On July 21, 2015, the Federal Circuit issued a divided decision in Amgen Inc. v. Sandoz Inc.,1 interpreting two provisions of the Biologics Price Competition and Innovation Act (BPCIA).2 The Federal Circuit decided 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 twenty 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 provided the Federal Circuit with its first real opportunity to substantively interpret the provisions of the BPCIA.
The majority opinion was authored by Judge Lourie and joined in parts by Judges Chen and Newman. The majority (Judges Lourie and Chen) affirmed the district court’s interpretation of the “information exchange” provision of the BPCIA, finding that biosimilar applicants are not required to provide their biosimilar applications to the Reference Product Sponsor (RPS). However, the majority (Judges Lourie and Newman) partially reversed the district court’s decision by holding that the 180-day notice of commercial marketing provision of the BPCIA is ineffective unless it is provided after a biosimilar applicant receives FDA licensure. The Court’s decision therefore blunts Sandoz’s earlier victory at the district court.
Quoting Winston Churchill and echoing statements made during oral argument, the majority opinion described the BPCIA as “a riddle wrapped in a mystery inside an enigma,”3 and noted that the Court did their “best to unravel the riddle, solve the mystery, and comprehend the enigma.” Judge Chen, in his separate opinion, similarly noted that “[t]o fulfill our judicial obligation ‘to say what the law is,’ we must choose from a series of imperfect choices.”4 In contrast, Judge Newman wrote that the “BPCIA as enacted leaves no uncertainty as to which of its provisions are mandatory and which are permissive.”5
1. The “information exchange” provision does not require biosimilar applicants to give their application to RPSs.
Paragraph (l)(2)(A) (the “information exchange” provision) of the BPCIA provides that:
Not later than twenty days after the Secretary notifies the subsection (k) applicant that the application has been accepted for review, the subsection (k) applicant shall provide to the reference product sponsor a copy of the application submitted to the Secretary under subsection (k), and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application.6
The first portion of Judge Lourie’s majority opinion, joined by Judge Chen, found that the “shall provide” language is permissive, rather than mandatory. Looking at the BPCIA as a whole, the majority found that the “shall” language cannot be read in isolation from the rest of the information exchange provision.7 Instead, when considering the statute as a whole, “latter provisions indicate that ‘shall’ in paragraph(l)(2)(A) does not mean ‘must.’”8
The majority looked at other provisions of the BPCIA to determine Congress’s intent in interpreting the “shall provide” language of (l)(2)(A).9 As was evident at the oral arguments, the majority’s opinion indicated that the term “shall,” when read in isolation, is mandatory, but like any other statutory term, its meaning is driven by context. The Court observed that the BPCIA “expressly contemplated” a situation that paralleled Sandoz’s refusal to disclose their aBLA application by setting forth “consequence[s] for such failure.”10 Seeing that “both 42 U.S.C. § 262(l)(9)(C) and 35 U.S.C.§ 271(e)(2)(C)(ii) are premised on a claim of patent infringement, and the BPCIA does not specify any non-patent-based remedies for a failure to comply with paragraph(l)(2)(A),”11 the majority concluded that “shall” in this instance does not institute a mandatory exchange of information. To bolster the holding, the majority stated that “mandating compliance with paragraph (l)(2)(A) in all circumstances would render paragraph (l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii) superfluous, and statutes are to be interpreted if possible to avoid rendering any provision superfluous.”12
Judge Newman dissented from this section of the opinion, asserting that the majority disrupts the balance between the benefits and concessions made by both sides under the BPCIA. Judge Newman’s dissent first noted that “Subsection (k) and subsection (l) are components of an integrated framework; to enjoy the benefits of subsection (k), the biosimilar applicant is obligated to comply with subsection (l) . . . . It is not denied that Sandoz obtained the benefit of the Amgen data in filing under subsection (k). Sandoz should be required to respect its obligations, in fidelity to the statute.”13 Judge Newman’s opinion also stresses textual interpretation, and criticizes the majority’s failure to account for the plain language of the BPCIA. Citing firmly established Supreme Court precedent, Judge Newman asserts that “[t]he word ‘shall’ is ordinarily the language of command.”14 Moreover, the term “shall” in the disclosure provision is followed immediately by the term “may,” and thus “[w]hen the same Rule uses both ‘may’ and ‘shall,’ the normal inference is that each is used in its usual sense—the one act being permissive, the other mandatory.”15
Finally, Judge Newman expresses concern about the majority’s opinion regarding the alternate pathways for recourse. According to Judge Newman, the option for the RPS to file a declaratory judgment action in the event a biosimilar applicant fails to disclose its aBLA are limited to product or use claims, and do not include manufacturing process patents. Indeed, Judge Newman noted that “[a]bsent adequate factual support in a complaint for manufacturing method claims, declaratory jurisdiction may be unsupported.”16
2. The “notice” provision requires biosimilar applicants to give RPSs 180 days advance notice of commercial marketing after receiving FDA licensure.
Paragraph (l)(8)(A) (the “notice” provision) provides that “[t]he subsection (k) 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).”17
The second part of Judge Lourie’s majority opinion, joined here by Judge Newman, found that the “notice” provision of the BPCIA requires a biosimilar applicant to first receive FDA licensure before giving the statutory 180 days’ notice of commercial marketing to the RPS. Thus, the majority reversed the district court’s holding that Sandoz may give notice at any point after the FDA had received their biosimilar application.
The majority supported its decision by noting that “[r]equiring that a product be licensed before notice of commercial marketing ensures the existence of a fully crystallized controversy regarding the need for injunctive relief . . . . If a notice of commercial marketing could be given at any time before FDA licensure, the RPS would be left to guess the scope of the approved license and when commercial marketing would actually begin.”18
While Sandoz argued that requiring the 180-day notice after FDA approval would extend Amgen’s exclusivity an additional six months, the majority stated that this was an anomaly predicated on the fact that Amgen’s 12-year exclusivity period had already expired, but that this anomaly might not become the norm.19 Moreover, the majority pointed out that “[a] statute must be interpreted as it is enacted, not especially in light of particular, untypical facts of a given case.”20
Judge Chen dissented to this portion of the opinion, arguing that the majority inconsistently interpreted the term “shall” in the two separate but related sections of the BPCIA.21 “To reach that inconsistent result, the majority takes the view that (l)(8)(A) should be read in a vacuum, apart from the context and framework of subsection (l), including the language of (l)(8)(B).”22
Judge Chen also writes that the 180-day notice provision of the BPCIA cannot be considered a “standalone” provision, and instead requires an integrated reading into the remainder of the statute like the information exchange portion. “The interwoven structure of subsection (l) indicates that Congress viewed the procedures of (l)(8) as inseverable from the preceding steps in (l).”23 According to Judge Chen, if a biosimilar applicant fails to disclose its application, none of the provisions of subsections (l)(3)-(l)(8) apply: “[T]he better reading of (l)(8) is that it does not apply, just as (l)(3)-(l)(7) do not apply, when the (k) applicant fails to comply with [the disclosure requirements of] (l)(2).”24 Thus, “[j]ust as ‘shall’ in (l)(2) does not mean ‘must,’ the same is true for the ‘shall’ provision in (l)(8)(A), once it is read in context with the entirety of subsection (l).”25
Finally, in addressing the majority’s concern that the BPCIA does not provide a remedy for non-compliance with the 180-day “notice” provision, Judge Chen concludes that additional recourse is unnecessary, because failure to comply with the disclosure requirement allows the RPS to immediately bring a declaratory judgment suit for patent infringement on any patent, including product, use, and process patents.26
The Federal Circuit’s decision in the Amgen v. Sandoz case provides much needed guidance on the comprehensive statute that governs the emerging biosimilar market. Given the dissenting opinions, one would be justified in wondering how long this guidance will last, and whether the case will be taken en banc by the Federal Circuit or appealed to the Supreme Court. But as it stands, the majority’s opinion provides advantages for both biosimilar applicants and RPSs. The decision makes clear that, at least for now, the BPCIA does not mandate disclosure of the aBLA, opening the door for other biosimilar applicants to forego the patent exchange procedures outlined in the statute. The decision also provides that to be effective, the 180-day notice of commercial marketing must be given after FDA approval, which, in some circumstances, may extend RPSs’ exclusivity by six months.