By Steven L. Baron and Michael J. Weil
This spring, the United States Supreme Court is set to hear a landmark case that could trigger a seismic shift in the drug market for both pharmaceutical companies and consumers. Sandoz Inc., the biologics division of drug-maker Novartis, is challenging a provision in the Affordable Care Act (“ACA”) requiring that companies wait 180 days before commercializing FDA approved biosimilars. This is the first time that the Supreme Court will decide a case relating to biosimilars.
II: What is a Biosimilar?
To understand why the Novartis challenge is such big news, it is important to t a sense of today’s pharmaceutical landscape. A doctor generally prescribes medication from two main drug classes: small-molecule drugs and biologics. Small-molecule drugs like Ibuprofin are made from chemicals in a duplicate process. Because each small-molecule drug is manufactured in an easily replicated system, every pill is identical and the drug’s effects stay consistent. When patents expire on these small-molecule drugs, competing manufacturers may produce generic versions—commonly called “generics.”
The second class of medicines are called biologics. Unlike small molecule drugs, biologics are made from organic material—living cells. These cells are typically an engineered bacterium or yeast. Because each biologic is created from a unique cell there is no way to guarantee that each dose will be identical. However, because biologics are made from living material they are dynamic, and extremely effective in treating a myriad of conditions from cancers to arthritis. Leading biologics include Humira®, Neulasta®, and Rituxin®. Doctors and patients have taken notice; by 2014 six of the ten best-selling medicines globally were biologics, with about $49 billion in combined sales. After the patent on a biologic expires, other manufacturers are allowed to produce their own “generic” version—known as a biosimilar.
III: The BPCIA and the American Biosimilars Frontier
In 2010, Congress paved the way for American receipt of biosimilars with the Biologics Price Competition and Innovation Act (“BPCIA”). Biosimilars have been available in Europe and Asia for 10 years, and the BPCIA has catalyzed their entry into the United States. The main thrust of the BPCIA permits drug manufacturers to produce biosimilars that are: “highly similar” to a reference product in their active ingredients. The reference product refers to the biologic being copied, and the company that makes the product is known as a “reference sponsor.” In addition the FDA must deem each biosimilar safe for use, pure and sufficiently potent. Finally, a biosimilar must use the same mechanism for action and route of administration as its reference product.
The BPCIA has triggered a race to the American market, and has opened the floodgates for litigation. Companies are battling each other to develop biosimilars of expensive, popular products while also launching patent disputes with other firms, which are creating copycats of their own drugs. This contest to both copy, and protect, has set the stage for the Supreme Court’s first ruling on the emerging field.
IV: Sandoz v. Amgen
The Sandoz appeal to the Supreme Court challenges a controversial section of the BPCIA. The case began in 2014 when Amgen, maker of the billion dollar biologic Neupogen®, sued Sandoz in San Francisco federal court. Amgen alleged that Sandoz infringed on its patents and violated the law governing biosimilars. Specifically, Amgen argued that Sandoz violated the 180-day wait time mandated by the BPCIA because it did not wait until 180 days after FDA approval to market its biosimilar. Sandoz countered that it gave notice to Amgen 180 days before first commercial marketing and consequently did not have to wait for FDA approval. The San Francisco court ruled that Sandoz did not violate the BPCIA provision, granted judgment to Sandoz on its counterclaims and denied Amgen’s motion for a preliminary injunction. In response, Amgen filed an appeal with the U.S. Court of Appeals for the Federal Circuit in Washington. The Court of Appeals ruled that notice before commercial marketing did not satisfy the BPCIA’s requirement; instead the court opined that 180 days notice may only be given after FDA approval. Dissatisfied with the ruling, Sandoz petitioned the Supreme Court to hear the case in February 2016. Subsequently, the Supreme Court granted certiorari in January 2017.
In its petition to the Supreme Court, Sandoz argued, “If not reversed, the (Court of Appeals) decision will delay access by patients to all biosimilars for six months longer than Congress intended.” Sandoz also contended that waiting 180 days after FDA approval improperly gave Amgen an extra six months of exclusivity on top of the 12 years already provided for under the BPCIA. Furthermore, consumer advocates have voiced concern that the 180-day waiting period impacts critically ill people, like cancer patients, who cannot afford expensive biologics but cannot wait for biosimilars to hit the market. Most patients who need biologics have few options that work as well as these treatments, which can range from approximately $23,000 to over $45,000 per year.
V: Amgen v. Sandoz
In addition to Sandoz suit against Amgen, the Court will hear Amgen’s cross petition against Sandoz. Amgen has asked the Court to decide whether an Applicant (Sandoz) is required by law to provide the Sponsor (Amgen) with a copy of its biologics license application and related manufacturing information. If the Applicant does not meet the terms, Amgen asks whether a Sponsor’s only remedy is to commence a declaratory judgment action, and/or a patent infringement action.
VI: Looking Ahead
Because this is a case of first impression, the Court’s ruling could define the future timeline for biosimilars distribution in the United States. Former Acting Solicitor General of the United States, Ian Gershengorn, wrote that a decision would have a “significant impact on the biotech companies that hope to “promptly bring their biosimilars to the public.” Predictably, biosimilars manufacturers hope that the Court sides with Sandoz because it will increase profitability of biosimilars and lessen the wait time for production and distribution. Many are lining up behind Sandoz; notably pharmaceutical giant Pfizer’s subsidiary, Hospira, along with biologics manufacturer Celltrion, submitted a friend-of-the-court filing in support of Sandoz.
In contrast, Amgen and other producers of FDA exclusive biologics want the Court to recognize the expense and extensive research required to make biologics. As such, these companies contend that they are entitled to compensation or a broader period of protection for their biologics–before competitors cut into their hard-earned sales.
Ultimately, the Supreme Court’s opinion in the Amgen-Sandoz dispute will be a seminal decision in biotechnology law. The ruling will help shape the future of the biotech market and is a case to watch in the coming months.
Michael Weil is a licensed patent attorney at Lowis & Gellen LLP in Chicago.
Steven Baron is a partner at Mandell Menkes LLC in Chicago