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Biosimilar makers score Supreme Court win, but questions linger on state laws

The U.S. Supreme Court June 12 unanimously ruled that makers of drugs intended to be lower-cost versions of biologics, or biosimilars, are not required to wait six months after gaining regulatory approval before entering the U.S. market.

In addition, the court said biosimilar makers cannot be forced under federal law through an injunction to engage in disclosure and negotiation procedures to share a copy of their marketing applications and manufacturing details with brand-name firms — a process dubbed the patent dance.

The ruling was a major victory for Novartis AG unit Sandoz Inc. and companies like it, permitting them to bring their products to the market as soon as they are approved, as long as they have provided 180 days' notice to the innovator beforehand.

"The justices' unanimous ruling on the notice of commercial marketing will help expedite patient access to life-enhancing treatments," Carol Lynch, global head of biopharmaceuticals at Sandoz, told S&P Global Market Intelligence in an emailed statement. "As the global leader in biosimilars, it is our responsibility to help eliminate barriers so patients can access more affordable medicine."

The decision, however, was a blow to Amgen Inc., Sandoz's rival in the case, which said in a statement to S&P Global Market Intelligence it was disappointed in the ruling, but would keep up its fight to protect its intellectual property.

The Supreme Court, which heard oral arguments in April, also re-opened a question that might give Amgen at least the possibility of a different result, said William Jay, a partner at Goodwin Procter, co-chair of the firm's appellate litigation practice and head of litigation in Washington.

The justices asked the U.S. Court of Appeals for the Federal Circuit, which ruled on the case in July 2015, to re-examine whether brand-name firms can seek state-law injunctions to compel biosimilar companies to engage in the patent dance and disclose their documents, noted New York lawyer Robert Cerwinski, a partner in the intellectual property litigation group at Goodwin Procter.

Sandoz and other biosimilar manufacturers thought that issue was settled in their favor by the appeals court, Cerwinski told S&P Global Market Intelligence.

While the remand on the state-law injunction and pre-emption issues pose a risk to biosimilar makers, Lynch said her firm appreciated the clarity from the Supreme Court, which she said would help the industry move forward.

Jay said the Federal Circuit could invite supplemental briefings, have a supplemental oral argument or do both or neither in deciding that issue.

"I would expect that it's very likely they would at least want to entertain supplemental briefings on these questions because the premise of the Supreme Court's decision is that this is an issue that hasn't been adequately briefed or decided yet," he said.

Dancing with complexities

The Supreme Court's decision was the first attempt by the justices to interpret the Biologics Price Competition and Innovation Act, or BPCIA, a complex law enacted in 2010 as part of the Affordable Care Act that gave the U.S. Food and Drug Administration the authority to use a streamlined approach to approve biosimilars. It also established the process for resolving patent disputes.

But the Biotechnology Innovation Organization, a Washington trade group, asserted the Supreme Court's ruling "effectively gutted" the law and said it would "do nothing to expedite the delivery of biosimilars to market."

"To the contrary, it is likely to delay patient access to biosimilars," the lobbying group said in a statement to S&P Global Market Intelligence.

The law mandated the biosimilar applicant "shall provide" a notice to the brand-name company not later than 180 days before the date of the first commercial marketing of its product.

Amgen argued Congress meant for the 180-day notice to come after FDA approval and not before.

In Sandoz's case, it provided notice to the brand-name firm before the FDA granted approval in March 2015 of Zarxio, a biosimilar version of Amgen's Neupogen, a leukocyte growth factor used to treat the depletion of white blood cells caused by cancer. But Amgen won an injunction to delay Zarxio's market entrance for six months.

Biosimilar makers are permitted to rely on the brand-name company's data, although the BPCIA provides 12 years of protection of that information, meaning the FDA cannot grant approval of follow-on versions of the innovator drug until that exclusivity period runs out.

Sandoz argued that forcing it to wait to enter the market essentially gave Amgen an added six months of exclusivity — something the biosimilar maker said was not intended by Congress.

The Federal Circuit sided with Amgen.

The Supreme Court, however, said the Federal Circuit's interpretation of the law was wrong.

The justices argued that the statute's use of the word "li­censed" merely reflected the fact that, on the date of the first commercial marketing, the product must be li­censed, "because you can't market an unlicensed biosimilars," Jay explained.

"Accordingly, the applicant may provide notice either before or after receiving FDA approval," Justice Clarence Thomas wrote in the opinion.

He said Amgen's arguments were "unpersuasive, and its various policy arguments cannot overcome the statute's plain language."

In a one-paragraph concurring opinion, Justice Stephen Breyer said the FDA should be more involved in ironing out issues of how the patent dance could operate and when notice of commercial marketing could be effectively given.

"Reference companies know long before we submit to the FDA that this competition is on its way, so it makes perfect sense that we can now give notice to reference companies before the FDA grants its decision, and get the products to market sooner," Steve Lydeamore, president of Apobiologix, told S&P Global Market in an emailed statement. His company, a unit of Apotex Corp., also is seeking approval of a biosimilar of Amgen's Neupogen, in addition to a version of the innovator biotech's longer-acting form of the drug, Neulasta.