2017 was an eventful year for biosimilars in the U.S. As the number of biosimilar filings increased, important legal and regulatory decisions changed the strategic landscape of the biosimilars market for both innovators and biosimilar makers. While results of the changed landscape will continue to play out over the coming year, there are a several new strategic considerations general counsel should consider.

Shall we Dance?

In Sandoz v. Amgen, decided June 12, 2017, the Supreme Court held that several provisions of the Biologics Price Competition and Innovation Act (BPCIA) cannot be enforced by federal injunction. On December 14, 2017 the Federal Circuit Court of Appeals held on remand that the BPCIA pre-empts state law remedies for failure to comply with provisions of the BPCIA.

The BPCIA imposed deadlines for exchange of information and legal positions between biosimilar makers and innovators (commonly referred to as “the patent dance”). Among other things, the BPCIA sets forth deadlines for: 

• Exchange of technical development information
• Deadlines for notice of commercial marketing
• Exchange of patents to be asserted early or after the biosimilar maker receives a notice of commercial marking
• Infringement and validity contentions

After the exchange of information between innovators and biosimilar makers, litigation under the BPCIA occurs in two stages on a prescribed timetable. If the biosimilar maker elects not engage in the patent dance, innovator companies have the right to commence patent litigation on patents of their choosing at any time.

After Sandoz v. Amgen, Biosimilar makers can follow all, some, or none of the provisions of the BPCIA. Biosimilar makers now will have to seriously consider the extent to which they wish to engage in the patent dance. From a practical perspective, the appropriate strategy will depend on whether the benefits of engaging in the patent dance outweigh the liabilities. Potential benefits to biosimilar makers include:

• Postponing disclosure of technical information to the innovator company
• Avoiding disclosure of pre-litigation invalidity and non-infringement contentions
• Making it more difficult for innovator companies to allege infringement of manufacturing processes

However, not engaging in the patent dance can make litigation unpredictable for biosimilar makers. The biosimilar maker would not have access to the infringement and validity contentions of the innovator company. A biosimilar maker would no longer control the litigation schedule, and the innovator company would not have to produce patents it intends to assert. Any information the biosimilar maker would withhold by not engaging in the patent dance would be disclosed eventually during discovery. Other factors to consider include the number of patents that can be asserted by the innovator company against the biosimilar maker and how much of the innovator’s 12-year period of market exclusivity remains.

General Counsel will need to consider these issues carefully in adopting an appropriate litigation strategy.

Inter Partes Review (IPR) Strategy

Biosimilar makers should consider post-grant patent challenges such as IPRs as part of a larger business strategy. Post-grant proceedings can provide advantages compared to litigation. Any party other than the patent owner can initiate a post-grant challenge, and the challenge is not tied to a biosimilar approval process. An IPR can allow a biosimilar maker the ability to determine the strength of patents earlier in the process, and at less expense. IPRs have a broader standard for claim construction, a lower standard of proof for invalidity, and cases are decided by an administrative patent judge. Multiple post-grant challenges, such as IPRs and reexams, can be filed on the same patent. On the other side of the ledger, an unfavorable decision by the Patent Trial and Appeal Board (PTAB) estops a biosimilar maker from making the same argument in litigation. IPRs have drastically reduced discovery compared to litigation.

Cases currently pending before the Federal Circuit will determine the extent to which post-grant challenges can be used as part of a broader strategy, and the extent to which they will affect future litigation. The courts will likely consider cases regarding the extent of estoppel in IPR challenges. The Federal Circuit currently is determining the extent to which the PTAB has discretion to cancel reexam proceedings on the same subject as an IPR.

Recent statistics suggest that biopharmaceutical post-grant proceedings are increasing. General Counsel should follow these changes while including post-grant proceedings as part of a larger biosimilar litigation strategy.

FDA Guidance

In January 2017 the U.S. Food and Drug Administration (FDA) released long-awaited draft guidance on statistical approaches to evaluate analytical similarities for biosimilars. In September 2017, FDA provided draft guidance describing the type of data a sponsor of a proposed biosimilar product should obtain to support analytical similarity to a referenced product. On December 4, 2017, several industry stakeholders provided a final round of comments on analytical similarity. The eventual rules, and the extent to which they will affect the development of biosimilar products, should also be watched closely in 2018.