Amgen Vs. Sandoz. How Will This Shape the Biosimilar Sector?

These are formative days for biosimilar developers in the U.S. courts. Last month, the biosimilar market witnessed its first legal settlement, between Mylan and Genentech for trastuzumab, and further settlements are sure to follow. On April 26, the Supreme Court began hearing the case between Amgen and Sandoz regarding the infamous “patent dance.” The Court’s ruling (expected in July) will have significant ramifications on how quickly new biosimilars reach the market.

Given the current climate, Biosimilar Development reached out to three attorneys with experience in the space: Patrick Gallagher of Duane Morris, Terry Mahn of Fish & Richardson, Lawrence Sung of Wiley Rein. In this two-part Q&A article series, these experts share their insights on recent and upcoming legal actions of importance, emerging litigation strategies, best practices for biosimilar companies in addressing legal challenges, and related topics. We open with a discussion of the Amgen v. Sandoz case, for which oral arguments began today.

What are your predictions for the Supreme Court case Amgen vs. Sandoz? Who do you expect will win, and why?

Patrick Gallagher, Duane Morris: There are two separate issues before the Court in this case: (1) whether participation in the “patent dance” under the Biologics Price Competition and Innovation Act (BPCIA) is optional, and (2) whether a biosimilar applicant can provide notice of commercial marketing before FDA licenses the biosimilar product. On the first issue, the Federal Circuit set forth a well-reasoned approach why Sandoz was not required to participate in the patent dance. Viewed in the context of the full BPCIA regulatory scheme, the statute envisioned that the biosimilar applicant may choose not to provide the information called for in the statute.

On the second issue, again the Federal Circuit looked to the plain language of the statute as well as to policy reasons to hold that the statute does not allow a biosimilar applicant to provide notice of commercial marketing until after FDA has licensed the product. By requiring that FDA license a biosimilar product before notice of commercial marketing can be provided, disputes between the parties will be more concrete rather than speculative. According to the Federal Circuit, before the biosimilar product is licensed, there is some uncertainty whether the product will be licensed at all, whether FDA will request changes to the product before licensure, and what indications FDA will approve for licensure. Framed this way, courts are not inclined to spend time and resources on speculative disputes. Of course, in the Hatch-Waxman context, patents are litigated all the time before a generic medication is approved by FDA. This ruling by the Federal Circuit is as much a reflection of uncertainty regarding biologic and biosimilar medications in general as it is a reflection of the language of the BPCIA.

Terry Mahn, Fish & Richardson: We think the Supreme Court will uphold the U.S. Court of Appeals for the Federal Circuit (CAFC) ruling that the BPCIA patent dance is optional, and will clarify that the 180-day notice of commercial marketing must come after FDA acceptance of the abbreviated biologics license application (aBLA) for review but prior to formal aBLA approval.

We believe that the BPCIA statute is clear on the patent dance being optional, and that a “balanced” reading of the statute would require commercial notice to come after the aBLA is ready for formal FDA review, but prior to formal approval. Requiring notice after approval would give the pioneer innovator an additional six months of exclusivity, which is very hard to read into the intent of the statute.

Lawrence Sung, Wiley Rein: The outcome rests largely on the judicial activism of the Supreme Court (without now-Justice Neil Gorsuch’s participation) on this issue. We don’t yet know if the court will remain mindful of its mandate to interpret the law, or if it will instead try to step into Congress’ shoes to rewrite the law to better align with the BPCIA’s goals. Irrespective of position, commentators since the BPCIA enactment agree that the statute is not clear. In this regard, the Supreme Court could resolve this case on the narrow grounds that (1) the statute requires 180-day premarket notice by the biosimilar applicant, and (2) the biosimilar applicant must provide the reference product sponsor with a copy of its application and related manufacturing information. The temptation, however, is to remedy the problematic statutory language in order to align the BPCIA with its intended role of promoting faster and cheaper biologic drug alternatives. But if it were to do so, the Supreme Court would be departing from its typical practice of leaving the correction of statutory amendments to Congress.

Based off of your prediction, how do you expect this will impact the biosimilar market moving forward?

Gallagher: If the patent dance remains optional, biosimilar applicants will need to evaluate on a case-by-case basis whether they want to share commercially sensitive business information about their product with the reference product sponsor. In doing so, this would fall in line with the full regulatory scheme envisioned by the BPCIA. A biosimilar applicant will need to evaluate the risks and benefits of disclosing information early under the BPCIA or waiting until a lawsuit is filed to produce the information contemplated under the statute. There will be consequences to opting out of the patent dance. For example, the District of Massachusetts recently held that where a biosimilar applicant did not participate in the patent dance, they could not limit potential damages to a reasonable royalty as provided under the BPCIA. Opting out of the requirements of the BPCIA meant opting out of its protections as well. As long as the patent dance is optional, biosimilar applicants will have flexibility in developing a patent strategy for each biosimilar product in development, but will need to consider both the risks and benefits of opting out of the statutory information exchange.

Mahn: The market is dealing right now with the U.S. Court of Appeals for the Federal Circuit (CAFC) holding on the patent dance being optional, and several courts have ruled that the notice of commercial marketing is not optional. A Supreme Court ruling that notice of commercial marketing can precede formal approval will speed the second wave of litigation up by six months, but the impacts on the market will be small in cases where entry will nonetheless be blocked or delayed by patent litigation.

Sung: The statutory framework for biosimilars approval is critical to the governance and growth of this industry. Accordingly, whatever the outcome of Amgen v. Sandoz, Congress will likely hear from various stakeholders and be encouraged to introduce amendments to the BPCIA to clarify the effect of the marketing notice requirement on reference product exclusivity, along with other statutory ambiguities. The key to the biosimilars business will be legal certainty more than the statutory or regulatory standards themselves. So, while the biosimilars market may continue to languish until better legal guidance is established, this uncertainty will diminish as more legal guidance is provided.

Were there any noteworthy developments during oral arguments in the Amgen v. Sandoz Supreme Court hearing?

Lawrence Sung, Wiley Rein: Conventional wisdom regarding the Supreme Court is that trying to predict the outcome from oral arguments is ill-advised. In addition, the Supreme Court rarely grants certiorari to an appeal from the Federal Circuit only to affirm the judgment. But in this case, the justices seemed aligned in a concerned recognition that the Biologics Price Competition and Innovation Act (BPCIA) is unclear, and that the BPCIA is not the product of a deliberative legislative process that typically includes agency guidance (which was lacking here). As a consequence, the court may refrain from interpreting the BPCIA in a manner that seeks to fix the statutory ambiguities that gave rise to this litigation. And if that is the case, then the likelihood increases that the court will affirm the Federal Circuit.

Terry Mahn, Fish & Richardson: The bench was very active during oral arguments. Although not fully briefed, the justices were interested in the interplay between the BPCIA and state laws. Aside from the text of the statute, the justices also expressed interest in understanding the role of the FDA in the process and whether a reference product sponsor could have a good faith basis to sue if it did not have access to the abbreviated biologics license application (aBLA).

Patrick Gallagher, Duane Morris: Perhaps the most noteworthy issue raised during oral arguments before the Supreme Court was an issue that no party addressed in its briefs — preemption. On the question of whether the patent dance is optional, several of the justices focused on the available remedies if a biosimilar applicant opts out of the statutory information exchange. Amgen had brought claims under California state law in asking for an injunction requiring Sandoz to turn over the information required by the BPCIA. The Federal Circuit had determined the issues regarding state law claims were moot based on their holding that the biosimilar applicant could opt out of the information exchange. Based on that ruling, neither Amgen nor Sandoz nor the Solicitor General broached the issue in the Supreme Court about whether the federal statute preempted any state law claims related to the dispute between Sandoz and Amgen. However, several of the Supreme Court justices raised the question of preemption during oral argument as relevant to determining whether the BPCIA provided for the exclusive remedies available to Amgen when Sandoz chose not to participate in the information exchange — or whether Amgen had the option of turning to state law for an injunction. While it may seem logical that the complex statutory scheme of the BPCIA would preempt related state law claims, more than one justice found it curious that none of the parties raised or addressed preemption in their briefs. 

How do you expect new Justice Neil Gorsuch will approach this particular case, or other future biosimilar vs. innovator challenges?

Gallagher: It can be very difficult to predict in advance how a new justice will approach or decide a specific case. Among Justice Gorsuch’s opinions that received attention during the confirmation process were his opinions questioning the doctrine of Chevron deference, which had been afforded to federal agencies by courts. Under the doctrine, the Supreme Court has held that courts should defer to an executive agency’s reasonable interpretation of the laws it is charged with implementing. In a concurring opinion issued in August 2016, then Judge Gorsuch questioned whether this deference had swallowed the constitutional separation of powers by allowing an executive agency to effectively overrule a judicial decision and supplant the legislative process of enacting laws in response to judicial interpretation of statutes.

If Justice Gorsuch were to apply the same reasoning in his new position on the Supreme Court to agencies such as the FDA, that would potentially give both biosimilar applicants and biologic reference product sponsors more leverage to challenge decisions or actions taken by FDA that they deem to be unfavorable. Of course, that would be assuming enough of his new colleagues on the Supreme Court were convinced to share this point of view and to overrule — or at least significantly narrow — several decades of Supreme Court precedent.

Sung: Now that Justice Gorsuch is a member, the Supreme Court will likely tend to greater literalism in statutory interpretation, much like the composition with the late Justice Scalia. This reinforces the likelihood Congress will need to act to resolve problems with the BPCIA framework, which arguably requires substantive amendments to achieve better alignment with the intended public policy of fostering faster and cheaper biologic drug alternatives.

In the biosimilar litigation landscape, we’ve already seen one settlement take place between Genentech and Mylan (March 2017). Is there anything biosimilar developers should take note of from this settlement, and should we expect to see many more instances of this in the future?

Mahn: Settlements in the biosimilar space will carry the same risks for consumers (e.g., higher prices due to market collusion) that they carry in the Hatch-Waxman (H-W) space, only there will be fewer co-conspirators (interchangeable biosimilars) involved.

Gallagher: In the biosimilar arena, just as in other areas of litigation, parties are likely to find a way to settlement when the cost of litigating is more than the cost of finding a middle ground. Considering the value of many biologics product lines, both to the reference product sponsor and to the biosimilar applicants, many disputes will go through litigation instead of settlement. But in situations where a reasonable resolution can be reached at an early stage, companies will continue to search out settlement possibilities to avoid the cost and uncertainty of litigation.

While settlement prospects will always need to be evaluated on a case-by-case basis, there are a few details to note from the Mylan settlement for Herceptin. First, it was a global settlement. Biologics and biosimilar products operate in a global marketplace, and it can be beneficial to everyone to reach global resolution rather than address issues piecemeal country by country. Second, Mylan was early. Many companies have taken a wait-and-see approach as regulatory and procedural questions for the BPCIA are resolved — but there can be clear advantages to staking out a strategy and charting a course ahead of the pack. Third, Mylan had inter partes review (IPR) petitions pending. IPR petitions can be an effective way to gain or add leverage against a patent holder, or to knock out patents early to narrow the scope of any litigation down the road.

What impact will these settlements have on the biosimilar market, especially in terms of the number and breadth of products on the market?

Sung: At present, the biosimilars market remains nascent, drawing principally from well-characterized biologic drugs for which clinical data about the respective biosimilars is available from the European Medicines Agency (EMA) approval process. Accordingly, the dynamic between U.S. reference product sponsors, biosimilars applicants, and the FDA has a greater focus momentarily on nomenclature, labeling, and other definitional matters, rather than technical and patent disputes. As newer biosimilars arrive on the scene, there should be a shift to more complex controversies for which the settlements of today provide less relevant guidance.


Article originally written by Terry Mahn for