By Stacie Ropka, Ph.D., Drew Alan Hillier, and Aaron Savit, Ph.D., Axinn, Veltrop & Harkrider LLP
As follow-on biologics litigation expands, and the FDA provides additional information on the approval process for follow-on biologics,1 industry and observers are gaining clarity on how the Biologics Price Competition and Innovation Act (BPCIA) functions in practice. This article provides insight into two recent developments that will impact strategic and economic considerations for biologics developers. First, a recent ruling from an influential Federal District Court could provide a new incentive to pursue interchangeable status for developers of follow-on biologics. Second, a recent Supreme Court case about the on-sale bar changes how challengers and patentees approach patent portfolios.
Interchangeability For Follow-On Biologics: New Strategies And Lower Costs
The interchangeable designation allows pharmacists to substitute the follow-on biologic in place of the reference product (i.e., the brand product) without an explicit instruction from the prescribing doctor. By contrast, a biosimilar follow-on biologic may not be given in place of the reference product unless it is specifically indicated by the prescribing physician.2 To date, although the FDA recently issued final guidelines for pursuing an interchangeable designation,3 no interchangeable follow-on biologics have been approved in the United States. Only one company has publicly disclosed that it is pursuing the certification.4 Recent developments in patent litigation might encourage follow-on biologics developers to pursue a determination of interchangeability.
A Recent Ruling On Induced Infringement Provides New Strategies
A case out of the United States District Court for the District of Delaware before Chief Judge Stark provides a novel strategy for defending against a charge of induced infringement for follow-on biologics developers. Unlike direct infringement, which involves a party itself infringing a patent, induced infringement involves persuading another person to make, use, or sell a patented invention without authorization. In this case, the patentee argued that an indication of use on the generic label should be taken as evidence of induced infringement.5 Because the small molecule generic was already on the market, the patentee had to prove that the information contained in the generic label actually induced others to infringe the patents.6 The court found no evidence that the generic label had actually induced others to infringe, but instead determined that prescribing physicians based their actions on documents not attributable to the generic manufacturer, including the brand’s own label and marketing materials, research studies, and professional guidelines.7
Judge Stark’s decision, which is on appeal to the Federal Circuit, might have a bigger impact on follow-on biologics litigation for at least two reasons. First, many, if not most, patents typically at issue in BPCIA litigation are directed to methods of use, which tend to be enforced by patentees under an induced infringement theory. Second, Judge Stark’s analysis arguably makes it harder to prove that follow-on biologics that have already come to market will induce infringement. Under the rule, a patentee must show that the follow-on label is an actual cause of infringement in post-launch-suits – as opposed to industry research, professional guidelines, or the brand’s label. Follow-on biologics developers will be able to take advantage of this new rule because, unlike most small molecule generics litigated under Hatch Waxman, follow-on biologics can be brought to market before the resolution of patent litigation. Thus, follow-on biologics developers might decide that pursuing an at-risk launch is advantageous, at least because it will provide a potent defense to an accusation of patent infringement.
Judge Stark’s ruling also presents strategic considerations for follow-on developers as they decide whether to pursue interchangeable status. Without an interchangeability designation, a follow-on biologic must be specifically prescribed by a physician in place of the reference product. An interchangeable biologic, on the other hand, is more like the generic small molecule at issue in Judge Stark’s opinion because both can generally be freely substituted for the reference product at the pharmacy. Once the interchangeable product is on the market, the developer will have a stronger argument that its label does not actually cause inducement because any alleged infringement can be attributed to preestablished prescribing and usage behavior by the medical community. For example, a physician might read the reference product label and prescribe the reference product, but the pharmacist may provide the interchangeable follow-on biologic without the physician’s knowledge. This arguably makes it harder to prove that the interchangeable label is a cause of allegedly infringing activity.
If Judge Stark’s holdings survive appeal to the Federal Circuit, developers will have a stronger incentive to pursue interchangeability.
The On-Sale Bar: Emergent Liabilities
In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., the United States Supreme Court held that secret sales between companies trigger the on-sale bar under the America Invents Act.8 The on-sale bar means that an alleged invention is not eligible for a patent if it has been “on sale” for over a year prior to the filing date.9
A secret sale refers to the sale of an invention to a third party who must keep the invention confidential.10 Both follow-on biologics and reference product developers often enter into confidential agreements with third parties involved in the research, development, and manufacturing of biologics. For example, confidential sales of the formulation to a contract manufacturing group or prior agreements to produce biologics under a later-patented method of manufacture have the potential to inadvertently create a secret sale.
To avoid running afoul of the on-sale bar, Helsinn confirms that follow-on biologics developers and reference product sponsors must maintain diligence in filing for patent protection as early as possible in the product development process. Once patent dispute resolution under BPCIA begins, the Helsinn ruling might also impact which patents a reference product sponsor chooses to assert during litigation, if there is discoverable information that raises issues with the on-sale bar. Likewise, follow-on biologics applicants might prioritize certain patents as they negotiate the scope of litigation if they believe that discovery will reveal confidential sales that trigger the on-sale bar.11
All players in the biologics industry should be aware of these recent developments. If the Federal Circuit preserves Judge Stark’s ruling, litigants can rely on that precedent to argue that an FDA interchangeability certification favors the follow-on biologics developer in many cases of induced infringement. This holding may inform aggressive business strategies for developers of follow-on biologics by encouraging the pursuit of an interchangeability designation together with an at-risk launch. In exchange for bringing a product to market with the ongoing risk of litigation, follow-on developers might force patentees to face a potentially more challenging proof for induced infringement. Thus, it may make good business sense for developers of follow-on biologics to avoid the cost of the patent dance and go to market quickly with an interchangeable designation for their product. Finally, the Supreme Court’s recent pronouncement about the on-sale bar provides fertile ground for new strategies for follow-on biologics developers and reference product sponsors alike. The ruling provides intriguing opportunities for follow-on developers to invalidate patents asserted during the patent dance, while at the same time counseling against entering into commercial agreements before seeking appropriate patent protection.
About The Authors:
Stacie Ropka, Ph.D., is a partner at Axinn. Her practice focuses on intellectual property litigation, due diligence, and client counseling, with an emphasis on the life sciences. Ropka’s experience includes extensive counseling for product development efforts relating to biologics and reconstructive biomaterials, including products that utilize adult stem cells. Prior to attending law school, she held a faculty position at SUNY Upstate Medical University, and she also spent many years as a research scientist in the fields of neurology, virology, and immunology.
Drew Hillier is an associate at Axinn. He litigates patent cases and high-stakes commercial disputes. His experience includes advising follow-on biologic manufacturers on product development and litigation strategy. As a former federal law clerk, Hillier has litigated patent-related cases in some of the highest-profile districts in the country, including the Southern District of New York and the Eastern District of Texas.
Aaron Savit, Ph.D., is a summer associate in the Intellectual Property practice at Axinn.