Judge Seeborg of the U.S. District Court for the Northern District of California issued an order in Amgen, Inc. v. Sandoz, Inc., ruling that the patent dispute resolution procedures of the Biologics Price Competition and Innovation Act (BPCIA) are optional. If this interpretation is upheld, will any parties go through the complicated biosimilar patent dance of 42 USC § 262(l)?

The Neupogen® / Zarxio™ Biosimilar Dispute

Sandoz Zarxio™ (filgrastim-sndz) product is the first product approved under the BPCIA, and was approved as a biosimilar of Amgen’s Neupogen® (filgrastim) product. Under § 262(l)(2)(A), once the FDA notified Sandoz that its biosimilar application had been accepted for review, Sandoz had 20 days to provide Amgen with a copy of its biosimilar application and other information describing how its product is made. As set forth in the district court’s order, Sandoz did not provide Amgen a copy of its application within the 20 day period, and did not follow any of the other patent dispute resolution procedures of the statute.

Amgen sued Sandoz asserting various state law claims arising out of Sandoz’ failure to follow § 262(l) and infringement of U.S. Patent 6,162,427. Sandoz defended its conduct and asserted counterclaims of non-infringement and invalidity. Amgen moved (and Sandoz cross-moved) for partial judgment on the pleadings on issues that turned on the interpretation of § 262(l).

The District Court Decision

The crux of the main issue before the court was whether the patent dispute resolution procedures of § 262(l)(2)-(9) are mandatory or optional. (Please see this article for a review of the procedures.)

As Amgen pointed out and the district court acknowledged, “these paragraphs repeatedly use the word ‘shall‘ to describe the parties’ obligations under its prescribed procedures.” Although such language often signifies “mandatory requirements” the court found that the statutory scheme as a whole supported a more permissive interpretation. In particular, the court found that the fact that the statute sets forth consequences for a party’s failure to follow its steps indicates that such failure is “not unlawful.”

Considering § 262(l) as a whole and the related provisions of 35 USC § 271, Judge Seeborg concluded:

It is … evident that Congress intended merely to encourage use of the statute’s dispute resolution process in favor of litigation, where practicable, with the carrot of a safe harbor for applicants who otherwise would remain vulnerable to suit. The statute contains no stick to force compliance in all instances ….

The court addressed in a footnote Amgen’s argument that making § 262(l) optional would “enable biosimilar producers to evade liability for patent infringement because biosimilar producers may keep reference product sponsors in the dark about their biosimilarity BLAs and plans to take their products to market,” citing the 180-day notice requirement of § 262(l)(8) as “mitigat[ing] such concerns”:

With six months’ advance notice of a biosimilar producer’s intent to commence sales, a reference product sponsor who believes it may have an infringement claim can file suit to access the biosimilarity BLA, manufacturing process, and other relevant information via discovery—as in any other typical instance of potential infringement. While Amgen may have preferred that Sandoz share this information voluntarily, the BPCIA rendered it Sandoz’s choice to make.

However, in rejecting Amgen’s argument that Sandoz violated § 262(l)(8) by giving notice before its product was approved, the court stated–again in a footnote–that a failure to give notice under § 262(l)(8) “would be subject only to the consequences prescribed in 42 U.S.C. § 262(l)(9)(B)—an action for declaratory judgment regarding patent infringement, viability [sic: validity], or enforceability.”

The Pros and Cons of the Biosimilar Patent Dance

All of the biosimilar patent cases to date have involved biosimilar applicants trying to avoid the complicated patent dispute resolution procedures of § 262(l). (For examples, see this article on the Remicade® biosimilar dispute and this article on the Enbrel® biosimilar dispute.) So, if the provisions are optional, why would a biosimilar applicant go through the biosimilar patent dance? Judge Seeborg offers these reasons:

• to “preview which patents the reference product sponsor believes are valid and infringed”

• to “assess related factual and legal support”

• to “exercise some control over which patents are litigated and when”

• to “undergo the information exchange while protected by the statute’s safe harbor from litigation”

• to have an opportunity to “delay its product launch to protect the investment it made in developing its biosimilar”

Judge Seeborg also understands why an applicant would not want to follow § 262(l):

• the process “could take up to 230 days—just to commence patent litigation”

• the process “[c]ould introduce needless communications and delay”

• the applicant “may have good reason to believe that no unexpired relevant patents relate to its biosimilar”

• the applicant could believe “that it is likely to prevail if challenged with an infringement suit”

Could This Interpretation Be Right?

As one of many attorneys who spent hours parsing through § 262(l), diagramming the steps and timing of the biosimilar patent dance, and considering the merits of various strategies, I find it interesting that the first judge to consider the statute has determined that the patent dispute resolution procedures are optional. But could that interpretation really be right?

If the entirety of § 262(l) is optional, a reference product sponsor may need to monitor the FDA website, press releases, and the market to learn about potentially infringing biosimilar products. While other patent holders face similar challenges in identifying infringement, it is important to remember that the biosimilar applicant relies on the reference product sponsor’s license (BLA) to obtain review and approval of its potentially infringing product. Should the reference product sponsor at least get notice that its BLA has been used by a would-be competitor?

In some ways, the biosimilar approval pathway is similar to the generic drug approval pathway, which also includes patent dispute resolution procedures, most of which have been held to be mandatory. For instance, under 21 USC § 355(j), the ANDA filer must give notice to the NDA holder of its ANDA. Why would Congress not want to ensure that similar notice is given to BLA holders?

I will be watching to see how the Massachusetts district court decides the § 262(l) issues presented in the Remicade biosimilar dispute, and how the Federal Circuit interprets the statute when these cases are on its dance card.