Amgen v. Sandoz—Let’s Just Agree to Disagree

Pharma Corner blueAmgen v. Sandoz—Let’s Just Agree to Disagree
July 22, 2015

Yesterday ended the long wait for the first appellate court interpretation of the 2010 Biologics Price Competition and Innovation Act (“BPCIA”). A 3-judge panel of the Federal Circuit (Lourie, Newman and Chen) struggled with arguably inconsistent language in the Act, which Judge Lourie described as “a riddle wrapped in an enigma.” Ultimately, a decision on two precedential issues was cobbled together through three separate opinions: Judges Newman and Chen reached opposite conclusions on each issue, with one joining Judge Lourie on the first point and the other joining Judge Lourie on the second.

The BPCIA created a streamlined process for approving new biologic drugs that are deemed “similar” to already marketed biologics and which are shown to be safe and efficacious. The BPCIA is the counterpart of the Hatch-Waxman Act which, in 1984, created an abbreviated process for approval of generic equivalents to “small molecule” drugs. Because biologic drugs are made using live cells or organisms, they are less easily characterized than chemically synthesized small molecule drugs and don’t meet the same standards of uniformity. Nonetheless, biologics are generally considered to represent the future of modern pharmaceutical development. Eleven of the top selling biologics (excluding insulin products, which have their own classification) had U.S. Sales totaling $26.8 Billion in 2011, growing to $30.5 Billion in 2013. Eight of these drugs advanced in the sales rankings among drugs of all types, with four of them moving into the top ten largest sellers in 2013.

Given the size of the opportunity presented–Humira alone sold $5.4 billion in the U.S. in 2013– pharmaceutical developers are clamoring to take advantage of the new biosimilar pathway. Of the eleven drugs described above, all but one are now the subject of a biosimilar application with the FDA, or public announcements that a biosimilar is under development. Amgen v. Sandoz involves the drug filgrastim, which is the first (and, thus far, only) biosimilar to be approved in the U.S. under the BPCIA. Although it ostensibly governs FDA approval processes, the BPCIA is, as Judge Chen noted, also designed to create an “integrated litigation management process.” Section 262(l) of the statute describes an information exchange process under which the filer of an abbreviated Biologic License Applicant (aBLA) provides the maker of the original (“reference”) drug with information about its application and proposed manufacturing process. In a series of timed steps, the two then identify and potentially narrow the set of patents that may be asserted in litigation between them. Cumulating the maximum number of days allowed for each step, the information exchange can consume almost a year, during which the reference drug maker continues to enjoy protection from competition.

Sandoz argued that the information exchange process set forth in section 262(l) was optional and that an aBLA applicant may choose to forego its benefits, thereby freeing up the reference drug maker to file suit on any and all applicable patents. Citing the fact that section 262(l) uses the word “shall” in describing the information exchange, Amgen characterized Sandoz as a “scofflaw” that was willfully flouting the law. The Federal Circuit disagreed and affirmed the District Court’s decision that the information exchange was, indeed, optional with the aBLA filer and that the word “shall” had to be read within the larger context of the statute. To do otherwise would, as Judges Lourie and Chen both noted, render meaningless two other provisions of the BPCIA. The result of the decision is that aBLA filers must now weigh the significant economic trade-offs between speed to market and narrowing of risk.

On the second issue, the District Court’s decision was overturned. BPCIA Section 262(l)(8)(A) directs the aBLA filer to give written notice at least 180 days before commercial marketing of its licensed biologic product. Amgen argued that Sandoz’ notice had been premature because it pre-dated final FDA approval of the biosimilar. The District Court disagreed, noting that the statute itself contains no such restriction and merely specifies the latest (but not earliest) date on which notice may be sent. To encourage innovation, the BPCIA already provides a new biologic drug with 12 years of market exclusivity, regardless of whether the product is protected by any patent. The District Court found Amgen’s interpretation to be inconsistent with this statutory framework because it would effectively extend the reference drug’s exclusivity for an additional 180 days after final biosimilar approval.

On appeal, the majority concluded that an aBLA filer which has bypassed the information exchange process must give the 180 day notice after FDA approval. However, its reasoning leads to the conclusion that an aBLA filer which does engage in the information exchange could forgo the commercial marketing notice altogether with the only consequence that it would be exposed to immediate litigation on all patents. In his dissent, Judge Chen pointed out this inconsistency and the automatic extension of exclusivity that it would implicitly–but without clear statutory directive–create. Judge Lourie’s opinion downplays this concern, suggesting that filgrastim may be an outlier because its twelve years of assured market exclusivity for Amgen’s reference drug long ago expired. However, a review of FDA approval data indicates that this is likely to be a typical fact pattern. Of the eleven top-selling biologics discussed above, ten were approved between 1989 and 2002, more than twelve years ago. Further, of the 118 biologics currently approved by the FDA under BLAs, 47% were approved more than twelve years ago. As a result, it likely will not be long before the conflicting interpretations of Section 262(l)(8)(A) presented in Amgen v. Sandoz reappear in other litigation.

OnPoint Analytics, a litigation consulting firm, compiles a wide variety of pharmaceutical data and tracks important market developments, including emerging trends for biologics.