Post-BPCIA Enforcement of Biologic Patents Under Section 337

Post-BPCIA Enforcement of Biologic Patents Under Section 337

*By Daniel E. Yonan, Dallin G. Glenn, and Stephanie Nguyen of Sterne Kessler Goldstein & Fox PLLC

Biologics have been making the headlines thanks to the accelerated approval process for biosimilar applications under the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”). While many aspects of the BPCIA remain untested, patent owners can often protect their market share from competitors by initiating Section 337 investigations before the United States International Trade Commission (“Commission”). This article addresses the benefits and requirements of filing a Section 337 complaint to prevent the launch of an infringing biosimilar.

Background regarding the BPCIA

The BPCIA, adopted as part of the Patient Protection and Affordable Care Act, created an abbreviated approval pathway for new biologic products that are sufficiently similar to a reference product already approved by the FDA. These new products are known as “biosimilars.” The BPCIA allows biosimilar producers to rely on the studies and clinical trials completed by the reference product sponsor (“RPS”) to demonstrate the safety and efficacy of the biosimilar.

Alongside the accelerated approval process, the BPCIA introduced a procedure to identify potential patent disputes while a biosimilar application is still pending before the FDA. This process, colloquially known as the “patent dance,” sets up a schedule for biosimilar applicants and reference product sponsors to exchange information regarding patents that may be asserted against the product described in the biosimilar application.

Once the FDA accepts a biosimilar application for review, the biosimilar applicant has 20 days to initiate the patent dance by providing its application and relevant manufacturing information to the RPS.[1] After a period of pre-litigation information exchange, the parties privately negotiate a list of patents that may be asserted against the biosimilar applicant.[2] This first round of litigation is restricted to only the patents on the agreed-upon list.[3]

The second round of litigation begins when the applicant provides a mandatory 180-day notice of their intent to launch commercial marketing for the biosimilar.[4] After receiving this notice, the RPS may assert subsequent patents against the biosimilar applicant, but may not re-litigate the initially listed patents.[5]

The BPCIA provides a strategic advantage to the biosimilar applicant: the choice of whether to initiate the patent dance by sharing information with the RPS, or to opt out of the process entirely.[6] But a savvy RPS may gain its own tactical advantages against biosimilars manufactured outside of the United States by filing a complaint under Section 337 of the Tariff Act.[7]

Advantages of Section 337 if the applicant chooses the patent dance

If the biosimilar applicant chooses to initiate the patent dance, the RPS may file a complaint at the Commission and gain four strategic advantages: (1) an earlier-filed complaint, (2) a broader scope of patents to assert, (3) a faster (sometimes much faster) procedural schedule, and (4) a lower bar for obtaining an injunction.

First, the RPS can file the complaint much earlier at the Commission. When the patent dance begins, the BPCIA outlines a schedule for the biosimilar applicant and the RPS to exchange information and eventually agree upon a list of patents that may be asserted in the first round of litigation for patent infringement.[8] This process could take up to 195 days.[9] But at the Commission, the RPS can file a complaint as soon as is practicable—there is no waiting period.

Second, the RPS can assert more patents at the Commission. During the first round of litigation, the BPCIA only allows the RPS to assert the patents that were agreed to during the patent dance.[10] If the parties fail to agree on a list, the RPS may assert any patent that it identified during the patent dance, but the quantity of patents is limited—the RPS may be restricted to just one patent.[11] But Section 337 does not restrict which patents may be asserted and, depending on the Administrative Law Judge, may not limit the number of patents in one investigation.

More importantly, the BPCIA is silent as to whether it provides a cause-of-action against a biosimilar applicant for a method-of-manufacture claim, and it remains unclear whether the Federal Circuit will read that ability into 35 U.S.C. § 271(e)(2).[12] Method-of-manufacture claims are particularly important for biologics because their complex structures are difficult to describe; as a result, patent claims often describe biologics in terms of the process used to make them. At the Commission this is not a concern, as the RPS may assert method-of-manufacture claims, in addition to any product or method-of-use claims.[13] In addition, the safe harbor defenses of 35 U.S.C. § 271(g) (providing protection from method-of-use claims if an imported product has been “materially changed by a subsequent process” or has become a “trivial and nonessential component of another product”) are generally not available under Section 337.[14]

Third, the Commission is a much faster jurisdiction than district court—an important consideration for an RPS seeking to prevent the launch of an infringing biosimilar. District courts on average require 2 years to issue an injunction. But the Commission typically requires only 14-18 months to issue an exclusion order. This speed is further enhanced by the fact that investigations at the Commission under Section 337 are conducted by Administrative Law Judges with extensive experience handling complex patent cases. Moreover, unlike their district court counterparts, these investigations are rarely stayed pending patent office review proceedings such as inter partes reviews.

And under the BPCIA, the RPS cannot request a preliminary injunction until the applicant provides the 180-day notice of commercial marketing.[15] Once the applicant provides the notice, only then can the RPS seek a preliminary injunction for subsequent patents that were not included on the agreed-upon list.[16] But at the Commission, this restriction does not apply. In addition, the RPS can request a temporary exclusion order (akin to a preliminary injunction) which, if successful, would be awarded between 4 and 6 months after filing.[17]

Fourth, the RPS who wins on the merits is far more likely to receive an injunction against biosimilar imports at the Commission than in district court. Obtaining injunctive relief in district courts requires the RPS to show that it will be irreparably harmed without an injunction.[18] In contrast, Section 337 does not require a showing of harm for claims based on patent infringement.[19] As a result, the Commission routinely grants injunctions in the form of exclusion orders that prevent the product from being imported into the United States and preclude sales of already imported products.

Advantages of Section 337 if the applicant avoids the patent dance

If the biosimilar applicant chooses to opt out of the patent dance by not disclosing the relevant information to initiate the patent dance, the BPCIA provides the RPS with a remedy of limited practical utility. Because the biosimilar did not make the required disclosures, the RPS may bring a declaratory judgment on any patents that could have been identified had the patent dance occurred.[20] But the RPS is unlikely to prevail in district court without knowing what the biosimilar application contains or how the proposed biosimilar product will be manufactured. Because the complaint will lack these important details, the biosimilar applicant may oppose the complaint as lacking the evidentiary support required by Rule 11. Further, if the relevant evidence is held by a foreign manufacturer, even if a district court action can be maintained, the RPS may be unable to obtain the needed foreign discovery or at least obtain it in time to prevent the launch of the competing biosimilar.

In contrast, foreign discovery can be obtained effectively worldwide against a respondent at the Commission. Discovery begins immediately upon institution of a Section 337 investigation, and the Commission can compel discovery from all respondents—foreign and domestic—under the severe threat of adverse factual, or even ultimate, case findings, without judicial assistance or recourse to the Hague Convention. Thus, the RPS can quickly obtain not only the biosimilar application but also any other information regarding the product, manufacturing process, and launch plans. Section 337 even allows for domestic and foreign site inspections.[21]

In addition to the discovery benefits, the RPS will also enjoy three of the benefits discussed in the previous section: the accelerated procedural schedule, the ability to assert method-of-manufacture claims, and the greater likelihood of receiving injunctions.

Final considerations before proceeding before the Commission

While Section 337 can be a valuable tool, before filing a complaint the RPS must consider three requirements unique to the Commission. First, the RPS must allege an actual or imminent importation or sale for importation of the accused biosimilar into the U.S.,[22] including whether the safe-harbor provision of 35 U.S.C. § 271(e)(1) applies. Second, the RPS must demonstrate that its own biologic product is covered by the asserted patent and that it has sufficient domestic manufacturing, research operations, or other qualifying domestic economic activity to satisfy the Commission’s domestic industry requirement.[23]

And third, before it can issue a remedial order, the Commission is required to consider the public interest. The RPS should therefore consider whether the public interest might preclude excluding the biosimilar from importation. The Commission has not yet considered the public interest of excluding a biosimilar. As a general rule, reduced consumer costs are not a sufficient public interest to override the public interest in enforcing valid patents. And, while a stated goal of the BPCIA is to reduce the cost of biologics for consumers, the Commission rejected a similar argument regarding the purpose of the Hatch-Waxman Act in promoting the affordability of generic drugs.[24] More important than price, the RPS should consider whether the requested exclusion order will result in an inadequate supply of biologics that are critical to the public health.[25]

In conclusion, although biologic manufacturers are currently under-represented in the increasing number of pharmaceutical and medical product investigations filed at the Commission, manufacturers who conduct an adequate pre-filing analysis may be able to use Section 337’s tactical and strategic advantages to protect against infringing competitors and preserve their market share.

[1] 42 U.S.C. § 262(l)(2).

[2] 42 U.S.C. § 262(l)(3), (4).

[3] 42 U.S.C. § 262(l)(6).

[4] 42 U.S.C. § 262(l)(8)(a).

[5] 42 U.S.C. § 262(l)(8)(b).

[6] See Amgen Inc. v. Sandoz Inc., 2015-1499, slip op. at 15 (Fed. Cir. July 21, 2015) (holding that Sandoz did not violate the BPCIA by refusing to disclose its application to Amgen; rather, “Sandoz took a path expressly contemplated by the BPCIA”); FDA Denial of Citizen’s Petition of Jeffrey Kushan, Docket No. 2014-P-1771 (March 25, 2015) (denying request to require biosimilar applications to include a certification that the applicant will provide the RPS with a copy of the biosimilar application).

[7] See Daniel E. Yonan & Dallin G. Glenn, Section 337’s Potential for Defending Biologics Market Share Against Biosimilars, Sterne, Kessler, Goldstein & Fox, P.L.L.C. (2015), http://skgf.com/uploads/1380/doc/Section_337_Potential_for_Defending_Biologics_Market_Share_Against_Biosimilars.pdf

[8] 42 U.S.C. § 262(l)(6).

[9] 42 U.S.C. § 262(l)(3)(A)-(C), (4), (5).

[10] 42 U.S.C. § 262(l)(6).

[11] 42 U.S.C. § 262(l)(5).

[12] Once the patent dance has begun and the RPS has provided a list of patents for which the RPS believes a claim of infringement could reasonably be asserted, § 271(e)(2)(C)(i) provides that it is an artificial act of infringement for “a patent that is identified in the list of patents,” although that section does not specifically reference process patents. See § 271(e)(C)(i). Where the biosimilar applicant does not exchange its manufacturing information, 35 U.S.C. § 271(e)(2)(C)(ii) provides that, “It shall be an act of infringement to submit … an application seeking approval of a biological product … if the purpose of such submission is to obtain approval … of a … biological product claimed in a patent or the use of which is claimed in a patent … .”

In Amgen, the Federal Circuit noted that the lack of explicit reference to process patents in § 271(e)(2)(C)(i) did not preclude the RPS from asserting process patents, and that § 271(e)(2)(C)(ii) also makes reference to the patents in the RPS list: “While it is true that 42 U.S.C. § 262(l)(9)(C) premises the declaration judgment action on “any patent that claims the biological product or a use of the biological product” (emphasis in original), which does not appear to include process patents, 35 U.S.C. § 271(e)(2)(C)(ii) does contemplate an infringement action based on “a patent that could be identified pursuant to [paragraph] (l)(3)(A)(i)” (emphasis in original), which does not exclude process patents. Section 271(e)(2)(C)(ii) allows the RPS to assert process patents, “if the [subsection (k)] applicant . . . fails to provide the application and information” and “the purpose of [the subsection (k)] submission is to obtain approval . . . to engage in the commercial manufacture, use, or sale of a . . . biological product claimed in a patent or the use of which is claimed in a patent before the expiration of such patent.” 35 U.S.C. § 271(e)(2). Amgen, slip op. at n.3.

[13] See Christopher M. Gallo, Looking Forward: Section 337 Investigations as Big Pharma’s New Enforcer, Vol. XXXIV 337 Rep., ITC Trial Law. Ass’n, The Paul J. Luckern Summer Associate Edition 2 (2011); see also 19 U.S.C. §1337(a)(1)(B).

[14] Kinik Co. v. ITC, 362 F.3d 1359, 1363 (Fed. Cir. 2004).

[15] 42 U.S.C. § 262(l)(8). Note that it remains unsettled whether an applicant who initiates the patent dance is required to provide the 180-day notice at all. Amgen, slip op. at 20-21 (Fed. Cir. July 21, 2015) (holding that the notice of commercial notice is mandatory if the applicant fails to provide the biosimilar application and information to initiate the patent dance); see also 42 U.S.C. § 262(l)(9)(B).

[16] 42 U.S.C. § 262(l)(8)(B).

[17] 19 C.F.R. §210.51(b).

[18] eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).

[19] Compare 19 U.S.C. §1337(a)(1)(A) and (B).

[20] See 42 U.S.C. § 262(l)(9)(C); Amgen, slip op. at 12-13 (stating that the BPCIA “specifically sets forth the consequences for such a failure: the RPS may bring an infringement action under 42 U.S.C. § 262(l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii).”).

[21] See 19 C.F.R. §210.27(a).

[22] It is sufficient to obtain Commission jurisdiction if the biosimilar has been sold outside the United States for importation into the United States. This can be in the form of a binding contract even though delivery has not yet occurred. It is an open question whether the ITC has jurisdiction over disputes where sale or importation has not occurred but is imminent. The Federal Circuit has not foreclosed ITC jurisdiction over such claims. See Amgen, Inc. v. Int’l Trade Comm’n, 565 F.3d 846, 853-54 (Fed. Cir. 2009).