As we previously reported here, earlier this year the Supreme Court agreed to hear its first case arising under the Biosimilars Price Competition and Innovation Act (“BPCIA”) in the cases of Sandoz v. Amgen and Amgen v. Sandoz.  Our earlier post provides the factual background on this case, which involves Sandoz’s application to market Zarxio®, a biosimilar to Amgen’s Neupogen® (filgrastim) product.

This case is very important in determining how two key provisions of the BPCIA will be interpreted: (1) Can a biosimilar applicant provide an effective 180-day notice of commercial marketing prior to FDA approval (licensure); and (2) Is an injunction available to require a biosimilar applicant to provide the reference product sponsor with a copy of its biologics license application and its manufacturing information (i.e., to take the first step of the “patent dance”)?

Briefing was completed on April 14, 2017, as discussed in this prior article, and we also provided a summary of oral argument in this article.

The Court issued its unanimous decision on June 12, 2017Sandoz Inc. v. Amgen, Inc., 137 S. Ct. 1664 (2017).  The Court provided clear guidance that biosmilar applicants may provide 180-day notice of commercial marketing prior to the FDA’s approval of the application.  This holding means that an applicant that provides early notice of its intent to commercially market a biosimilar product may be able to launch that product immediately upon receiving FDA approval (provided no injunction has been entered pending resolution of patent disputes).

The Court left some open questions, however, regarding whether the biosimilar applicant can unilaterally “opt out” of the BPCIA’s patent dance.  The Court held that Federal law does not provide for an injunction requiring a biosimilar applicant to start the patent dance by providing its application and manufacturing information to the reference product’s sponsor under 42 U.S.C. § 262(l)(2)(A).  The Court left open the possibility, however, that state law (e.g., California’s unfair competition statute) may provide a remedy for the biosimilar applicant’s failure to provide its application to the reference product’s sponsor.

1.Notice of Commercial Marketing Can Be Provided Before the FDA Approves the Application

The BPCIA requires that a biosimilar applicant “shall provide notice to the reference product sponsor not later than 180 days before the date of the first commercial marketing of the biological product licensed under subsection (k).”  42 U.S.C. § 262(l)(8)(A).  The Federal Circuit had interpreted this provision as requiring 180-day notice to be provided following the FDA’s approval of the application, reasoning that phrase “the biological product licensed under subsection (k)”refers only to a product that has already received a license.  Amgen, Inc. v. Sandoz Inc., 794 F.3d 1347, 1357 (Fed. Cir. 2015), rev’d and remanded by Sandoz, 137 S. Ct. 1664.

The Supreme Court disagreed.  The Court held 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.’”  Slip Op. at 16.  The Court therefore held that “the applicant may provide notice either before or after receiving FDA approval.”  Id.

The Court dismissed both sides’ policy arguments, stating that “[t]he plausibility of the contentions on both sides illustrates why such disputes are appropriately addressed to Congress, not the courts.”  Id. at 18.  Interestingly, Justice Breyer’s short concurrence suggests that the FDA could later issue a rulemaking that departs from the Court’s interpretation of the BPCIA in the Sandoz case.  Justice Breyer states his view that “Congress implicitly delegated to the [FDA] authority to interpret [the statutory terms at issue].”  Therefore, Justice Breyer reasons that if, “after greater experience administering this statute,” the FDA “determines that a different interpretation would better serve the statute’s objectives, it may well have the authority to depart from, or modify, today’s interpretation.”

2.Federal Law Does Not Provide for an Injunction Requiring the Biosimilar Applicant to Provide its Application and Marketing Information (to begin the “Patent Dance”), But the Court Left Open the Question of Whether State Law May Provide Such a Remedy

A. The Patent Dance

The Sandoz v. Amgen decision also addresses whether a biosimilar applicant can “opt out” of the patent dance, as Sandoz elected to do in this case.  The patent dance involves a series of steps for the exchange of information between the biosimilar applicant and the sponsor of the reference product that is designed to narrow the issues for patent litigation.  As the Supreme Court explains, “[i]f the parties comply with each step outlined in the BPCIA, they will have the opportunity to litigate the relevant patents before the biosimilar is marketed.”  Sandoz, 137 S. Ct. 1664, Slip Op. at 7.

The steps of the patent dance, set forth in 42 U.S.C. §262(l), are summarized in the chart below.

Note that if the parties take the full time allotted for each step, 250 days will have passed from the FDA’s acceptance of the application until the litigation is filed.  A biosimilar applicant that anticipates receiving FDA approval relatively soon may seek to avoid this lengthy process, despite the various advantages of participating in the patent dance.  The question before the Supreme Court in this case was whether the reference product sponsor can obtain an injunction forcing the biosimilar applicant to provide the information required by § 262(l)(2)(A).

B. No Federal Injunction to Require Participation in the Dance

Although § 262(l)(2)(A) states that the biosimilar applicant “shall provide” the reference product sponsor with a copy of its application and manufacturing information to begin the patent dance, § 262(l)(9) expressly contemplates a situation in which the biosimilar applicant fails to provide its application and manufacturing information.  In that case, the sponsor of the reference product (but not the biosimilar applicant) may immediately bring an action “for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product.”  42 U.S.C. § 262(l)(9)(C).

The Supreme Court held that “[t]he remedy provided by §262(l)(9)(C) excludes all other federal remedies, including injunctive relief.”  Sandoz, Slip Op. at 12.  The Court found the BPCIA’s “carefully crafted and detailed enforcement scheme” evidences that Congress did not intend to authorize other remedies.  Id.

The Federal Circuit had reached the same conclusion that no injunctive relief was available, but under somewhat different reasoning.  The Federal Circuit relied on both 42 U.S.C. § 262(l)(9)(C) and 35 U.S.C. § 271(e), finding those statutes “expressly provide the only remedies for a violation of § 262(l)(2)(A).”  Amgen, 794 F.3d at 1357.  In reaching its conclusion, “the Federal Circuit relied primarily on § 271(e)(4), which states that it provides ‘the only remedies which may be granted by a court for an act of [artificial] infringement.’”  Sandoz, 137 S. Ct. 1664, Slip Op. at 11.

The Supreme Court explained that “[f]ailing to disclose the application and manufacturing information under §262(l)(2)(A)” does not itself constitute an artificial act of infringement under § 271(e)(2)(C)(ii).  Id.  Rather, it is the act of filing the application that constitutes an artificial act of infringement.   The Court explained that 35 U.S.C. 271(e)(2)(C)(ii) “facilitates [the § 262(l)((9)(C) declaratory judgment] action by making it an artificial act of infringement, with respect to any patent that could have been included on the §262(l)(3) lists, to submit a biosimilar application.”  Id. at 7, 11.

Accordingly, § 271(e)(4) does not provide the remedy for failure to disclose an application and manufacturing information under 42 U.S.C. § 262(l)(2)(A).  This is a potentially important distinction because of Amgen’s unfair competition claims under California state law.

C. State Law Claims Remanded

California’s unfair competition law prohibits “any unlawful … business act or practice.”  A practice is considered “unlawful” if it violates a rule in some other state or federal statute.  However, California’s unfair competition law does not provide a remedy when the underlying statute specifies an “expressly … exclusive” remedy.  The Federal Circuit thus rejected Amgen’s state law claims because § 271(e)(4) expressly states that it provides the exclusive remedy for artificial acts of infringement.  See Sandoz, Slip. Op. at 13-14.

The Supreme Court rejected the Federal Circuit’s reasoning, holding “[b]ecause §271(e)(4) provides remedies only for artificial infringement, it provides no remedy at all, much less an ‘expressly … exclusive’ one, for Sandoz’s failure to comply with §262(l)(2)(A).”  Id. at 14.

The Court also declined to rule on the Federal Circuit’s alternative basis for its holding: that Sandoz’s choice not to provide information under 42 U.S.C. § 262(l)(2)(A) was not “unlawful,” because it is a course expressly contemplated by the BPCIA.  The Court held that the issue of whether Sandoz’s conduct is “unlawful” is a state law question, and Federal Circuit had erred by trying to answer it solely by looking to the BPCIA.  Id. at 15.

The Court remanded to the Federal Circuit to determine “whether California law would treat noncompliance with § 262(l)(2)(A) as ‘unlawful,’” and, if so, whether Federal law nonetheless preempts the state law claims.  Id.  Alternatively, the Court noted that the Federal Circuit could first address the pre-emption issue by assuming that a remedy under state law exists.  Id.  The latter course might provide the Federal Circuit with the opportunity to clarify that there are no state law remedies available to require biosimilar applicants to participate in the patent dance—rather than limiting the holding to California law issues.  However, the Federal Circuit noted that “Sandoz did not argue preemption as a defense to Amgen’s state law claims,” so this case may not be the appropriate vehicle for the Federal Circuit to reach a broad preemption holding.

Sandoz has now asked the Federal Circuit to remand the state law claims to district court, rather than determining these questions in the first instance.  Appeal No. 2015-1499, ECF #174 (filed June 29, 2017).  The Federal Circuit has not yet issued an order determining how the remand will be handled.

We will continue to keep you apprised of further developments.