Yesterday, before a packed courtroom, Judges Newman, Lourie, and Chen of the U.S. Court of Appeals for the Federal Circuit heard oral arguments in Amgen Inc. v. Sandoz Inc., No. 2015-1499 (Fed. Cir. June 3, 2015), concerning the proper interpretation of two provisions of the Biologics Price Competition and Innovation Act (BPCIA). See 42 U.S.C. § 262(k), (l). In particular, the Federal Circuit is tasked with deciding two issues: 1) whether, as Amgen contends, the BPCIA requires Sandoz, and other biosimilar applicants, to provide a complete copy of their biosimilar application and manufacturing information within 20 days after the U.S. Food and Drug Administration (FDA) accepts the application, and 2) whether Sandoz’s 180-day notice of commercial marketing was premature, as it was provided before the FDA approved and licensed Zarxio® (filgrastim-sndz), Sandoz’s biosimilar to Amgen’s Neupogen® product (filgrastim). These issues provide the Federal Circuit with its first real opportunity to substantively interpret the provisions of the BPCIA.

Counsel for Amgen summarized its position by stating that the “fundamental problem” with Sandoz’s interpretation of the BPCIA is that Sandoz wants to follow the provisions of the BPCIA that it likes, but not the provisions it does not like. According to Amgen, if Sandoz wants to benefit from the abbreviated application provisions of the BPCIA, then it should also be required to abide by the notice and exchange provisions. Sandoz, however, took the position that the BPCIA provides for a series of “if-then” scenarios that a biosimilar applicant must consider. According to Sandoz’s counsel, the patent and information exchange provisions in subsection (l) are independent of the abbreviated approval pathway set forth in subsection (k), and the “shall” language in subsection (l)(2)(A) really means “may,” making the provision optional.

Subsection (l)(2): Disclosure of the biosimilar application and manufacturing information

Judges Newman and Chen expressed some concern with Sandoz’s position that the term “shall” in subsection (l)(2)(A) of the BPCIA means “may,” and is not mandatory on a biosimilar applicant. Judge Chen called Sandoz’s interpretation the “choose your own adventure” option, and Judge Newman asked why Congress would use the word “shall” if they really meant “may.”

Judge Newman wanted to know whether interpreting “shall” to mean “may” would give rise to “stealth” biosimilar applicants that would be in position to launch their product without the reference product sponsor knowing. Indeed, Judge Newman questioned whether that was the intent of the statute, stating that “it is hard to make sense of the statute with [Sandoz’s] interpretation.” Amgen agreed, and Sandoz also acknowledged the possibility of “stealth” applicants if the notice provisions of the BPCIA were optional. But on that point, Sandoz indicated that such a scenario might be unlikely given the high cost of entering the market and the potential for significant damages if the applicant were found to infringe a valid patent covering the biologic.

Judge Lourie noted that in most instances, “shall” does mean “shall,” but in the context of subsection (l)(9) of the BPCIA, giving a reference product sponsor the right to file a declaratory judgment action if an applicant fails to comply with the exchange provisions of section (l), “shall” should be interpreted as “may.” As further support, Judge Lourie directed Amgen’s counsel to subsection (l)(6)(A), which states that a reference product sponsor “shall” bring an action for patent infringement. According to Judge Lourie, this could not mean that filing a patent suit was mandatory.

Subsection (l)(8): 180-day notice of commercial marketing of the biosimilar product

Judge Lourie asked several questions concerning the second issue on appeal—the proper timing of the 180-day notice of commercial marketing set forth in subsection (l)(8) of the BPCIA. Signaling some uncertainty about Amgen’s interpretation of subsection (l)(8), Judge Lourie asked Amgen’s counsel whether their reading would extend market exclusivity another six months, on top of the over “twenty years” Amgen has already enjoyed for Neupogen®. However, Judge Lourie also noted that many future biosimilar suits would likely be brought before the reference product sponsor had enjoyed their full exclusivity term, putting Amgen in a unique position. Judge Lourie asked Sandoz’s counsel whether subsection (l)(8) requires FDA approval of the biosimilar application before notice is given to the reference product sponsor. Not surprisingly, Sandoz’s counsel said no. Judge Lourie concluded that without prior approval, the 180-day notice period is linked to an “undetermined” date.

Tying together Sandoz’s position that “shall” means “may,” and is optional, Judge Chen asked Sandoz’s counsel whether such an interpretation would also cause the 180-day notice provision in subsection (l)(8) to “fall away.” Sandoz’s counsel indicated that they believe subsection (l)(8) is a stand-alone provision. Additionally, when Sandoz’s application for Zarxio® was received in July 2014, the FDA gave no indication of when or if the application would be approved. Based on this information, Judge Chen expressed some skepticism about Sandoz’s position, noting that a biosimilar application can be amended after its initial submission, leaving “no fixed product that will remain the same” during the FDA approval process.

Amgen’s request for a preliminary injunction and Sandoz’s bond request

Very little was said about Amgen’s request for a preliminary injunction (PI), other than Judge Lourie’s question as to whether the PI was moot in light of the Federal Circuit’s temporary injunction. Sandoz agreed that the issue was moot and, as expected, Amgen disagreed. The panel did not ask any questions about an appropriate bond.

Conclusion

Predicting the outcome of an appeal based on the questions asked during oral argument is a difficult task, and we will not attempt to do so here. What we can conclude from the oral argument, however, is that the panel fully understands the implications that their decision will have on the biosimilars industry and their desire to implement congressional intent. We hope to receive the panel’s decision in a few months. Until then, Amgen’s patent infringement suit before the District Court for the Northern District of California is on hold, as the parties agreed to stay proceedings pending the Federal Circuit’s decision.