Abstract
O
Background
Just as the innovator of a new drug product must submit a New Drug Application (NDA) to the FDA for approval, the innovator of a new biological product must submit a Biologics License Application (BLA). Regulations on licensing of biological products are provided in the Public Health Service (PHS) Act. 1
On March 23, 2010, the Biologics Price Competition and Innovation Act (BPCIA) was enacted to provide “an abbreviated licensure pathway for biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed biological reference product.” 2 The BPCIA is a counterpart of the Hatch-Waxman Act, which has provided the pathway for generic drugs by piggybacking on the originator's safety and efficacy data. The BPCIA amended the PHS Act to add § 351(k), which sets forth the application requirements for a biosimilar or interchangeable product. This is why the applications are called § 351(k) applications.
The Purple Book provides the information on the approved biologics listed with their BLA numbers and the availability of any interchangeable or biosimilar products. 3 If the biologic product is withdrawn, it is reflected in the Purple Book as well. The exclusivity of the biologics will include the 12-year exclusivity, 42 U.S.C. § 262(k)(7), plus pediatric exclusivity, if any. The Purple Book will not include information on orphan drug exclusivity, nor will it contain any patent information.
Issues with the BPCIA
Does the 12-year exclusivity apply to the BLAs filed before the BPCIA?
When Congress passed the BPCIA in 2010, many predicted it would become enmeshed in litigation. Unlike the Hatch-Waxman Act, the BPCIA was silent on its impact on drugs approved on BLA applications filed before its effective date. The FDA's interpretation seems to be that the BPCIA's 12-year exclusivity period applies to all BLAs whether filed before or after the BPCIA. The FDA quietly provided its interpretation when it provided the expiration of February 20, 2003 for Neupogen, which was approved in 1991. 4 The FDA's interpretation seems to be reasonable since § 262(k)(7) refers to licenses approved under § 262(a), which was not amended. All BLAs, both prior to the BPCIA and after, are approved under § 262(a). It has been assumed that the provisions relating to biosimilar products apply to all approved BLAs. 5
Are BLA holders entitled to compensation?
In 2012, Abbott filed a Citizen Petition 6 claiming that the safety and efficacy data it submitted with its BLA for its biologic Humira (adalimumab) are valuable trade secrets. Abbott argued that the FDA's reliance on Abbott's safety and efficacy data when examining a biosimilar application would be an impermissible taking of the trade secrets under the Fifth Amendment to the U.S. Constitution. Abbott thus demanded compensation for the fair value of its trade secret information. To date, the FDA has not decided the petition and instead simply provided an interim response stating that “it [the petition] raises complex issues requiring extensive review and analysis by Agency officials.” 7
While at first blush, Abbott's position may seem to be extreme, Abbott's spinoff, AbbVie, may have a legitimate claim if the FDA approves a biosimilar application for adalimumab. In its petition, Abbott lays out its trade secret claim for its biologic Humira (adalimumab) 8 under the state and the federal trade secret laws. Federal court decisions have found “data” submitted to the FDA, including clinical data, to support a marketing application constitute a trade secret. 9 In the past, the FDA was challenged on its reliance on a prior finding that the reference product is safe, etc., which was only an “indirect” reliance. The problem with “indirect” reliance is that the reference drug owner is injured by the entry of a competitor into the market who avoided the costs of obtaining all of the data the reference drug holder was obligated to provide in its application.
The California Appellate Court has found a “taking” for such “indirect” use in Syngenta Crop Protection. 10 Syngenta had submitted to the California Department of Pesticide Regulation trade secret information to obtain the state's registration of its product. Later, another applicant submitted an application to register a pesticide product with the same active ingredient as Syngenta's. This applicant provided no data with its application, nor did he reference the Syngenta data. The California Department of Pesticide Regulation did not review Syngenta's data again but simply relied upon the fact it had already granted a license to Syngenta. The California court found a taking because the actions by the state had spared the subsequent applicant the expense of acquiring its own data to submit with its application and had used Syngenta's data for the benefit of a subsequent applicant.
Abbott's petition relies heavily on Ruckelshaus v. Monsanto Co., 11 where Monsanto had submitted its trade secret information to the Environmental Protection Agency (EPA) to support an EPA registration of its pesticides. At the time of the submission, the statute controlling the submission of such data prohibited the disclosure of information relative to the product's formulation. The EPA later considered Monsanto's data in evaluating applications filed by other companies. The U.S. Supreme Court found that Monsanto had a reasonable, investment-backed expectation that the EPA would not use the data to benefit a competitor. Thus, the government use of the data interfered with this expectation and constituted a taking. The Court limited Monsanto's claim to the period from 1972–1978 when the scheme then in effect provided the necessary assurance of non-use by the EPA. Data submitted during periods when there was no reasonable expectation the EPA would not use the data was not a taking.
The Monsanto decision has been consistently followed. 12 This is no trivial issue, as trade secret protection exists in the United States for so long as the information remains secret. The pre-BPCIA BLA applicants relied on this when filing their BLA applications to provide them protection from competitors obtaining the regulatory benefit of their trade secrets. Thus, there is a substantial likelihood that any reliance on a BLA holder's data submitted prior to the enactment of the BPCIA could give rise to liability on the part of the United States government to the BLA holder for the fair value of the property taken.
Challenges to the BPCIA patent provisions
A challenge to the BPCIA patent resolution scheme has come from two recent § 351(k) applicants, Sandoz and Celltrion. Both disputes involve the patent disclosure provisions. The Sandoz product was a biosimilar of Amgen's Neupogen, and Celltrion's was a biosimilar of Janssen's Remicade.
Sandoz
In June 2013, Sandoz filed a declaratory judgment action against Amgen, alleging that Amgen's United States Patents 8,063,182 (’182 patent) and 8,163,522 (’522 patent) were not infringed, invalid, and unenforceable. 13 Sandoz's basis for the declaratory judgment action was that it undertook the development of etanercept with the belief that etanercept's patent protection would expire in 2014. Sandoz claimed it was surprised by the issuance of the ’182 and ’522 patents in 2012, which were filed in 1990 and, thus, not published, as publishing of pending patent applications was a much later development. By the time the ’182 and ’522 patents issued, Sandoz had already had etanercept under development for eight years. Sandoz's claim for fear of immediate litigation was the existence of the ’182 and ’522 patents and Amgen's general statements it intended to defend its patents.
Amgen's response to the complaint was to file a motion to dismiss on the pleadings because the patent provisions of § 262(l)(2) were the exclusive method of resolving patent disputes involving biosimilar applications. The district court granted the motion to dismiss, finding that Sandoz had not sufficiently pled the necessary elements of a declaratory judgment action, and that § 262(l)(2) procedures could not be avoided by a declaratory judgment action. 14 The court also held that the notice of intent to market required by the statute could not be sent until the § 351(k) application had been approved. This last ruling is quite problematic, because it means that the § 351(k) applicant cannot begin marketing for 180 days after its application is approved if the BLA holder discloses relevant patents. 15
This extra 180 days of exclusivity appears to be inconsistent with the goal of the BPCIA, which was to provide a pathway for a biosimilar to be approved in a reasonable time period. The purpose of the 180-day notice is to allow the patentee to have the time to request a court to enter a preliminary injunction preventing such marketing. Considering the statute as a whole and its purpose, a reasonable interpretation is that the notice could be given any time after the FDA has accepted the § 351(k) application for filing. 16 Filing before the effective filing would be premature because until the FDA has accepted the application, the statute does not come into play. 17 Thus, the notice should be given with the copy of the application forwarded to the reference product sponsor within 20 days of receiving the FDA notice that the application has been accepted for filing. 18
Sandoz's § 351(k) application was accepted by the FDA on July 7, 2014; by July 27, Sandoz was to provide Amgen with a copy of its application. Instead of providing the application, Sandoz advised Amgen that it viewed the entire § 262(l) as optional and to be used at the discretion of the biosimilar applicant. 19 Sandoz did offer to make its application available to Amgen, but on terms unacceptable to Amgen. Sandoz invited Amgen to initiate litigation if Amgen found the terms unacceptable. In its petition, Amgen requests the FDA to require biosimilar applicants to comply with the disclosure requirements of § 262(l)(2)(A) by requiring a certification at the time the biosimilar application is submitted that the biosimilar applicant will comply with the disclosure requirements. 20 Adding insult to injury, Sandoz advised Amgen that it had filed a biosimilar application for Amgen's Neupogen (filgrastim) and that Sandoz had opted to not provide any information on this product to Amgen, either.
Amgen retaliated by filing suit in California against Sandoz on filgrastim alleging patent infringement, conversion, and unfair competition under California Business and Professional Code § 17200. 21 The complaint details from Amgen's viewpoint the failure of Sandoz to comply with the BPCIA patent provisions. Amgen asserts that Sandoz's failure to comply with §§ 262(l)(2)(A) and 262(l)(8)(A) deprive Amgen of the benefits accorded to the reference product BLA holder resulting in an unfair business practice and unlawful conversion of Amgen's property. Amgen also included a patent infringement declaratory action that if Sandoz markets an approved filgrastim it will infringe Amgen's U.S. Patent 6,162,427 and requested an injunction. Sandoz has answered, denying that the BPCIA patent provisions are not mandatory when the reference product owner does not agree to the § 351(k) applicant's terms under which it will provide access to the application and that Amgen's option when the biosimilar applicant opts not to take part in the patent provisions is to file a declaratory judgment action. 22
Amgen relies on § 262(l)(1)(A), which provides:
(1) CONFIDENTIAL ACCESS TO SUBSECTION (k) Application—
(A) APPLICATION OF PARAGRAPH Unless otherwise agreed to by a person that submits an application under subsection (k) (referred to in this subsection as the “subsection (k) applicant”) and the sponsor of the application for the reference product (referred to in this subsection as the “reference product sponsor”), the provisions of this paragraph shall apply to the exchange of information described in this subsection. (emphasis added)
Reading this provision alone, the statute appears—unless both Amgen and Sandoz agree to different terms—to apply. The statute continues:
(B) IN GENERAL—
(i) PROVISION OF CONFIDENTIAL INFORMATION—When a subsection (k) applicant submits an application under subsection (k), such applicant shall provide to the persons described in clause (ii), subject to the terms of this paragraph, confidential access to the information required to be produced pursuant to paragraph (2). …(emphasis added)
Again the language appears to be mandatory, “such applicant shall provide.…”
Sandoz justifies its position in its answer by relying upon § 262(l)(9)(C), which states:
If a subsection (k) applicant fails to provide the application and information required under paragraph (2)(A), the reference product sponsor, but not the subsection (k) applicant, may bring an action under section 2201 of Title 28, for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product. 23
This provision becomes superfluous if the provisions of § 262(l) are mandatory. In addition, the statute uses the term “shall” in other sections where it clearly means “may”; see § 262(l)(6)(A)–(B), where it states that the sponsor “shall” bring suit for a patent infringement action. Obviously, the decision to file suit lies in the sole discretion of the sponsor/patent holder. There may be business reasons why the sponsor may decline to initiate suit—for example, that little time left in the term of the patent and significant damages are unlikely because of the biosimilar's need to convince doctors to use its product. Thus, the statutory language, when read as a whole, supports the proposition that the exchange of patent information may be optional.
The FDA approved the Sandoz application on March 6, 2015. 24 On March 13, 2015, District Judge Seeborg, to whom the Amgen declaratory judgment action is assigned, heard arguments on Amgen's request for a preliminary injunction based on Sandoz's violation of the BPCIA. At the start of the arguments Judge Seeborg stated, “I don't think Sandoz violated the [law].” He went on to state that he was not inclined to grant Amgen's request for a preliminary injunction. However, after hearing Amgen's presentation that it makes no sense for the statute to lay out a series of complex steps if they were simply optional, Judge Seeborg decided to take the arguments under submission.
In its motion for a preliminary injunction, Amgen asserted that it had many patents that could cover the manufacture of filgrastim, as well as others that could be relevant to its use, but that without access to Sandoz's application it cannot determine which, if any, of these patents may be asserted against the Sandoz product, its method of manufacture, or use. While a facially attractive argument, Amgen is in no different position than the NDA holder who receives no information as to how the Abbreviated New Drug Application (ANDA) applicant makes its active pharmaceutical ingredient (API) or its formulation. As for the filgrastim uses, those can only be the ones approved by the FDA; since Sandoz filed a biosimilar application, they must be those approved in the Amgen BLA. Amgen also has alleged state law claims regarding conversion and violation of the California Business and Professional Code.
On March 19, 2015, District Judge Seeborg entered judgment in favor of Sandoz, denying Amgen a preliminary injunction and dismissing with prejudice Amgen's claims under California's Unfair Competition Law. In denying Amgen's motion for a preliminary injunction and granting Sandoz's counterclaims, the court found that the patent steps in § 262(l) are optional and that the statute does not require a biosimilar applicant to wait until it receives approval to give its notice of intent to market. In deciding that the patent steps were optional, the court noted that these steps gave advantages to the biosimilar applicant not available if the applicant chose not to follow the patent steps. In particular, the court noted that by following the patent steps, the applicant received information as to what patents might cover its products and could thus avoid or limit the scope of the litigation. For example, an applicant might amend its application to seek approval for only “off-patent” indications. Judge Seeborg noted that:
Sandoz therefore traded in the chance to narrow the scope of potential litigation with Amgen through subsection (l)'s steps, in exchange for the expediency of an immediate lawsuit. The BPCIA's plain language and overall statutory scheme support a reading that renders this decision entirely permissible. (Slip op. at 12)
In addressing the timing of notice of intent to market, the court stated:
Because the FDA cannot license a biosimilar until twelve years after approval of a reference product, Amgen's reading would tack an unconditional extra six months of market exclusivity onto the twelve years reference product sponsors already enjoy under 42 U.S.C. § 262(k)(7)(A). Had Congress intended to make the exclusivity period twelve and one-half years, it could not have chosen a more convoluted method of doing so. Moreover, Congress presumably could have been far more explicit had it intended for infringement suits to commence only once a biosimilar receives FDA approval. It was, therefore, not wrongful for Sandoz to give Amgen its 180 days' notice prior to first commercial marketing pursuant to subparagraph (l)(8)(A) in July 2014, in advance of receiving FDA approval.
Judge Seeborg's conclusions are reasonable given the statutory language, especially with respect to the timing of the 180-day notice of intent to market.
The FDA agreed with the court that the patent information exchange is indeed optional. In its letter of March 25, 2015, denying Amgen's Citizen Petition of October 29, 2014, the FDA stated that “[n]either section 351(k) nor section 351(l) requires FDA to impose a certification requirement as part of the biosimilar review process.” 25 The FDA also stated “[t]he BPCI Act generally does not describe any FDA involvement in monitoring or enforcing the information exchange by creating a certification process or otherwise.” 26 In clarifying that the patent exchange procedures are “separate from” the FDA review process, the FDA noted the differences from the Federal Food, Drug, and Cosmetic Act, which “requires new drug application sponsors to identify certain patents for listing FDA.” 27
Celltrion
Like Sandoz, Celltrion began its quest for regulatory approval by filing a declaratory judgment action against the BLA holder, Janssen Biotech and Kennedy Trust for Rheumatology Research (Kennedy), the owner of some of the involved patents. Unlike Sandoz, Celltrion dismissed its declaratory judgment action against Janssen 28 but maintained it against Kennedy, which was not a holder of the BLA. Kennedy moved to dismiss the action, which motion was granted primarily on the ground that there was imminent threat of litigation, since at the time the suit was filed, Celltrion had not filed its BLA. 29 Also unlike Sandoz, Celltrion initially took part in the information exchange set forth in the BPCIA. Celltrion also used its BLA filing to send Janssen its notice of intent to market. As the process proceeded, Janssen complained that Celltrion was not forthcoming with disclosure of its manufacturing process. This led Janssen to file suit in Massachusetts on March 6, 2015, alleging infringement of six Janssen patents and violation of the BPCIA patent procedures. 30 Like Amgen, Janssen is asserting that the notice to market is ineffective since it was given prior to approval, and that Janssen's refusal to provide manufacturing information is a violation of the BPCIA.
Conclusions
Congress's failure to account for BLAs granted prior to the enactment of the BPCIA has created a quagmire that only an attorney could love. First, the BPCIA patent disclosure requirements presume that the biosimilar application will be filed well before the 12-year exclusivity expires, so that all the patent disputes can be resolved before the exclusivity expires, so that the biosimilar can be timely launched without delay if the patent hurdles are cleared. Unlike the current ANDA procedure, where the timely filing of a patent infringement suit effectively results in a 30-month extension of the five-year regulatory exclusivity, the BPCIA statutory scheme shows Congress's intent that the 12-year exclusivity (12.5 years with pediatric exclusivity) was to be the only exclusivity in the absence of an injunction.
The failure to provide for a transition has created uncertainties for both the BLA holder and the biosimilar applicant, as can be seen from the Sandoz and Celltrion cases. If the Sandoz decision is affirmed on appeal, it offers the biosimilar applicant a choice of which avenue to pursue: the patent steps with the attendant delay to market, or opting out of the patent steps and moving on to immediate marketing. Where the 12-year BLA exclusivity has expired or expires shortly, the biosimilar is more likely to opt out of the patent procedure and go for the earlier launch. For BLA holders with expired or soon-to-expire exclusivity, they must prepare for the need to file preliminary injunction motions as soon as the biosimilar is approved.
Congress also failed to provide for protection or compensation for the use of the trade secrets of the preexisting BLA holders, as evidenced by the Abbott (now AbbVie) Citizen Petition. It is only a question of when, not if, this issue is litigated.