Markman Advisors
Patent Valuation, Monetization and Investments

Blog

Intellectual Property

What is the take-away from the Federal Circuit’s latest BPCIA decision?

Zachary Silbersher

Since the first BPCIA cases hit the courts a few years ago, the Federal Circuit and the Supreme Court have slowly been untangling the knots and confusions around the complicated regulatory scheme.  Innovator companies and biosimilars have wrangled over the “patent dance” and the 180-days notice of commercial marketing, including what’s required, what’s not, and who can leverage a regulatory tactical advantage.  A case between Amgen and Sandoz has helped resolve many of these issues, and this week, the Federal Circuit took another step towards gutting the statute.

Much like the Hatch-Waxman Act for small-molecule drugs, the primary purpose of the BPCIA is to allow an innovator biologics manufacturer (sponsor) and a biosimilar applicant to resolve any disputes over the sponsor’s patents before the biosimilar launches. The BPCIA sets forth a procedure for resolving patent disputes between the sponsor and the biosimilar. The first stage is commonly referred to as the “patent dance.” Under the “patent dance,” the biosimilar applicant discloses its aBLA and its manufacturing process, and then the parties identify patents that could potentially enjoin the biosimilar and serve as the basis for a lawsuit.

Yet, the BPCIA envisions that not all patents that the sponsor may wish to assert against the biosimilar will be identified during the dance.  This was evident in AbbVie’s recent BPCIA lawsuit against Amgen for a biosimilar for HUMIRA®.  Both AbbVie and Amgen engaged in the patent dance, and identified 10 patents.  AbbVie then promptly sued on those 10 patents.  The problem, however, was that AbbVie claimed to have another 60-plus patents that it still endeavored to assert against Amgen, but could not do so at that time.  The reason is that the “patent dance” gives the biosimilar applicant control over how many patents can be asserted in the BPCIA case.  For instance, towards the end of the dance between AbbVie and Amgen, Amgen identified six patents for inclusion in the suit.  The statute, however, only allows the sponsor to reciprocally identify the same number of patents as the biosimilar applicant.  AbbVie also identified six patents, but two overlapped with Amgen’s identified patents, and thus the case proceeded with only 10 asserted patents.

Strangely, even though the BPCIA is intended to set forth a scheme for efficient resolution of patent infringement allegations, the “patent dance” would appear to run contrary to that goal, by forcing the sponsor, such as AbbVie, to delay assertion of patents.  Yet, the BPCIA has a purported solution to that problem.  Before the biosimilar applicant can enter the market, it must give the sponsor 180 days notice before it does so.  After giving that notice, the sponsor can then bring another lawsuit, and assert any other patents it wishes. 

It all makes sense.  Sort of.  Except, as most patent practitioners know, six months is not nearly enough time to resolve a patent litigation.  In AbbVie’s case, had it not settled with Amgen, it is beyond reason that it could have resolved a 60-patent lawsuit within six months.  Technically, the sponsor can move for a preliminary injunction.  Yet, the sponsor is clearly playing for as much delay as possible, and moving for a PJ can be a double-edged sword.  If the sponsor moves for a PJ, and wins, that would confirm the biosimilar will not launch at-risk after six months.  On the other hand, if the sponsor moves for a PJ, and loses, that increases the odds of an at-risk launch by the biosimilar (as well as negating a finding of willful infringement.)  Not moving for a PJ at all, however, and simply allowing the case to proceed, perpetuates the risk that any launch by the biosimilar will be at risk, which could be profitable for the sponsor, if the litigation itself takes three or four years.  On the other hand, not moving for a PJ could damage irreparable harm arguments down the road.  Exactly how sponsor and biosimilars will play these angles still remains to be seen.

Thus, the BPCIA set forth a complicated, nuanced regulatory scheme, with ample angles for tactical and strategic advantage.  However, over the past couple years, both the Federal Circuit and the Supreme Court have been stripping away much of the “shall” and “must” obligations under the statute.  In June 2017, the Supreme Court issued two clarifications that took much of the bite out of the BPCIA. 

First, the Court held that the 180 days notice of commercial marketing can be given before FDA approval of the aBLA.  That was a boon for biosimilars.  If commercial marketing notice had to be delayed until after FDA approval, as previously argued it should be by sponsors, that delays any subsequent lawsuit for patents not identified during the “patent dance,” and it potentially gives the sponsor another six months of monopoly sales, depending on whether the marketing exclusivity has yet to expire.  Ironically, this point may, over time, become moot since the “patent dance” itself has been held to be optional, which leads to the Supreme Court’s second clarification from June 2017.

Second, the Court confirmed that the “patent dance” is optional, and the biosimilar applicant is not required to disclose its aBLA or manufacturing process to the sponsor.  The sponsor’s only recourse is to sue, essentially blind, for patent infringement.  (Blind because, without the biosimilar’s aBLA or manufacturing process, the sponsor cannot conduct really know which of its patents are infringed.)  In that suit, the sponsor can obtain the biosimilar’s aBLA and manufacturing process through discovery.  The Court further clarified that if the biosimilar applicant refuses to engage in the “patent dance,” the sponsor’s only recourse under federal law is to sue.  More to the point, the sponsor cannot enjoin the biosimilar applicant to disclose its aBLA and manufacturing process, and the sponsor cannot seek damages based on the biosimilar’s failure to do so.

That was also a boon for biosimilars.  The “patent dance,” though intended to be an efficient scheme for identifying the sponsor’s patents that are most important for resolution, nonetheless can take seven to nine months.  Those months simply delay the biosimilar’s entry.  That is one reason that biosimilars, such as Sandoz among others, stonewalled the “patent dance,” and argued it should be deemed optional. 

Yet, the Supreme Court left open one potential sop to sponsors.  It remanded to the Federal Circuit to determine if the sponsor can bring claims under state law when a biosimilar applicant refuses to engage in the “patent dance,” such as unfair competition, wrongful use of an FDA license, and so forth.  If those claims were available, then theoretically they could provide a basis for an injunction or damages.  That, in turn, could derail biosimilar applicants into the “patent dance,” as well as into the corresponding delay.

This week, however, the Federal Circuit rejected any relief under state law (Amgen v. Sandoz, No. 2015-1499).  The Court held that state law remedies are not available to a sponsor in the event a biosimilar applicant refuses to engage in the “patent dance,” and does not disclose its aBLA and manufacturing process.  The Court reasoned that the BPCIA preempts state law claims based on a biosimilar applicant’s failure to engage in the “patent dance.”  This was another boon for biosimilars, because it essentially removes almost all legal risk for stonewalling the “patent dance” and refusing to disclose the aBLA and manufacturing process. 

What is the takeaway?  Much of the regulatory scheme in the BPCIA has been left toothless.  Biosimilars can now bypass that scheme, and effectively force the sponsor to sue immediately on all potential patents.  Courts will undoubtedly compel the biosimilar’s immediate production of the aBLA and manufacturing process, and asserted patents for which there is no tractable infringement allegations, can be pruned from the suit.  But rather than a two-stage litigation process, which is tied to a nine month “patent dance” and a 180-day marketing notice period that could only be given after FDA approval, and which together is arguably inefficient and delays entry of biosimilar drugs, the sponsor will now be forced to put all of its patents on the table from the start.  In many ways, that is more closely aligned to the scheme for small-molecule drugs under the Hatch-Waxman Act.

The Federal Circuit’s recent decision also killed the prospect that BPCIA litigation would take on forum-shopping tactics.  Had the Court held that state law remedies are available for avoiding the “patent dance,” then different jurisdictions could theoretically develop a line of jurisprudence that is more or less favorable to that tactic.  If so, sponsors may have gravitated to those districts where state law remedies for violations of the BPCIA were more sponsor-friendly.  (Perhaps even the Eastern District of Texas would have resurrected itself as district of choice for biologics sponsors.)  Pending Supreme Court review, however, BPCIA litigation is likely to escape that version of venue shopping.

While the Federal Circuit’s ruling may seem like another strike against sponsor’s, it must be remembered that biologics enjoy 12 years of marketing exclusivity.  That is far in excess of what is available to small-molecule drugs under the Hatch-Waxman Act.  Biosimilars can theoretically file aBLAs after four years of that marketing exclusivity, although it remains to be seen how many research-intensive biosimilar applications will reach that deadline.  And if the sponsors have, in fact, surrounded their biologic drugs with a portfolio of strong patents, then it will be the patents themselves, not the tactical advantages of a complicated regulatory scheme, that reward biologics with additional years of exclusivity.  Maybe, just perhaps, that is how it should be.