Biosimilars Litigation: When Safe Harbor Is Not Safe

A safe harbor in the maritime world is a relatively calm place to drop anchor during a storm. In the world of biologics, safe harbor is a legal provision that allows use of an originator product to help develop biosimilars without danger of patent infringement.

However, case law shows that correctly interpreting safe harbor has been challenging for some. Biosimilar developers are treading cautiously following a 2019 ruling that slapped Hospira with a $70 million penalty for legally unprotected use of Amgen’s epoetin alfa (Epogen).

This is among recent developments that are shaping litigation in biosimilars, according to Rob Cerwinski, JD, a partner in Goodwin’s Intellectual Property (IP) Litigation group who coauthored the updated Guide to Biosimilars Litigation and Regulation in the US, 2020-2021 with Alexandra Valenti, JD, also a partner in the IP Litigation group.

The above-mentioned case involved Hospira’s manufacture of 21 batches of a biosimilar candidate referencing Epogen. Just 7 of the batches were ruled to be necessary for a biologics license application (BLA) for approval of the drug and the remainder were judged to be for commercial use, which was not protected.

“That kind of liability for premarket, preauthorization manufacturing was definitely something that everybody watched very carefully, so I think as a consequence of that ruling, everyone is scrutinizing whether any of their preapproval activities could be held to be commercial instead of purely in support of the FDA regulatory process,” Cerwinski said.

A related issue is the use of patented material by a biosimilar sponsor to comply with FDA postapproval reporting and disclosure requirements. It’s unclear whether safe harbor covers a biosimilar developer for this type of use. “What we’ve seen is some confusion. Sometimes it does, sometimes it doesn’t,” he said.

California’s New Pay-to-Delay Law

Antitrust concerns have long been a concern in the biosimilars area because various barriers, such as excessive patenting, product rebates, and misinformation, are perceived to prevent the smooth and rapid uptake of lower-cost biosimilars in markets dominated by originator brands. Many will be watching California’s new pay-for-delay statute, which went into effect January 1, 2020, and was the first state law aimed at thwarting the practice of originators paying generics and biosimilar manufacturers not to market their products, Cerwinski said.

“Will we see actions on the state level by California asserting the statutory authority it now has under that so-called pay-for-delay statute? And if, in fact, California does bring pay-for-delay suits and there are settlements that earn money for California, will we see other states enact similar legislation? I think there are some very interesting issues to watch on the state level on this issue,” he said.

On the federal level, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) require pharmaceutical companies to report patent litigation settlements to the FTC and DOJ for antitrust scrutiny, he noted. Similarly, the new California law requires pharmaceutical companies to report patent litigation suits to state regulatory authorities. “The statutory scheme that California has set up for how it will scrutinize those settlements is somewhat different than the federal rules/case law/practice that we’ve been living with for a number of years now. So, it’s a second layer of somewhat different regulation of these patent settlements that has really caused quite a ripple in the industry,” Cerwinski said.

Manufacturing Process Disclosure

The Biologics Price Competition and Innovation Act contains a pathway for biosimilar approval that anticipated the growing dominance of biologics in medicine and the need for lower-cost versions of these products. Companies appear to be getting used to the process of hammering out patent disputes prior FDA approval of biosimilars (aka, the patent dance); however, some issues still need clarification, such as the extent of manufacturing process information that must be disclosed to the originator company by the biosimilar developer.

“Is there really any requirement to disclose manufacturing information beyond the detailed information that’s in the BLA? I think parties still struggle with that,” Cerwinski said. “There are still attempts by the reference product sponsors to demand wholesale pre-suit discovery, using that provision. And there are attempts by biosimilar applicants to resist that and simply produce the application, saying, ‘Look, all the information that’s relevant to our manufacturing process is in there.‘ And we haven’t really seen a case to [definitively] resolve that ambiguity in the statute definitively yet.”

Another grey area is the conditions under which a biosimilar maker must reissue a 180-day notice of intent to begin marketing (Notice of Commercial Marketing). Changes to the biologics application and other developments appear to have the potential to trigger such an event and also may require a new patent dance, “but where exactly that line is has not been resolved,” Cerwinski said. “It’s going to take the right case with the right facts in order for the Federal Circuit to resolve this issue.”

Cerwinski and Valenti also have observed a complexity in biosimilars litigation that is commensurate with the complexity of manufacturing these agents vs generics. Biosimilars are covered by many more patents, such as patents for substance combinations (aka composition of matter), methods of use, dosage strength, dosage intervals, devices such as syringes and vials, and impurities and protein charge variation. “That means lots of experts and often-protracted litigation timetables, and what we’ve seen here are very complicated injunction motions that often look like miniature trials,” Cerwinski said.

For a video discussion by Cerwinski and Valenti on other updates to the Guide to Biosimilars litigation and Regulation in the US, 2020-2021, click here.