Feeling Dissed, Amgen Sues After Sandoz Abandons the BPCIA Patent Dance Procedures for NEUPOGEN Biosimilar; Alleges Unfair Competition, Patent Infringement, and Theft

By Kurt R. Karst –      

Ever since the July 2014 announcement by Sandoz Inc. (“Sandoz”) that FDA accepted the first ever application for a biosimilar biological product submitted pursuant to Section 351(k) of the Public Health Service Act (“PHS Act”) – in this case, a biosimilar version of Amgen, Inc.’s (“Amgen’s”) NEUPOGEN (filgrastim) approved under BLA 103353, and which 351(k) application could be acted on by May 2015 under the performance goals agreed to as part of the Biosimilar User Fee Act of 2012 – we wondered how the so-called “patent dance” procedures added to the law by the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”) were progressing (or not).  Apparently Amgen has been left on the dance floor without a partner.  And Amgen doesnt take rejection well.  Feeling dissed and spurned, last week Amgen filed a Complaint in the U.S. District Court for the Northern District of California alleging that Sandoz has unlawfully refused to follow the BPCIA’s patent resolution procedures, and is seeking declaratory and injunctive relief. 

By way of background, the BPCIA lays out a multi-step “patent dance” at PHS Act § 351(l) for an applicant seeking approval of a biosimilar version of a reference product: Step 1 – Transmission of Biosimilar Application; Step 2 – Reference Product Sponsor’s Paragraph 3(A) Patent List; Step 3 – Biosimilar Applicant’s Paragraph 3(B) Patent List; Step 4 – Reference Product Sponsor’s Response; Step 5 – Patent Resolution Negotiations; Step 6 – Patent Resolution If No Agreement; and Step 7 – Filing of the Patent Infringement Action.  Under Step 1, not later than 20 days after FDA informs a 351(k) applicant that its application has been accepted for review (i.e., filed), the applicant must provide to the reference product sponsor “a copy of the application submitted to the Secretary under subsection (k), and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application” (PHS Act § 351(l)(2)(A); 42 U.S.C. § 262(l)(2)(A)) and “may provide to the reference product sponsor additional information requested by or on behalf of the reference product sponsor” (PHS Act § 351(l)(2)(B); 42 U.S.C. § 262(l)(2)(B)). 

In addition, the BPCIA provides that a 351(k) applicant must provide notice to a reference product sponsor “not later than 180 days before the date of the first commercial marketing of the biological product licensed under [Section 351(k)].”  After receiving that notice, a reference product sponsor may seek a preliminary injunction prohibiting the 351(k) applicant from manufacturing or selling its biosimilar product until a court decides the issue of validity, infringement, and enforcement of certain patents (PHS Act § 351(l)(8); 42 U.S.C. § 262(l)(8)).

Thus far, controversy surrounding the BPCIA’s patent resolution procedures has focused on whether or not a prospective 351(k) applicant can seek patent certainty by filing an action for declaratory judgment.  As we previously reported, in November 2013, in Sandoz Inc. v. Amgen Inc., Case No. 3:13-cv-02904-MMC (N.D. Cal.), the U.S. District Court for the Northern District of California granted Amgen’s Motion to Dismiss a June 2013 Complaint for Declaratory Judgment and Patent Invalidity and Non-infringement concerning two patents Roche licensed to Amgen that purportedly cover Amgen’s biological product ENBREL (etanercept).  According to the California District Court, “Sandoz does not contend, and cannot contend, it has complied with its obligations under [PHS Act §§ 351(l)(2)-(6)], because . . . it has not, to date, filed an application with the FDA.”  In addition, the court noted that “Sandoz cannot, as a matter of law, have provided a ‘notice of commercial marketing’ because . . . its etanercept product is not  licensed under subsection (k).’”  That decision was appealed to the U.S. Court of Appeals for the Federal Circuit where a decision is pending (see our previous post here).  Meanwhile, two other declaratory judgment complaints were filed.  Both of those cases involve REMICADE (infliximab) and Celltrion Healthcare Co., Ltd. and Celltrion, Inc.’s biosimilar version of the product (see our previous post here).  One of the cases was recently dismissed voluntarily (see here), while the other case is progressing and is in the Motion to Dismiss stage (briefs available here, here, and here).

In its October 24th Complaint, Amgen alleges that Sandoz received notice from FDA on July 7, 2014 that the Agency had accepted the company’s 351(k) BLA for a biosimilar version of NEUPOGEN, and that such notice should have triggered a cascade of events under the patent resolution procedures at PHS Act § 351(l), but did not because Sandoz failed to comply with the initial disclosure under PHS Act § 351(l)(2)(A).  According to Amgen:

Defendants are attempting to obtain the benefits of the BPCIA by filing their BLA under the § [351(k)] pathway without complying with the requirements that Congress also imposed through the BPCIA on biosimilar applicants.  For example, Defendants made a deliberate decision not to provide Amgen with a copy of its BLA, together with other information necessary to describe the process(es) for manufacturing the biosimilar product, within 20 days of receiving notification of FDA acceptance of their application.  Under [PHS Act § 351(l)(2)], Sandoz was required to provide Amgen with such materials by Monday, July 28, 2014.

Instead, Sandoz apparently proposed an alternative procedure in a July 8, 2014 letter to Amgen: that the parties exchange certain information without following the process at PHS Act § 351(l)(2).  Amgen rejected the offer.  Later, Sandoz letter sent Amgen another letter stating that Sandoz had decided “not to disclose our application to Amgen” and also  not to exercise the company’s “right to use the patent information exchange process of the BPCIA.”  Finally, in an October 20, 2014 letter, Sandoz allegedly reminded Amgen that Sandoz’s initial July 8th letter provided Amgen with Sandoz’s 180-day notice of commercial marketing pursuant to PHS Act § 351(l)(8)(A).  Amgen’s Complaint, which cites, among other things, the November 2013 decision in Sandoz Inc. v. Amgen Inc. for the proposition that the 180-day notice can come only after approval of a 351(k) BLA, followed a few days later. 

According to Amgen:

Each of [Sandoz’s] unlawful acts (violation of 42 U.S.C. § 262(l)(2)(A) and violation of 42 U.S.C. § 262(l)(8)(A)) independently deprive Amgen of the benefits afforded under the statute and which Congress provided to reference product sponsors.  Defendants’ failure to provide the BLA and manufacturing information to Amgen under 42 U.S.C. § 262(l)(2)(A) deprives Plaintiffs of the opportunity to seek a preliminary injunction enjoining Defendants from engaging in the commercial manufacture or sale of the Sandoz biosimilar product in time to prevent irreparable harm to Plaintiffs, i.e., after FDA approval of the Sandoz biosimilar product but before Defendants’ commercial marketing of the biosimilar product.  In addition, Defendants’ failure to provide a legally operative notice of commercial marketing deprives Plaintiffs of the opportunity to seek a court intervention to prevent Plaintiffs from suffering irreparable harm.  This too prevents Plaintiffs from enjoining Defendants in time to prevent irreparable harm.

Amgen asserts three causes of action: (1) unfair competition under Cal. Bus. & Prof. Code § 17200 et seq.; (2) conversion; and (3) infringement of U.S. Patent No. 6,162,427 covering a method of using NEUPOGEN to treat a disease requiring peripheral stem cell transplantation in a patient in need of such treatment. 

Amgen’s second cause of action – i.e., conversion – caught our attention.  It’s not a cause of action we see on a daily basis.  Conversion, better known as theft, is an intentional tort that consists of the wrongful exercise of dominion or control over personal property that so seriously interferes with another’s right to control the property that the converter (i.e., thief) is required to pay the other the full value of the property as damages for the conversion.  According to Amgen:

[Sandoz’s] use of the license for NEUPOGEN® (filgrastim) to obtain a governmental privilege (FDA approval to market, manufacture, import, and sell the Sandoz biosimilar product for use in the United States) for Defendants’ own benefit and profit is an act of conversion.  Specifically, Defendants filed a BLA for the Sandoz biosimilar product that intentionally uses Amgen’s prior demonstration of the safety, purity, and potency of NEUPOGEN® (filgrastim), but without Plaintiffs’ authorization or permission and without satisfying the mandatory provisions of 42 U.S.C. § 262(l) that apply to biosimilar applicants.  By filing their BLA for the Sandoz biosimilar product under the § 262(k) pathway rather than the § 262(a) pathway, Defendants seek to obtain a valuable benefit from the license for NEUPOGEN® (filgrastim).  Without Amgen’s efforts, the information relied on by Defendants for the safety, purity, and potency of the Sandoz biosimilar product would not exist. As a result, Defendants have converted property belonging to Plaintiffs.

Amgen is seeking declaratory and injunctive relief.  In particular, Amgen wants the court to enjoin Sandoz from “commercially marketing the biosimilar product until Amgen is restored to the position it would have been had Defendants met their obligations under the BPCIA” and until Sandoz provides Amgen with notice of commercial marketing “on or after FDA licensure of its biosimilar product (and no later than 180 days before first commercial marketing of the product by Sandoz).  In addition, Amgen wants an injunction preventing Sandoz “from continuing to seek FDA review of [the company’s 351(k)] application and/or compelling Defendants to suspend FDA review of [the company’s 351(k)] application until Defendants have obtained permission from Plaintiffs to use the NEUPOGEN® (filgrastim) license or require Defendants to restore to Amgen the benefits afforded to reference product sponsors in the statute,” and a judgment “[a]djudging and decreeing that Defendants have committed a statutory act of infringement under 35 U.S.C. § 271(e)(2)(C)(ii) of the’427 patent by submitting their BLA to the FDA for approval of the Sandoz biosimilar product without providing the required BLA and manufacturing information to Amgen.” 

Those of us who work in the Hatch-Waxman/BPCIA space predicted back in 2010 when the BPCIA was enacted that there would be a lot of controversy over the patent dance procedures (and even hesistance from some to go on to the dance floor in the first place).  We’re now seeing those predictions become reality, and in controversies that will shape the future of the biosimilar approval pathway for decades to come.