Standing Alone – The Current Status of the BPCIA’s Notice of Commercial Marketing

In March 2015, the FDA approved the first biosimilar application, which was for a follow-on biologic drug of Amgen’s reference product NEUPOGEN^® (filgrastim).[1] Yet, before the applicant, Sandoz, could launch its biosimilar under the brand name ZARXIO^®, it had to wait for the Federal Circuit to interpret the controlling statute, the Biologics Price Competition and Innovation Act (“BPCIA”). This year, a different applicant with an approved biosimilar drug is in a very similar situation. On April 5, 2016, the FDA approved its second biosimilar application, this time Celltrion’s application for a biosimilar therapeutic antibody related to Janssen Biotech Inc.’s REMICADE^® (infliximab).[2] Celltrion had already agreed not to launch until at least June 30, 2016.[3] However, as this date rapidly approaches, Celltrion is similarly waiting for the Federal Circuit to rule on an issue that was not squarely addressed in the Federal Circuit’s Amgen v. Sandoz decision from last year[4] – whether the 180-day Notice of Commercial Marketing period is mandatory for parties that participate in the disclosure and patent exchange provisions of the BPCIA – the so-called “patent dance.”[5] Resolution of this issue in Celltrion’s favor could provide a valuable approach for biosimilar applicants wishing to reach the market six months earlier than they otherwise could.

Interestingly, even though the outcome of this issue will greatly impact Celltrion, it was not the party to bring this issue to the attention of the Federal Circuit. Instead, Apotex did so when it appealed a preliminary injunction issued by Judge Cohn of the Southern District of Florida requiring Apotex to “provide Amgen with at least 180 days notice before the date of the first commercial marketing of the biological product approved by the FDA.”[6] Apotex had filed an application with the FDA to market a biosimilar version of NEULASTA^® (pegfilgrastim). But, unlike Sandoz before it, Apotex had participated in the patent dance. The question before the Federal Circuit in the Amgen v. Apotex appeal rests on the status of the 180-day notice requirement as a stand-alone provision of the BPCIA. The Federal Circuit heard arguments in the Apotex appeal on April 4, 2016. This article analyzes the status of the Apotex and Celltrion cases, the issue the Federal Circuit faces in the Apotex appeal, and the implications for all biosimilar applicants in the future.

The BPCIA

Congress passed the BPCIA in 2009 to facilitate the entry of biosimilar drugs into the market by allowing the biosimilar applicant to submit an abbreviated Biologics License Application (“aBLA”) that relies in part on the approved license of a reference product.[7] The BPCIA consists of two parts – the first, found at 42 U.S.C. § 262(k), addresses regulatory aspects of the new regime, and the second, found at 42 U.S.C. § 262(l), addresses patent resolution issues. This latter section lays out the steps of the patent dance, which begins within 20 days of the FDA’s notification to the biosimilar applicant that the aBLA has been accepted.[8] According to the language of the statute, the biosimilar applicant “shall” provide to the reference product sponsor (“RPS”) the aBLA “and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application.”[9] This disclosure begins a cascade of information exchanges regarding patents that the RPS could assert against the biosimilar applicant if it were to launch before patent expiration.[10]

The culmination of this process is a (potential) two-phase litigation, where the parties agree that the RPS will only initially assert a subset of the identified patents. After that, the RPS holds any remaining identified patents in reserve until the biosimilar applicant provides notice that it intends to market the biosimilar product sometime after 180 days from the date of that notice (the so-called “Notice of Commercial Marketing”).[11] When the biosimilar applicant provides that notice, the RPS can seek a preliminary injunction with respect to the second-phase patents.[12] Importantly, the statute provides that “[i]f a [biosimilar] applicant fails to complete an action required” by this patent resolution mechanism – including providing the Notice of Commercial Marketing – the RPS “may bring an action . . . for a declaration of infringement, validity, or enforceability of any patent included in the list described in paragraph (3)(A), including as provided under paragraph (7).”[13] In other words, the RPS can immediately sue the biosimilar applicant with respect to any patent identified during the patent dance.

Amgen v. Sandoz

The Federal Circuit provided its first interpretation of the BPCIA in the Amgen v. Sandoz case. The first issue decided was whether the patent dance is even mandatory. Amgen had asserted that the kick-off step of the dance, in which the biosimilar applicant provides the RPS with a copy of the aBLA and other information,[14] is not optional because the statute specifies that the biosimilar applicant “shall” provide such information to the RPS. The Federal Circuit disagreed, holding that because the statute provides a remedy for failure to comply with that provision, the biosimilar applicant can voluntarily choose not to participate in the patent dance.[15] That statutory remedy allows the RPS to bring a declaratory judgment suit for “any patent that claims the biological product or a use of the biological product.”[16] Congress presumably provided this broad remedy (“any patent”) because there would be no list of identified patents in such situations.

The second issue was whether the “Notice of Commercial Marketing” provision was also mandatory, and if so, in which situations? Sandoz had provided notice shortly after its application had been accepted for review by the FDA, which Amgen argued was too soon to be of any practical use. The Court agreed, holding that a Notice of Commercial Marketing could only be effective after the FDA has licensed the product – in other words, after FDA approval.[17] Importantly, the majority of the Court (in this instance Judges Lourie and Newman) held that the Notice provision was a standalone provision, independent of the patent dance.[18] Judge Chen disagreed in his dissent-in-part.[19] He believed that the Notice provision was “part and parcel to, and contingent upon” the patent dance.[20]

Stand-Alone Provision?

This “stand-alone” dichotomy in the Amgen v. Sandoz panel stems from the panel members’ differential reading of the interplay between the Notice provision and the remainder of the patent dance provisions. The majority acknowledged that paragraph (l)(9)(B) specifically provides a remedy for violations of the Notice of Commercial Marketing provision (paragraph (l)(8)(A)) “after the applicant has complied with paragraph (l)(2)(A)[‘s requirement to share the aBLA and other manufacturing information] . . . .”[21] The majority also noted, in contrast, that the BPCIA does not specify the consequence for noncompliance with the Notice of Commercial Marketing provision in the situation where the biosimilar applicant does not share the aBLA and other manufacturing information.[22] Therefore, the Court concluded that “Paragraph (l)(8)(A) is a standalone notice provision in subsection (l),”[23] and:

where, as here, a [biosimilar] applicant completely fails to provide its aBLA and the required manufacturing information to the RPS by the statutory deadline, the [notice] requirement of paragraph (l)(8)(A) is mandatory. Sandoz therefore may not market Zarxio before 180 days from March 6, 2015, i.e., September 2, 2015.[24]

This, of course, left unanswered the questions of whether notice is mandatory if the biosimilar applicant provides its aBLA and the required manufacturing information to the RPS, and what happens if that applicant does not provide requisite notice.

Judge Chen, on the other hand, found that “[t]he interwoven structure of subsection (l) indicates that Congress viewed the procedures of (l)(8) as inseverable from the preceding steps in (l).”[25] To reach this conclusion, he looked to the purpose behind the Notice provision: “the entirety of (l)(8), including (l)(8)(A)’s notice provision, serves to ensure that an RPS will be able to assert all relevant patents before the [biosimilar] applicant launches its biosimilar product.”[26] As such, “the most logical conclusion when reading (l)(8) in context is that (l)(8)’s vitality is predicated on the performance of the preceding steps in subsection (l)’s litigation management process.”[27] Indeed, according to Judge Chen, “[w]ithout first engaging in these procedures, (l)(8) lacks meaning.”[28] Therefore, according to him:

The most persuasive reading of subsection (l) as a whole is that Congress provided two paths to resolve patent disputes: (1) the intricate route expressed in (l)(2)-(l)(8); and (2) the immediate, more flexible route provided in (l)(9), should the [biosimilar] applicant falter on any of its obligations recited in (l)(2)-(l)(8).[29]

With such a reading, the Notice provision should be as optional as the patent dance, with paragraph (l)(9) providing the requisite remedy should the biosimilar applicant choose not to comply.

However, because the majority viewed the Notice provision as standing alone, biosimilar applicants would be advised to view the Notice provision as mandatory in all cases, at least until the Federal Circuit or Supreme Court says differently. Moreover, until there is further clarification from the courts, as explained by Judge Chen in his dissent-in-part, the majority’s logic could result in different consequences for non-compliance with the Notice provision, depending on whether the biosimilar applicant had engaged in the patent dance.[30] A non-patent dancer who refuses to provide notice would face an 180-day injunction, whereas a patent dancer would likely face an immediate second lawsuit on the second-phase patents.[31]

Amgen v. Apotex

As suggested above, the issue of whether the notice is required in all cases is at the forefront of an appeal pending before the Federal Circuit. Apotex is appealing the grant of a preliminary injunction resulting from Apotex’s warning that it would not provide a notice of commercial marketing when it receives approval. Apotex believes that Amgen v. Sandoz does not control because Apotex provided its aBLA and other relevant information to Amgen, and otherwise participated in the patent dance. On the other side, Amgen argued that the Federal Circuit’s Amgen v. Sandoz opinion provided no leeway for such an interpretation. The District Court agreed with Amgen, stating that “[t]he scenario proposed by Apotex would result in confusion and uncertainty, as well as inconsistent results, depending on which route a [biosimilar] applicant chooses to travel.”[32]

During the April 4, 2016, hearing at the Federal Circuit, it was unclear from the questioning which way the judges were leaning. Importantly, the panel consisted of Judges Bryson, Wallach, and Taranto, none of whom was on the panel that decided the Amgen v. Sandoz appeal. The court expressed an interest in an issue highlighted in the amicus briefs – the fact that this case might be distinct because all of the patents identified during the dance were part of the initial litigation. In other words, a second round of litigation was not necessary because there were no patent issues remaining to be resolved. Amgen thought this was irrelevant, because the purpose of the 180-day notice period is to allow the RPS to seek a preliminary injunction. Amgen argued that, without the certainty of these six months to resolve those remaining patent issues, an RPS would seek an early preliminary injunction in all cases. This would be a potential waste of resources, according to Amgen, because all of the patent issues might be resolved before the applicant ever receives approval, thereby rendering the injunction unnecessary.

Apotex, for its part, focused on the same canons of statutory construction that dictated the outcome in the Amgen v. Sandoz case with regard to whether the patent dance was mandatory. In fact, Apotex argued that the majority opinion in that case was limited to cases where there had been no patent exchange. Because that distinction did not apply in the present case, Apotex argued that the statutory remedy – the ability to bring an immediate declaratory judgment action – was the only remedy to which Amgen was entitled.

The parties were also in disagreement about whether the Notice provision acted as a de facto extension of the twelve-year exclusivity granted to the RPS.[33] The concern is that because a biosimilar applicant cannot give effective notice until the FDA has licensed the biosimilar product, and because the FDA cannot license the product until the twelve-year exclusionary period has run, an RPS would always gain an extra six months of exclusivity. The majority opinion in Amgen v. Sandoz suggested that this was not an issue because the statute contemplated aBLA filings during the twelve-year period. This conclusion, however, assumes that a biosimilar applicant could provide notice after the FDA provides “tentative licensure.” It is not clear, though, if the FDA will “tentatively” approve/license any biosimilar application. Not surprisingly, Amgen and Apotex had different responses when questioned about this potential problem. Amgen pointed to 42 U.S.C. §262(k)(7)(A), which states in part that “[a]pproval of an application under this subsection may not be made effective by the Secretary until the date that is 12 years after the date on which the reference product was first licensed . . . .”[34] As such, according to Amgen, approval and effectiveness are two distinct events, with approval serving as a “tentative licensure,” potentially before the expiration of the 12-year period. Not surprising, Apotex did not agree, noting that the FDA has not indicated that it will provide an early, non-effective “approval” if warranted. Of course, the outcome of this case may influence what the FDA does in the future.

A decision in this case is expected within the next few months.

Janssen v. Celltrion

Although the Janssen v. Celltrion case was filed before the Amgen v. Apotex case, the Amgen v. Apotex case leap-frogged the Janssen case to the Federal Circuit. However, the decision in the Amgen v. Apotex case could very well determine the date Celltrion launches its infliximab biosimilar product, even though it may not address all the issues raised in the Janssen case.

Celltrion provided an initial Notice of Commercial Marketing in February 2015, and at the same time it provided Janssen with a copy of its aBLA.  The 180-day period triggered by that notice passed without Celltrion securing licensing approval for its biosimilar product. In February 2016, the FDA’s Arthritis Drugs Advisory Committee recommended that the FDA approve Celltrion’s biosimilar application, and on April 5, 2016, that license was granted.[35] In the meantime, however, Janssen and Celltrion entered an agreement in which Celltrion agreed that it would not sell its biosimilar product in the U.S. before June 30, 2016, following the expiration of one of the patents at issue in the parties’ pending patent infringement litigation, in exchange for Janssen dismissing that patent from the suit.[36]

In light of that agreement, Celltrion could not launch on the date of approval. Moreover, it was still facing a claim from Janssen that its February 2015 Notice of Commercial Marketing was premature and thus violated paragraph (l)(8)(A) of the BPCIA.[37] Indeed, Janssen had filed a motion for a preliminary injunction to prevent Celltrion from launching its biosimilar product within 180 days of its FDA approval.[38] That motion was eventually dismissed without prejudice after a conference with the court, during which it was acknowledged that the Amgen v. Apotex case might resolve the issue.[39]

Celltrion provided another Notice of Commercial Marketing on the day its biosimilar product was licensed,[40] presumably to comply with the Federal Circuit’s decision from Amgen v. Sandoz that a notice is not effective unless provided after the FDA has licensed the product.[41] However, Celltrion has characterized the later notice as a “conditional 180-day notice of commercial marketing that applies only “if” required by the anticipated decision in Amgen Inc. v. Apotex Inc., No. 16-1308 (Fed. Cir.).”[42] Under that second notice, Celltrion could not launch before October 2, 2016. However, since the Amgen v. Apotex case could result in a decision that exempts biosimilar applicants who have engaged in the patent dance from the notice requirements, Celltrion “expressly ‘reserved [the] right to void this notice and to launch’” before the 180-day period started by the second notice.[43] That is, Celltrion has poised itself to launch as early as June 30, 2016, should the Amgen v. Apotex court side with Apotex (and biosimilar applicants that engage in the patent dance) on the notice issue.

But that leads to the second issue in the Janssen case – did Celltrion engage in the patent dance? While Celltrion said yes, Janssen’s answer was a resounding no. Celltrion did not go as far as Sandoz and refuse to provide Janssen with a copy of its aBLA. However, Celltrion also did not go as far as Apotex either, at least according to Janssen. Celltrion provided Janssen with a copy of its aBLA, but not any additional manufacturing information called for in paragraph (l)(2)(A).[44] When pressed by Janssen to provide manufacturing information, Celltrion indicated that “[a]ll relevant information needed to generate a list of patents for which a claim of patent infringement can reasonably be asserted by Janssen is included in Celltrion’s [a]BLA”[45] and later, that “Celltrion does not have the authority” to share certain manufacturing information with Janssen.[46]

After receiving Janssen’s paragraph (l)(3)(A) patent list, Celltrion provided the paragraph (l)(3)(B)(ii) statement of defenses.[47] But rather than provide its own patent list as contemplated by paragraph (l)(3)(B)(i), Celltrion informed Janssen that it “consented to Janssen’s patent list” and considered moot the remaining steps in the patent dance, namely Janssen’s paragraph (l)(3)(C) response to Celltrion’s defenses, the paragraph (l)(4) patent resolution negotiations, and the further paragraph (l)(5) negotiations to identify patents to be immediately litigated.[48] Celltrion also asserted that Janssen was required to file suit against Celltrion on all of the patents on Janssen’s paragraph (l)(3)(A) patent list within 30 days of receipt of Celltrion’s paragraph (l)(3)(B)(ii) statement of defenses.[49]

Janssen alleged that Celltrion’s failure to provide manufacturing information at the start of the patent dance, and its refusal to engage in the BPCIA’s subsequent patent dispute resolution procedures, are violations of the mandatory procedures under section (l) of the BPCIA.[50] That claim remains pending.[51] And if faced with a decision in Amgen v. Apotex that exempts patent dancers from the notice requirement, Janssen will almost certainly argue that Celltrion failed to engage in the patent dance, thereby precluding Celltrion from qualifying for such an exemption.

The time has not yet come for the Janssen v. Celltrion court to address these issues. At some point, though, the court may be called upon to decide whether a biosimilar applicant can be deemed to have complied with the “shall provide” provision of paragraph (l)(2)(A) if it does not provide manufacturing information beyond that found in the aBLA, or whether the “shall” provisions of paragraphs (l)(3)(C), (l)(4), and (l)(5) are prerequisites to a finding that the biosimilar applicant has engaged in the patent dance.

Thus, the Janssen case is destined to play a role in defining the contours of what qualifies as having engaged in the patent dance. If the federal courts accept Celltrion’s approach to the patent dance, it is unlikely that any biosimilar applicant will ever provide manufacturing information, other than what is included in the aBLA. And future biosimilar applicants may accept an RPS’s complete list of patents in order to accelerate the filing of the eventual patent litigation.

© 2016 McDonnell Boehnen Hulbert & Berghoff LLP 

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