On October 10, 2018 President Trump signed into law the “Patient Right to Know Drug Prices Act” (S.2554) which requires antitrust scrutiny of biosimilar settlements by the Federal Trade Commission (FTC). The law amends the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 to require Reference Product Sponsors and biosimilar applications to submit their settlement agreements to the FTC for review. The bill was introduced in March 2018 by Senators Susan Collins (R-Maine), Clair McCaskill (D-Missouri), and Debbie Stabenow (D-Michigan).
The new law will allow the FTC to access the terms of a deal without seeking additional authority from the commission. It will also allow the FTC to track biosimilar deals and develop a data record of relevant terms, similar to what has been down with small molecule generics.
The law comes at an important time. Humira®, which is the best-selling drug in the world yielding more than $18 billion in sales in 2017, entered the market in Europe this past Tuesday on October 16, 2018. However, no biosimilars of Humira® are expected to enter the market in the US until at least 2023. This is because in the US, AbbVie not only maintains a robust patent portfolio protecting Humira®, it has also reached deals with multiple biosimilar manufacturers, including Amgen, Samsung Bioepis, Mylan, Sandoz, and as of yesterday, Fresenius Kabi, to hold off competition until 2023.
Apart from this new law, other legislations addressing settlement agreements are also moving forward in Congress. It will be interesting to see if these legislations will increase the entry of biosimilars on the US market.
We will keep you informed of any new developments in this field.
I recently spoke at a biosimilars conference in Boston, MA and one topic that came up multiple times is the antitrust issue relating to Remicade®. I reviewed the recent decision involving Remicade® and its biosimilar, Inflectra®, to see if the court provided any insights into how antitrust issues dealing with biosimilars, particularly those involving “exclusionary contracts” and rebates, will be addressed.
On August 10, 2018, the Pennsylvania Court denied Johnson & Johnson’s (“J&J”) motion to dismiss Pfizer’s antitrust lawsuit relating to its Remicade® biosimilar, Inflectra®. We previously wrote how Pfizer sued J&J in the U.S. District Court for the Eastern District of Pennsylvania in September 2017 alleging that J&J has been conducting “anti-competitive practices” to prevent biosimilar competition by effectively preventing health insurers, hospitals, and clinics from offering Pfizer's lower-priced biosimilar product. According to Pfizer, J&J forced hospitals and insurers to enter exclusive arrangements and bundled rebate programs to ensure that Remicade® was given preferential treatment over Inflectra®.
J&J moved to dismiss the lawsuit, but on August 10, the Court denied Janssen’s motion and is allowing the antitrust suit, the first lawsuit of its kind in the biosimilar field, to continue. In it’s ruling, the Court provides insights as to how some antitrust issues relating to biosimilar market entry may be analyzed.
First, the Court addressed the issue of exclusionary agreements. In Pfizer’s lawsuit, Pfizer alleged that J&J forced hospitals and insurers to enter exclusive arrangements to exclude biosimilars other than Remicade® from coverage under their plans, thereby making Remicade® the exclusive infliximab available to patients covered by that plan. These exclusionary agreements are particularly important in the context biologics. Remicade® and Inflectra®, like most biologics, are administered intravenously at a clinic or hosptial. They are a “medical benefit” product, rather than a “pharmacy benefit” product, which means they must be stocked in advance by providers, rather than directly purchased by patients on an as-needed basis. Since the providers bear the financial risk of reimbursement, there is an incentive for them to stock the drug that will actually be covered by most insurers.
J&J tried to argue that there is no correlation between Inflectra’s® poor market traction and sales and J&J’s exclusionary contracts with insurers and providers and pointed to a number of alternative theories to explain the marked difference in sales between the two products. In particular, J&J argued that the lack of commercial success of Inflectra® was independent of J&J’s exclusionary agreements, and instead were due to provider’s lack of comfort with biosimilars, Inflectra's® status as a “biosimilar” rather than as an “interchangeable”, and Remicade’s® cost-effectiveness.
In the end, the Court dismissed J&J’s argument that Pfizer needed to disprove all of their alternate theories of why sales of its product were lagging at this stage of litigation. By holding that Pfizer was not required to disprove all other theories on a motion to dismiss, the Court left open the possibility that J&J, or a future innovator, could exonerate itself using one or more of these alternate theories. That is an important takeaway because it suggests that even though J&J’s actions could lead to antitrust liability, i.e., by entering into exclusionary contracts, it also provided ways to avoid such liability.
Bundled Rebates and Multi-Product Bundling Programs
Second, the Court addressed the issue of bundled rebates and multi-product bundling programs. In one instance, Pfizer alleged that J&J introduced a rebate program that would provide savings off Remicade®’s increasing list price for all existing Remicade® patients, which would, in effect, bundle the base of existing Remicade® patients with new patients entering the infliximab market. To this end, the Court held that bundled rebates can be anticompetitive when they preclude competition for new infliximab patients by being linked to noncontestable (existing) patients. This, of course, assumes that new patients are contestable because they are not anchored to a product while existing patients are incontestable because they are anchored to a product. Under this reasoning, the Court found that J&J’s rebate program could be anticompetitive since it “bundled its power over existing Remicade patients to break the competitive mechanism and deprive new infliximab patients (and their insurers) of the ability to make a meaningful choice between Remicade and its biosimilars.” The Court, therefore, refused to dismiss Pfizer’s bundling claim. Since most biologics have legacy patients, this factor may be relevant to future rebate schemes. Specifically, this shows that rebate schemes may be tailored by innovators to potentially exclude non-competitive products and avoid antitrust liability
Additionally, Pfizer alleged that J&J bundled rebates across multiple products to force insurers to grant exclusivity to Remicade® or pay higher prices on other J&J products. J&J argued that this claim should be dismissed because Pfizer failed to offer its own multi-product bundles. The Court appears to have sided with J&J on this issue and held that bundling rebates across multiple products is not, per se, an antitrust violation. The Court noted that Pfizer was not a single-product company and therefore had the capacity to offer such bundles itself. This seems to suggest that whether or not rebates schemes are permissible will depend, in part, on who the biosimilar competitor actually is.
Companies developing innovator and biosimilar products, alike, should be aware of the outcomes of this dispute. At least one United States District Court has found that certain pricing tactics may rise to the level of impermissible monopolization. The outcome of this case will likely provide more insights on which pricing practices are permissible under antitrust laws and which are not.
We will continue to monitor the case and provide updates as they become available.
Two weeks ago, the Supreme Court issued two important decisions involving Inter Partes Reviews (IPRs). On April 24, 2018, the Supreme Court first issued a seven to two decision in Oil State Energy Services, LLC v. Greene’s Energy Group, LLC (Oil States), where it upheld the constitutionality of the IPR practice. That same day, the Supreme Court issued a five to four decision in SAS Institute Inc. v. Iancu (SAS), holding that when the Patent Trial and Appeal Board (PTAB) institutes an IPR, it must decide the patentability of all challenged claims, not just some of them. Here we discuss some of the implications that the Supreme Court rulings may have on biosimilar manufacturers.
The Supreme Court decision in Oil States was a welcome decision for biosimilar manufacturers. At a minimum, the decision affirmed the constitutionality of IPRs and held that, for the time being, IPRs are here to stay. That is not to say that IPR procedures will not change in the future or that there will not be further constitutional challenges to them. In fact, this decision opens the door for Congress to revisit the America Invents Act and address the many unresolved issues relating to IPR proceedings. However, IPRs and the general concept of challenging patents at the U.S. Patent and Trademark Office (USPTO), will continue to be an effective means by which biosimilar manufacturers can challenge issued patents outside of the traditional district court litigation route.
In contrast to the Oil States decision, the Supreme Court’s decision in SAS may have increased some of the hurdles faced by petitioners in challenging patents at the U.S. Patent Trial and Appeal Board (PTAB). According to the Court, the PTAB was improperly issuing “partial-institution” decisions and holding trials on only a subset of challenged claims. Thus, from now on when the PTAB decides to institute an IPR, the PTAB must decide the patentability of all challenged claims as opposed to only granting institution on and/or fully considering only some of the challenged claims.
This all-or-nothing approach to the new IPR treatment by the PTAB will require petitioners to be more careful and strategic in selecting the claims to be challenged due to estoppel considerations. Previously, if the PTAB decided not to institute an IPR on an invalidity argument, the petitioner could raise those arguments again in district court because IPR estoppel did not attach to grounds that were denied at institution. However, estoppel does attach to final decision. Therefore, if the PTAB now has to fully grant a petition in an “all-or-nothing” fashion, challenges that previously would have been denied at institution will be part of the final decision and petitioners will be estopped from raising those issues again in future district court challenges. To prevent being estopped from raising arguments in future litigations, biosimilar manufactures will, as a result, have to be more strategic in deciding which arguments to raise in an IPR proceeding.
Biosimilar manufactures, and petitioners in general, will likewise need to be more selective in the claims they decide to challenge. The dissent, written by Justice Breyer, notes that the PTAB has discretion not to institute review. Previously, if the petitioner challenged 16 claims, and the PTAB decided that the challenges to 15 of those claims were frivolous, the PTAB could institute review on only one claim. Now the PTAB could chose to simply deny the petitioner entirely if it feels the overall case is not strong. To prevent a denial of all of its challenges, biosimilar manufactures will need to put forth their best arguments against a carefully selected set of claims and not just throw everything at the wall and hope something sticks.
The SAS decision may also impact whether or not patent owners submit a preliminary response, which occurs before an institution decision is made by the PTAB. As of May 2016, preliminary responses have also been permitted to include expert testimony. Historically, patent owners could submit a preliminary response to avoid institution on certain claims. Now, if the patent owner feels that institution is likely, there is little incentive to submit a preliminary response since it may be strategically advantageous to withhold the best arguments and evidence until the proceeding is further advanced. Moreover, patent owners may wish to fight the claims before the PTAB and chose to forgo submitting a preliminary response thereby increasing the chance that the PTAB institutes review of all of the challenged claims. This will create estoppel with respect to the challenged claims and preclude future district court challenges on those claims. On the other hand, with the number of preliminary responses expected to decline, biosimilar manufactures will not have the benefit of knowing which arguments and evidence they may be up against in an IPR proceeding.
While the Supreme Court decisions in Oil States and SAS will have immediate implications on biosimilar manufacturers, there remain many unanswered questions especially with regard to how institution decisions at the PTAB will play out. If the PTAB considers only 2 of 10 claims to be worth review, will the PTAB simply deny the overall petition? Will the PTAB require that all claims be ripe for review before instituting an IPR proceeding? Will the petitioner even be told how the PTAB made its decision, or based on which evidence the decision was made, if the petition is denied? Bioimilar manufacturers should continue to stay tuned to how the PTAB behaves in the coming year as more developments concerning IPR processes are expected to follow.
Last week it was announced that Abbvie entered into a settlement agreement with Samsung Bioepis that would delay the U.S. launch of Samsung Bioepis’ biosimilar version of Humira® (adalimumab) until June 30, 2023. This is the second such settlement agreement that Abbvie has entered into related to the its blockbuster rheumatoid arthritis drug. In September 2017, Abbvie also entered into an agreement with Amgen that would delay the U.S. launch of Amgen’s biosimilar product until January 31, 2023, several months earlier than the Samsung Bioepis’ biosimilar.
While a 2023 biosimilar launch perhaps cuts Humira’s patent market exclusivity by more than a decade -- some of Humira’s patents have a patent term extending to 2034 – both settlement agreements provide for undisclosed royalties on Amgen’s and Samsung Bioepis’ biosimilar once those biosimilars launch. Even more impressively, both settlements allow Abbvie to continue marketing Humira without competition more than four years beyond the expiration of a key patent protecting Humira in 2018 (U.S. Patent No. 8,889,135 (‘135 patent)), and more than five years beyond the invalidation of that same patent by the Patent Trial and Appeal Board (PTAB) in an inter partes review (IPR) proceeding in the Summer 2017.
As I previously wrote about, the ‘135 patent is important because it covers the dosing and treatment regimen of the drug, which is necessary for any biosimilar drug looking for gain FDA approval. Specifically, claim 1 is directed to “A method for treating rheumatoid arthritis in a human subject, comprising administering subcutaneously to a human subject having rheumatoid arthritis a total body dose of 40 mg of a human anti-TNFα antibody once every 13-15 days for a time period sufficient to treat the rheumatoid arthritis….”
This begs the question, how has Abbvie managed to extend Humira’s monopoly even when one of its key patents has been invalidated? The simple answer is found in Abbvie’s aggressive patent strategy. While it is unreasonable to believe that all companies will follow the patent strategy that Abbvie took with Humira, there are some lessons to learn from Humira’s IP portfolio that could be beneficial to others seeking to protect their IP assets, especially in today’s anti-patent climate.
Our marketplace understands the importance of patents; their value to business in the US cannot be overstated. Patents provide several offensive and defensive marketplace benefits to their owners or licensees. They can do everything from preventing competitors from making, using, selling, and importing the owner’s claimed product, protecting and expanding one’s presence in the marketplace, to attracting investment from venture capitalists, potential partners, and other investors.
Despite their importance, it should be no surprise to patent owners and licensees that the U.S. is currently operating in an anti-patent climate. Patents are being challenged through various strengthened post-grant procedures enacted by the America Invents Act of 2011 (AIA) or through a more traditional litigation pathway provided by the Biologics Price Competition and Innovation Act of 2009 (BPCIA), and patent holders are finding more and more that their patents are becoming susceptible to attack from competitors prior to the expiration of the patents.
The IPR process, for instance, allows a third party to challenge the patentability of an issued patent based on prior art under 35 U.S.C. §§ 102 and 103. The IPR process differs from a traditional district court litigation because it is heard in front of the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB), a final decision can be typically expected within 12-18 months, and the costs are a fraction of a traditional patent infringement litigation. As I’ve written previously, when a company challenges a patent by requesting an IPR, their odds of invalidating the challenged claim(s) are high.
No company is completely immune from an IPR challenge, although these proceedings are more popular in certain fields like electronics and computers. While IPRs are less popular in the biopharma space, they are still used consistently and with tremendous impact. Humira, for instance, has been a favorite target of IPRs from different challenges. In the summer of 2017, the PTAB struck down the ‘135 patent two times in two months finding it obvious over prior art. Other patents covering Humira were also subject to IPR challenges, including U.S. Patent Numbers 9,017,680; 9,073,987; 9,085,619; 8,802,100; and 9,512,216. Abbvie is certainly not the only company facing IPR challenges. Other biologics that are currently facing or have faced IPR challenges include Avastin®, Enbrel®, Lantus®, Neulasta®, Rituxan®, and Herceptin®.
To mitigate the threat from an IPR, companies need to develop a patent portfolio that is robust enough to withstand not only IPR challenges and traditional litigations, but also possible invalidations. Abbvie’s Humira patent portfolio is a perfect example of this strategy, often termed the “patent thicket” strategy. Despite the challenges and invalidations of Humira’s ‘135 patent over the summer of 2017, no competitor can yet market a biosimilar of Humira in the U.S. without fear of triggering a patent infringement lawsuit. Amgen and Samsung Bioepis are the first in line after signing their settlement agreements, but they will not even be able to enter the market until 2023.
Humira’s dominance in light of the unfavorable environment is in part due to its robust patent portfolio. Humira is protected by about 110 patents, some of which extend the life of the patent portfolio all the way into 2034. We can learn a few things from Humira’s patent portfolio.
First, the Humira patent portfolio is big. As I mentioned previously, there are more than 100 patents protecting various aspects of the drug. Such a large portfolio is designed to contain so many different types of claims, sets of claims, and different claim scopes that at least one of the patents will continue standing even if a few patents are invalidated. Moreover, if a company wanted to challenge all of Humira’s patent, they would find themselves in a very lengthy and costly process. In contrast, many products are not protected by such large patent portfolios. More often than not, companies only pursue a handful of patents for their products, making the portfolio, and thus the product, less valuable and more susceptible to attack.
Second, the Humira patent portfolio is very diverse. In a presentation in October 2015 entitled “Broad U.S. Humira Patent Estate”, Abbvie outlined its strategy: to cover every aspect of the drug. Abbvie listed 22 patents directed to various diseases or methods of treatment, 14 patents directed to the drug’s formulation, 24 patents encompassing the manufacturing practices surrounding production of the drug, and 15 “other” patents. Often companies focus narrowly on specific formulations, indications, or manufacturing processes instead of incorporating modifications, alternatives, or improvements, sometimes not developed until after the initial patent filing, that would expand their scope.
Third, the Humira patent portfolio is temporally staggered. By not filing all the patent applications at one time and including additional inventive elements in later follow-on patent application filings, Abbvie was able to extend Humira’s patent protection to 2034, 16 years past the initial expiration of the primary patents in 2018. Within the U.S. first-to-file system, companies are sometimes too eager to file their patent applications and too focused on making their limited number of patent filings as broad as possible, thereby risking condensing their potential patent term by cutting off the ability to file future follow-on patent applications.
Of course, it should be mentioned that a portfolio like Humira’s comes at a price. Filing, prosecuting, and later maintaining a global portfolio is not cheap. As a $16 billion per year drug, Abbvie’s investment in the Humira patent portfolio most certainly pays for itself. For other products, however, companies should weigh the overall cost of prosecuting and maintaining patent applications in the US and abroad against a realistic projected value of their product in various jurisdictions of the global marketplace. That being said, patent portfolio building decisions can be made strategically to tailor the size and shape of the portfolio to fit the business strategy of the company. Competent patent counsel should guide companies through decision-making gates to determine how best to strategically design and implement the best protection strategy.
In today’s AIA and BPCIA era, companies with robust patent portfolios are better positioned to weather this attack. It is therefore important to cultivate a patent portfolio that includes claims that are not only broad enough to provide ample protection in the marketplace, but also one that is deep enough to withstand possible invalidation. Such patent portfolios should include sufficient “back-up” claims in case the first claim set falls prey to post-grant attack and should further include sturdy, well-written, and strategically planned specifications to prop up those claims and support further revisions if needed.
On December 14, 2017, the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”), in a unanimous opinion, ruled in favor of Sandoz in Sandoz Inc. v. Amgen Inc., when it prevented reference product sponsors from using state laws to punish biosimilar manufactures for not disclosing information about they biosimilar products. The Federal Circuit’s decision is a victory for biosimilar manufacturers who now have fewer obstacles to overcome in reaching the market. At issue in the lawsuit was whether Amgen could use state laws, namely California’s unfair competition law, to force Sandoz to disclose its manufacturing information under the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”).
As a way of background, the BPCIA was passed on March 23, 2010 by Congress as part of the Affordable Care Act to provide an expedited approval pathway for biosimilars. In addition to expediting FDA approval of biosimilar products, the BPCIA provides a means of resolving patent disputes between reference product sponsors and biosimilar applicants earlier in the drug development process. The BPCIA sets forth several requirements for biosimilar applications, with the most litigated requirement being that of the “Patent Dance.”
Sandoz v. Amgen is the pioneer case for interpreting the Patent Dance. This case involved the drug filgrastim, a biologic used to stimulate the production of white blood cells. Amgen claims to hold patents on the manufacture and use of filgrastim, which it sells under the name Neupogen®. Sandoz, the biosimilar applicant, filed an application with the FDA seeking approval of a filgrastim biosimilar, Zarxio®.
In June 2017, the Supreme Court ruled, in part, that the only federal remedy available to the reference product sponsor when a biosimilar applicant fails to disclose its biosimilar application and manufacturing information is to bring a declaratory judgment action for patent infringement. The Supreme Court noted that “[t]he BPCIA’s carefully crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.” The Supreme Court, however, did not rule out the possibility that an injunction might still be available under state law. For its state law claim to be successful, Amgen would have to show that Sandoz’s failure to share its biosimilar application and follow 42 U.S.C. §262(l)(2)(A) of the BPCIA is “unlawful” under California’s unfair competition law.
In the eagerly-awaited decision in the remand of Amgen v. Sandoz from the U.S. Supreme Court, the Federal Circuit unsurprisingly held that Amgen’s state law claims “are preempted on both field and conflict grounds.” To this end, the court noted that patents are “inherently federal in character” because a patent “originates from, is governed by, and terminates according to federal law.” The Federal Circuit thus found that Congress “fully occupied” the field of biosimilar litigation through its creation of the BPCIA and as a result, state laws must give way to federal laws. While the decision does not address specifics of California law, it does seem to foreclose any attempts to enforce BPCIA provisions on state law grounds.
The Federal Circuit’s decision is a win for biosimilar manufacturers because it reduces some of the obstacles faced by biosimilars in reaching the market. In fact, Sandoz called the ruling “an important win for patient access to life-changing medication.” Not only does the ruling streamline the Patent Dance process by reducing potential state law claims, it also eliminates the possible uncertainty that could have been created as a result of having different state remedies being applied. The Federal Circuit acknowledged that concern, writing that “compliance with the BPCIA’s detailed regulatory regime in the shadow of 50 states’ tort regimes and unfair competition standards could dramatically increase the burdens on biosimilar applicants.”
For reference product sponsors, on the other hand, the decision may act to discourage sponsors from engaging in the Patent Dance. By removing the possibility of seeking state law remedies, including damages or an injunction, sponsors may not be able to compel biosimilar applicants to disclose critical manufacturing information that may be needed to determine whether infringement occurred. As a result, sponsors are left with the only recourse available to them under federal law, which is to sue -- a very costly and timely endeavor. Thus, the Federal Circuit may have removed a very important incentive for sponsors to dance. Nevertheless, there may be other factors -- including the potential profitability of the biosimilar, the strength and number of patents protecting the innovator product, and the patent term remaining on the innovator product -- that determine whether a sponsor wants to engage in the Patent Dance so it will be important to monitor how companies manage their strategies when it comes to the BPCIA.
On November 13, 2017, the U.S. Court of Appeals for the Federal Circuit upheld the District Court verdict in Amgen v. Apotex (Amgen v. Apotex, No. 2017-1010, slip op. at 3 (Fed. Cir. Nov. 13, 2017), in which the court ruled that the commercial marketing of Apotex's proposed biosimilar versions of Amgen's Neulasta® and Neupogen® do not infringe Amgen's U.S. Patent No. 8952,138 (the '138 patent). The claims of the ‘183 patent are directed to a method of refolding recombinant proteins expressed in non-mammalian cells. At the center of the dispute was whether information provided during the information exchange process of the “Patent Dance” pursuant to 42 U.S.C. § 262(Ɩ)(3) can later be used as evidence during a District Court patent infringement litigation.
The '138 patent is generally directed to a method of refolding misfolded proteins, known as "inclusion bodies,” expressed in non-mammalian cells. Claim 1 of the '138 patent recites a "refold mixture" and specific protein concentrations that the District Court interpreted as a high protein concentration "at or above 1 g/L." As part of the Patent Dance, Apotex stated in several "pre-litigation letters” that it did not infringe Amgen's '138 patent because the relevant inclusion body concentration in its product was limited to 0.9-1.4 g/L. Apotex's abbreviated Biologics License Application, or aBLA, also identified the relevant inclusion body concentration in its product to be in the range of 0.9-1.4 g/L. During the infringement trial, however, Apotex's fact witness testified that the "pre-litigation letters" were "factually inaccurate," and Apotex presented two batch records showing the protein concentration in its "refold mixture" never exceeded 0.56 g/L. Based on this new evidence, the District Court sided with Apotex and found that Amgen had failed to prove direct infringement of the '138 patent.
On appeal to the Federal Circuit, Amgen argued that the District Court erred, in part, in finding that Apotex's "pre-litigation letters" lacked probative value.
On this issue, the Federal Circuit found that the District Court properly considered the statements in the "pre-litigation letters" and properly found that they lacked probative value in light of the other evidence presented at trial. The Federal Circuit also noted that Amgen did not present any evidence to contradict the statements from Apotex's fact witness, and furthermore, did not attempt to challenge the accuracy of the witness's testimony. In its decision, the Federal Circuit clarified that statements made in the "pre-litigation letters" are party admissions and therefore have some probative value.
The Federal Circuit’s decision underlines the importance of statements made during the Patent Dance and their potential use in a subsequent patent infringement litigation. Parties on both sides should be careful of what they say during the Patent Dance exchange because, as clarified by the Court in this decision, such statements are treated as party admission. These statements therefore carry probative weight and must be considered in view of other evidence presented at trial. This decision also further emphasizes the importance of fact witness testimony and other evidence to support arguments regarding infringement. To this end, the parties in a biosimilars patent infringement litigation should be prepared to rebut or support these statements with their own expert witness testimony and other intrinsic and/or extrinsic evidence.
Two weeks ago, I was a featured speaker during the one-hour webinar, “The BPCIA Patent Dance: Recent Trends, Developments and Court Decisions,” hosted by the Knowledge Group. During the webinar, I discussed some of the ways that Inter Partes Reviews (IPRs) may be used by biosimilar manufactures as part of their strategy of navigating the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”) and the Patent Dance following the Supreme Court’s June 12, 2017 decision in Sandoz Inc. v. Amgen Inc.
As a quick reminder, the US Supreme Court reversed the Federal Circuit in Sandoz Inc. v. Amgen Inc., interpreting two key provisions of the BPCIA, and held that: (i) biosimilar manufacturers can begin marketing their biosimilar product prior to U.S. Food and Drug Administration (“FDA”) approval, and (ii) reference product sponsors cannot compel a biosimilar applicant to disclose its application and manufacturing information. On the second holding, the Court found that the only federal remedy for failing to provide a copy of the biosimilar application and manufacturing information is to bring a declaratory judgment action for patent infringement and proceed outside of the BPCIA. One way of challenging a patent outside the BPCIA is through the use of inter partes review.
We have already seen biologic products being invalidated through the use of IPRs. A few weeks ago, for instance, the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) struck down U.S. Patent No. 8,889,135 (“the ‘135 patent”) covering Abbvie’s blockbuster rheumatoid arthritis drug, Humira® (adalimumab) two times in two months finding it obvious over prior art. Other patents covering Humira are also subject to inter partes review challenges, including U.S. Patent Numbers 9,017,680; 9,073,987; 9,085,619; 8,802,100; and 9,512, 216.
Abbvie is certainly not the only company facing IPR challenges. Other biologics facing IPR challenges include Avastin®, Enbrel®, Lantus®, Neulasta®, Rituxan®, and Herceptin®.
Whether or not to challenge patents through an IPR or through a more traditional means such as district court litigation comes down to several key considerations. While not an exhaustive list, the factors below highlight some of the important considerations that biosimilar manufacturers should consider when constructing their strategy.
1. Timing. The first cases involving the BPCIA, e.g., Sandoz v. Amgen, Janssen v. Celltrion, involve drug products whose patent term is either expired or close to being expired. In these cases, the biosimilar can enter the market as soon as it receives FDA approval and satisfies the requirements of the BPCIA, i.e., provides a 180 notice of commercial marketing. But what about the situations where the reference product still has ten or more years of patent term left? In those situations, the biosimilar applicant may choose to invalidate some patents through the use of IPRs earlier on in the process rather than waiting to litigate the patents as part of the BPCIA.
2. Certainty. By choosing to challenge patents through the use of IPRs earlier on, the biosimilar applicant may benefit from the certainty provided by an IPR decision. An IPR proceeding is generally faster and more cost effective than litigation. Therefore, an IPR allows the petitioner to have a final decision, whether positive or negative, much sooner.
3. High probability of success. An IPR challenge further offers petitioners a high probability of success in overturning patents. When a petitioner challenges a patent, their odds of invalidating the challenged claim(s) are high. A look at recent IPR data shows that, when a case reaches a final written decision, the odds of invalidating all challenged patent claims are around 67%. For patent holders, the numbers are less optimistic, with patent claims being upheld less than 20% of the time. A recent article published even more remarkable numbers. A look at the Final Written Decisions issued by the PTAB in June found that the Board cancelled 555 (80.32%) of the instituted claims while declining to cancel 114 (16.50%) of the instituted claims.
The biosimilar applicant also could benefit from the lower burden of proof standard that applies to IPRs but not to litigations. IPR proceedings are subject to the “preponderance of the evidence” standard whereas litigation is subject to “clear and convincing evidence”, a much higher hurdle to overcome. Challenging patents through an IPR, therefore, often favors the petitioner.
4. Number of patents. Certainly, another important factor to consider in the biologic market is the number of patents that protect each product. Unlike with small molecule drugs that may have a handful of patents protecting their compositions, a biologic product may have dozens and potentially hundreds of patents protecting its composition, including but not limited to, method of manufacture, method of treatment, formulation, etc. With so many patents out there, a biosimilar applicant may choose to challenge some patents through an IPR and leave others to litigation. By challenging some patents, and presumably being successful, the biosimilar applicant may not only obtain some certainly but can also improve its own leverage when negotiating a license with the reference product sponsor. On the other hand, with so many patents blocking its path to market, the biosimilar applicant may struggle to identify the most critical patents that would render an IPR less effective. Moreover, depending on how some of the other factors listed here turn out, a petitioner may choose to forgo IPRs and instead challenge the patents during litigation.
5. Limited discovery and estoppel. One reason that a biosimilar applicant may choose to forgo challenging a patent using the IPR process is the limited discovery and estoppel that IPRs offer. While an IPR allows the petitioner to challenge a patent multiple times, the petitioner nevertheless needs to be thoughtful when citing prior art to challenge patents. Since discovery is limited, if a petitioner cannot put together an effective argument that the petitioner otherwise would be able to if a more in-depth discovery was permitted, then the petitioner should consider pursuing those arguments in a litigation. If the petitioner proceeds with less than optimal arguments and fails, estoppel will prevent the petitioner from raising those arguments in a later district court litigation. Thus, before proceeding with an IPR, the petitioner should make sure that his arguments are sufficient.
Companies developing biosimilar products should consider these factors when preparing to launch their product. As more biosimilars are developed, we will likely see the different ways that IPRs are used in paving the road to market.
I’ve previously written about how U.S. Patent No. 8,889,135 (the ‘135 patent) covering Abbvie’s blockbuster rheumatoid arthritis drug, Humira® (adalimumab), was invalidated by the U.S. Patent Trial and Appeal Board’s (the “PTAB”) in three separate Inter Partes Review (“IPR”) proceedings, two of which were filed by Boehringer Ingelheim (IPR2016-00408 and IPR2016-00409). While Boehringer Ingelheim filed two challenges to the same ‘135 patent, Coherus filed six challenges to a different Humira patent, U.S. Patent 9,085,619 (“the ‘619 patent”). Such aggressive use of PTAB proceedings is not uncommon, and today I want to look at the strategy behind filing multiple PTAB challenges to the same patent and the reasoning behind such sequential or parallel challenges.
The ‘619 Humira patent at issue in this case is directed to the drug’s formulation. Only claims 16–19 and 24–30 are challenged, with independent claim 16 reciting:
16. An aqueous pharmaceutical formulation comprising:
(a) an anti-tumor necrosis factor alpha antibody comprising a light chain variable region (LCVR) having a CDR3 domain comprising the amino acid sequence of SEQ ID NO:3, a CDR2 domain comprising the amino acid sequence of SEQ ID NO:5, and a CDR1 domain comprising the amino acid sequence of SEQ ID NO: 7, and a heavy chain variable region (HCVR) having a CDR3 domain comprising the amino acid sequence of SEQ ID NO:4, a CDR2 domain comprising the amino acid sequence of SEQ ID NO: 6, and a CDR1 domain comprising the amino acid sequence of SEQ ID NO:8, wherein the concentration of the antibody is 50 to 200 mg/ml; and (b) water;
wherein the formulation does not comprise a buffering system.
Formulation patents are important for any company seeking to manufacture a biosimilar of Humira.
Four of the Coherus IPR petitions were filed on January 31, 2017, as follows:
Several weeks later, on March 2, 2017, Coherus filed two additional IPR petitions:
5. IPR2017-01008 asserted obviousness in view of the 2003 Humira® Label, Fransson, and Gorkan ‘011, and obviousness over Gorkarn ‘011 in view of the 2003 Humira® Label.
6. IPR2017-01009 asserted obviousness in view of the 2003 Humira® Label, Fransson, and the 2005 Gamimune ® Label.
On April 11, 2017, the PTAB granted Coherus’s unopposed motions to dismiss IPR2017-00826 and IPR2017-00827 (IPRs 3 and 4, above) without prejudice. Coherus essentially replaced IPR2017-00826 and IPR2017-00827 with IPR2017-01008 and IPR2017-01009 (IPRs 5 and 6, above). Thus, Coherus has four IPR petitions pending and is awaiting institution decisions against the ‘619 patent.
There are several reasons for companies to file sequential IPR proceedings such as Coherus did against the ‘619 patent.
First, there are technical advantages to be gained by filing multiple IPRs against a single patent. Each IPR petition is limited to a specific word count. In the case of filing any petition before the PTAB, the limit is 14,000 words. If the petitioner is looking to challenge multiple claims and using multiple prior art references, or if the patent contains numerous claims, then this word limit could be problematic. To avoid exceeding the word limit, the petitioner could separate out his arguments over more than one IPR.
Second, and more importantly, filing more than one IPRs against a single patent gives the petitioner multiple “bites at the apple.” Each IPR is a pretty good lottery ticket in the post-grant patent invalidation game in the US. A look at recent IPR data shows that, when a case reaches a final written decision, the odds of invalidating all challenged patent claims is around 67%. In fact, the patent holder is only successful less than 20% of the time. https://www.wsgr.com/publications/PDFSearch/PTAB-Year-in-Review-2016.pdf) Thus, while filing one IPR is favorable, filing more than one can increase the odds of success. Big companies launching critical product lines find these odds appealing and often “double down” on the IPR process in an attempt to reduce the risk of failure.
Third, filing multiple IPRs allows you to challenge a patent using different prior art or different combinations of prior art. This, of course, requires the petitioner to carefully evaluate the arrows in their quiver and to strategically decide which prior art arrows to launch in an IPR attack and which, if any, to reserve for potential future battles, such as another IPR proceeding or even in a litigation. Such decisions are important in light of a company’s overall IP strategy. If a company challenges a patent in an IPR proceeding using prior art reference X, and the IPR is unsuccessful, then the company can try to challenge the patent in a subsequent IPR proceeding using reference Y. If the company is successful with only reference X, then there is no need to disclose reference Y and the company can hold on to reference Y until a litigation, if any, is initiated. If the company, however, tries to challenge a patent using all of its references immediately, and is unsuccessful, then the company may not have any further means of challenging the patent. The failure of the IPR in this scenario leaves the patent in an extremely strong and enforceable position, and the challenger with no defenses. In this case, the company may not be able to enter the market until the patent expires or unless the patent holder is amenable to granting a license.
Fourth, timing must also be strategically considered since challenging a patent multiple times can help a challenger learn from their mistakes in earlier proceedings. This is what happened when Kyle Bass and the Coalition for Affordable Drugs filed two separate petitions against the Ampyra® patents, namely U.S. Patent Nos. 8,663,685, 8,007,826, 8,440,703, and 8,354,437, which constitute four of the five Ampyra® Orange-book listed patents. Kyle Bass’s first IPR petition against the Ampyra® patents was denied because he did not establish that the cited posters displayed at conferences qualified as prior art “printed publications” as required by 35 U.S.C. § 311(b). In the second challenge, however, there was a question regarding the “printed publication” status of Acorda’s S-1 Statement, but the PTAB found a “sufficient showing that the S-1 was publicly accessible to the public interested in the art.”
Fifth, filing multiple IPRs could be used as a means of intimidation. Faced with multiple instituted IPR challenges, a patent holder may simply fold and give up if the patents are not critical to their business. Alternatively, multiple IPR challenges can motivate a patent holder to license the technology if previously they were unwilling to license. In this way, filing multiple IPR challenges creates a bargaining chip that is sort-of a “win-win” for the challenger if they are successful. However, it should be noted that settlements between the parties do not necessarily mean the IPR will be terminated (though in practice they usually are terminated) as it is ultimately up to the PTAB to decide whether termination is merited.
Finally, a biosimilar company such as Coherus may take an aggressive approach to PTAB proceedings to challenge patents as a way to eliminate at least some patent disputes without participating in the patent dance, which is part of the Biologics Price Competition and Innovation Act (BPCIA). By eliminating patents in front of the PTAB, a biosimilar applicant can avoid the cost and uncertainty of litigating patents in court.
Multiple IPR filings against a single patent offer several benefits to the challenges and show that even patent owners who successfully avoid one IPR challenge may still face a subsequent IPR challenges by the same party.
One June 12, 2017, the United States Supreme Court, in a unanimous opinion, reversed the Federal Circuit in Sandoz Inc. v. Amgen Inc., interpreting two provisions of the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”). This decision permits manufacturers of biosimilars to begin marketing their biosimilar product prior to U.S. Food and Drug Administration (“FDA”) approval and deprives the owner of the reference product of a means to force disclosure of the method used to manufacture the biosimilar. The Supreme Court’s decision is a victory for manufacturers of biosimilars who now have fewer obstacles to overcome in reaching the market.
The BPCIA was passed on March 23, 2010 by Congress as part of the Affordable Care Act to provide an expedited approval pathway for biosimilars. In addition to expediting FDA approval of biosimilar products, the BPCIA provides a means of resolving patent disputes between reference product sponsors and biosimilar applicants earlier in the drug process. The BPCIA sets forth several requirements for biosimilar applications, with the most litigated requirement being that of the “Patent Dance.” The Supreme Court’s decision on June 12th was the Court’s first interpretation of two key provisions of the Patent Dance.
Interpreting the “Patent Dance”
Amgen v. Sandoz is the pioneer case for interpreting the Patent Dance. This case involved the drug filgrastim, a biologic used to stimulate the production of white blood cells. Amgen claims to hold patents on the manufacture and use of filgrastim, which it sells under the name Neupogen®. Sandoz, the applicant, filed an application with the FDA seeking approval of a filgrastim biosimilar, Zarxio®.
At issue in the case were two provisions of the BPCIA aimed at facilitating early resolution of patent disputes between the sponsor and applicant; (1) whether a biosimilar applicant can choose to not disclose its biosimilar application and manufacturing information under 42 U.S.C. §262(l)(2)(A), and (ii) whether a biosimilar applicant can provide notice of commercial marketing of its product under 42 U.S.C. §262(l)(8)(A) prior to FDA approval, and whether such notice is mandatory.
District Court: In a decision issued on March 19, 2015, the District Court held that the Patent Dance is not mandatory, stating that §262(l) provides a “carrot of a safe harbor for applicants,” but “contain[ ] no stick to force compliance” if the applicant chooses to forgo that safe harbor and engage in litigation. One the second issue, the District Court held that biosimilar applicants can provide notice of commercial marketing before FDA approval, stating to hold otherwise “would tack an unconditional extra six months of market exclusivity onto the twelve years reference product sponsors already enjoy” under §262 (k)(7)(A). Amgen appealed the District Court’s decision to the United States Court of Appeals for the Federal Circuit.
Federal Circuit: In a split decision issued on July 21, 2015, the Federal Circuit affirmed the District Court’s holding that the Patent Dance is optional, but reversed its decision that notice of commercial marketing may be given prior to FDA approval. The Court agreed with Sandoz’s interpretation of §262(l)(2)(A) that an applicant can choose whether or not to disclose (k) application and manufacturing information. The Court emphasized that despite the use of “shall” in §262(l)(2)(A), other provisions, such as §262(l)(9)(C), 35 U.S.C. §271(e)(2)(C)(ii), and 35 U.S.C. §271(e)(4) “indicate that ‘shall’…does not mean ‘must’.” These provisions explicitly contemplate that a subsection (k) applicant might fail to disclose the required information by the statutory deadline.” As such, the BPCIA specifically sets forth the consequences for such failure – the reference sponsor may bring an infringement action.
On the second issue of commercial marketing under §262(l)(8)(A), however, the Federal Circuit agreed with Amgen that notice can only be given after FDA approval of the biosimilar product. The Court believed that “Congress intended the notice to follow licensure, at which time the product, its therapeutic uses, and its manufacturing processes are fixed.” Thus, when a subsection (k) applicant files its application, it will not be able to know for certain when, or even if, it will obtain FDA licensure. The FDA could very well request changes to the product, or only approve some but not all uses sought. Thus, if notice of commercial marketing could be given at any time before FDA licensure, the RPS would be left to guess the scope of approved license and as to when the commercial marketing would commence.
Both Sandoz and Amgen petitioned the Supreme Court to review the case and the Supreme Court granted certiorari on the cross-petitions in January 2017.
The Supreme Court’s Decision
Can the Biosimilar Applicant be Compelled to Disclosure Biosimilar Manufacturing Information? The Supreme Court first addressed the issue of whether a court could compel a biosimilar applicant to disclose its manufacturing information. The Supreme Court agreed with the Federal Circuit that an injunction under federal law is not available to enforce §262(l)(2)(A),” but disagreed with the Federal Circuit’s interpretation that 35 U.S.C. §271(e)(2)(c)(ii), and 35 U.S.C. §271(e)(4) provide remedies for failure to disclose. The Supreme Court instead focused on 42 U.S.C. §262(l)(9)(C) as providing the only federal remedy for failing to provide a copy of the biosimilar application and manufacturing information, which is to bring a declaratory judgment action for patent infringement and proceed outside of the BPCIA. The Supreme Court noted that “[t]he BPCIA’s carefully crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.” Thus, the Court held that the only federal remedy available to the reference product sponsor when a biosimilar applicant fails to disclosure its biosimilar application and manufacturing information is to bring an declaratory judgment action.
The Supreme Court, however, did not rule out the possibility that an injunction might still be available under state law. For a state law claim to be successful, Amgen would have to show that Sandoz’s failure to share its biosimilar application and follow 42 U.S.C. §262(l)(2)(A) is “unlawful” under California unfair competition law. Moreover, any remedies available under the state law claim must not be preempted by the BPCIA. The Supreme Court remanded these issues to the Federal Circuit for further consideration.
When Can Effective Notice of Commercial Marketing be Given? On the issue of commercial marketing notice, the Supreme Court disagreed with the Federal Circuit that notice can only be given after FDA approval of the product. Instead, the Court concluded that only commercial marketing, but not notice to the reference product sponsor, must wait for FDA approval. The Court reasoned that the statute only requires the applicant to give notice “at least 180 days prior to marketing its biosimilar” and does not impose the additional requirement that the notice be “after the FDA licenses the biosimilar” as suggested by the Federal Circuit.
This decision allows biosimilar manufacturers to provide notice of commercial marketing to the reference product sponsor months in advance of FDA approval instead of six months after FDA approval, thus allowing them to reach the market immediately after obtaining approval.
What the Supreme Court’s Decision Means for Biosimilar Manufacturers
The Supreme Court’s decision is a win for biosimilar manufacturers on both issues. The Court’s decision gives biosimilar applicants more control over managing patent disputes. Not only can a biosimilar applicant decide when to initiate the dispute, the applicant can also determine the manner in which the dispute will proceed.
For instance, if a biosimilar applicant wants to resolve patent disputes early on in the process, the applicant could share its application with the reference product sponsor at the beginning of the Patent Dance and force the reference product sponsor to bring suit under the BPCIA. On the other hand, if a biosimilar applicant wants to wait on resolving the patent issues, the applicant could decide not to share its application, forcing the reference product sponsor to bring suit outside the BPCIA. Alternatively, the biosimilar applicant may choose to challenge the patents in an inter partes review or post grant review proceeding at the U.S. Patent Office, where it could benefit from the lower burden of proof standard.
This decision also grants biosimilar manufacturers more control when it comes to determining when they can begin marketing their product. Instead of waiting until six months after the FDA approves the biosimilar product, the biosimilar applicant can now provide notice in advance of approval, thus allowing them to enter the market immediately after obtaining FDA approval.
BioPharma Law Blog posts updates and analyses on IP topics, FDA regulatory issues, emerging legal developments, and other news in the constantly evolving world of biotech, pharma, and medical devices.