Amgen Vs. Sandoz: Who Will Win Over The Supreme Court?

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 three-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.

In Part 2, we will continue to unpack the Supreme Court case and explore the importance of the recent Genentech-Mylan settlement.