Today’s unanimous ruling by the U.S. Supreme Court in Sandoz v. Amgen injects much-needed certainty into a difficult statute and streamlines the process for biosimilar products to enter the marketplace following FDA approval under the Biologics Price Competition and Innovation Act (BPCIA).
A biosimilar is a type of biological product that is licensed or approved by the FDA because it is highly similar to biological products already approved by the FDA. These FDA-approved biological products are made from living organisms and include medications currently used to treat conditions such as rheumatoid arthritis, anemia, low white blood cell counts, inflammatory bowel disease, skin conditions such as psoriasis, and various forms of cancer.
Background
The BPCIA provides for accelerated FDA approval of “generic” biological products that are biosimilar to or interchangeable with a previously FDA approved reference product. Biological products under the FDA’s framework are medical products derived from living sources that are intended to treat or prevent diseases, distinguishable from chemical drugs. Biologics represent a multi-billion dollar industry, and include drugs such as Humira®, Remicade®, and Enbrel®. The BPCIA allows a first-approved reference biological product, which is typically a brand-name drug, a period of exclusivity (12 years, regardless of patent protection) against follow-on products and is intended to foster both competition and innovation by permitting the accelerated approval and marketing of subsequent “biosimilar” products.
Under the BPCIA, a prospective follow-on marketer must provide data and studies to the FDA that support the biosimilarity of the later product to the brand name product. In addition, notice of a biosimilar product that has been “licensed” by the FDA must be provided to the brand name manufacturer 180 days before the first commercial marketing of the biosimilar product. The BPCIA also provides a process referred to as the “patent dance” through which the two parties exchange confidential information in an attempt to identify potential patent infringement disputes.
Unfortunately, the BPCIA is far from clear and has been characterized by the Federal Circuit, with credit to Winston Churchill, as a “riddle wrapped in a mystery inside an enigma.” The U.S. Supreme Court was called on to resolve issues about this lack of clarity that arose during litigation between Amgen Manufacturing Ltd. (Amgen), the marketer of the brand name Neupogen® biological product, and Sandoz Inc. (Sandoz), the marketer of a follow-on biosimilar product it intended to sell under the trade name Zarxio.
In May 2014, Sandoz filed an application for FDA approval of Zarxio under the BPCIA. On July 7, 2014 the FDA notified Sandoz that its application was under review, and the next day Sandoz provided its first notification to Amgen of the application and its proposed biosimilar product, which it intended to sell immediately upon FDA approval. Later that month Sandoz also notified Amgen that it would not be disclosing the details of the application as contemplated by the BPCIA, based on its interpretation that these disclosures were optional and it could opt out. It was not until March 2015 that the FDA approved the application for Zarxio, at which point Sandoz provided its second notification to Amgen, this time of the approval of the application.
Amgen sued Sandoz in October 2014 for violating the BPCIA. First, it alleged that because Sandoz provided notice of its intent to market Zarxio commercially on a date prior to FDA approval of the application, such notice was premature and improper. Second, Amgen argued that Sandoz was obligated to disclose the details of its application and participate in the “patent dance” under the BPCIA.
The district court ruled that Sandoz’s failure to disclose the details of the application alone didn’t give Amgen a basis for damages or injunctive relief. The district court also held that notice of commercial marketing could be given prior to FDA approval of the application, meaning that Sandoz gave proper notice in July 2014. The Federal Circuit vacated that decision and held that effective notice could only be given after FDA approval, meaning that Sandoz’s notice was not effective until March 2015. The Federal Circuit also held that failure to disclose the application details didn’t violate the BPCIA and Amgen’s remedy was to file a patent infringement suit, as it did.
Today’s Ruling
In today’s ruling, the Supreme Court upheld the Federal Circuit’s decision that the “patent dance” contemplated by the BPCIA is optional, noting however that its reasoning was flawed. As such, failure to comply with the disclosure requirements is not enforceable by an injunction under federal law. The case was remanded to the Federal Circuit to consider whether an injunction under California state law was available to enforce the disclosure requirements under the BPCIA. The Supreme Court further held that notice of commercial marketing can be provided prior to or after approval of the biosimilar product by the FDA, though the commercial marketing itself must be of a licensed product. Both rulings for the most part favor Sandoz over Amgen, though the impact of state law on Sandoz remains unresolved.
Impact
In ruling that notice can be provided prior to FDA approval of the biosimilar product, the Supreme Court has essentially sped up the entry of biosimilars into the market. Allowing biosimilar manufacturers the ability to provide notice before licensure by the FDA means that they can effectively begin commercial marketing immediately upon FDA approval. Brand name manufacturers will be forced to act more quickly in challenging the marketing and, indeed, may have to take steps to prepare for legal action even before knowing whether the biosimilar product will be approved at all.
The Supreme Court’s ruling will also force biosimilar applicants to consider closely whether they want to participate in the “patent dance” under the BPCIA. First, it remains unclear whether state law may impact the lawfulness of the activity. In addition, while opting out of the early disclosure would allow biosimilar manufacturers to delay disclosing commercially sensitive information until the pendency of subsequent litigation, this is still likely to have consequences. The BPCIA provides various protections to the biosimilar applicant, such as having damages limited to a reasonable royalty, which will likely be forfeited if the applicant opts out of full disclosure. Again, the ruling seems to allow for greater uncertainty for brand name manufacturers, who may need to pursue legal action without having access to a complete record.
Overall, the most important thing to emerge from the Sandoz v. Amgen case is a clarification of the BPCIA. The future of the “patent dance” remains unclear pending remand to the Federal Circuit, but biosimilar manufacturers can at least rest assured that they do not have to wait 180 days following FDA approval to begin marketing their products.
The opinions expressed are those of the author and do not necessarily reflect the views of the Firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice.
