On April 26 2017 the Supreme Court heard oral argument in Sandoz Inc v Amgen Inc on two questions regarding the Biologics Price Competition and Innovation Act:
- whether a biosimilar applicant's 180-days' notice of commercial marketing is properly given only after its biosimilar product has been approved by the Food and Drug Administration (FDA); and
- whether a biosimilar applicant is obliged to provide its abbreviated biologics licence application (aBLA) and manufacturing information to the reference product sponsor within 20 days after the FDA accepts the aBLA for filing, thereby triggering early patent litigation.
Congress passed the Biologics Price Competition and Innovation Act in 2010 to promote competition by allowing faster market entry of biosimilars while also fostering innovation by providing a period of market exclusivity for innovator biologics. The act allows a biosimilar applicant to rely on the safety and efficacy data of an approved reference product, but provides 12 years of marketing exclusivity for the reference product before a biosimilar application may be approved by the FDA.
To facilitate early resolution of patent disputes between a reference product sponsor and a biosimilar applicant, the Biologics Price Competition and Innovation Act sought to create a process for the parties to exchange information and litigate patent infringement claims in an orderly fashion. Two parts of that process are at issue in this case.
The Biologics Price Competition and Innovation Act states that the applicant "shall provide" the sponsor with a copy of the applicant's aBLA and information describing the manufacturing processes used to make the proposed biosimilar.(1) This exchange triggers a series of information exchanges between the applicant and the sponsor commonly referred to as the 'patent dance', which results in early litigation of key patent disputes. The act also states that the applicant "shall provide notice" of commercial marketing of the biosimilar to the sponsor:
"not later than 180 days before the date of the first commercial marketing of the biologic product licensed under subsection (k) [the subsection concerning abbreviated biosimilar approval]."(2)
After receiving this notice, the sponsor is entitled to bring a declaratory judgment action based on any remaining patents not yet litigated.
In this case, Sandoz filed an aBLA for a biosimilar to Amgen's Neupogen® (filgrastim) product. The aBLA for Sandoz's product – now sold as Zarxio® (filgrastim-sndz) – was accepted for review by the FDA on July 7 2014. The following day, Sandoz notified Amgen of its application and its intent to market Zarxio on FDA approval, which Sandoz expected in the first half of 2015, but did not provide Amgen with a copy of the Sandoz aBLA or any manufacturing information.
The Federal Circuit affirmed the district court's decision that providing a copy of the aBLA and manufacturing information pursuant to Section 262 (l)(2)(A) is optional, and held that when an applicant opts not to provide that information, the sponsor's sole remedy is to bring a declaratory judgment action – injunctive relief is not available to compel the applicant to comply. The Federal Circuit vacated the district court's decision regarding the 180-day notice provision, holding that under Section 262 (l)(8)(A), the applicant may give effective notice of commercial marketing only after the FDA has approved the biosimilar product because the statute expressly refers – in the past tense – to "the biologic product licensed under subsection (k)", (emphasis added.) To remedy Sandoz's failure to comply with the 180-day notice provision, the Federal Circuit enjoined Sandoz from marketing Zarxio for 180 days after FDA approval. Both parties' petitions for rehearing en banc were denied.
Sandoz petitioned for certiorari on the Section 262 (l)(8)(A) 180-days' notice issue and Amgen filed a conditional cross-petition arguing that the Supreme Court should not review the Federal Circuit's decision, but if it did, it should also review the Federal Circuit's decision that information exchange under Section 262 (l)(2)(A) is optional. The United States joined as amicus curiae in support of Sandoz's positions.
In its petition and briefs, Sandoz argued that Section 262 (l)(8)(A) does not require that notice be given only after the applicant's aBLA is approved, in part because according to Sandoz, giving 180-days' notice only after licensure amounts to "a grant of 180 days of additional exclusivity for all biological products beyond the [12 year] exclusivity period". Sandoz also argued that by granting a 180-day injunction to prevent Sandoz from launching its product, the Federal Circuit created a judicial remedy not contemplated by the statute.
As expected, at oral argument Sandoz argued that Congress had no concern that the 180-days' notice could be too early, and that early notice of commercial marketing lifts the gate to allow the sponsor to litigate any remaining patent rights via a declaratory judgment action. Sandoz argued that the word 'licensed' is just a description of the biosimilar for which a licence is sought and that Congress did not use the word 'licensed' to impose a timing limitation, requiring that the biosimilar actually be licensed before notice can be given. According to Sandoz, Congress would not have extended the 12-year exclusivity period in "such a bizarre way".
From the outset Justice Kennedy expressed scepticism that a 180-day notice period would make sense without a trigger for providing that notice – namely, approval of the biosimilar application by the FDA. Justice Breyer similarly questioned how notice of the launch of a licensed product could be given if no product had been licensed, which could not occur until after the sponsor's 12-year exclusivity had run. Breyer also observed that Sandoz's position had the potential to 'gut' the patent dance process because, under Sandoz's interpretation of the law, "everyone will be free… to start bringing declaratory judgment actions" following early notice of commercial marketing.
The court, through Justices Sotomayor, Kagan and Roberts, also expressed some concern about whether a sponsor not in possession of the applicant's aBLA and manufacturing information would have a good-faith basis for bringing a declaratory judgment action. Sandoz argued that sponsors have a good-faith basis to bring suit because the Biologics Price Competition and Innovation Act creates an artificial act of infringement and also because a biosimilar product must be highly similar to the reference product, and thus would be expected to be covered by the sponsor's patents covering its own product.
The court also questioned why the FDA had not promulgated rules to aid in implementing the statute. In response to a question by Justice Ginsburg, Sandoz responded that it did not believe the FDA had authority to interpret these statutory provisions through rulemaking and that "the [statutory] text answers the questions I'm being asked".
As to the Section 262 (l)(2)(A) question regarding an applicant's obligation to provide its aBLA and manufacturing information to the sponsor early on, Sandoz argued in its petition and briefs that:
- Amgen had misinterpreted the statute;
- the information exchange process is merely "one route to pre-approval litigation"; and
- the Biologics Price Competition and Innovation Act "expressly contemplates that an applicant might not" take that route.
At oral argument, Sandoz reiterated that position and added in response to a question from Sotomayor that the information in question could easily be obtained via the discovery process in a declaratory judgment action. In support of Sandoz, counsel for the United States argued that the courts should not police whether the parties engage in the patent dance.
In its conditional cross-petition and briefs, Amgen argued that the statutory text and legislative history of the Biologics Price Competition and Innovation Act make clear that the 'shall provide' language of Section 262 (l)(2)(A) requires the applicant to provide its aBLA and manufacturing information to the sponsor and that federal law authorises courts to compel the applicant to comply. Amgen argued that without receiving that information a sponsor might have insufficient information to determine which patents could properly be included in a declaratory judgment suit, primarily because the sponsor would lack information about the applicant's manufacturing process and the therapeutic indications for which the applicant was seeking approval. As to the Section 262 (l)(8)(A) question, Amgen argued that the statutory text (ie, "biosimilar licensed under subsection (k)" (emphasis added)) and legislative history require that an applicant's 180-days' notice of commercial marketing may be effective only after the FDA has licensed its aBLA, and that allowing applicants to provide effective notice before the aBLA is approved would cause chaos as the sponsor would not know when launch in fact will occur, decreasing the likelihood of success in seeking a preliminary injunction to prevent launch of the biosimilar.
At oral argument Amgen built on those core messages, stating that:
"Congress did not create detailed procedures for resolving biosimilar disputes and repeatedly use the word 'shall' merely to have applicants who choose to take advantage of the statute's benefits and use the sponsor's information, then disregard those mandates."
Amgen also emphasised that, until a biosimilar has been licensed, the reference product sponsor has no notice of what the marketed biosimilar product or the approved therapeutic uses of that product will be. While stopping short of suggesting that the FDA could give Hatch-Waxman style tentative approval to a biosimilar application in order to speed up the timing of declaratory judgment actions, Amgen's counsel noted that the statute only says that approval may not be "made effective" within 12 years:
"As expected, Amgen's counsel also argued that premature notice of commercial marketing could thwart a sponsor's efforts to get a preliminary injunction because it would be difficult to show that harm was imminent."
The court pressed Amgen on the idea that, even if "shall means shall" and applicants are mandated to provide their applications and manufacturing information to the sponsor under the Biologics Price Competition and Innovation Act, the statute still provides a remedy – in the form of a declaratory judgment action – when the applicant fails to abide by the mandates of the statute. Amgen disputed that declaratory judgment actions were included in the statute as a remedy for the reference product sponsor, arguing that those provisions were intended instead to foreclose the applicant itself from bringing a declaratory judgment action after it violated the statute.
Although it is difficult to predict how the court will rule, the judges seemed reluctant to adopt Sandoz's view that 180-days' notice may be provided before FDA licensure of the biosimilar in question. Affirming the Federal Circuit's opposite view on that issue would provide sponsors with at least some degree of predictability as to when they should bring declaratory judgment actions and what patents to include in those actions. The court focused comparatively little on whether it is optional for a party to provide its aBLA and manufacturing information during the patent dance, with some judges seeming to treat the supposedly optional nature of the exchange as a foregone conclusion. If the court affirms Sandoz's position on that issue, sponsors will need to carefully consider how to prepare for and undertake declaratory judgment actions, perhaps within a compressed time frame and with little knowledge at the outset of the proposed biosimilar or its manufacturing process.
For further information on this topic please contact Brendan O'Malley or Jacob T Whitt at Fitzpatrick, Cella, Harper & Scinto by telephone (+1 212 218 2100) or email ([email protected] or [email protected]). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.