Biologics Price Competition and Innovation Act: Refusal to Dance

By Dennis Crouch

The 2009 Biologics Price Competition and Innovation Act (BPCIA) was created as the Hatch-Waxman Act for Biologics – a mechanism for both protecting innovator investment and for encouraging third-party follow-ons albeit through “biosimilars” rather than “generics.” While parallel in theory to Hatch-Waxman, BPCIA includes many complicating twists that on the already complex innovator-generic dance. In recent oral arguments, Judge Lourie stated that Congress might be awarded “the Pulitzer Prize for complexity or uncertainty” based upon its drafting of the BPCIA.

Amgen v. Sandoz (Fed. Cir. 2015) offers the Federal Circuit a case of first-impression regarding an important element of the BPCIA – what happens when the biosimilar applicant refuses to play?

Under the BPCIA, the ‘patent-dance’ is kicked-off by the filing of a biosimilar application. Under, the statute, that applications “shall” include a set of disclosures. 42 U.S.C. § 262(l)(2). In a three-way split decision, the Federal Circuit holds that an applicant is not actually required to make the disclosure (i.e., not a “must” requirement) but instead that failure to make the disclosure merely results in the penalty defined by statute – permitting the “reference product sponsor” but not the biosimilar applicant to bring an action of declaratory judgment for infringement based merely upon the filing of the application.

My University of Missouri Law School colleague Erika Lietzen was deeply involved in the legislative negotiations and believes that the decision here is “inconsistent with the intent at the time.”

 

Judges Lourie, Newman, and Chen all filed separate opinions. Undoubtedly, the case will receive a petition for en banc rehearing as well as a petition for writ of certiorari.

Read the Decision: https://patentlyo.com/media/2015/07/AmgenSandoz.pdf

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

16 thoughts on “Biologics Price Competition and Innovation Act: Refusal to Dance

  1. Section (k) ‘‘(6) EXCLUSIVITY FOR FIRST INTERCHANGEABLE BIOLOGICAL
    PRODUCT.—Upon review of an application submitted under this
    subsection relying on the same reference product for which
    a prior biological product has received a determination of interchangeability
    for any condition of use, the Secretary shall not
    make a determination under paragraph (4) that the second
    or subsequent biological product is interchangeable for any
    condition of use until the earlier of—
    ‘‘(A) 1 year after the first commercial marketing of
    the first interchangeable biosimilar biological product to
    be approved as interchangeable for that reference product;
    ‘‘(B) 18 months after—
    ‘‘(i) a final court decision on all patents in suit
    in an action instituted under subsection (l)(6) against
    the applicant that submitted the application for the
    first approved interchangeable biosimilar biological
    product; or
    ‘‘(ii) the dismissal with or without prejudice of
    an action instituted under subsection (l)(6) against the
    applicant that submitted the application for the first
    approved interchangeable biosimilar biological product;
    or
    ‘‘(C)(i) 42 months after approval of the first interchangeable
    biosimilar biological product if the applicant
    that submitted such application has been sued under subsection
    (l)(6) and such litigation is still ongoing within
    such 42-month period; or
    ‘‘(ii) 18 months after approval of the first interchangeable
    biosimilar biological product if the applicant that submitted
    such application has not been sued under subsection
    (l)(6).

    Under the Court’s reading – the first mover (Sandoz), that opts not dance, gets either 18 months from approval or 1 year from first marketing (whichever is earlier) exclusivity from any second or subsequent mover because the patent owner can not sue under (l)(6). But because the majority read (l)(8) notice requirement as “must” with 180 commercial markerting hold- both (A) & (C)(ii) basically mean the same thing [18 months from approval, because the first mover will market if they can to maximize profit because second movers will follow quickly].

    My point I guess – why choose not to dance? If the patent owner has patents they are going to assert them, and you get up to 42 months from approval because the courts don’t resolve anything in near the same speed as the FDA approved this biosimilar [applied may 2014 – approved march 2015].*

    *Yes – if the patent suit happens to go quickly, then only 18 months from a final decision or dismissal

    1. slaf, why dance if dancing requires the disclosure to the patent holder of exactly the process and product one is using. Until that time, the patent holder does not know that there is any infringement at all, does he?

      1. What about a protective order? Are they provided for by the statutes? At least in litigation, disclosures can be kept confidential.

        1. the section (l) disclosure is all confidential (as in the patent owner must maintain the follow-on company’s info confidential and vice-versa) and sections detail how the district court action takes over to use protective orders – there is no difference in information because the patent owner is going to ask for all of those documents in discovery, the only difference is when the patent owner knows it; moreover, in this case amgen got ALL of that information in the discover portion of the suit – its not like they couldnt figure it out

          my real issue: either go with Chen the full way (if you are inclined to read (l)(2) to be an optional trigger for the dance, (l)(8) should be as well; otherwise, the entire process should be mandatory like Newman (which then actually accomplishes what congress wanted – efficient litigation to resolve the issues)

          1. slaf, I don’t think you see the problem. A protective order keeps the highly confidential information about processes etc. away from inside counsel, executives, scientists and their patent attorneys that could use it adversely to the disclosing party.

            Any requirement for disclosure of information directly to the patent owner is a nonstarter, and may I submit, is probably why this legislation has failed.

            1. I checked the statute — disclosure is very limited to the patent owner, only one inside counsel who cannot be involved in patent prosecution.

              This is equivalent to a protective order.

  2. Why do I get an email to be notified when someone replies? I don’t want such an email. Furthermore, I never look at the email address I use, and I use this email address solely for anonymity.

    1. When you reply, under the “Post Comment” button, there is a drop down box. It defaults to “Replies to my comments.” To not get the email, switch it to “Don’t subscribe” before hitting the “Post Comment” button.

  3. “To balance innovation and price competition, Congress
    enacted the BPCIA to provide a four-year and a
    twelve-year exclusivity period to a reference product, both
    beginning on the date of first licensure of the reference
    product. Specifically, a subsection (k) application “may
    not be submitted to the Secretary until the date that is
    4 years after the date on which the reference product was
    first licensed under subsection (a),” id. § 262(k)(7)(B), and
    approval of a subsection (k) application “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 under subsection (a),”

    If I understand it, the first reference biologic product approved gets 12 years exclusivity. No patent protection is required. No novelty is required. Just a race for approval.

    Why shouldn’t we adopt this regime for all FDA approved drugs?

    Where does Congress get its power to grant such exclusive rights?

    1. “Why shouldn’t we adopt this regime for all FDA approved drugs? Where does Congress get its power to grant such exclusive rights?”

      Great questions. Given the uncertainty of patents, shifting subject matter eligibility and the chaos of incoherent Supreme Court decisions from the last 8 years or so, maybe patents on drugs no longer make sense economically or in terms of what best serves the public interest. Maybe a flat 12-year market exclusivity is a better, more stable incentive than patents.

      The power to grant such a right is tricky. Commerce clause maybe? Patent clause, but calling the first approval a “patent”. Maybe the first FDA approval itself can reasonably be considered novel, nonobvious (given the high failure rate (< ~99.9999% ?) from candidate compound or drug discovery to marketing approval), described, useful subject matter and not frivolous or harmful to the public interest.

      1. Given the uncertainty of patents, shifting subject matter eligibility and the chaos of incoherent Supreme Court decisions from the last 8 years or so, maybe patents on drugs no longer make sense economically or in terms of what best serves the public interest.

        There are certainly drug patents that “don’t make sense economically” and don’t serve the public interest. In most instances, that’s because the patents are invalid.

        But the last time I checked, if you have invented a new non-obvious drug, filing for patent protection makes a lot of sense.

        Which Supreme Court cases do you find “incoherent”? There’s a lot of terrible writing on the Internets these days about patent jurisprudence and subject matter eligibility, in particular (IPWD and Patent Docs are the worst offenders). If you’re confused about something, I’m always happy to lend a hand. Just ask.

        1. Personally, I find all SC cases on 101 to be ab horrent, in coherent, you name it. After Alice, I no longer know what’s patentable, and there’s really no way to discern what’s patentable, since the SC didn’t provide any reasonable descriptions of their rules.

          For instance, what does it mean to improve the functioning of the computer itself? The end citation for that text is to a case (pre-Alice) where the claims themselves I believe would not be patentable post-Alice. How does one interpret this?

          Consider the claims (I added my comments in parentheticals):

          A computer-implemented method for halftoning a gray scale image, comprising the steps of:
          (MATH) generating, with a processor, a blue noise mask by encoding changes in pixel values across a plurality of blue noise filtered dot profiles at varying gray levels;
          (Implementing the abstract idea on a generic computer) storing the blue noise mask in a first memory location;
          (Implementing the abstract idea on a generic computer) receiving a gray scale image and storing the gray scale image in a second memory location;
          (MATH) comparing, with a processor on a pixel-by-pixel basis, each pixel of the gray scale image to a threshold number in the corresponding position of the blue noise mask to produce a binary image array; and
          (MATH) converting the binary image array to a halftoned image.

          This claim is invalid under the reasoning in Alice. MATH = abstract idea. The other elements of the claim are merely implementations of the abstract idea.

          Yet these claims form the basis of the comment by the SC that improving the functioning of the computer itself is patentable. How does one interpret this when the support for this contention is invalid under the very rules they gave?

          1. Agreed. I’m definitely for weaker computer implemented claims, but I find the various decisions and the Interim Guidance absolutely baffling. It seems more like a gut-feeling test which is unacceptable.

      2. What if the first to qualify his drug is not the first to invent or first to file. Someone else gets the patent. What then?

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