Here are our picks for the top five most significant legal developments of 2018 that may impact the biosimilar industry:
1. New Law Requiring FTC/DOJ Review Of Biosimilar Patent Litigation Settlements
With the enactment of the Patient Right to Know Drug Prices Act, biosimilar applicants and reference product sponsors must file patent settlement agreements with the Federal Trade Commission and the U.S. Department of Justice for review. This imposes the same requirements required of Hatch-Waxman litigation regarding generic pharmaceuticals, so that the government may review settlement agreements for anticompetitive conduct. The enactment of this new law reflects concerns of anticompetitive agreements that delay biosimilar availability.
2. Major IPR-related decisions:
- Oil States: IPRs Do Not Violate Article III Or Seventh Amendment
The Supreme Court held in a 7-2 decision that IPR proceedings do not violate Article III or the Seventh Amendment of the United States Constitution. The Court explained that patents are governed by the “public-rights doctrine,” and are public franchises that are granted by the executive branch without determination by an Article III court. The Court further explained that the US Patent and Trademark Office (USPTO) can cancel patents, and patent owners have no right to a jury trial under the Seventh Amendment.
- SAS: No Partial Institutions In IPRs
The Supreme Court held in a 5-4 decision that if the USPTO institutes an IPR, it must decide the patentability of all challenged claims, reversing the Federal Circuit. According to the Court, the plain text of 35 U.S.C. §318(a) requires that the USPTO address all challenged claims in a final written decision. This decision upended IPR practice, as the USPTO no longer institutes IPRs on only some of the challenged claims or some of the challenged grounds. Following SAS, institution decisions are binary: the USPTO either institutes on all challenged claims and grounds, or declines to institute the entire petition.
- St. Regis: No Tribal Immunity In IPRs
The Federal Circuit decided that tribal immunity is a bar to institution of an IPR. In the underlying case, Allergan had transferred title to its patents to the St. Regis Mohawk Tribe, and then sought to terminate IPRs filed by Mylan, Inc. on the basis of tribal immunity. The court held that IPRs are more like agency enforcement actions from the executive branch, and less like to civil suits brought by individuals, and as such, tribal immunity does not apply. The court’s ruling limited its application to tribal immunity, and left open the question of whether state sovereign immunity is applicable in IPRs.
3. Janssen’s Motion to Dismiss Pfizer’s Remicade Antitrust Complaint Denied
Janssen sought to dismiss Pfizer’s antitrust complaint, which alleges an anticompetitive scheme to protect Janssen’s Remicade® (infliximab) product. Janssen argued that Pfizer did not plead facts that Janssen’s rebate and discounts are the cause of poor sales of Pfizer’s infliximab biosimilar, Inflectra®. The district court for the Eastern District of Pennsylvania ruled that Pfizer’s allegations of anticompetitive conduct were sufficient at this stage: Pfizer alleged that it had priced its biosimilar lower than Janssen’s Remicade®, and alleged that Remicade®’s average sales price continues to increase despite Inflectra®’s lower per unit cost. The FDA itself has raised concerns about uses of rebates to exclude biosimilar competition. This case will be closely watched by biosimilar applicants concerned about market share.
4. Federal District Court in Texas Rules that Entire ACA is Invalid
The federal district court for the Northern District of Texas issued an order declaring that the individual mandate of the Affordable Care Act (ACA, commonly referred to as “Obamacare”) is unconstitutional, that the remaining provisions of the ACA are not severable from the mandate provision, and that the entirety of the ACA (which includes the Biologics Price Competition and Innovation Act (BPCIA) provisions that set out a biosimilar approval pathway) is therefore invalid. However, the court did not grant an injunction, so the ACA remains in effect. The decision also does not affect non-parties to the litigation. Given the stakes of the outcome, this decision is expected to be appealed to the U.S. Court of Appeals for the Fifth Circuit, and then the Supreme Court.
5. Proposed Amendment to Hatch-Waxman and BPCIA Could Curb IPRs by Generic and Biosimilar Applicants
Senator Orrin Hatch (R-UT), co-author Hatch-Waxman Act, proposed an amendment in the Senate Judiciary Committee to modify the IPR and PGR process for pharmaceuticals. The amendment, titled the Hatch-Waxman Integrity Act of 2018, would require biosimilar applicants to certify in their application that, for any patent that could be included in the list of potentially infringed patents to be supplied by the reference product sponsor, the biosimilar applicant has not and will not file an IPR or PGR challenging the potentially listed patents. Hatch’s press release stated that “generic drug and biosimilars manufacturers have increasingly used the IPR process to circumvent the Hatch-Waxman Act and BPCIA patent challenge processes while nonetheless taking advantage of their abbreviated processes for drug entry.” If enacted, this procedure would significantly limit opportunities for biosimilar applicants to invalidate patents.
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