As an overview, the patent dispute resolution procedures under the Biologics Act include (1) the confidential disclosure of the aBLA information to the reference product sponsor, (2) mutual identification of potentially disputed patents, (3) an immediate first patent lawsuit directed to a narrowed number of patents, and (4) a later, second patent lawsuit on a broader number of patents that may be filed when the aBLA applicant indicates that it is prepared to commercially launch the product.
Disclosure of the aBLA to the Reference Product Sponsor
After receiving an aBLA, FDA reviews the application for completeness. If the application is acceptable for review, FDA notifies the aBLA applicant that its application has been accepted.
Within 20 days of receiving this notice from FDA, the aBLA applicant must provide
a copy of the application “and such other information that describes the process . . . used to manufacture the biological product” to (1) the reference product sponsor and (2) “a representative of the owner of a patent exclusively licensed to the reference product sponsor with respect to the reference product” (hereinafter collectively, “the reference product sponsor” or “sponsor”). 42 U.S.C. §§ 262(l)(1)(B); 262(l)(2)(A). The aBLA applicant may also may provide the reference product sponsor with any additional information requested by the reference product sponsor. Id. at § 262(l)(2)(B).
This disclosure is limited to (1) outside counsel of the reference product sponsor who “do not engage, formally or informally, in patent prosecution relevant or related to the reference product” and (2) only one in-house lawyer of the sponsor. Id. at § 262(l)(1)(B)(ii)(I) – (II).
The use of the aBLA information is strictly limited to:
the sole and exclusive purpose of determining, with respect to each patent . . . , whether a claim of patent infringement could reasonably be asserted if the [aBLA] applicant engaged in the manufacture, use, offering for sale, sale, or importation into the United States of the biological product that is the subject of the [aBLA].
Id. at §262(l)(1)(D).
Disclosure & Exchange of Patent Information – “The Patent Dance”
Following the aBLA applicant’s disclosure of the application and manufacturing information, the aBLA applicant and the reference product sponsor engage in successive, back-and-forth disclosures aimed at (1) identifying patents that may be relevant to the aBLA product and (2) disclosing each side’s contentions regarding the infringement, validity, and enforceability of each identified patent. These rounds of disclosures are sometimes called “the patent dance.”
Reference Product Sponsor’s List of Patents
Within 60 days of receiving the aBLA and manufacturing information, the sponsor must provide the aBLA applicant a list of patents for which the “sponsor believes a claim of patent infringement could reasonable be asserted” if a person without a license made, used, offered to sell, sold, or imported the aBLA biological product. Id. at § 262(l)(3)(A)(i). The sponsor must also identify any patents on the list that it would be willing to license to the aBLA applicant. §262(l)(3)(A)(ii).
The Biologics Act thus contemplates litigation of all potentially relevant patents, including method patents and process patents which are excluded from Hatch-Waxman Act litigation of drug patents.
aBLA Applicant’s List of Patents & Disclosure of Legal Contentions
Within 60 days of receiving the sponsor’s list of patents, the aBLA applicant must provide to the reference product sponsor:
(1) a list of additional patents, if any, that the applicant believes are relevant but that the sponsor omitted from its own list, §262(l)(3)(B)(i),
(2) for each patent identified by the sponsor and each patent identified by the aBLA applicant :
(a) a detailed statement explaining the aBLA applicant’s legal contentions for why the patent is invalid, unenforceable, or not infringed. Id. at § 262(l)(3)(B)(ii)(I), or
(b) a statement that the aBLA applicant “does not intend to begin commercial marketing of the biological product before the date that such patent expires.” Id. 262(l)(3)(B)(ii)(II), at
(3) a response to the sponsor’s offers to license particular patents.
Id. at § 262(l)(3)(B)(iii).
Here, a statement by the aBLA applicant that it does not intend to commercially market the product until after patent expiration is analogous to a Paragraph III certification under the Hatch-Waxman Act. Also, a statement by the aBLA applicant providing a detailed explanation of its legal defenses is analogous to the notice of Paragraph IV certification under the Hatch-Waxman Act.
Reference Product Sponsor’s Disclosure of Legal Contentions
Within 60 days of receiving the aBLA applicant’s disclosure of legal contentions regarding each of the identified patents, the reference product sponsor must also disclose its own arguments concerning infringement, enforceability, and validity for each of the identified patents. Id. at § 262(l)(3)(C).
Negotiations Regarding Scope of Immediate Patent Litigation
Following these exchanges of patent lists and legal contentions, the parties must collaborate to narrow the identified patents down to a “short list” of patents that they wish to litigate immediately. Any of the remaining identified patents that are not on the “short list” are eligible to be litigated in a later, second phase of patent litigation commencing after the aBLA applicant gives notice of its intent to commercially market the biological product.
Successful Negotiations
Negotiations over the short list of patents begin after the reference product sponsor discloses its legal contentions regarding the infringement, validity, and enforceability of each of the identified patents. The parties have 15 days to negotiate. See id. at § 262(l)(4)(A). If the parties agree on a short list of patents within 15 days, then the reference product sponsor must file suit on each of the short-list patents within 30 days after reaching agreement. See id. at § 262(l)(6).
Failed Negotiations
If the parties cannot agree on a short list of patents, then they must engage in another round of information exchange. See id. at § 262(l)(4)(B).
After the failed negotiations, the aBLA applicant must tell the reference product sponsor the number of pat¬ents that the aBLA applicant intends to identify for inclusion in the patent lawsuit. See id. at § 262(l)(5)(A). This disclosure places a cap on the number of patents that the reference product sponsor can identify for inclusion in the patent lawsuit. See id. at § 262(l)(5)(B)(ii)(I). However, if the number of patents that the aBLA applicant identifies is zero, then the sponsor may identify only one patent. See id. at § 262(l)(5)(B)(ii)(II).
For example, if the aBLA applicant tells the sponsor that the aBLA applicant will identify three patents, then the sponsor can, at most, identify only three patents. If the aBLA applicant tells the sponsor that it will not identify any patents, then the sponsor can choose one patent for immediate litigation. In this way, the aBLA applicant can exercise considerable control over the number of patents that may be litigated in the first phase of patent litigation.
Within five days after the aBLA applicant tells the sponsor the number of patents that the aBLA applicant will identify, the parties “shall simultaneously ex¬change” their lists of the patents they wish to litigate immediately—limited to the number of patents as discussed above. Id. at § 262(l)(5)(B)(i).
Under the failed negotiations scenario, the reference product sponsor must file suit within 30 days on each of the patents identified on the parties’ simultaneously exchanged lists. See id. at § 262(l)(6)(B).
Immediate Patent Litigation – Phase 1 Litigation
Section 271(e)(2) of the Patent Act facilitates this first phase of litigation by making the submission of the aBLA an act of infringement and permitting patent litigation to proceed even before commercial manufacture or sale the biosimilar or interchangeable biological product. See 35 U.S.C. § 271(e)(2)(C)(i). If the reference product sponsor brings a timely action and prevails, then FDA may not approve the aBLA until after expiration of the infringed patents. See 35 U.S.C. § 271(e)(4).
Phase 2 Patent Litigation
The second phase of litigation involves all patents identified by the parties except any patent that was litigated in the first phase of litigation. The second phase of litigation may also include any patents that the reference product sponsor acquired after the parties’ exchange of lists identifying patents. See 42 U.S.C. §262(l)(7)).
The reference product sponsor may commence this second phase of patent litigation after the aBLA applicant provides notice of intent to commercially launch its biosimilar or interchangeable biological product. Under the Biologics Act, the aBLA applicant is required to provide this notice “not later than 180 days before the date of the first commercial marketing of the biological product.” Id. at § 262(l)(8)(A).
The Biologics Act prohibits any declaratory judgment action prior to this notice. See id. at § 262(l)(9)(A). However, after this notice, either party may sue for declaratory relief. See id. at § 262(l)(9)(A). This means that the aBLA applicant may ask the court for a declaratory judgment that the patents at issue are not valid, enforceable, or infringed. The reference product sponsor may seek a declaratory judgment that the patents at issue are valid and enforceable and that one or more claims of the patents are infringed. In addition, prior to the date of first commercial marketing, the sponsor may “seek a preliminary injunction prohibiting the [aBLA] applicant from engaging in the commercial manufacture or sale of [the biosimilar or interchangeable biological product] until the court decides the issue of patent validity, enforcement, and infringement.” Id. at § 262(l)(8)(B).
Limitations on Declaratory Judgment Actions
If the parties comply with each of the information exchange procedures provided in the Biologics Act, then the parties will have an opportunity to resolve their patent disputes before the biosimilar or interchangeable product is marketed. To encourage parties to comply with the information exchange procedures, the Biologics Act includes certain consequences if they do not comply.
First, if the aBLA applicant fails to provide its application and manufacturing information to the reference product sponsor, then the sponsor, but not the applicant, may immediately bring an action “for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product.” Id. at § 262(l)(9)(C). The sponsor may sue the applicant on any patent that could have been included in the patent disclosures between the sponsor and applicant. 35 U.S.C. § 271(e)(2)(C)(ii).
Second, if the aBLA applicant provides the application and manufacturing information but fails to complete a subsequent step in the information exchange, then the reference product sponsor, but not the applicant, may bring a declaratory-judgment action with respect to any patent included on the sponsor’s list of patents (as well as those it acquired later and added to the list). 42 U.S.C. § 262(l)(9)(B).
Amgen v. Sandoz
Despite these consequences for failing to comply with the Biologics Act’s information exchange procedure, the aBLA applicant in the very first litigation under the Biologics Act chose not comply. That first case involved aBLA applicant Sandoz and reference product sponsor Amgen.
In July 2014, Sandoz notified Amgen that the FDA had accepted for review Sandoz’s aBLA for Zarxio (filgrastim), a biosimilar to Amgen’s Neupogen, a recombinant DNA product used for treating the side effects of cancer therapy. In the same letter, Sandoz told Amgen that it would not (1) provide a copy of its aBLA and manufacturing information (2) participate in the exchange of patent information. Sandoz also told Amgen that it intended to commercially market Zarxio as soon as FDA approved the aBLA.
On October 24, 2014, Amgen filed suit in the Northern District of California, accusing Sandoz of infringing two patents. Amgen also sought an injunction to compel Sandoz’s compliance with Biologics Act’s information disclosure and exchange procedures.
On appeal, the U.S. Supreme Court decided two questions: (1) whether Sandoz could be compelled to comply with the Biologic Act’s information disclosure and exchange procedures and (2) whether Sandoz must wait until after FDA approves the aBLA to notify Amgen of its intention to commercially market the biosimilar product. See Sandoz Inc. v. Amgen, Inc., 137 S. Ct. 1664 (2017).
Concerning the first question, the Court ruled that Sandoz could not be compelled to participate in the Biologics Act’s information disclosure and exchange procedures. The Court explained that Amgen’s sole remedy for Sandoz’s refusal to comply with those procedures is exercising the option to bring an immediate declaratory judgment action for patent infringement against Sandoz under 42 U.S.C. § 262(l)(9)(C). See id. at 1667-68.
Concerning the second question, the Court ruled that an aBLA applicant “may provide notice either before or after receiving FDA approval,” because the language of the statute imposes a “single timing requirement,” which is simply 180 days before commercial marketing of the biosimilar. In other words, FDA approval is not relevant to the timing of the 180-day notice required by the Biologic’s Act. The only requirement is that the aBLA applicant provide the notice at least 180 days before commercially launching that product. Thus, the notice can be given at any time, before or after FDA approval, so long as the notice is given at least 180 days before commercial marketing. See id. at 1667.
Accordingly, the “patent dance” is not a compulsory procedure. An aBLA applicant or reference product sponsor can choose not to comply. However, refusal to “dance” empowers the other party to bring a declaratory judgement action on a potentially broad range of patents.
Interestingly, in two subsequent litigations involving Amgen as the reference product sponsor, Sandoz chose “to dance” and participated in the Biologic’s Act’s information disclosure and exchange procedures. Thus, the decision of whether “to dance” will need to be made based on the facts and circumstances of each case and a determination of the best strategy to pursue.