United States: Supreme Court Construes Key Provisions Of Biosimilar Statute

On June 12, 2017, the United States Supreme Court issued a unanimous opinion, written by Justice Thomas, in Sandoz, Inc. v. Amgen, Inc.,¹ marking the High Court's first decision construing the Biologics Price Competition and Innovation Act of 2009 (the BPCIA). The BPCIA, codified under 42 U.S.C. § 262, governs the approval of a "biosimilar" version of a previously licensed biologic product (a reference product) of a manufacturer (a reference product sponsor). The BPCIA sets forth a complex scheme for the exchange of product and patent information between the biosimilar applicant and the reference product sponsor which is intended to provide a pathway to resolve patent disputes, including through patent litigation.

The Court addressed two key provisions under the BPCIA. The first provision, § 262 (l)(2)(A), provides that a biosimilar applicant "shall provide" to the reference product sponsor its biosimilar application and its manufacturing information within 20 days after the Food and Drug Administration (FDA) accepts the application. On this issue, the Supreme Court held that the provision is not enforceable by injunctive relief under federal law, but remanded for a determination as to whether injunctive relief is available under state law. The second provision, § 262 (l)(8)(A), provides that a biosimilar applicant "shall provide" to the reference product sponsor notice at least 180 days "before the date of the first commercial marketing of the biological product licensed under subsection (k) [the subsection directed to biosimilar applications]." On this issue, the Supreme Court held that a biosimilar applicant may provide notice of commercial marketing before FDA approval of the biosimilar application.

In the case, Sandoz had filed an application with the FDA for approval to market a biosimilar of Amgen's reference product, Neulasta^® (filgrastim), under the brand name Zarxio^®. Although Sandoz had notified Amgen of the filing of its biosimilar application, it declined to provide its application and manufacturing information under § 262 (l)(2)(A) and informed Amgen that it intended to market its biosimilar product immediately upon receiving FDA approval. Sandoz further informed Amgen that Amgen could sue for patent infringement immediately under § 262 (l)(9)(C), which provides that a reference product sponsor can bring a declaratory judgment action against a biosimilar applicant which "fails to provide the application and information required under paragraph (2)(A)."

Amgen sued Sandoz in the United States District Court for the Northern District of California for patent infringement and also asserted two claims under California state unfair competition law. Amgen alleged that Sandoz engaged in "unlawful" conduct when it failed to provide its biosimilar application and manufacturing information under § 262 (l)(2)(A), and also when it provided its notice of commercial marketing under § 262 (l)(8)(A) before, rather than after, its biosimilar application was approved by the FDA. Amgen sought injunctive relief to enforce both provisions of the BPCIA that it accused Sandoz of violating. Sandoz counterclaimed for declaratory judgment that the asserted patent was invalid and not infringed, and that it had not violated the BPCIA.

The District Court granted Sandoz partial summary judgment on the BPCIA claims and dismissed Amgen's state law unfair competition claims. Thereafter, a divided Court of Appeals for the Federal Circuit² held that an injunction under federal law was not available to enforce § 262 (l)(2)(A) where the biosimilar applicant does not provide the reference product sponsor with its biosimilar application or manufacturing information, but that the 180-day notice of commercial marketing under § 262 (l)(8)(A) could not be provided until after the biosimilar application is approved and that the provision could be enforced by injunctive relief.

After the FDA licensed Sandoz's biosimilar application while the action was pending, Sandoz gave Amgen a second notice of commercial marketing. The Federal Circuit enjoined Sandoz from marketing its approved biosimilar product until 180 days after it provided its second notice of commercial marketing.

The Supreme Court granted certiorari, heard oral argument on April 26, 2017, and issued its unanimous opinion on June 12, 2017.

The Supreme Court affirmed the Federal Circuit's decision that § 262 (l)(2)(A)'s requirement that the biosimilar applicant provide its biosimilar application and manufacturing information was not enforceable under federal law by injunctive relief. In reaching this decision, the Supreme Court concluded that § 262 (l)(9)(C) authorizes the reference product sponsor to bring an immediate declaratory judgment action when the biosimilar applicant fails to provide the required information³ and that "[t]he remedy provided by § 262 (l)(9)(C) excludes all other federal remedies, including injunctive relief."⁴ However, the Supreme Court remanded the issue of whether injunctive relief was available under state law. The Supreme Court reasoned that whether the disclosure requirement of § 262 (l)(2)(A) is mandatory or conditional is an issue of state law, and if mandatory, a violation of the provision could be "unlawful" under state law. The Supreme Court further stated that if on remand the Federal Circuit determines that noncompliance with § 262 (l)(2)(A) is unlawful under California law, the Federal Circuit should proceed to determine whether the BPCIA preempts any additional remedy available under state law. The Supreme Court added that the Federal Circuit "is also of course free to address the pre-emption question first by assuming that a remedy under state law exists."⁵

In reversing the Federal Circuit's decision that § 262 (l)(8)(A)'s 180-day notice of commercial manufacturing could only be provided after the FDA approved the biosimilar application, the Supreme Court rejected the Federal Circuit's construction based on the use of the term "licensed" in the provision. Whereas the Federal Circuit had concluded that the term "licensed" meant that the FDA had to have licensed the biosimilar product before the 180-day notice under § 262 (l)(8)(A) could be given, the Supreme Court concluded that "[t]he statute's use of the word 'licensed' merely reflects the fact that, on the 'date of the first commercial marketing,' the product must be licensed."⁶ The Supreme Court therefore held that Sandoz had "fully complied with § 262 (l)(8)(A) when it first gave notice (before licensure)" and that "the Federal Circuit erred in issuing a federal injunction prohibiting Sandoz from marketing Zarxio until 180 days after licensure."⁷ Furthermore, because Amgen's state law claims were predicated on its argument that the BPCIA forbid prelicensure notice, the state law claims also failed.

Justice Breyer, in a concurring opinion, stated that "Congress implicitly delegated to the Food and Drug Administration authority to interpret [the] same terms" that the Supreme Court interpreted in its opinion, and set forth his understanding that the FDA "may well have the authority to depart from, or to modify, today's interpretation" of the BPCIA.⁸

Footnotes

1. 582 U.S. ___ (June 12, 2017), No. 15-1039.

2. Amgen Inc. v. Sandoz Inc., 794 F.3d 1347 (Fed. Cir. 2015). The majority opinion of the Federal Circuit was written by Judge Lourie. Judges Newman and Chen concurred-in-part and dissented-in-part on different aspects of the majority opinion.

3. The Supreme Court disagreed with the Federal Circuit's alternative holding that 35 U.S.C. § 271(e)(2)(C)(ii) precluded enforcing § 262 (l)(2)(A) by federal injunction. The Supreme Court noted that § 271(e)(2)(C)(ii), which made the filing of a biosimilar application an act of patent infringement, did not also make an act of infringement, as the Federal Circuit had concluded, the failure to provide the biosimilar application and manufacturing information. Accordingly, the Supreme Court concluded that only § 262 (l)(9)(C), and not § 271(e)(2)(C)(ii), provided a remedy for a biosimilar applicant failing to provide its application and manufacturing information. Sandoz, slip op. at 11-12.

4. Id. at 12. In a footnote, the Supreme Court stated that "we express no view on whether a district court could take into account an applicant's violation of § 262 (l)(2)(A) (or any other BPCIA procedural requirement) in deciding whether to grant a preliminary injunction under 35 U.S.C. § 271 (e)(4)(B) or § 283 against marketing the biosimilar," citing case authority on a court's consideration of the "balance of equities" in deciding whether to grant a preliminary injunction. Id. at 13 n.2.

5. Id. at 15.

6. Id. at 16. The Supreme Court noted that § 262 (l)(8)(A) had only one timing requirement (that the biosimilar applicant had to provide notice at least 180 days prior to commercial marketing), whereas the Federal Circuit had interpreted the provision as having two timing requirements (the biosimilar applicant must provide notice after licensing and at least 180 days before commercial marketing). The Supreme Court pointed to another to another provision, § 262 (l)(8)(B), which did have two timing requirements as support for its interpretation that Congress only intended a single timing requirement for § 262 (l)(8)(A).

7. Id. at 16.

8. Id. at 1 (Breyer, J. concurring).

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