This past summer, a divided Federal Circuit panel found, in the case of Amgen v. Sandoz, that the so-called “patent dance” under the Biologics Price Competition and Innovation Act of 2009 (BPCIA) is optional.  This past Friday, the Federal Circuit declined to rehear that decision.  Its decision provides biosimilar developers with continued choice while opening the door for an appeal to the Supreme Court and, perhaps, a final decision on this important issue.

Interpretation of the BPCIA’s provisions has important implications for the development of biosimilars and the legal process by which their entry to the market is determined.  There are currently about 105 different biologics licensed by the FDA.  Almost 75% of them were licensed more than four years ago, which means that they could be a reference product for an abbreviated Biologics License Agreement (aBLA).  About 40% of them were licensed more than 12 years ago, which means that their period of exclusivity has already ended, absent any patent protection.  Thus, there are many opportunities for companies to develop biosimilars and capitalize on them in the near future.  Yet only four applications are known to have been filed to date.  This is likely due in part to the technical difficulties of producing a commercial, safe biologic.  But it may also be due in part to the challenges and uncertainties of the legal procedures for determining their commercial prospects in view of patent rights.

As codified at  42 U.S.C. § 262(l), the BPCIA sets forth an intricate eight-month or so procedure for identifying the patents to be assessed in determining when the biosimilar can legally enter the market.  The dance begins with the applicant’s disclosure of its aBLA to the reference product sponsor.  The parties then provide lists of patents that they believe to be at issue, and work to reach agreement on which ones should be litigated.  The disclosure of the aBLA helps the reference product sponsor identify patents that are likely to be found infringed, prior to the actual filing of any lawsuit.  The process may benefit the applicant, as well, especially if commercial marketing is not imminent.  As provided at section 262(l)(9)(A), the dance delays the filing of any lawsuits on identified patents until after the applicant gives notice of commercial marketing.

At issue in Amgen v. Sandoz is the right of an applicant to choose whether to provide its aBLA and participate in the patent dance for identification of patents.  Sandoz, who filed an application to make a biosimilar for Amgen’s Zarxio (filgrastim), refused to do so.  Amgen brought suit for patent infringement and included unfair competition and conversion claims for harms occurring as the result of Sandoz’s refusal to provide its aBLA.  The unfair competition and conversion claims were dismissed by the Northern District of California court, and their dismissal was upheld by the Federal Circuit.  The courts found that Sandoz was not required to participate in the patent dance, and hence Amgen could not seek damages for its failure to do so.

In so finding, the courts relied upon the BPCIA’s provision for recourse if an applicant fails to participate in the patent dance.  Section 262(l)(9) specifically provides that, if no aBLA is disclosed, the reference product sponsor – but not the applicant – may bring a declaratory judgment action on any patent believed to cover the biosimilar product.  Thus, failure of the applicant to begin the patent dance means (a) it cannot file any relevant declaratory judgment suits, e.g. for noninfringement or invalidity, and (b) it is subject to the filing of immediate lawsuits by the reference product sponsor, e.g. for declaratory judgment of infringement and validity.  The courts found that these and other provisions for non-compliance indicated that compliance by the applicant was optional.

The courts also addressed an issue in the timing of notice of commercial marketing.  The district court found that such notice could be provided only after the FDA licenses the biosimilar.  Since actual licensure can only occur after the 12-year statutory period of exclusivity, and the notice must be given 180 days prior to the start of marketing, Sandoz argued that this effectively extends the period of exclusivity to 12 ½ years – a result that was not intended.  The Federal Circuit rejected this view.

The current interpretation of the statutory provisions of the BPCIA thus provides biosimilar applicants with a choice:  They may disclose their aBLA, and ensure that lawsuits are not filed until after they get approval and provide notice of commercial marketing, or they can forego disclosure and risk immediate lawsuits by the reference product sponsor.  In situations where approval is at hand, marketing is imminent, and a speedy resolution is desired, foregoing the patent dance may be the better, and more commonly used, option – at least until the Supreme Court addresses the issue.