By Andrew Williams --
United States District Judge Seeborg of the Northern District of California denied Amgen's motion for a preliminary injunction today in the Amgen v. Sandoz case, thereby paving the way for the marketing of the first biosimilar in the United States. The Judge also agreed with the interpretation of the Biologics Price Competition and Innovation Act ("BPCIA") proffered by Sandoz, and as a result denied several motions by Amgen for partial judgement on the pleadings. This decision poses the real concern that no biosimilar applicant will ever chose to participate in the disclosure provisions and patent exchanges dictated by the BPCIA -- the so-called biosimilar "patent dance." It also raises the question whether any BLA holder will ever be able to secure a preliminary injunction preventing a launch of a biosimilar product while the corresponding patent litigation plays out.
To set the stage, earlier this month the U.S. Food and Drug Administration ("FDA") approved the Sandoz's biosimilar application to market a biosimilar version of Amgen's NEUPOGEN® (filgrastrim) biologic drug product (see "FDA Approves Sandoz Filgrastim Biosimilar"). This was, of course, the first such application to be approved using the new biosimilar pathway created by the BPCIA. Sandoz announced last July that the FDA had accepted its application. However, even though Sandoz chose to avail itself of the first part of the BPCIA statute in filing the application, thereby reducing the time and cost required to obtain approval of its drug, it unilaterally chose to forego the second part of the statute and did not supply Amgen with a copy of its biosimilar application or related disclosures. Sandoz also informed Amgen in July 2014 that it would likely begin commercially marketing its drug product by the second quarter of this year.
Amgen filed the present case in October 24, 2014, premised mainly on the failure of Sandoz to follow the disclosure procedures set out in the statute. Amgen alleged that it was a violation of California's state law of unfair competition for Sandoz to both (1) use the abbreviated pathway but refuse to comply with the statutory requirements of the BPCIA and (2) to fail (or to soon fail) to meet the obligation to provide notice of first commercial marketing. Amgen also asserted a cause of action for conversion based on Sandoz's use of Amgen's information related to safety, purity, and potency. Finally, Amgen alleged infringement of U.S. Patent No. 6,162,427, but reserved the right to assert additional patents based on information obtained during discovery. Among other things, Amgen sought an injunction to prevent Sandoz from marketing ZarxioTM.
As we reported last week, after the Answer by Sandoz, Amgen filed a motion for partial judgment under Rule 12(C), or alternatively, for partial summary judgement. The issues that Amgen sought to be addressed by this motion were: (1) whether "provision of the BLA and manufacturing information under subsection 262(l)(2)(A) [is] mandatory," (2) whether Sandoz's notice of commercial marketing given before its filgrastim product is licensed was effective, and (3) whether Sandoz should be allowed to bring counterclaims seeking declaratory judgments of non-infringement and invalidity, even though it failed "to provide the BLA and manufacturing information" to Amgen. In addition, likely prompted by the imminent approval of the Sandoz application, Amgen filed a motion for a preliminary injunction on February 5, 2015 to prevent Sandoz from entering the market before these issues can be resolved by the Court. The Court held a hearing last week, on Friday, March 13, 2015, and issued its order today, March 19, 2015.
In determining that the patent dance was not mandatory, the Court began by providing the history and purpose behind the BPCIA. Tellingly, the Court focused on the ramifications established by the new statute if either party chose not to participate, or terminated participation, in the biosimilar patent dance. Moreover, even though the statute used the word "shall" with regard to this pathway, the Court highlighted the benefits that a biosimilar applicant would lose by not engaging in this process. "That compliance allows an applicant to enjoy a temporary safe harbor from litigation and, potentially, to resolve or narrow patent disputes outside court proceedings," favored Sandoz's interpretation of the BPCIA, the Court concluded. Slip Opinion at 9. The Court also appeared swayed by the length of time that the patent dance would take to reach Federal Court -- up to 230 days after acceptance of the application by the FDA. In this case, the suit could not have been filed until around mid-March 2015. Finally, the Court pointed out that "shall" does not necessarily always mean mandatory. Instead, it found it a "fair" reading that "shall" only applies to the proscribed procedures if both parties wish to take advantage of the dance. "[I]n other words, these procedures are 'required' where the parties elect to take advantage of their benefits, and may be taken way when parties 'fail.'" Id.
With regard to the 180-Day Notice of First Commercial Marketing, as required by the BPCIA, the Court also sided with Sandoz's interpretation. Amgen had argued that such notice can only be provided after the biosimilar application had been approved. The Court again was swayed by the timing that would result from such a conclusion. A BLA applicant is already afforded twelve years of marketing exclusivity based on the data it presents to the FDA. In other words, the FDA cannot approve a biosimilar application until twelve years has elapsed after licensure. To require a biosimilar application to wait another 180 days would extend this period of exclusivity by half a year. If Congress had intended for infringement suits to commence only after approval, according to the Court, they could have been more explicit in the statute.
Because the Court found that Sandoz has not behaved "wrongfully," it both denied Amgen's motions related to the state law claims for unlawful business practices and conversion, and dismissed Amgen's related claims with prejudice pursuant to a cross-motion by Sandoz. In addition, with regard to Amgen's assertion that the counterclaims for declaratory judgments of noninfringement and invalidity brought by Sandoz were barred by the statute, the Court again sided with Sandoz. As the Court pointed out, counterclaims are not the same as commencing a lawsuit, and therefore the statute was silent on the issue. Moreover, according to the Court, if it were to have barred these claims, it would have raised serious due process concerns.
Finally, the Court denied Amgen's motion for a preliminary injunction, which would have prevented Sandoz from marketing its biosimilar drug product. Amgen had alleged that it would suffer several harms if Sandoz was allowed to launch, including (1) the inability to undertake research and development for new drugs, (2) diverting sales representatives from selling new products in order to compete with Sandoz for filgrastim market share, (3) being required to drop the price of Neupogen to remain competitive, and (4) damage to customer relationships and goodwill should Amgen win and subsequently raise its price back to current levels. The Court stated that "[n]ot only are such harms at best highly speculative; they are based on the as-yet unproven premise that Sandoz has infringed a valid patent belonging to Amgen." With regard to the 400 or more potential patents covering the drug that Sandoz may be infringing, Amgen "has not raised these contentions for a disposition at this juncture." Id. at 18. "It must, therefore, be assumed that no such infringement has occurred." Id. The Court, therefore, concluded that "there exists no substantive bar to market entry for Sandoz's biosimilar filgrastim . . . ." Id.
This last ruling is troubling from the perspective of a BLA holder. The Hatch-Waxman act, on which the BPCIA is loosely fashioned, provides 30 months for concluding any related litigation before the generic applicant can launch. Moreover, if that amount of time is insufficient, Courts will often grant preliminary injunctions to bridge any gaps. The innovator company will also usually have some idea about the generic product because the ANDA filer is required to provide notice that it certified to the FDA that one or more of the patents covering the product are either not infringed or are invalid. In the biosimilar case, if the follow-on applicant choses to not disclose its application and related documents, and choses not to participate in the patent dance, the innovator company will likely have no idea which of its patents will cover the biosimilar drug product. If this uncertainty isn't resolved in the 180-day notice period, it may not be able to assert its patents in federal court before approval of the biosimilar application. This will only be truer if the heightened pleading requirements contained in the Innovation Act actually pass. As such, similar results are likely to occur again. Following this case, district courts will be reticent to grant injunction because of the "assumption" that infringement has not occurred. With the deck stacked against the BLA holder, this case also begs the question whether any biosimilar applicant will ever chose to participate in the patent dance. Because such applicants can apparently avoid disclosing their confidential business information, and apparently be able to avoid preliminary injunctive relief, the answer is probably "no."
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