A New Pathway for Follow-on Biologics. Steven A. Nash 1 Rebecca Workman 2 Connolly Bove Lodge & Hutz LLP 3

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1 Steven A. Nash 1 Rebecca Workman 2 Connolly Bove Lodge & Hutz LLP 3 I. Introduction The recent passage of the Patient Protection and Affordable Care Act establishes an abbreviated pathway by which the Food and Drug Administration ( FDA ) may approve a follow-on biological product that is either biosimilar or interchangeable with a previously licensed biological product. 4 The pathway is set forth in Title VII, Subtitle A, and called the Biologics Price Competition and Innovation Act (hereafter, the Biosimilars Act or the Act ). The Act is derived from bills introduced last year in the U.S. House of Representatives by Rep. Eshoo (H.R. 1548), and in the Senate HELP Committee by Senator Enzi (Amendment No. 297). In contrast to competing proposals embodied in bills introduced by Rep. Waxman and Senator Schumer (H.R and S. 726, respectively), the proposal adopted by the Act includes a twelve-year period of data exclusivity, demands a more rigorous showing of biosimilarity, and establishes new, unique provisions for resolving patent disputes. These provisions are intended to strike a balance between making follow-on biologics available to patients, mitigating the associated risks, and providing incentives for further innovation. 1 Steve Nash is a senior associate in the Intellectual Property Group of Connolly Bove Lodge & Hutz LLP. He currently focuses his practice on patent litigation, with particular emphasis in the biotechnology and pharmaceutical fields. His practice involves counseling pioneer drug companies in product life cycle issues, including a combination of patent and regulatory exclusivity under the Hatch-Waxman Act and related laws. Mr. Nash also has significant experience in patent prosecution, counseling, and due diligence in life science technologies, including DNA, proteins, expression systems, small molecule therapeutics, treatment methods, medical devices, purification, and filtration systems. Mr. Nash received his J.D. from Widener University School of Law, his B.S. from the Pennsylvania State University, and his M.S. in Bioscience and Biotechnology from Drexel University. Mr. Nash can be reached by telephone at (302) or by at snash@cblh.com. 2 Rebecca Workman is an associate in the Business Law Group of Connolly Bove Lodge & Hutz LLP. She currently focuses her practice on corporate litigation, commercial bankruptcy and creditors rights; and she regularly assists the Intellectual Property Group in patent infringement matters. Ms. Workman received her J.D. from the George Washington University School of Law and her B.A. from the University of Richmond. Ms. Workman can be reached by telephone at (302) or by at rworkman@cblh.com. 3 The Nemours Building, 1007 North Orange Street, P.O. Box 2207, Wilmington, DE. The views expressed herein are those of the authors alone and do not necessarily reflect the views of Connolly Bove Lodge & Hutz LLP or its clients. 4 The Patient Protection and Affordable Care Act, Pub. L. No , 124 Stat. 119 (previously H.R. 3590) was signed into law by President Obama on March 23, Title VII, Subtitle A is the Biologics Price Competition and Innovation Act of 2009, Pub. L. No , 124 Stat 119, which establishes the Biosimilars pathway discussed in this paper.

2 The Biosimilars Act includes two main parts. The first adds 351(k) to the Public Health Service Act ( PHSA ) (42 U.S.C. 262) and describes licensure requirements for followon biologics based on the previously-licensed reference product. Accordingly, this paper will refer to an application for licensure of a biosimilar or interchangeable product as a 351(k) application. The second main part of the Act adds PHSA 351(l), which sets forth the mechanism for resolving patent disputes. The Act also adds certain conforming provisions to previously-enacted provisions of the PHSA and modifies the statute governing patent infringement, 35 U.S.C The Biosimilars Act is loosely modeled on portions of the Hatch-Waxman Act, which in 1984 established a process through which generic pharmaceutical manufacturers could seek expedited approval to market generic copies of pioneer small-molecule drugs by filing abbreviated new drug applications ( ANDAs ). 5 The ANDA provisions of the Hatch-Waxman Act apply to drugs approved under 505 of the Food Drug and Cosmetic Act ( FDCA ) (21 U.S.C. 355), but not to new biologics, which are licensed under 351 of the PHSA. This paper is intended to serve as an introduction to the new Biosimilars Act, and should not be construed as legal advice. Where appropriate, provisions of the Act will be compared or contrasted with analogous provisions of the Hatch-Waxman Act for the benefit of those readers who are experienced in ANDA matters. II. Scientific Background It is helpful to briefly differentiate small molecule therapeutics from biologics to understand the different objectives and challenges faced by the drafters of the Hatch-Waxman and Biosimilars Acts. In general, small molecule drugs are of relatively low molecular weight and are chemically synthesized in a well-defined and tightly controlled manufacturing process. Accordingly, once the process has been established, it can usually be reproduced with accurate and predictable results. And by adhering to good manufacturing practices, it is possible to consistently produce an active ingredient that is chemically identical to that of a reference product. On the other hand, biologics are large, complex molecules produced by living organisms (typically single-celled creatures such as bacteria or yeast) or cells derived from living organisms (for example mammalian cells engineered to produce antibodies). These organisms or cells require complex environments in which to survive, and they produce a large number of diverse molecules beyond the desired product. Thus, the active biologic must be separated from the raw material produced in a bioreactor through a series of isolation and purification steps. However, it 5 More formally known as The Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No , 98 Stat (1984), the Hatch-Waxman Act created ANDAs under 505(j) of the FDCA. 21 U.S.C. 355(j). An ANDA applicant may rely on the FDA s previous determination, made after review of the innovator company s NDA, that the drug product is safe and effective for the uses for which it has been approved. 21 U.S.C. 355(j)(2). The generic applicant must demonstrate only that the product for which it seeks approval is bioequivalent to the approved product. Id. Further ANDA requirements are set forth in 21 C.F.R

3 is almost impossible to make the biologic 100% pure, and unknown co-isolates may be difficult to identify. Further, the cellular machinery utilized to produce the biologic may inherently introduce variation from one manufacturing process to the next, or even from batch-to-batch within a given process. For example, while a polypeptide can be consistently reproduced with a pre-selected nucleotide sequence expressed within a cell, it may undergo different posttranslational modifications within the cell, thereby acquiring different secondary or higherorder structures or unique antigenic properties when compared to a reference product. 6 As a result of this complexity and the inherent variability of living organisms, the process of making biologics cannot be as precisely controlled as the chemical synthesis of small molecules. Even minor differences in the manufacturing process of follow-on biologics can lead to variations that significantly modify the molecule s stability, activity, specificity, or antigenic properties when compared to the reference product. This variability is potentially significant because an individual treated with the follow-on product may have or develop an adverse immune reaction to the follow-on product which is not caused by the reference product. Further, the follow-on product may exhibit a stronger or weaker than expected effect on the intended target, or even interact with unintended targets. Due to these risks, the licensure of follow-on biologics will require greater proof of sameness to the reference product as compared to the proof of bioequivalence needed for a generic small molecule drug. Thus, the biosimilars pathway may be more costly, time-consuming, and require more information (such as clinical trial data) than that needed for ANDA approval. The substantial differences between follow-on biologics and generic small-molecule pharmaceuticals explain some of the concern over an abbreviated biologics pathway, and why such a path to FDA approval is only now available, while approval of generic small-molecule drugs has been permitted for over twenty-five years. Many cellular mechanisms remain poorly understood even today, and it is difficult to predict the ultimate outcomes of attempts to produce new safe and effective biologics. Nonetheless, the life sciences have made huge advancements in recent years, and many previously unknown mechanisms have been elucidated. And now, the time for follow-on biologics has arrived. III. Significance of the Biosimilars Act The Biosimilar Act s pathway to approval of follow-on biologics is intended to lower the costs of biologics by introducing competition into the market, thereby making biologic treatments more accessible to patients. According to the Federal Trade Commission, almost 15% of expenditures for prescription drugs are now spent on biologics, and that figure increases each year. FTC, Emerging Health Care Issues: Follow-On Biologic Drug Competition (June 10, 6 Posttranslational modification of polypeptides (i.e., proteins) is a routine function of living cells. Once a polypeptide chain has been assembled, various amino acid residues along the chain are modified by the addition of sugars (i.e., glycosylation), lipids, or other functional groups, such as phosphate or acetate. Moreover, the polypeptide chain can fold to form secondary and tertiary structures involving further chemical modifications (e.g., disulfide bridges) or hydrogen bonding interactions, and can interact with other peptides to form protein complexes. Any of these modifications can be affected by subtle changes in the environment within the bioreactor

4 2009) ( FTC Report ) at 3. Moreover, the cost of treatment with biologics is substantial, approaching $50,000 per year for some patients. Id. Follow-on biologics will likely acquire a market share at a slower rate than generic smallmolecule pharmaceuticals because of the lack of automatic substitution between a pioneer biologic and a follow-on product. Physician concerns may also remain regarding differences in safety and efficacy, which may prevent doctors and patients from choosing a follow-on biologic over a tried-and-true pioneer product. As a result, the Federal Trade Commission predicts that discounts will not be larger than 10 to 30 percent of the pioneer product s price, and pioneer manufacturers will likely retain 70 to 90 percent of their market shares by offering competitive discounts after biosimilar entry. Id. at Moreover, competition by follow-on biologics manufacturers may be slower to develop than generic drug competition because biologics are more difficult to replicate than traditional, chemically-synthesized drugs. Despite the new pathway for follow-on biologics, the costs to obtain FDA approval and develop manufacturing capacity will likely still be substantial and may limit the number of follow-on competitors in the near term. For example, the estimated average cost to bring a follow-on biologic to market is $100 million to $200 million, as compared to the $5 million price tag to bring a small-molecule generic drug to market. Id. at 14. The costs associated with developing a follow-on biologic are likely to remain high under the Act because the standards for approval will be rigorous and the underlying science has not yet developed to the point where biosimilar products can be routinely produced. Thus, the effects of the Biosimilars Act on the costs of biologics are likely to be less dramatic than those of the Hatch- Waxman Act on the price of small-molecule pharmaceuticals. Nonetheless, as investment in new biologics continues to grow, efforts to create followon products will increase commensurately. Accordingly, the procedures and requirements of the Biosimilars Act are sure to become a significant part of business strategies and future litigation. IV. The Section 351(k) Application A. Biosimilar vs. Interchangeable A 351(k) applicant must demonstrate that its follow-on product is biosimilar to a previously-licensed reference product. The showing needed to demonstrate biosimilarity is significantly more rigorous than the bioequivalence standard used for ANDAs under the Hatch- Waxman Act. A follow-on product is biosimilar to the reference product if the two are highly similar and have no clinically meaningful differences with respect to safety and efficacy. 7 Thus, unlike an ANDA applicant, the 351(k) applicant must show that its product matches the 7 Section 7002(b) of the Act amends PHSA 351(i) to define biosimilar to mean (A) that the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components; and (B) there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product. On the other hand, two products are considered to be bioequivalent when they are equally bioavailable; that is, the rates and extent of absorption of the drugs are not significantly different. FDCA 505(j)(8)(B)

5 innovator s product in safety and efficacy, rather than mere equivalence in terms of bioavailability. A 351(k) applicant must demonstrate biosimilarity using studies similar to those required for an original Biologics License Application ( BLA ), although likely fewer of these studies will be needed. Such studies must include: (1) analytical studies showing that the follow-on product is highly similar to the reference product notwithstanding minor differences in clinically inactive components, (2) animal studies assessing toxicity, and (3) one or more clinical studies sufficient to assess immunogenicity and pharmacokinetics or pharmacodynamics and to demonstrate safety and efficacy for each proposed indication. PHSA 351(k)(2)(A)(i)(I). The FDA is given the discretion to waive the requirement for any of these studies if it deems them unnecessary. PHSA 351(k)(2)(A)(ii). However, it is unlikely that FDA will waive safety and efficacy studies given the complexity and unpredictable properties of biologics. In addition to showing biosimilarity, an applicant may also attempt to meet the higher standard of interchangeability. A follow-on product is deemed interchangeable with the reference product if it is biosimilar and can be expected to produce the same clinical results in any given patient. PHSA 351(k)(4)(A). In addition, there must be no greater risk to the patient in switching from the reference product to the follow-on biologic than would be involved in remaining on the reference product. PHSA 351(k)(4)(B). After showing that the follow-on biologic is biosimilar or interchangeable, the applicant must also demonstrate that both the follow-on biologic and the reference product have the same mechanism of action, route of administration, dosage form, strength, and indications in the proposed labeling. PHSA 351(k)(2)(i)(II)-(IV). Finally, the manufacturing facility that produces the follow-on biologic must meet standards designed to assure that the follow-on biologic continues to be safe and effective. PHSA 351(k)(2)(i)(V). B. Data Exclusivity The Act prohibits the filing of a 351(k) application until at least four years after the date on which the reference product was first licensed. PHSA 351(k)(7)(B). This provision is analogous to the five year Hatch-Waxman exclusivity period for new molecular entities and the three year period for applications supported by new clinical trials. FDCA 355(j)(5)(F)(ii), (iii). More significantly, FDA approval of a 351(k) application may not be granted until at least twelve years after the date on which the reference product is first licensed. These regulatory exclusivity periods give innovators time to recoup the substantial costs incurred in developing and obtaining approval for a pioneer biologic before competitors enter the market, independent of patent protection. C. Pediatric Exclusivity The Biologics Act also adds new 351(m) to the PHSA. This new section applies the pediatric exclusivity provisions of FDCA 505A to biologics, which extends the regulatory - 5 -

6 exclusivity periods described above by six months. Thus, those reference product sponsors 8 who receive a request from FDA for pediatric studies and properly complete those studies will receive a 12½ year regulatory exclusivity period. And the time during which no 351(k) application can be filed against the reference product will be extended to 4½ years. D. FDA Approval of Section 351(k) Applications The Act gives FDA complete responsibility for the review and approval of 351(k) applications, and broad discretion in determining whether an applicant has demonstrated biosimilarity. There is presently no standardized approval process for follow-on biologics. However, FDA has announced that it will accept 351(k) applications immediately, and will regulate directly from the statute until guidance or regulations are established. As a result, FDA will be required to make case-by-case decisions on the sufficiency of biosimilarity and interchangeability evidence. It is uncertain how FDA will ultimately implement the Biosimilars Act, especially in light of the challenges involved with evaluating biosimilarity and interchangeability. There is no specific timeframe within which the FDA must issue guidance, and it may be several years before it promulgates final regulations. 9 E. Exclusivity for First Interchangeable Product The first 351(k) applicant to earn interchangeable status for any given reference product will be given one year of market exclusivity for the interchangeable product (hereafter interchangeable exclusivity ) from the date of its first commercial marketing. PHSA 351(k)(6)(A). However, similar to the forfeiture provisions of the Hatch-Waxman Act with respect to 180-day generic exclusivity, 10 the one-year interchangeable exclusivity period can be shortened or forfeited. Specifically, a subsequent 351(k) application seeking interchangeable status can be approved as follows without regard to the first successful applicant s exclusivity: 18 months after a final court decision 11 or dismissal (with or without prejudice) of a patent infringement action brought against the first successful applicant, 12 PHSA 351(k)(6)(B); 8 The reference product sponsor, often abbreviated elsewhere as RPS, will be referred to from time to time simply as the sponsor. For purposes of this paper, the sponsor is considered to be the innovator who filed the original BLA on a product and still holds the biologics license issued by FDA. 9 After passage of the Hatch-Waxman Act in 1984, FDA issued proposed regulations on July 10, 1989, 54 FR 28872, and final regulations on April 28, 1992, 57 FR The forfeiture provisions of the Hatch-Waxman Act, FDCA 505(j)(5)(D), were passed as part of the Medicare Prescription Drug, Improvement, and Modernization Act ( MMA ) of 2003, Pub. L. No , 117 Stat (2003). Prior to the MMA amendments, the Hatch-Waxman framework included certain triggering events that would commence the running of the 180-day generic exclusivity period. 11 Final court decision is defined as a final decision of a court from which no appeal (other than a petition to the United States Supreme Court for a writ of certiorari) has been or can be taken. PHSA 351(k)(6). This definition is the same as that used to define one contingency of the failure to market forfeiture event for generic 180-day - 6 -

7 42 months after approval of the first applicant s 351(k) application if the patent infringement action brought against the first applicant is still ongoing, PHSA 351(k)(6)(C)(i); or 18 months after approval of the first applicant s 351(k) application if no patent infringement suit was brought against the first applicant, PHSA 351(k)(6)(C)(ii). The interchangeable exclusivity provision of the Biosimilars Act differs in a significant way from the 180-day generic exclusivity provided in the Hatch-Waxman Act. In addition to the longer time period of one year as compared to six months, the interchangeable exclusivity period is awarded to the first follow-on applicant that earns FDA approval as an interchangeable product without regard to any patent challenges presented. In contrast, the 180-day exclusivity of Hatch-Waxman is awarded to the first generic applicant that challenges the innovator s patents without regard to FDA approval. 13 FDA will be required to determine whether or not the one-year interchangeable exclusivity period can extend past expiration of the innovator s relevant patents. In the Hatch- Waxman context, FDA has determined that 180-day exclusivity rights do not survive past expiration of the last challenged patent. However, FDA s underlying rationale is not applicable to interchangeable exclusivity under the Biosimilars Act. 14 Because one-year exclusivity is based only on the first successful applicant s approval as an interchangeable, and not on patent challenges, this exclusivity should survive expiration of the innovator s relevant patents. The one year exclusivity awarded to the first successful interchangeable 351(k) applicant will not prevent a subsequent applicant from receiving approval for a non-interchangeable product that is biosimilar to the same reference product. And there is no exclusivity awarded to exclusivity under the post-mma Hatch-Waxman Act. FDCA 505(j)(5)(D)(i)(I)(bb)(AA). It is also the same standard used to define a decision of a court as a triggering event for 180-day exclusivity in the pre-mma Hatch- Waxman context. MMA 1102(b)(3), Pub. L. No , 117 Stat (2003). In any of these circumstances, the applicable decision is typically a Federal Circuit decision (effective upon issuance of the mandate), or a district court decision after the period for appeal has lapsed. 12 Under an alternative reading of 351(k)(6)(B)(i), the final court decision could be in a case brought against any applicant so long as the decision is on all patents that were in suit against the first applicant day generic exclusivity under Hatch-Waxman is awarded on a dosage strength-by-dosage strength basis for the first ANDA applicant to submit a Paragraph IV challenge to any of the innovator s patent. Prior to the MMA, 180-day exclusivity was awarded on patent-by-patent and dosage strength-by-dosage strength bases. Similar to the post-mma Hatch-Waxman provisions, the framework of the Biosimilars Act should provide interchangeable exclusivity without regard to specific patent challenges. In fact, the first applicant for an interchangeable biological product need not present any challenge to the innovator s patents. 14 Hatch-Waxman s 180-day exclusivity comes from FDCA 505(j)(5)(B)(iv), which bars subsequent ANDAs from receiving approval during the exclusivity period if the subsequent ANDA contains a Paragraph IV certification. In FDA s view, the Paragraph IV certification is converted to a Paragraph II certification upon expiration of the patent. Because the subsequent ANDA no longer contains a Paragraph IV certification, it has been held that the 180-day exclusivity provision no longer applies. Mylan Labs. v. Leavitt, 484 F. Supp. 2d 109, (D.D.C. 2007)

8 the first successful 351(k) applicant to earn approval as a biosimilar absent interchangeable status. V. Patent Infringement Suits The Biosimilars Act includes substantial differences from the Hatch-Waxman framework for resolving patent disputes. The procedure is set forth in new 351(l) of the PHSA and in certain amendments to 35 U.S.C. 271(e). While some parallels may be drawn between ANDA litigation and the soon-to-come biosimilars litigation, the latter will involve several brand-new procedures and challenges. In addition to wide-ranging procedural implications, unique provisions of the Biosimilars Act can affect an innovator s abilities to file a patent infringement suit and to protect market exclusivity while the suit is pending. Under the Hatch-Waxman Act, a reference product sponsor can immediately file an infringement suit when notified that an ANDA applicant has submitted a Paragraph IV certification against a patent listed in the Orange Book, FDCA 505(j)(2)(A)(vii)(IV). If the innovator files suit within 45 days of receiving notice, FDA automatically places a thirty-month stay on approval of the ANDA, thereby blocking generic market entry until expiration of the stay or the suit is resolved. In contrast, the Biosimilars Act contemplates several exchanges of information, patent lists, and a round of negotiations before the reference product sponsor files suit; and once it is filed, the Act provides no automatic stay on approval of the 351(k) application. A. Information Exchange Prior to Infringement Suit The Biosimilars Act has no requirement comparable to the Hatch-Waxman Act s Orange Book listing procedure, FDCA 505(b)(1). Instead, the Biosimilars Act provides for a step-wise exchange of information prior to initiation of an infringement suit. PHSA 351(l)(1)-(3). A flow chart summarizing the procedures is presented in Figure 1, attached hereto. These procedures are described in more detail below. 1. Mandatory Disclosure of Section 351(k) Application Once the 351(k) applicant receives notice that FDA has accepted the application, the applicant must provide the reference product sponsor with a copy of the complete application along with additional information describing the manufacturing process. 15 PHSA 351(l)(2)(A). This information must be provided within 20 days to: 15 In contrast, the Hatch-Waxman Act gives an ANDA applicant who files a Paragraph IV certification the option of providing the reference product sponsor with an offer of confidential access to the ANDA. Moreover, the ANDA applicant has the option of redacting its ANDA to remove information that it deems irrelevant to the issue of infringement. FDCA 505(j)(5)(D)(i)(III). While the offer of confidential access is optional, an ANDA applicant who fails to provide one is barred from bringing a declaratory judgment action if the Paragraph IV certification was based on non-infringement grounds. FDCA 505(j)(5)(D)(i)(I)(cc)

9 outside counsel designated by the reference product sponsor, provided that the outside counsel does not participate in patent prosecution related to the reference product, PHSA 351(l)(1)(B)(ii)(I); and one in-house attorney for the reference product sponsor, provided that the in-house attorney does not participate in patent prosecution related to the reference product. PHSA 351(l)(1)(B)(ii)(II). In addition, if a patentee has exclusively licensed a patent covering the innovator s product to the reference product sponsor, and the patentee retains the right to participate in litigation, access to the application may be given to a representative of the patentee. PHSA 351(l)(1)(B)(iii). Significantly, the Biosimilars Act does not require that the patentee representative be an attorney; and thus, may be an officer or employee of the patentee. However, in order to receive access the representative must agree to be bound by certain confidentiality provisions provided in the Act. The Biosimilars Act mandates that the 351(k) application be treated as confidential and imposes detailed restrictions with respect to use and dissemination of the application and other confidential information exchanged pursuant to the Act. 16 Recipients of the information may not disclose it to outside scientific experts, employees of the reference product sponsor, or nonrecipient outside counsel unless the 351(k) applicant consents in writing. PHSA 351(l)(1)(C). And the information may be used solely for the purpose of determining whether or not an infringement action could be brought. PHSA 351(l)(1)(D). These restrictions remain in effect until an infringement suit is brought and a protective order is entered; and if no infringement action is brought before a certain deadline (set forth in PHSA 351(l)(6), discussed below), the information must be destroyed or returned. PHSA 351(l)(1)(F). 2. Mandatory Exchange of Patent Lists Within 60 days of receiving the 351(k) application, the reference product sponsor must provide the 351(k) applicant with a list of patents (the Paragraph 3(A) List ) on which the sponsor believes an infringement action could reasonably be asserted. PHSA 351(l)(3)(A)(i). The standard for determining whether a patent should be included in the 16 The Hatch-Waxman Act, on the other hand, provides that an ANDA applicant, when making an offer of confidential access, may impose such restrictions as to persons entitled to access, and on the use and disposition of any information accessed, as would apply had a protective order been entered without further defining same. FDCA 505(j)(5)(D)(i)(III). Thus, an ANDA applicant must be careful in attaching restrictions to its offer of confidential access. Because the innovator has only a 45-day window to assess infringement, jurisdictional and related issues, and to prepare and file a Complaint, there is no meaningful opportunity to negotiate back and forth concerning confidentiality terms. Thus, restrictions attached to the initial offer that go beyond what would be found in a court-approved protective order can render the offer noncompliant and preclude the ANDA applicant from bringing declaratory judgment claims. C.f. In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litigation, --- F.Supp.2d ----, 2010 WL , MDL No , at *5 (D. Del. March 12, 2010) ( attaching unacceptable conditions to [an ANDA filer s] offer of access frustrates the Hatch-Waxman system)

10 Paragraph 3(A) List appears to be similar to that for listing in the Orange Book under the Hatch- Waxman Act, 17 with at least one significant difference. A patent for a method of manufacturing may be included in the sponsor s Paragraph 3(A) List under the Biosimilars Act, while such patents may not be listed in the Orange Book. The sponsor must carefully consider which patents to include on the Paragraph 3(A) List because failure to list a relevant patent can have significant consequences, which are discussed below. See Part V.B.4.e. infra. The reference product sponsor must at the same time identify which patents on the Paragraph 3(A) List, if any, the sponsor would be willing to license to the 351(k) applicant. PHSA 351(l)(3)(A)(ii). The 351(k) applicant then has 60 days to respond to the reference product sponsor s Paragraph 3(A) List. PHSA 351(l)(3)(B). The response must address each patent identified on the Paragraph 3(A) List by either challenging the patent or by stating that the 351(k) applicant does not intend to begin commercial marketing before the date that the patent expires. PHSA 351(l)(3)(B)(ii). In the case of a patent challenge, the response must include a detailed statement that describes, on a claim by claim basis, the factual and legal basis of the opinion of the subsection (k) applicant that such patent is invalid, unenforceable, or will not be infringed PHSA 351(l)(3)(B)(ii). This language is similar to the requirements that FDA has established for an ANDA notice letter following the filing of a Paragraph IV certification. 18 In addition to setting forth the 351(k) applicant s patent challenges or declaring its intention to stay off the market until patent expiry, the response must address each patent that the reference product sponsor identified for potential licensing. PHSA 351(l)(3)(B)(iii). Finally, the 351(k) applicant may also include its own list of patents (the Paragraph 3(B) List ) for which it believes an infringement claim could be asserted by the reference product sponsor, together with the same type of patent challenge or statement of intent not to market for each newly identified patent. PHSA 351(l)(3)(B)(i), (ii) Under the Hatch-Waxman Act, the NDA holder must list in the Orange Book any patent with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug. FDCA 505(b)(1). Similarly, a biologics innovator confronted with a 351(k) application must identify patents for which it believes a claim of patent infringement could reasonably be asserted if a person not licensed by the reference product sponsor engaged in the making, using, offering to sell, selling, or importing into the United States of the biological product PHSA 351(l)(3)(A)(i). 18 Regulations promulgated under the Hatch-Waxman Act require an ANDA applicant to include in its ANDA notice letter [a] detailed statement of the factual and legal basis of the applicant s opinion that the patent is not valid, unenforceable, or will not be infringed. The applicant shall include in the detailed statement: (i) For each claim of a patent alleged not to be infringed, a full and detailed explanation of why the claim is not infringed. (ii) For each claim of a patent alleged to be invalid or unenforceable, a full and detailed explanation of the grounds supporting the allegation. 21 C.F.R (c)(6). 19 The reference product sponsor s Paragraph 3(A) List and the 351(k) applicant s Paragraph 3(B) List will be collectively referred to as the Paragraph 3 Lists. Patents appearing on one or both lists may be referred to as Paragraph 3-listed patents

11 After receiving the 351(k) applicant s patent challenges and Paragraph 3(B) List, the reference product sponsor has another 60 day period to reply. The reply must include a detailed infringement contention for each patent on which the 351(k) applicant asserted noninfringement, as well as a response to any invalidity or unenforceability assertions. PHSA 351(l)(3)(C). The language of the Biosimilars Act literally requires a reply to all noninfringement contentions set forth by the 351(k) applicant, including those relating to patents that the reference product sponsor did not assert but that were identified for the first time on the 351(k) applicant s Paragraph 3(B) List. In some circumstances, the sponsor may be unable to make the required detailed statement of infringement with respect to such patents, particularly if it does not have a good faith basis to assert infringement. In such circumstances, it may be appropriate, if not necessary, for the sponsor to state that it lacks sufficient information to form an opinion on the infringement issue, or instead admit non-infringement or covenant not to sue, regardless of the literal language of the Act. 3. Determination of Patents that Must Be in Suit The Biosimilars Act requires good faith negotiations between the 351(k) applicant and the reference product sponsor in an effort to agree on which Paragraph 3-listed patents to include in litigation. PHSA 351(l)(4)(A). The Act does not set forth a deadline for when the negotiations must begin only that they occur after receipt by the 351(k) applicant of the sponsor s reply to the Paragraph 3(B) List. However, it appears that either party has the power to begin the negotiations. And once the negotiations have commenced, the parties must reach an agreement within 15 days. PHSA 351(l)(4)(B). If the parties agree on a final list of the patents to be in suit, the reference product sponsor must bring an infringement action on the agreed patents within thirty days. On the other hand, if the parties fail to reach agreement in the 15-day window, they must prepare to exchange yet another set of lists ( the Paragraph 5 Lists ) to determine the patents on which suit must be brought. The exchange of Paragraph 5 Lists promises to be strategically important. Each party must identify on its Paragraph 5 List the patents that it believes should be included in the infringement suit, and the combined lists will ultimately determine the patents on which suit must be brought. PHSA 351(l)(5)(B)(1). As explained below, the 351(k) applicant has control over timing of the Paragraph 5 List exchange and the power to limit the number of patents the reference product sponsor may list. The exchange procedure is commenced by the 351(k) applicant, who does so by disclosing the number of patents (i.e., the quantity, but not the identity) that the 351(k) applicant will include on its Paragraph 5 List. Id. The actual exchange of Paragraphs 5 Lists occurs simultaneously and within a five-day period of the date that the 351(k) applicant disclosed the number of patents it will list. There is no set time period in which the 351(k) applicant must begin the procedure by disclosing this number. Thus, this step, from which the timing of the rest of the pre-suit procedure and filing of the complaint is based, represents a potential opportunity for delay by the 351(k) applicant. However, it is unlikely that the 351(k) applicant could delay indefinitely. An innovator should be permitted to bring an infringement suit on the patents of its

12 choosing if the 351(k) applicant fails to disclose the number of patents it will list under Paragraph 5 in a reasonable time. And a court may look unfavorably upon a motion to dismiss by a 351(k) applicant who refuses to cooperate at this critical stage. The reference product sponsor is limited in the number of patents it can include on its Paragraph 5 List. Specifically, the reference product sponsor may include no more than the number of patents that the 351(k) applicant disclosed prior to the exchange, unless the 351(k) applicant disclosed zero patents. PHSA 351(l)(5)(B)(1)(ii). If the 351(k) applicant elects to list no patents, then the reference product sponsor may list one patent on its Paragraph 5 List. Ultimately all patents appearing on at least one of the Paragraph 5 Lists must be included in the litigation. And as discussed below in more detail, the mechanics of the Paragraph 5 List exchange may empower the 351(k) applicant to exercise significant control over the scope of the litigation. B. The Infringement Suit The reference product sponsor has 30 days in which to file a complaint for patent infringement after the parties have exchanged Paragraph 5 Lists. PHSA 351(l)(6)(B). If the parties avoided the Paragraph 5 procedure by reaching an agreement on the patents to be included, the 30 day period runs from the date of that agreement. PHSA 351(l)(6)(A). This time period is critical because the reference product sponsor will lose remedies if it overlooks the deadline. See Part V.B.4.e. infra. 1. Scope of Litigation Assuming the parties cannot agree on the patents in suit, the Biosimilars Act requires the filing of an infringement action on all patents that are included on one or both of the Paragraph 5 Lists. PHSA 351(l)(6)(B). The Act forbids the inclusion of patents that are not on a Paragraph 3 List in such an action. 35 U.S.C. 271(e)(6)(C). However, the Act does not expressly prohibit the inclusion of patents that were identified on a Paragraph 3 List, but excluded from the Paragraph 5 Lists (hereafter Excluded Paragraph 3 Patents ). 20 This will likely be an early point of dispute under the Act. A reference product sponsor may view 351(l)(6)(B) of the Act as a non-limiting provision that merely mandates the inclusion of Paragraph 5-listed patents. In other words, the reference product sponsor may take the position that it can sue on patents that it originally identified on its Paragraph 3(A) List, but that are not found on a Paragraph 5 List, i.e., Excluded Paragraph 3 Patents, so long as all of the Paragraph 5-listed patents are also included. In this regard, the reference product sponsor may rely on the long-standing rule of statutory construction that courts must treat the plain language of a statute as controlling absent clear 20 If the provisions of paragraph (5) apply to the parties as described in paragraph (4)(B), not later than 30 days after the exchange of lists under paragraph 5(B), the reference product sponsor shall bring an action for patent infringement with respect to each patent that is included on such lists. PHSA 351(l)(6)(B)

13 legislative intent to the contrary. Miller v. Dep t of Army, 987 F.2d 1552, 1555 (Fed. Cir. 1993). Specifically, the Biosimilars Act amends 35 U.S.C. 271(e)(2) to state that it shall be an act of infringement to submit with respect to a patent that is identified in the list of patents described in 351(l)(3) of the [PHSA], an application seeking approval of a biological product. 35 U.S.C. 271(e)(2)(C)(1). Thus, the infringement that is actionable under 35 U.S.C. 281 is defined in terms of the Paragraph 3 Lists, and not the Paragraph 5 Lists. Accordingly, the reference product sponsor may be successful in arguing that 351(l)(6)(B) does not prohibit suit on Excluded Paragraph 3 Patents. On the other hand, the 351(k) applicant will likely view 351(l)(6)(B) as limiting. Under this interpretation, the reference product sponsor would be permitted to bring an infringement action only on patents included in one of the Paragraph 5 Lists. Arguments in support of this interpretation may include the doctrine that statutory provisions are to be evaluated in light of the language of the Act as a whole, Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, (1986), and that all provisions of a statute should be given effect, Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 167 (2004) (noting the settled rule that we must, if possible, construe a statute to give every word some operative effect ). In the case of 351(l)(6)(B), one might argue that the Paragraph 5 procedures, and particularly those requiring the reference product sponsor to limit the number of patents on its Paragraph 5 List, e.g., PHSA 351(l)(5)(B)(ii), would serve no purpose if the reference product sponsor could include as many patents as it wished in the litigation. If courts ultimately agree with this view, the initial litigation would be limited to Paragraph 5-Listed patents. Thus, under this view, the 351(k) applicant would be able to exercise significant control over the scope of the initial litigation by forcing truncated Paragraph 5 Lists. Ultimately, the scope of the initial litigation permitted under the Biosimilars Act will be a matter for the courts to decide. 2. Preliminary Injunctions The availability of preliminary injunctive relief will be another subject ripe for judicial interpretation. As noted earlier, the Biosimilars Act does not provide for an automatic 30-month stay of the follow-on application under 351(k). Therefore, an innovator will be required to pursue a preliminary injunction to preserve its market exclusivity following expiration of the 12- year data exclusivity period. Notably, the Biosimilars Act includes no express language either authorizing or prohibiting the reference product sponsor from seeking a preliminary injunction on patents-insuit. However, the Act provides a detailed framework of the circumstances under which a reference product sponsor can pursue a preliminary injunction against a 351(k) applicant on Excluded Paragraph 3 Patents. 21 PHSA 351(l)(8)(B). The preliminary injunction provisions 21 The Act s discrimination between Paragraph 5-listed patents and Excluded Paragraph 3 Patents may lend additional support for the view that the initial litigation should be limited to Paragraph 5-listed patents. See Part

14 work as follows. The 351(k) applicant must notify the reference product sponsor of its intention to commence commercial marketing at least 180 days prior to the actual launch. PHSA 351(l)(8)(A). 22 Upon receipt of the notice, the reference product sponsor may seek a preliminary injunction for infringement of Excluded Paragraph 3 Patents at any time before the launch occurs. PHSA 351(l)(8)(B). If a preliminary injunction is sought, both parties must reasonably cooperate to expedite such further discovery as is needed in connection with the preliminary injunction motion. PHSA 351(l)(8)(C). 23 Thus, the literal scope of 351(l)(8) is limited to Excluded Paragraph 3 Patents, i.e., those patents for which the reference product sponsor (or 351(k) applicant) initially believed a a claim of patent infringement could reasonably be asserted, PHSA 351(l)(3)(A)(i), but on which the reference product sponsor either choose not to sue or could not sue. The apparent purpose of 351(l)(8) depends upon one s point of view with respect to the potential limitations on the scope of litigation imposed by 351(l)(6)(B). See Part V.A.3. supra. If one accepts that the reference product sponsor can sue on any Paragraph 3-listed patent, then the preliminary injunction provisions of 351(l)(8) incentivize innovators to voluntarily keep patents of secondary importance out of suit, thereby simplifying the litigation while still providing innovators with a remedy on the secondary patents if faced with an impending biosimilar launch. On the other hand, if one believes that the initial litigation is limited to Paragraph 5-listed patents, then 351(l)(8) serves to expand the innovator s rights by allowing the reference product sponsor to pursue some form of relief for patents which were initially barred from suit when faced with an impending launch. The latter theory views the preliminary injunction provisions as rectifying an otherwise inequitable position in which an innovator would find itself powerless to enforce relevant patents when faced with impending biosimilar competition. 24 V.A.3. supra. Specifically, it could be argued that PHSA 351(l)(8) serves little purpose if all Paragraph 3-listed patents could be included in the litigation. A contrary view is presented later in the text. 22 The Biosimilars Act does not explicitly prohibit the 351(k) applicant from noticing an impending launch prior to receiving FDA approval. However, the Act does state that the applicant shall provide notice of the launch of the biological product licensed under subsection (k), PHSA 351(l)(8)(A), possibly implying that the product must be licensed at the time the notice is sent. Thus, it may become necessary for the courts to decide whether a preapproval notice is premature. If so, 351(l)(8)(A) will establish a de facto 180-day waiting period between approval and launch. 23 The preliminary injunction provisions of 351(l)(8) do not lend themselves well to routine motion practice. As noted below, the provisions appear to expand the innovator s rights by granting the power to obtain a preliminary injunction on patents that may otherwise not be in suit. Accordingly, the Act contemplates that additional discovery will be needed on the newly involved patents. This discovery should be completed before a motion for preliminary injunction is filed to permit the parties to fully brief the issues and without the need to burden the court with later supplementation. Thus, one could envision the filing of a Notice of Intent to Seek Preliminary Injunction to invoke the protection of 351(l)(8)(C) well before the motion is filed. 24 There has been yet another point of view expressed by some on the generic side of the Hatch-Waxman fence. Some have opined that 351(l)(8) operates to eliminate the court s power to issue a preliminary injunction on

15 Regardless of the true purpose of 351(l)(8), the Biosimilars Act is silent as to whether a reference product sponsor can request a preliminary injunction on a patent that appears on a Paragraph 5 List. Accordingly, the provisions of 35 U.S.C. 283 should apply. And a reference product sponsor should be free to seek a preliminary injunction on a Paragraph 5-listed patent-insuit. See Pfizer, Inc. v. Teva Pharma., USA, 429 F.3d 1364, 1372 (Fed. Cir. 2005) (affirming grant of preliminary injunction in ANDA case and noting that [c]ourts have the power to grant injunctions to prevent the violation of patent rights ). 3. Later Issued Patents If a patent is acquired by the reference product sponsor after provision of the Paragraph 3(A) List, the sponsor has 30 days to provide the 351(k) applicant with a supplemental Paragraph 3(A) List identifying the newly-acquired patent. PHSA 351(l)(7). The 351(k) applicant must then respond by providing its patent challenge or declaring its intention to stay off the market until the new patent expires. PHSA 351(l)(7). The requirements of the challenge are the same as those described above in Part V.A.2. There is, however, no requirement in the Act that the reference product sponsor reply to the 351(k) applicant s patent challenge. For purposes of obtaining a preliminary injunction, the newly acquired-patent is treated the same as an Excluded Paragraph 3 Patent. PHSA 351(l)(7)(B). 4. Permanent Remedies The Biosimilars Act amends subsections (A) through (C) of 35 U.S.C. 271(e)(4) to apply the same remedies for infringing 351(k) applications as are provided by the Hatch- Waxman Act for infringing ANDAs. In addition, the Biosimilars Act adds a new provision for a mandatory injunction under certain circumstances, and new limitations on declaratory judgment actions. Finally, the Act limits remedies available to reference product sponsors who fail to sue a 351(k) applicant within 30 days, 25 who fail to include a relevant patent in its Paragraph 3(A) List, or who neglect to timely supplement same. a. Declaratory Judgment A declaratory judgment is generally not available to either the reference product sponsor or the 351(k) applicant with respect to any Excluded Paragraph 3 Patent under the Act. 26 PHSA Paragraph 5-listed patents. However, there is little support for this view. And for reasons pointed out in the next paragraph of the text, courts will likely reject it. 25 See Part V.B. regarding triggering of the 30-day period. 26 Compare FDCA 505(j)(5)(C) (setting forth the circumstances under which an ANDA applicant can seek declaratory judgment). The most analogous provision in the Biosimilars act is the 351(k) applicant s ability to force patents into suit under the provisions of PHSA 351(l)(5) and (l)(6). However, these provisions require that the reference product sponsor bring an action for infringement on all Paragraph 5-listed patent. PHSA 351(l)(6)(B)