Findings that U.S. companies can sue foreign rivals despite limited business operations in the country could dissuade drug developers from targeting the U.S. market, potentially benefiting domestic producers of biosimilars.
In January of this year, the Federal Circuit appellate court found that international biosimilar companies can be sued in the United States despite limited domestic connections. The pair of cases at issue involved companies that had no offices, employees or direct sales teams in the U.S. Nonetheless, the court found it was enough that they had filed abbreviated biologics license applications (aBLAs) and shown an intent for the finished products to eventually be marketed in the states.
The decisions marked the first time the court considered the effect filing an application to market a biosimilar product in the U.S. has on companies’ ability to sue foreign rivals in domestic courts. As an attorney focused on intellectual property who advises clients in the pharmaceutical industry, it’s clear that international biosimilars companies should take particular note when assessing their own litigation risks when doing business in the U.S. Indeed, those risks may be a deciding factor in whether such companies ultimately market their products here.
The Patent Infringement Lawsuits
The plaintiff in each case that came before the Federal Circuit appellate court was Regeneron, which holds the BLA for Eylea. Alleging patent infringement, Regeneron sued several companies, including Samsung Bioepis and Formycon, that had filed aBLAs with the FDA seeking approval under the Biologics Price Competition and Innovation Act (BPCIA) to market Eylea biosimilars. The cases were consolidated in the Northern District of West Virginia, which issued a preliminary injunction barring Samsung and Formycon from commercializing the products described in their aBLAs. Samsung and Formycon objected, including on the basis that they should not be subject to suit in the U.S.
Apart from the aBLAs, Samsung and Formycon have few direct connections with the U.S. Samsung is headquartered in South Korea and Formycon is based in Germany, and neither have facilities or employees in the U.S., nor business relationships in West Virginia. Neither company has plans to directly sell the finished product in the U.S.; the drugs would instead be sold through partners.
The Federal Circuit’s Analysis
Under the U.S. Constitution, a defendant is not subject to suit in a particular state unless it has sufficient “minimum contacts” there. The application of this standard to cases filed before the proposed products are on the market is not straightforward, and the court looked beyond the parties’ existing contacts and focused on their intent for future product distribution.
The court observed that Samsung Bioepis had filed an aBLA; had served Regeneron with a Notice of Commercial Marketing, which communicated an intent to market upon FDA approval; had engaged various partners within the U.S.; and had entered into a nationwide distribution agreement with a U.S. company, retaining “significant involvement” in commercialization activities.
The court similarly found that Formycon intended to market its finished product in West Virginia and other states. As with Samsung, the court relied on Formycon’s filing of its aBLA, service of Notice of Commercial Marketing, and partnering with U.S. companies to manufacture, package and label its product. Although Formycon had not yet entered into an agreement with a marketing partner, the court found Formycon intended to ultimately distribute the finished product nationwide.
Thus, the combination of filing an aBLA and the intent for the product to eventually be distributed was sufficient “minimum contacts” to subject the parties to suit in the U.S., and West Virginia in particular.
Potential Broader Effects on International Biosimilars Companies
The court’s decisions could have implications for biosimilar business development both domestically and abroad. Biosimilars are a lucrative market and consequently carry a risk of substantial liability in the event of an at-risk launch. To the extent that development or manufacturing was shifted abroad to reduce the risk of U.S. liability for the filer, these recent court rulings undermine this incentive and thus may ultimately promote domestic operations.
In an effort to avoid jurisdiction, international biosimilar developers may work to minimize connections with the U.S., including relying less on U.S. partners for development, manufacturing, packaging and labeling. These companies may also choose to structure relationships so that a domestic marketing partner responsible for sales is the sole avenue of recourse for damages.
