Novartis Is Cleared to Sell Biotech Copycat in U.S.

The ruling Tuesday by the U.S. Court of Appeals for the Federal Circuit in Washington came on the same day Switzerland-based Novartis said its second-quarter profit fell 32% amid a strengthened U.S. dollar and a weak result from the company’s eye-care-treatment business.

The court decision clears a way for Novartis to begin sales of Zarxio, a knockoff of cancer supportive-care drug Neupogen, which is sold by Amgen Inc. of the U.S. 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 such as 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 U.S. 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 written 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.”

The company hasn’t yet given a price for Zarxio. In Europe, biosimilars typically cost 15% to 30% less than the brand-name drugs.

Novartis said Tuesday that its net income fell to $1.86 billion for the quarter ended in June, compared with $2.72 billion a year earlier. Core earnings, which strip out one-time events such as impairments or gains, fell 8% to $3.07 billion. Net sales fell 4.5% to $12.7 billion from $13.3 billion.

Updated July 21, 2015 2:54 p.m. ET

—John Letzing contributed to this article.

Write to Jonathan D. Rockoff at [email protected]

Source: Wall Street Journal Health