By Jonathan D. Rockoff
A U.S. appeals court ruled Tuesday that Novartis AG could begin
selling the first knockoff of a biotech drug on Sept. 2, a key step
in efforts to contain spending on high-cost therapies through
lower-priced competition.
The ruling by the U.S. Court of Appeals for the Federal Circuit
in Washington clears a way for Novartis to begin sales of Zarxio, a
knockoff of cancer supportive-care drug Neupogen, which is sold by
Amgen Inc. Yet sales might be delayed longer if Amgen opts to
appeal the decision to the U.S. Supreme Court, or wins a related
patent fight against Novartis.
Biotech drugs like Neupogen are among the most expensive
medicines, often costing tens of thousands of dollars a year or
more. Neupogen is given to chemotherapy patients whose immune
systems have been weakened as a result of their cancer treatment.
Some patients receive multiple injections in a week, with each dose
costing between $315 and $500. Neupogen had $839 million in sales
in the U.S. last year.
Unlike standard pills, injected or infused biotech drugs have
long been immune to generic competition because they are
complicated to replicate, and because for many years there was no
regulatory framework for copying them. In an attempt to contain
spending on the therapies, the federal government established under
the 2010 health-care overhaul a regulatory route for drug companies
to sell lower-priced versions of biotech drugs once their patents
expire.
The fight between Novartis and Amgen over sales of a Neupogen
knockoff, or biosimilar, has been an important test case for
working out the kinks in the process. The court ruling Tuesday
could serve as a guide for the handling of other biosimilar drugs
in the works.
Comparing the federal biosimilar law to a famous Winston
Churchill description of Russia, the court said it was trying to
"do our best to unravel the riddle, solve the mystery, and
comprehend the enigma."
In March, the Food and Drug Administration approved Zarxio for
sale. But Amgen has been fighting against the start of sales in the
federal courts, arguing that Novartis failed to follow the timing
and notification terms of a new federal law authorizing biotech
drug copycats.
The federal appeals court rejected Amgen's interpretation of two
of the provisions, a ruling that makes it easier for biosimilar
makers to avoid lengthy legal fights delaying the launch of the
drugs.
Yet the court did read one provision of the federal law in a
manner supporting Amgen's case. It said a provision requiring a
biosimilar maker to notify its rival of its intention to launch a
knockoff drug should effectively delay the start of Zarxio sales
for six months after FDA approval.
Amgen seized on that win in a statement, but said it didn't have
any comment on whether it would appeal the appellate court's
ruling, or take further action on a related patent infringement
case it has filed against Novartis, which is pending.
The patent claim could delay sales further. In addition, Ronny
Gal, an analyst at Sanford C. Bernstein & Co., said he was
"reasonably certain" that Amgen will appeal Tuesday's ruling to the
Supreme Court, but far less certain the high court would take the
case.
If the decision stands, it would give a boost to biosimilar
makers while hurting "large drug companies with aging blockbuster
products which may find it more challenging to delay biosimilars,"
Mr. Gal said in a research note to investors.
Novartis, whose Sandoz generics unit will sell Zarxio, said the
ruling vindicated its arguments, and that the company is looking
forward to launching Zarxio "as the first U.S. biosimilar."
Novartis hasn't yet given a price for Zarxio. In Europe,
biosimilars typically cost 15% to 30% less than the brand-name
drugs.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com
Access Investor Kit for Novartis AG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CH0012005267
Access Investor Kit for Amgen, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0311621009
Access Investor Kit for Novartis AG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US66987V1098
Subscribe to WSJ: http://online.wsj.com?mod=djnwires