It’s March Madness. Who is (Patent) Dancing?

Friday, March 24th, 2017 at 11:08 am, by Eugene Kim

No one seems to completely understand the “patent dance” provisions of the Biologics Price Competition and Innovation Act (BPCIA). On March 1, the U.S. District Court of Delaware dismissed a complaint filed by Genentech against Amgen seeking declaratory judgment that Amgen failed to comply with the disclosure requirements of the BPCIA. After the FDA accepted Amgen’s application for a biosimilar (the biologics equivalent to generics of small molecule pharmaceuticals) of Genentech’s Avastin, Amgen provided Genentech a copy of it’s abbreviated biologics license application (aBLA) without disclosing its manufacturing information. Genentech argued that by not providing its manufacturing process, Amgen violated the BPCIA’s process designed to address patent disputes before the biosimilar is released. This process is referred to as the “patent dance.” The court dismissed the complaint without prejudice for lack of subject matter jurisdiction. Now Genentech is left with two options: continue the patent dance or bring an infringement action.

One would think that most of these issues would have been resolved by now considering the BPCIA was enacted in 2010. However, the complexities of generic biologics have made this impossible. The principal objective of the BPCIA was to allow for an abbreviated FDA approval process for biosimilar therapeutics. Although the Hatch Waxman Act of 1984 provided this avenue for generic versions of small molecule drugs, which often consist of fewer than 50 covalently bound atoms and excludes complex macromolecules such as proteins and antibodies, the BPCIA was written for “biologics”—defined as “a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein (except any chemically synthesized polypeptide), or analogous product.” One of the features of the statute is a disclosure requirement mandating that once the FDA has accepted an aBLA for review, the applicant “shall provide to the reference product sponsor a copy of the application submitted . . . and such other information that describes the process or processes used to manufacture the biological product.” However, the question of whether an applicant has to engage in the patent dance at all and thus the disclosure step remains unresolved. Furthermore, the Genentech case concerned exactly what information a biosimilar applicant must share, once it has opted to join the patent dance.

Will the nondisclosure by Amgen have any effect on Genentech’s patent rights? This decision puts Genentech in a precarious position. Under the patent dance framework, Genentech is now required to produce a list of patents that the biosimilar could potentially infringe. This list is important because Genentech will be precluded from later asserting patents not listed. Because the bioprocessing of biologics is significantly more complicated than small molecule synthesis, without full disclosure of Amgen’s manufacturing process, Genentech has limited information to produce a list of potentially infringed patents. At the same time, because, unlike most small molecule drugs, the manufacturing process is no simple matter, Amgen has incentive to withhold potentially confidential information from one of its closest competitors.

Ever since the Federal Circuit’s decision in Amgen Inc. v. Sandoz Inc., 794 F.3d 1347 (Fed. Cir. 2015) (cert. granted Jan. 13, 2017) the patent dance question has shined bright. In that case, the Federal Circuit decided that the patent dance is optional and that “when a subsection (k) applicant fails the disclosure requirement, 42 U.S.C. § 262(l)(9)(C) and 35 U.S.C. § 271(e) expressly provide the only remedies as those being based on a claim of patent infringement. Because Sandoz took a path expressly contemplated by the BPCIA, it did not violate the BPCIA by not disclosing its aBLA and the manufacturing information by the statutory deadline.”

Read in this way, the statutory scheme can be readily abused by biosimilar manufacturers. A biosimilar manufacturer can strategically withhold information and dare the brand name to bring an infringement suit. Since the patents on the molecule in question will either be expired or close to expired, the brand names may have less incentive to litigate, thus giving the biosimilar a head start. In fact, Amgen has been on the other side of the issue in two other biosimilar litigation cases.

This is not to say that all biosimilar manufacturers will avoid the patent dance altogether. Some believe that biosimilar applicants will be incentivized to get the patent issues over with early in the process and avoid the litigation costs that come with an infringement case. But the need for clarity in the dance procedure is obvious.

So far, the FDA has approved four biosimilars but none of them are directed to a cancer indication. However, three key biologics that treat cancer are expected to get the biosimilar treatment soon—Herceptin (a mainstay in breast cancer and becoming more important in gastric cancer), Avastin (approved to treat brain tumors, colorectal cancer, kidney cancer, non–small-cell lung cancer, advanced cervical cancer, and platinum-resistant ovarian cancer), and Rituxan (used to treat both non-Hodgkin’s lymphoma and rheumatoid arthritis). All three are manufactured by Genentech and have patents recently expired or expiring by 2019.

Why does this matter? Seven of the top ten pharmaceuticals were biologics as of 2015, the last year for which complete figures are available. In 2016 alone, Avastin recorded global sales of almost $7 billion. It is Genentech’s best-selling cancer drug and one of the top-selling drugs in the United States. Genentech also recently came to a settlement with Mylan regarding a biosimilar for its revolutionary breast cancer drug Herceptin, which could be the first oncology biosimilar. The global sales of biologics are expected to exceed $390 billion by the year 2020 and Rituxan, Avastin, Herceptin all rank in the top ten of best selling prescription drugs of all time by revenue. Therefore, generic versions of these drugs could turn out to be an extremely lucrative venture.

Care should be taken not to read too much into the District Court of Delaware’s decision. The question of whether the patent dance is optional in the first place is before the Supreme Court in Amgen Inc. v. Sandoz Inc., with oral argument scheduled for April 26. It is possible that the Court will reach the question of how much information must be provided once an applicant has opted in or been required to engage in the patent dance. Regardless, with so much on the line, it is crucial that the BPCIA disclosure requirements be clarified in the near future.