A high-stakes case pitting Amgen against Novartis' Sandoz kicked off in court this week, with potential to change the course of Amgen's multi-billion dollar Enbrel business and shake up the biosimilars market in the U.S.
A district court in New Jersey will in coming weeks hear arguments from the pharma giants over whether or not patents related to the blockbuster Enbrel are valid and applicable in protecting it from biosimilar competition.
The U.S. biosimilar market has been slow to develop in no small part due to the murky legal foundation set by the Biologics Price Competition and Innovation Act of 2009 (BPCIA), experts said in interviews with BioPharma Dive. Legal squabbling among drugmakers has revved up since the Food and Drug Administration began approving copies of biologics.
Health and Human Services Secretary Alex Azar touched on the hope regulators hold out for the promise of the drugs helping ease healthcare costs at a summit on Thursday on value-cased care, highlighting the still fragile market.
"Nowhere is competition more urgently needed than in high-cost drug areas like biologics," Azar said.
FDA Commissioner Scott Gottlieb has laid blame on litigation for delaying market access, adding that his agency had approved 11 biosimilars at that time, yet only three were being marketed in the U.S. One of those 11 was Sandoz's Erelzi (etanercept-szzs), which won approval in August 2016. More than two years later, it still hasn't been launched commercially.
Jefferies analyst Michael Yee said this biosimilar lawsuit is a top development to watch for Amgen and the pharma industry overall heading into 2019.
"This is not widely appreciated by [Wall] Street," Yee said in a Sept. 9 video. "You are going to start hearing about this, and if Amgen loses there's downside."
Enbrel's profitable rise
After launching in 1998, Enbrel (etanercept) grew into a blockbuster drug for Amgen, gaining additional approvals over the years in plaque psoriasis, psoriatic arthritis and others.
Over the past three years, it's accounted for between 25% and 30% of Amgen's total product sales, earning $5.4 billion last year. So far in 2018, the biologic has posted $2.4 billion in sales. The investment bank Leerink forecasts Enbrel to sell $5 billion this year and $4.6 billion in 2019.
Sandoz's copycat version is a threat to that lucrative revenue stream. A few months after Erelzi's 2015 OK, Amgen sued on patent infringement grounds.
Amgen's blockbuster already faces two marketed biosimilars in Europe, which have cut into sales at a rapid rate of 6% per quarter over the past two years, according to Leerink.
Now, a bench trial in New Jersey raises the threat faced by Amgen in the U.S., which accounted for more than 95% of total Enbrel sales last year.
A win for Amgen could help extend its profitable monopoly further into the life of its remaining patents, one of which expires in 2029. For Sandoz, a court victory would find Amgen's patents invalid or not infringed, potentially clearing the path to U.S. market for its biosimilar without risk of damages.
"This sounds scary," Yee said. "If Amgen loses the court case in first half of '19, Sandoz could launch a biosimilar in the face of Amgen and it is not in consensus numbers."
Déjà vu all over again
This isn't the first Sandoz v. Amgen biosimilar case of importance.
In June 2017, the Supreme Court shined "a small torch of clarity" on aspects of the BPCIA by weighing in on a previous battle between the two companies, said Dominic Adair, a patent lawyer for Bristows LLP, in an interview.
In that case, the top U.S. court deemed voluntary the so-called patent dance, which describes the process by which both parties exchange information about the biologic and relevant patents. The Supreme Court also said a required 180-day notice of commercial marketing from the biosimilar applicant can happen prior to FDA approval, enabling a quicker launch.
Similar to the previous case, legal experts anticipate ramifications from a new ruling in biosimilars to ripple through the market. What the previous decision was to the patent dance and 180-day period, this case could become for label carve-outs if a ruling is reached.
"Judge Cecci's decision on the role of label carve-outs would be a first," patent lawyers Michael R. McDonald and Jordan Engelhardt wrote in a June blog post, "and may have important implications for innovators and biosimilar makers alike in biosimilar litigation."
Label carve-outs describe the idea that a copycat drug could aim for a single indication of a branded product, potentially side-stepping valid patents on remaining indications.
Enbrel, for example, is approved for five indications. Patents listed in Amgen's annual filing with the Securities and Exchange Commission include one covering Enbrel's "methods of treating psoriasis" that runs through August 2019.
"Other biosimilar developers are interested in the label carve-out strategy," Nicholas Mitrokostas, a partner in the law firm Goodwin Procter's intellectual property litigation group, told BioPharma Dive. "If the court finds infringement with respect to Sandoz, that could impact what other developers are doing in terms of their own strategies with their own biosimilar products."
As far as how this case will play out, Yee, the Jefferies analyst, predicted the two drugmakers will reach a settlement for entry in 2023, when Amgen plans to launch a biosimilar to AbbVie's Humira in the same class of drugs.
Settling to hedge risk of an unfavorable verdict makes it a common outcome in big-stakes pharma litigation where billions of dollars on the line.
Yet, a settlement would avoid clearing up the ambiguity that remains in domestic biosimilar law, while other countries have pushed ahead the U.S.
"The most developed countries like the U.S. are lagging behind the traditionally less well-developed countries in Asia and Europe in terms of developing law in this area," Adair said.
The chief executive of the Swiss pharmaceutical giant Novartis called the biosimilar space "a tale of two worlds" between the U.S. and Europe in a Feb. 1 earnings call.
"[The U.S.] is a healthcare system that desperately needs biosimilars to be successful to create fiscal space for new medicines," Vas Narasimhan said then.
Mitrokostas, the Goodwin patent lawyer, said analyzing the case was like "reading tea leaves," in part because of a lack of much information and heavy redactions in what is available.
He added a court decision following trial could be expected by early 2019.
"Nobody wants to lose," Adair said, speaking general on such suits. "They'd rather reach a deal."
Correction: A previous version of this article misidentified when Sandoz's biosimilar version of Enbrel was approved. The drug won approval in August 2016.