The Federal Circuit is Slated to Consider an Appeal of the First BPCIA Biosimilars “Patent Dance” Decision

By Kurt R. Karst –      

Sandoz Inc. (“Sandoz”) is appealing to the U.S. Court of Appeals for the Federal Circuit (Docket No. 14-1693) a November 2013 decision from the U.S. District Court for the Northern District of California granting Amgen Inc.’s (“Amgen’s”) and Hoffmann-La Roche Inc.’s (“Roche’s”) Motion to Dismiss a June 2013 Complaint for Declaratory Judgment and Patent Invalidity and Non-infringement concerning two patents Roche licensed to Amgen – U.S. Patent Nos. 8,063,182 (“the ‘182 patent”) and 8,163,522 (“the ‘522 patent”) – that purportedly cover Amgen’s biological product ENBREL (etanercept), which was initially licensed in November 1998 under BLA No. 103795.  The November 2013 decision is the first from a court interpreting the complex patent resolution provisions added to the PHS Act by the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created a pathway for the submission and approval of biosimilar versions of brand-name reference products.

According to the Sandoz Complaint, the ‘182 and ‘522 patents, which the U.S. Patent and Trademark Office “unlawfully” issued in November 2011 and April 2012, respectively, “place[] a cloud of legal uncertainty over Sandoz’s etanercept product,” which the company began developing as far back as 2004, and has discussed with FDA since 2010.  Prior to the issuance of the ‘182 and ‘522 patents, Sandoz believed that there were only a couple of relevant patents remaining covering etanercept: U.S. Patent No. 5,395,760 (“the ‘760 patent”), which expired in 2012, and U.S. Patent No. 5,605,690 (“the ‘690 patent”), which is scheduled to expire in 2014.  Armed with this belief,

Sandoz took significant steps in preparation for commercializing etanercept in reliance on the expectation it would be able to begin marketing immediately upon FDA approval and without the cloud of potential infringemet claims.  Sandoz is now faced with the quandary that any further significant investment it makes in its etanercept product may be wasted, and its commercial marketing will be met with claims for substantial damages or injunctive relief, based on Amgen’s allegations about it new patent position.  To remove this cloud of uncertainty, Sandoz seeks a declaration that the ‘182 and ‘522 patents are invalid and that its etanercept product does not infringe any of their claims.

Sandoz has not yet submitted a so-called “351(k)” application to FDA seeking approval to market a biosimilar version of ENBREL; however, the Complaint indicates that submission may occur in the not too distant future.  According to Sandoz, the company “timed its product development such that its commercial marketing would coincide with, or post-date, the expiration of [the ‘760 and ‘690] patents.”  In a later court filing, Sandoz identifies an “intended 2016 launch” of its etanercept biosimilar.

Amgen and Roche fired back in their Motion to Dismiss, alleging that Sandoz had jumped the gun and that the path to biosimilar approval is far from certain (thus, not supporting the declaratory relief requested by Sandoz):

[T]his action comes too soon because Plaintiff is just beginning the determinative phase of the clinical trial process and many uncertainties remain as to if and when Plaintiff’s alleged biosimilar will ever be approved and ready to market in the U.S. . . .  On the long journey to product approval, one must travel an obstacle-laden path through acres of uncertainty before ever arriving at a dispute of sufficient immediacy and reality.  A multitude of facts that do not yet exist must all come to pass.  Plaintiff must meet its Phase III trial completion date—a difficult proposition given the state of Plaintiff’s recruiting efforts and the strict requirements of its study.  That Phase III trial must succeed.  The Plaintiff must submit an application to the FDA.  And that application must be approved. . . .  Depending on how a series of future events turn out, there may one day be a dispute between the parties concerning an etanercept “biosimilar.”  But today is not that day.

Moreover, wrote Amgen and Roche, the BPCIA’s patent resolution procedures for biosimilars (PHS Act § 351(l)(6)), like the Hatch-Waxman Amendment’s patent resolution procedures for generic drugs (FDC Act §§ 505(j)(5)(B)(iii), 505(j)(5)(C)), “set the triggering act for statutory jurisdiction at the filing of an application for FDA approval to market the product candidate.”  “These statutory schemes reflect the Congressional judgment that the appropriate time for the courts to have jurisdiction to resolve patent disputes is at the filing of an FDA application, coincident with the applicant’s representation to the FDA that it has completed sufficient clinical testing and analysis of its product candidate to justify FDA approval.”  Accordingly, Amgen and Roche ask the court to exercise its discretion not to take the case.

In its Opposition Memorandum to the Amgen/Roche Motion to Dismiss, Sandoz proffers various arguments in support of the company’s position that declaratory judgment jurisdiction exists and that the Amgen/Roche Motion to Dismiss should be denied.  Sandoz also takes issue with the Defendants’ characterization of the BPCIA (and the Hatch-Waxman Amendments) as reflecting a Congressional intention the delay patent litigation until after an application is submitted to FDA:

If this statement were true, however, there would be statutory provisions confirming it. . . .  There is none.  On the contrary, a declaratory judgment action is necessary to achieve patent certainty prior to Sandoz’s commercial marketing. . . .  [C]onsistent with this goal, the BPCIA provides DJ actions can be filed by either party upon the biosimilar manufacturer’s notice of commercial marketing, which Sandoz has given here.  See 42 U.S.C. § 262(l)(8)-(9).  This action is thus entirely consistent with the text and the policy of the BPCIA.  [(Internal reference omitted.)]

Briefing continued with an Amgen/Roche Reply Brief (which included a declaration from a former FDA Chief Counsel), and a Sandoz Surreply, leading up the court’s November 12, 2013 decision.

Clocking in at just over 5 pages, Judge Maxine M. Chesney granted the Amgen/Roche Motion to Dismiss.  Despite her brevity, however, Judge Chesney’s decision says loads about her view of the relevance of the BPCIA’s multi-step “patent dance” procedures at PHS Act § 351(l): Step 1 – Transmission of Biosimilar Application; Step 2 – Reference Product Sponsor’s Paragraph 3(A) Patent List; Step 3 – Biosimilar Applicant’s Paragraph 3(B) Patent List; Step 4 – Reference Product Sponsor’s Response; Step 5 – Patent Resolution Negotiations; Step 6 – Patent Resolution If No Agreement; and Step 7 – Filing of the Patent Infringement Action.

Noting that the BPCIA “sets specific limitations on the timing of any litigation arising from the filing” of a biosimilar application under PHS Act § 351(k), and that “with limited exceptions not applicable here, neither a reference product sponsor, . . . nor an applicant, . . . may file a lawsuit unless and until they have engaged in a series of statutorily-mandated exchanges of information,” Judge Chesney wrote that “Sandoz does not contend, and cannot contend, it has complied with its obligations under [PHS Act §§ 351(l)(2)-(6)], because . . . it has not, to date, filed an application with the FDA.”  The court was not persuaded that PHS Act § 351(l)(8), cited by Sandoz (see above), provides declaratory judgment jurisdiction. . . . for several reasons:

First, as set forth in the section on which Sandoz relies, a “notice of commercial marketing” is required to be given by the applicant to the reference product sponsor “not later than 180 days before the date of the first commercial marketing of the biological product licensed under [PHS Act § 351(k)].”  Here, Sandoz cannot, as a matter of law, have provided a “notice of commercial marketing” because, as discussed above, its etanercept product is not “licensed under subsection (k).”  Second, even after an applicant provides a “notice of commercial marketing,” it cannot bring an action for declaratory relief until, at a minimum, it has complied with its obligations under [PHS Act § 351(l)(2)(A)].  [(Internal citations omitted)]

Moreover, Judge Chesney ruled that Sandoz did not establish an injury caused by Amgen/Roche that could establish declaratory judgment jurisdiction, and that Sandoz’s allegation that it intends in the future to submit a Section 351(k) biosimilar application for etanercept is insufficient to create a case or controversy for such jurisdiction. 

A briefing schedule for the appeal to the Federal Circuit has not yet been set.  We’ll be keeping a close eye on this case given its importance to the development of the nascent U.S. biosimilars industry.