Dancing With the Stars, Patent Style

In June 2017, the US Supreme Court ruled that the “patent dance” was not mandatory for biosimilar manufacturers. Since then, our discussion of the patent dance (not patent litigation) has been infrequent. The first wave of biosimilars tended to perform the dance (or did it not incompletely). Therefore, manufacturers of drugs like filgrastim, infliximab, epoetin, and others have already hit the dance floor or not. The patent litigation that has resulted or been headed off (less likely!) already occurred. Since the Supreme Court ruling, if you will, the music was still playing, but there were fewer spectators.

The patent dance can be mystifying but it can also be rewarding, say patent attorneys at a recent conference in New York City. Judging whether to participate requires several considerations.

I hadn’t given the patent dance much thought since that time. I was under the impression that the majority of developers of new biosimilars would likely now avoid this process.

An excellent session at the ACI Biosimilar Summit this week in New York City focused the spotlight on the dance floor once again. The meeting itself was chockfull of attorneys—attorneys talking patents. Inevitably, this topic resurfaced. And it caused me to alter my perceptions.

CONTROLLING THE INFORMATION EXCHANGE

The exchange of information that takes place upon initiating the patent dance can still be advantageous to the biosimilar maker and the manufacturer of the innovator biologic. Irena Royzman, PhD, Partner at Kramer Levin, explained, “The patent dance gives control to the biosimilar applicant. It limits the number of patents the innovator can litigate. This is very powerful, especially when the innovator has [a multitude of patents].”

However, there could be advantages for the biosimilar applicant who decides not to participate. For instance, she said, the applicant can keep reference manufacturers from knowing what indications are being sought, unless these are released publicly. They can also shield such critical information as the manufacturing process.

TAPPING IN AND TAPPING OUT

Petra Scamborova, PhD, Director, Dispute Resolution, Regeneron Pharmaceuticals, pointed out that participating in the patent dance does not have to be a black and white decision. “There are several options,” Dr. Scamborova remarked, besides fully participating in the patent dance, which she believes is still the best option for biosimilar manufacturers. “It gets you the patent list early on,” she said, “which commits the innovator to asserting a specific set of patents that they will defend. It also gets you the reference manufacturing information prelitigation,” added Dr. Scamborova.

“If the innovator doesn’t abide by the rules of the dance fully,” she continued, the applicant will be at reduced risk, which may result in “a reasonable royalty only” should the biosimilar maker be on the losing end of a district court decision. Dr. Scamborova also commented that full participation in the patent dance avoids unnecessary litigation down the line.

Charles Klein, Partner, Winston & Strawn LLP, offered another option: “dancing partway,” that is, beginning the patent dance but electing to exit the process before completion. He thinks this may be a viable strategy if the reference product’s 12-year exclusivity is already expired. He noted, “It usually takes 6 to 9 months to get through the patent dance prior to litigation.”  If a biosimilar maker intends to launch their product relatively soon after approval, delaying the litigation by 6 to 9 months can have a material effect on its ability to launch (e.g., 2 yr after approval).

However, undergoing the initial dance steps gains some of the important information during the exchange. “If you elect not to continue the dance,” Mr. Klein said, “the downside is that the biosimilar applicant loses control over the litigation. The sponsor could decide not to sue immediately (though not likely), which will delay resolution. You will also waive the statutory limitations on remedies.”

From the innovator’s perspective, a partial dance is better than no dance at all, Mr. Klein stated, “because you get a good deal of information from the applicant’s application. You control which patents to assert and when to assert them.”

GETTING IN AND OUT OF STEP, DEPENDING ON TIMING

What about option 3—no dance at all? The attorneys on the panel believe that decision again hinges on the timing of the 12-year exclusivity. Matthew Pearson, Partner at Akins Gump Strauss Hauer & Feld, pointed out that avoiding the patent dance altogether may be a good choice if, for instance, the applicant is not the first biosimilar for the innovator drug. “You may think you already know what patents will be asserted by the innovator.” In this scenario, the biosimilar applicant can keep its manufacturing information from the innovator company for some time.

Another important factor in deciding whether to engage in the patent dance relates to the new biosimilar maker’s belief as to whether it will infringe the innovator’s patents. If the biosimilar manufacturer believes it they will not infringe, and it does not have the first biosimilar for a particular biologic, he thinks it may make sense to avoid the patent dance completely.  

What of the scenario when the opposite is true, where the biosimilar maker is faced with 70 patents and expects to infringe on some? The patent dance can then limit the number of patents that can be litigated. In the case of fewer potential patents at issue, the attorneys on the panel believe that the launch timing will play a role (along with the biosimilar maker’s willingness to accept risk). If sufficient time exists before potential launch, proceeding to the dance floor would make sense, they said.

Finally, in the case where the applicant knows only partially which patents will be asserted, but assumes it will not infringe upon any of these. Then, beginning the patent dance makes sense; the biosimilar maker can obtain the list of patents to be defended by the reference drug maker. It might then also make sense to stop the dance after confirming the patent list. Overall, they claim, the patent dance does present some benefits for biosimilar developers. The Supreme Court’s opinion did not strike down the process, only the fact that it was not mandatory. Based on the opinions of these experts in the process, it make still help smooth a still rough path through the litigation process.

US Supreme Court Strikes Down 180-Day Waiting Period

In a unanimous decision, the Supreme Court rejected Amgen’s oral arguments—a biosimilar manufacturer can meet the 180-day notification period requirement by notifying the originator’s manufacturer before receiving approval. In other words, biosimilar launches can occur immediately after approval by the Food and Drug Administration (FDA).

The 180-day notification period was seen as giving the originator a further 6 months of exclusivity, not allowing newly approved products to reach the market until after the period had expired. The argument by biosimilar manufacturers has been that notification of its intention to commercialize the drug can be given prior to approval (e.g., at the time the application is sent to the FDA), without any disadvantage in terms of an examination of whether patents had been infringed.

Sandoz v. Amgen involved Sandoz’s filgrastim biosimilar Zarxio®, which has since launched, but this decision, written by Justice Clarence Thomas, will clear one barrier out of the way to faster access to biosimilars.Image result for justice clarence thomas

The justices decided to punt on a ruling of whether the patent dance is necessary to the states, where unfair business conduct laws may take precedence. The patent dance involves a protocol where the biosimilar applicant must provide to the reference drug maker information on how it plans to manufacture the agent and its actual 351(k) application. The reference drug manufacturer can then evaluate which of its patents it believes will be infringed, and must respond (and counter) within a specific timetable. According to Justice Thomas’ opinion, “There is no dispute about how the federal scheme actually works, supreme-courtand thus nothing for us to decide as a matter of federal law. The mandatory or conditional nature of the [Biologics Price Competition and Innovation Act] requirements matters only for purposes of California’s unfair competition law, which penalizes ‘unlawful’ conduct. Whether Sandoz’s conduct was ‘unlawful’ under the unfair competition law is a state-law question, and the court below erred in attempting to answer that question by referring to the BPCIA alone.

“We decline to resolve this particular dispute definitively because it does not present a question of federal law. The BPCIA, standing alone, does not require a court to decide whether §262(l)(2)(A) is mandatory or conditional; the court need only determine whether the applicant supplied the sponsor with the information required under §262(l)(2)(A).”

Justice Stephen Breyer suggested, in a concurring opinion, that the FDA may play a greater role in deciding the outcome of the patent dance. He stated, “[If FDA], after greater experience administering this statute, determines that a different interpretation would better serve the statute’s objectives, it may well have authority to depart from, or to modify, today’s interpretation.”

No Clear Winner on Supreme Court’s Biosimilar Hearing Day

Despite the fact that the arguments at Wednesday’s Supreme Court wrestling match on the patent dance and 180-day notification issue went into overtime, there was no clear winner discernable in Amgen v. Sandoz.

Some observers believe that the Supreme Court justices were more comfortable with Amgen’s arguments, but the justices admitted that there was little clarity in trying to interpret the ambiguous language of the Biologics Price Competition and Innovation Act. Justice Stephen Breyer stated his unfamiliarity with the technical aspects of the field and expressed concern about ruling on these issues.

Indeed, it is possible that the Court will not issue any ruling, since the case specifically arose around Sandoz’s launch of Zarxio®. Sandoz waited out the 180-day notification period before launching the product, which could prompt the justices to decide that the question is moot, avoiding the larger question of whether it should be enforced for future biosimilar launches.

Judicial experts and industry watchers will be pouring over the comments and questions from the justices for some time, until a final ruling is released (thought to be in July).

In other news… US sales of Janssen’s Remicade® slipped 2.4% to $1.18 billion, in the first full quarter following the launch of its biosimilar competitor, Pfizer’s Inflectra®. This does not necessarily reflect lost marketshare but Janssen’s concessions in matching the price of Inflectra to retain its preferred positioning. With a new competitor looming later this year (Renflexis™), Remicade’s earnings slide is expected to accelerate.

Amgen’s Enbrel® is also facing a less-rosy future, as the product’s sales in the anti-TNF category has begun to slip, independent of any active biosimilar competition. However, competition in the rheumatoid arthritis and psoriasis categories from other products, especially interleukin inhibitors, has been stiff. First quarter 2017 sales of Enbrel in the US dropped 15% to $1.18 billion. Sandoz’s biosimilar etanercept, though approved by the FDA and beyond the 180-day notification period, has not yet launched due to patent litigation questions.

Frustration Mounts as Sandoz’s Etanercept Biosimilar Launch Delayed into 2018

Call it irritation, exasperation, or frustration, but biosimilar manufacturers and payers alike are feeling it, as the fight over drug patents has barred the way to approval for yet another biosimilar for a costly biologic.

In this case, Sandoz’s Erelzi™, which was approved by the Food and Drug Administration on August 30, 2016, has been caught in the patent litigation web. The originator drug, Amgen’s Enbrel® was first approved in 1998. Amgen asserts that its patent on the agent protects exclusivity until 2029, which would give Amgen 31 years of sole marketing rights. Despite the unlikely event that it can defend its patent for this extraordinary period, Sandoz has acknowledged that it will need to hold off launch of the biosimilar until at least 2018.

In a report from Reuters on January 25, Richard Francis, CEO of Sandoz, stated that the legal battle “won’t really reach a conclusion until 2018. That’s the frustration sometimes of the legal situation, but the way I look at that, we’re carving the landscape out as we go.”

Indeed, Sandoz has been at launch-delaythe forefront of legal battles, also fighting Amgen on the validity of the 180-day notification period, which is now being readied for US Supreme Court arguments in the Spring. The 180-day notification period for Erelzi was due to end in
late February 2017. After this time, Sandoz may still launch the product, at risk of financial penalties and loss of revenues, if the courts rule that Amgen’s remaining patent is valid.

However, the potential for savings on Enbrel, through biosimilar competition, continues to be a mirage for payers. The agent, which pulled in US revenues of $5 billion in 2015, has been the subject of numerous recent price increases. Health plans and insurers, while believing these costs untenable, may have little choice but to pay up or find ways to more aggressively restrict access.

Supreme Court May Hear Biosimilar 180-Day Notice Suit

How soon after approval by the Food and Drug Administration (FDA) can a biosimilar be sold on the market? For a conventional generic drug, that is pretty much completely up to the manufacturer. For a biosimilar maker, they have to sit and wait.

The US Supreme Court has asked the Obama Administration for its views on the contentious 180-day notice period, mandated by law, that biosimilar manufacturers must give to makers of innovator products, indicating their intention to go to market.

The Biologics Price Competition and Innovation Act (BPCIA), which authorized the biosimilar approval pathway, also set the timing of when a biosimilar can be launched. Specifically, BPCIA stated that a biosimilar manufacturer must give 180-day notice to the innovator’s manufacturer before the agent can be launched. The original notion was that this 6-month period would allow for the resolution of any patent dispute brought by the innovator drug maker. This seems unnecessary in reality, as patent disputes have been initiated and underway for many months/years before FDA approval is given. Instead, the 6-month notice period is undully delaying product launch (and depriving the government and the public of cost savings), according to Sandoz, which petitioned in February for the US Supreme Court to decide the matter.

In 2015, Sandoz contended that the law allowed it to give Amgen notice of its marketing plans for Zarxio® before FDA approval was granted. The federal appeals court did not agree, forcing Sandoz to wait essentially another 6 months before going to market.

According to industry observer Ed Silverman, this means 2 things: (1) that it is likelier that the Supreme Court will hear the case and (2) that the Obama Administration, which had lobbied for shorter exclusivity periods than was actually granted in BPCIA (7 yr vs. 12 yr), may have another chance to influence how quickly biosimilars are brought to the marketplace.

Sandoz argues that it should be allowed to provide this notice well before FDA approval, as patents are being disputed well before hand; Amgen counters that notice of intention to launch is moot without FDA approval. Of course, with an 8-member Supreme Court, a tie would allow the appeals court decision to stand.