In a unanimous decision, the Supreme Court of the United States explained that under the Biologics Price Competition and Innovation Act of 2009 (BPCIA), biosimilar makers do not have to wait for approval before giving 180-day notice of commercial marketing under the BPCIA, and no federal injunction is available to compel biosimilar makers to disclose their approval applications to rivals. Sandoz Inc. v. Amgen Inc., Docket No. 15-1039 (Supr. Ct., June 12, 2017) (Thomas, Justice) (Breyer, Justice, concurring).
The BPCIA establishes processes both for obtaining US Food and Drug Administration (FDA) approval of biosimilars and for resolving patent disputes between manufacturers of licensed biologics and manufacturers of biosimilars. A manufacturer of a biologic product must obtain a license from the FDA to market its drug. A manufacturer may obtain a license either by demonstrating that the drug is “safe, pure and potent” or by piggybacking on the showing made by the manufacturer (sponsor) of a previously licensed biologic (reference product), showing that its product is “highly similar” (i.e., a biosimilar) to the reference product and that there are no “clinically meaningful differences” between the two in terms of safety, purity and potency.
The BPCIA facilitates litigation during the period preceding FDA approval, enabling the parties to bring infringement actions at certain points in the application process to resolve their patent disputes before commercial marketing (or other acts that would traditionally constitute patent infringement) commences.
An applicant seeking FDA approval of a biosimilar must provide its application and manufacturing information to the sponsor within 20 days of the date the FDA notifies the applicant that it has accepted the application for review. Moreover the statute 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 [by the FDA] under subsection (k).” The issues before the Supreme Court were (1) whether notice provided prior to the FDA decision to license the biosimilar is effective, and (2) whether the requirement that the applicant provide the application and manufacturing data is itself enforceable by injunction (IP Update, Vol. 20, No. 1).
The BPCIA provides various consequences for failing to comply with its procedural requirements. If an applicant fails to provide its application and manufacturing information to the sponsor, the sponsor may immediately bring an action “for a declaration of infringement,” which makes it an artificial act of infringement to submit a biosimilar application.
District Court Proceedings
Amgen markets a filgrastim product called Neupogen, a biologic used to stimulate the production of white blood cells, and has done so since 1991. Amgen holds patents on the methods of manufacturing and using filgrastim. After Sandoz filed an application with the FDA seeking approval to market a filgrastim biosimilar under the brand name Zarxio, with Neupogen as the reference product, Amgen sued Sandoz for patent infringement and asserted claims under California’s unfair competition law. Amgen alleged that Sandoz engaged in “unlawful” conduct (under California law) by (1) failing to provide its application and manufacturing information, and (2) providing notice of commercial marketing before, rather than after, the FDA licensed its biosimilar. Sandoz counterclaimed for declaratory judgments that the asserted patent was invalid and not infringed and that it had not violated the BPCIA.
During the pendency of the district court case, the FDA licensed Zarxio, and Sandoz provided Amgen further notice of commercial marketing following the grant of the license. The district court granted partial judgment on the pleadings to Sandoz on its BPCIA counterclaims and dismissed Amgen’s unfair competition claims with prejudice. Amgen appealed.
Federal Circuit Proceedings
On appeal, the US Court of Appeals for the Federal Circuit affirmed the dismissal of Amgen’s state law claim, finding that Sandoz did not violate the BPCIA in failing to disclose its application and manufacturing information, and therefore committed no unlawful conduct. The Federal Circuit found that the remedies contained in the BPCIA are the exclusive non-compliance remedies.
The Federal Circuit also concluded that an applicant may only provide effective notice of commercial marketing after the FDA has licensed the biosimilar. Thus, Sandoz’s 180-day clock did not begin until Sandoz’s post-licensure notice. Because the Federal Circuit found this notice requirement to be mandatory, the Court extended its injunction pending appeal to bar Sandoz from marketing Zarxio until 180 days after the date it provided its second notice (IP Update, Vol. 18, No. 8).
Supreme Court Decision
Addressing whether the requirement that an applicant provide the sponsor with its application and manufacturing information is enforceable by an injunction under either federal or state law, the Supreme Court affirmed the Federal Circuit’s holding that disclosure of the biosimilar application is not enforceable by an injunction under federal law. However, the Supreme Court rejected the Federal Circuit’s reasoning on this point, finding that Sandoz’s failure to disclose its application and manufacturing information was not an act of artificial infringement under the statute. Rather, when an applicant fails to comply with application disclosure requirements, the statute authorizes the sponsor to bring an immediate declaratory judgment action for artificial infringement. Thus, the remedy for this violation vests the sponsor with the control that the applicant otherwise would have exercised over the scope and timing of the patent litigation, depriving the applicant of the certainty it could have obtained by bringing a declaratory judgment action prior to marketing its product. The Supreme Court found that this remedy provision of the BPCIA excludes all other federal remedies, including injunctive relief.
The Supreme Court also remanded the case to the Federal Circuit to determine whether California law would treat non-compliance with the disclosure section as an “unlawful” act and whether the BPCIA pre-empts any additional remedy available under state law for this non-compliance.
Finally, the Supreme Court addressed the issue of whether an applicant may provide effective notice prior to FDA licensure. Reversing the Federal Circuit’s statutory interpretation, the Court found that the phrase “of the biological product licensed under subsection (k)” modifies “commercial marketing” rather than “notice.” In other words, it is “commercial marketing” that marks the point in time by which the biosimilar must be “licensed” by the FDA. In terms of notice, however, the Court concluded that the statute permits an applicant to provide notice either before or after receiving FDA approval.
Justice Breyer wrote a concurrence, joining the Supreme Court’s opinion and providing additional commentary on the FDA’s ability to depart from or modify the Supreme Court’s interpretation of the BPCIA.