SKIPPING THE PATENT DANCE: U.S. SUPREME COURT IN AMGEN v SANDOZ MAKES IT MORE DIFFICULT FOR PATENT OWNERS TO DELAY MARKETING OF BIOSIMILARS

On June 12, 2017, in a unanimous decision authored by Justice Thomas in Amgen Inc. v. Sandoz Inc., the United States Supreme Court considered the complex statutory scheme that attempts to expedite resolution of patent disputes that might affect the marketing of generic versions of biological drugs (so-called “biosimilars” that are made by living organisms rather than by conventional chemical synthesis).  In doing so, the court interpreted the statute in a way that appears to assist the producers of such generic products. Two issues were before the court:

 

 

 

1. whether failure to follow the scheme referred to as “the patent dance” which was intended to secure early resolution of passible patent issues relating to a biosimilar could be the subject of an injunction; and
2. the point in time when the proposed marketer of a biosimilar had to advise the originator of the product of its intention to market the biosimilar.

Any marketing of biological products requires a biologics license from the Food and Drug Administration (FDA) issued under the Public Health Service Act rather than under the Food, Drug and Cosmetic Act as is the case for the products of conventional chemical synthesis. The different requirements stem from the differences between the chemistry of small molecules and biological materials and the relative difficulty in accurately reproducing small molecule drugs that are normally made by chemical synthesis and biological products typically produced in cells and so subject to greater variability.

The Public Health Services Act was amended by part of the 2010 health care reform legislation (the Biologics Price Competition and Innovation Act ¹) to provide for provisions analogous to, but different from those provided for small molecules under the Hatch-Waxman Act.

These provisions made it easier for the manufacturer of a biological product that is a “biosimilar” of a reference biological product (i.e. one that has already been approved) while at the same time providing a means for suing someone seeking such approval for patent infringement prior to actual marketing of the biosimilar if the request is for approval to commence marketing before the relevant patents expire ².

For these provisions to apply, a biosimilar must inter alia be shown to be “highly similar to the reference product”, use the same mechanism of action as the reference product for the conditions that are “prescribed, recommended or suggested” in the labeling of the biosimilar. If this requirement is not met, the applicant for marketing approval of a biological product has to comply with the full set of FDA requirements for approval of a new product.

The first person to market a biological product is given a period of marketing exclusivity. Applications for marketing approval of biosimilars are subject to the requirements of 42 USC 262(k)³ and are subject to a twelve year exclusivity period for the reference product from the date of first authorization of the reference product, thereby in effect giving that product a twelve year exclusivity period independent of any patent protection.

The first issue addressed by the Supreme Court in Amgen v. Sandoz was the applicability of the scheme the statute sets out aimed at achieving early resolution of patent issues that may arise. Agreeing with the Court of Appeals for the Federal Circuit, the Supreme Court effectively found use of the scheme to be optional under federal law.

Under the scheme, 42 USC 262(l)(2)(A) provides that within 20 days after the FDA notifies the applicant for approval of a biosimilar product that its application has been accepted for review, the applicant is to give notice to the reference product sponsor by providing the application (which contains information about the product) as well as information describing the manufacturing process on a strictly confidential basis⁴. The statute provides for the grant of immediate injunctive relief should the sponsor of the reference product misuse the information given to it.

Once the sponsor of the reference product has received such information about the application for approval of a biosimilar, it has sixty days within which to provide the applicant for the biosimilar with a list of patents which the sponsor of the reference product believes could reasonably be asserted to be infringed by the making, using, selling, offering to sell or importing the biosimilar in question. And indicating any patents it would be willing to license⁵. Within sixty days of receipt of this list, the applicant for approval of the biosimilar may provide its own list of patents that it believes might be infringed and “shall” provide the sponsor of the reference product with a detailed statement on a claim-by-claim basis of the reasons why each claim is invalid, unenforceable or not infringed or a statement that it does not intend to begin commercial marketing until the patent expires. The response should also address any offer of a license made by the sponsor of the reference product ⁶.

The sponsor of the reference product has sixty days within which to respond to the allegations made by the applicant for marketing approval of the biosimilar⁷. The protagonists are then required to engage in good faith negotiations to agree which if any patents may be infringed by the biosimilar⁸. If there is a failure to agree, each side will supply a list of patents, which, unless the applicant lists no patents, shall not exceed the number of patents listed by the biosimilar applicant⁹.

Within thirty days of the agreement as to relevant patents or the exchange of patent lists, the sponsor of the reference product must institute a patent infringement action¹⁰. The applicant for approval of the biosimilar must notify the FDA ¹¹.  Any such immediate litigation is limited to a single patent if the applicant lists no patents, no matter how many patents the reference product sponsor designated as reasonably assertable against the making, selling, etc., of the proposed biosimilar product¹².  Failure to bring such an action within thirty days will result in the remedy for any subsequently filed infringement action being limited to the payment of a reasonable royalty. Failure of the owner of a patent that should have been included in a patent list to include it in such a list will result in the patent owner being unable to bring an action for infringement under this provision.

When read together, these requirements have been referred to as “the patent dance”¹³.

In Amgen Inc. v. Sandoz Inc.,¹⁴ Sandoz, the applicant for approval of the biosimilar product, declined to provide the sponsor of the reference product with all of the information noted above. The case turned on conflicting language in 42 USC 262(l) which at one point states that the applicant for a biosimilar application “shall” provide information and at another point states that if such information is not provided, the sponsor of the reference product can bring suit. Additionally, 35 USC 271(e)(2)(C)(ii) provides that it is a patent infringement if the applicant for the biosimilar fails to provide required information.

The Federal Circuit found that because the statute provided remedies where the applicant for marketing approval of the biosimilar failed to provide information, Sandoz was within its rights to refuse to do so until litigation was commenced, when it would in any case need to provide the information to comply with discovery requests.

The Supreme Court agreed that failure of the party seeking to market the biosimilar to provide the information about its application and manufacturing method was not remediable by an injunction ¹⁵. The effect of this decision may well be to make most steps of the “patent dance” optional under federal law, to the disadvantage of the sponsor of the reference product. Intriguingly, the Supreme Court left open and remanded for further consideration the question of whether failure to provide the information set out in the statute was “unlawful” under and so actionable under state law.

The second issue before the Supreme Court was the notice provision of the statute.

If the biosimilar applicant determines to commence commercial marketing of a product, the statute states it shall provide the producer of the reference product with 180 days advance notice ¹⁶ and the sponsor of the reference product shall be entitled to seek a preliminary injunction enjoining such marketing with respect to any patent noted in its original “patent dance’ list unless subsequently excluded.

The Federal Circuit had held, that the 180 day notice period that the applicant to market a biosimilar was required to give to the sponsor of the reference product to allow adequate time to commence litigation if appropriate could not commence any earlier than the date on which the FDA granted approval for marketing of the biosimilar product.

The Supreme Court disagreed. The requirement of the statute was that the applicant:

“shall provide notice to the reference product sponsor no later than 180 days before the date of the first commercial marketing of the biological product licensed” by the FDA.

The Supreme Court held that, as a matter of grammar, all that this meant was that the product had to be licensed at the time of commercial marketing, not that the product had to be licensed at the time of the notice. The effect of this is that the applicant for the biosimilar license could give notice long before approval has been received. Since if the patent dance has not been followed, the patent owner would need to wait until receipt of this notice or actual marketing has occurred before it can sue for infringement, the effect of the second part of the Supreme Court’s decision in Amgen v. Sandoz therefore is to complicate the litigation strategy for the patent owner since it will have a less clear idea of when infringement proceedings can be commenced.