprehensive and provides a full set of standards governing the exchange of information and biosimilar patent litigation, including the consequences for noncompliance. And, the Supreme Court held that the remedies provided by the BPCIA exclude all other federal remedies, including injunctive relief. Id.
The Federal Circuit noted that the relief Amgen was seeking under California law—injunctive relief and damages—was not provided for by the BPCIA. Indeed, the only remedy provided to an RPS by the BPCIA for a biosimilar applicant’s failure to comply with the BPCIA’s initial disclosure requirement is to bring a declaratory-judgment action. Permitting the state to impose its own penalties for alleged violations of the BPCIA would conflict with the careful framework Congress adopted. The Federal Circuit opined that such a conflict in available remedies between federal and state law underscores the reason for field preemption. Id. at 1328.
2. Conflict Preemption
Conflict preemption occurs when state laws conflict with federal law, such as when it is impossible for a private party to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. Id. at 1326.
The Federal Circuit again pointed out that the remedies that Amgen sought under state law were unavailable under the BPCIA. The Federal Circuit reasoned that this created a conflict in the method of enforcement between the BPCIA and state law, which is an obstacle to the regulatory system Congress chose. Assuming that Congress deliberately chose not to provide certain remedies for breach of BPCIA’s disclosure requirements, the Federal Circuit found that state law imposing such remedies would interfere with the careful balance struck by Congress. Further, compliance with the BPCIA’s detailed regulatory regime in the shadow of the tort regimes and unfair competition standards in 50 states could dramatically increase the burdens on biosimilar applicants beyond those contemplated by Congress in enacting the BPCIA. Id. at 1329.
As such, the Federal Circuit found Amgen’s state law claims intruded upon the field of biosimilar patent litigation that Congress reserved for the federal government and conflicted with the BPCIA, and thus were preempted on both field and conflict grounds. Consequently, the Federal Circuit affirmed the dismissal of Amgen’s unfair competition and conversion claims under California state law.
Going forward
Unless the Federal Circuit grants a petition for either a panel rehearing or a rehearing en banc, or the Supreme Court grants another petition for certiorari, it is very possible that the latest Federal Circuit decision in Amgen v. Sandoz lays to rest the uncertainty whether an RPS can rely on state law to enforce compliance with the initial disclosure requirements of the BPCIA, or otherwise penalize a biosimilar applicant for noncompliance.
However, other questions remain unanswered. Several recent cases raise issues concerning the information production and cooperation obligations of a biosimilar applicant that initiates the information exchange process by providing the RPS with a copy of the aBLA but provides only partial or no manufacturing information, or fails to complete the process by opting out at some later stage of the process.
Genentech v. Amgen
In Genentech, Inc. v. Amgen Inc., No. 17-165-GMS (D. Del. 2017), Genentech sued Amgen for failure to comply with the BPCIA’s initial disclosure requirement when Amgen provided Genentech with a copy of its aBLA, but refused to provide any information on the manufacturing process. Genentech argued that Amgen was trying to force Genentech to either (1) produce a list of potentially infringed patents without the full disclosure of Amgen’s manufacturing processes, which information was allegedly necessary to provide a complete list of patents that Genentech believed could be reasonably asserted, or (2) sue Amgen for infringement and then wait and see whether that lawsuit was proper at some later time. Genentech Br. 2–3, 28 February 2017. Amgen argued that the case could not be distinguished from Amgen Inc. v. Sandoz Inc., 794 F.3d 1347, and that Genentech’s only recourse was a patent infringement lawsuit. Amgen Br. 1, 27 February 2017. The district court agreed with Amgen and dismissed Genentech’s action without prejudice. Genentech, Inc. v. Amgen Inc., No. 17-165-GMS (D. Del. 1 March 2017).
Thus, with respect to compelling a biosimilar applicant to comply with the BPCIA, the district court did not recognize a distinction between the situation in Amgen v. Sandoz where the biosimilar applicant chooses not to initiate the information exchange process and where the biosimilar applicant initiates the information exchange process, albeit with allegedly incomplete information.
Amgen v. Hospira
Amgen was on the other side of a substantially similar scenario in Amgen Inc. v. Hospira, Inc. 866 F.3d 1355 (Fed. Cir. 2017). However, Amgen sought to obtain the missing manufacturing information through discovery, not through a declaratory-judgment action to compel compliance with the BPCIA. Here, Amgen is the RPS and Hospira is the biosimilar applicant. Hospira provided Amgen with a copy of the aBLA, without any additional information regarding the manufacturing process. In a letter to Hospira, Amgen alleged that Hospira did not fully comply with the initial disclosure requirement because Hospira did not provide the specific composition of the cell culture media used to manufacture its biosimilar. Hospira responded that the components Amgen had identified were commercially available raw materials, and that the aBLA provided sufficient information concerning the manufacturing processes. Despite this disagreement, Amgen provided its initial list of patents to Hospira, listing three patents. Hospira “accepted” Amgen’s list and opted out of the negotiation phase.
Notably, Amgen did not include its cell culture patents in its list and did not commence patent infringement proceedings on those cell culture patents. Ultimately, Amgen filed suit against Hospira on two of the listed patents. Amgen sought discovery on the composition of Hospira’s cell-culture medium. Hospira refused Amgen’s discovery requests. Amgen subsequently filed a motion to compel discovery, which the district court denied, stating that the cell-culture information sought by Amgen had essentially no relevance to the asserted patents. Amgen appealed the district court’s interlocutory order to the Federal Circuit.
In denying Amgen’s appeal, the Federal Circuit addressed Amgen’s argument that a RPS listing a patent without the benefit of a biosimilar applicant’s complete disclosure complying with the initial disclosure requirement would later be subject to sanctions under Federal Rules of Civil Procedure 11 or antitrust liability for asserting baseless claims of patent infringement. The Federal Circuit stated that the BPCIA merely requires the RPS to list patents that it believes could reasonably be asserted, and that for each listed patent, the burden is shifted to the biosimilar applicant to provide a detailed statement, on a claim-by-claim basis, setting forth the factual and legal basis as to why the patent could not be reasonably asserted. If the biosimilar applicant fails to comply with this requirement, then the RPS would have a reasonable basis for asserting a claim of patent infringement with respect to that patent. The Federal Circuit further noted that the BPCIA provides no sanction for holding or asserting a mistaken belief in good faith, and that there is no Rule 11 issue where the RPS forms a belief based on an inquiry that was limited by a biosimilar applicant’s withholding of information. Thus, the reasonableness requirement does not preclude a RPS from listing a patent for which a biosimilar applicant has not provided information. Id. at 1361–63.
The Federal Circuit’s list-it-or-lose-it holding could result in an RPS listing every conceivable patent that is or might be related to the manufacture of its biologics in situations where inadequate information has been provided by the biosimilar applicant. This, in turn, could significantly increase the burden on the biosimilar applicant to provide its detailed analysis as to why each patent could not be reasonably asserted, or otherwise result in the biosimilar applicant agreeing to a long list of patents that the RPS may assert in immediate legislation. Whether this actually happens remains to be seen. However, the possibility of such results would appear to diminish the benefits to a biosimilar applicant for initiating the information exchange process with incomplete information compared to opting out of the information exchange process entirely.
Janssen v. Celltrion
Another case suggests that there may be other ramification to a biosimilar applicant that opts-in to the information exchange process, but chooses not to fully comply with or complete the process. In Janssen Biotech, Inc. v. Celltrion Healthcare Co., Ltd., No. 1:15-cv-10698 (D.Mass.), Celltrion provided Janssen with a copy of the aBLA and some, but not all, of its manufacturing information. After Janssen provided its patent list, Celltrion provided a detailed statement in response, and agreed that all of the patents identified by Janssen would be listed for the first phase of BPCIA litigation, thus opting out of the negotiating steps. Janssen filed suit within the 30-day period to avoid having its damages limited to a reasonably royalty. The parties entered into settlement negotiations after Celltrion moved to dismiss for lack of standing. To guide settlement negotiations, the parties requested clarification from the court whether, among other things, Janssen would be prevented from seeking lost profits damages under the BPCIA in the event the action was dismissed and Janssen was forced to refile the complaint to correct standing, as the 30-day window provided by the BPCIA had already expired.
In response to this request, the district court issued a memorandum with its guidance. Finding that the ordinary meaning of the term “shall” as used in several of the information exchange process provisions of the BPCIA indicates a mandatory directive, the court opined that only the listed patents that emerge from a properly completed BPCIA information exchange process are potentially subject to the reasonable royalty damages limitation. Thus, the court advised, because Celltrion failed to complete the information exchange process, the 30-day time limit for Janssen to file suit or have its remedies limited to a reasonably royalty was never triggered. Memorandum and Order 5–7, 2 March 2017.
Accordingly, the Janssen guidance suggests that a possible consequence for a biosimilar applicant initiating, but not completing, the information exchange process is that an RPS’s remedies will not be limited to a reasonable royalty if a first phase BPCIA infringement suit is not timely filed.
Conclusion
It appears that it is now settled that a biosimilar applicant cannot be compelled to initiate the information exchange process of the BPCIA under federal or state law, and that the only remedy available to an RPS in such a situation is to bring an action of patent infringement. However, there are a number of issues that have yet to be resolved regarding the ramifications of various strategies a biosimilar applicant and an RPS respectively may adopt once an information exchange process has been initiated. Thus, these and other BPCIA cases should be monitored to see how these current issues and future issues are resolved.