On April 26, 2017, the U.S. Supreme Court heard oral arguments in Sandoz Inc. v. Amgen Inc., Nos. 15-1039, 15-1195, concerning Sandoz’s petition and Amgen’s cross-petition from the Federal Circuit’s July 2015 decision. Both parties’ briefs focused on the proper interpretation and effects of two provisions of the Biologics Price Competition and Innovation Act (BPCIA): (1) the timing of the notice of commercial marketing from biosimilar applicants; and (2) the disclosure requirements from the biosimilar applicant to the reference product sponsor. Amgen was represented by Seth P. Waxman of Wilmer, Cutler Pickering, Hale and Dorr, LLP, and Sandoz was represented by Deanne E. Maynard of Morrison & Foerster, LLP. In addition, Assistant to the Solicitor General, Anthony A. Yang, was given time to argue the United States Government’s position. Of the nine Justices present at the argument, Justices Kennedy, Sotomayor, Breyer, Roberts, Kagan, Ginsburg, and Gorsuch asked questions and interacted with counsel. At the outset of the case, the Court provided each side with an additional five minutes of argument time. A copy of the oral argument transcript can be found here.
Based on their questioning, the Justices who actively participated during oral argument seemed skeptical that the 180-day notice of commercial marketing could be provided prior to FDA licensure of the biosimilar product. At least some of the Justices expressed doubt that sufficient immediacy and certainty would exist prior to licensure, thereby hindering a reference product sponsor from presenting sufficient evidence to secure a preliminary injunction to prevent the launch of a biosimilar product. Questions concerning whether a biosimilar applicant was required to provide a copy of its biosimilar application and other manufacturing information during pre-suit exchanges indicated a willingness by the Justices to interpret “shall,” in the context of this provision, to indicate a mandatory requirement. The Court, however, spent significant time exploring the issue of appropriate remedies where a failure to comply with the disclosure provision occurred. In Amgen’s original complaint, its claims alleging that Sandoz had violated the disclosure requirements of the BPCIA were based on California state law. Given that neither party substantively raised the issue of the state law claims in their petitions or briefing before the Court, the Court may interpret “shall” as mandatory, and not address the issue of the appropriate remedy for a failure to comply with this disclosure provision. A more detailed discussion of the oral argument is provided below.
Question 1: Whether notice of commercial marketing given before FDA approval can be effective and whether, in any event, treating Section 262(l)(8)(A) as a stand-alone requirement and creating an injunctive remedy that delays all biosimilars by 180 days after approval is improper.
A majority of the oral argument was spent answering questions about the timing of the notice of commercial marketing provided by the biosimilar applicant. Below, the Federal Circuit held that the 180-day notice of commercial marketing could not be given by the biosimilar applicant until after the biosimilar is licensed by the FDA. Sandoz argued that this requirement essentially adds an additional six months of exclusivity to the statutory exclusivity period of twelve years already held by the reference product sponsor.
Questions from the Court focused on certainty surrounding any subsequent preliminary injunction motions filed after the 180-day notice was provided. Justice Breyer asked pointedly how a biosimilar applicant can give effective notice to the reference product sponsor if the license hasn’t yet issued. Building on Justice Breyer’s queries, Chief Justice Roberts also inquired how a party could bring a preliminary injunction action in good faith without fully knowing the specifics of the contents, manufacture, and therapeutic uses of the licensed product. Amgen agreed that the notice must issue before any preliminary injunction could be filed, and highlighted the differences between the Hatch-Waxman Act, which requires an “identical” small molecule, and the BPCIA, which only requires a “highly similar” product—countering Sandoz’s assertion that the two Acts share many similarities and should be interpreted as such. In the BPCIA, Amgen argued, the notice allows reference product sponsors to seek a preliminary injunction for the approved product and the approved therapeutic uses, and without these specifics, reference product sponsors would lack the immanency and specifics needed to bring suit. Following on this issue of certainty, Justice Sotomayor asked counsel for Sandoz to clarify whether the FDA can provide a biosimilar applicant notice that it will be licensed, but hold that final licensure until after the expiration of the twelve year period of reference product sponsor exclusivity, thereby allowing for the biosimilar applicant to give its 180-day notice. Counsel for Sandoz reiterated that under the statute, licensure can only come after twelve years and thus a biosimilar applicant, following the Federal Circuit’s prior decision, would have to wait until the twelve year period expired.
In addition to these questions, Justice Breyer indicated skepticism about the meaning of the term “notice” in this context. In his opinion, the term “notice” is ambiguous to a lay person, and as such, the experts in the agency—here, the FDA—have broad authority under the direction of Congress to interpret the term. Justice Breyer further opined that before any litigation is brought, the FDA should first issue regulations following a notice and comment rulemaking period to determine the proper meaning of “notice.” Only after this regulation is promulgated should parties be free to bring any claims concerning the interpretation of this part of the statute. In addition, Justice Kennedy noted that the FDA is already “intimately” involved in the review process of the biosimilar application, and might have the authority to delay the review until the applicant complies with the BPCIA requirements.
Question 2: Is an Applicant required by 42 U.S.C. § 262(l)(2)(A) to provide the Sponsor with a copy of its biologics license application and related manufacturing information, which the statute says the Applicant "shall provide," and, where an Applicant fails to provide that required information, is the Sponsor's sole recourse to commence a declaratory-judgment action under 42 U.S.C. § 262(l)(9)(C) and/or a patent-infringement action under 35 U.S.C. § 271(e)(2)(C)(ii)?
The Court also spent time probing the meaning and consequences of the term “shall provide” in the BPCIA. Several Justices appeared to agree with Amgen’s position that “shall” means “shall” and accept it as a mandate that the biosimilar applicant provide the sponsor a copy of its application and manufacturing information. That, however, did not resolve the issue for several of the Justices. For instance, Justices Gorsuch and Sotomayor asked hypotheticals about the pragmatic effect if the Court accepted Amgen’s proposed interpretation of the statute, “shall means shall,” and questioned counsel for Amgen as to whether the result is, as Sandoz suggests, to simply file a declaratory judgment action for patent infringement as outlined in the BPCIA. Justice Sotomayor asked whether a reference product sponsor could have a good faith basis to file a declaratory judgment action for patent infringement when it did not have the information relating to the biosimilar product or its indications. In response, Sandoz’s counsel indicated that the statute itself provided a good faith basis to sue by creating an artificial act of infringement, much like Hatch-Waxman, and also that the product has to be “highly similar” to the reference product. Despite this back-and-forth, the Court was less forthcoming about the consequences of this mandatory approach, with Justice Gorsuch noting that it is “hard to divorce the right from the remedy.”
The Justices also spent a considerable amount of time inquiring about the possibility of state law claims serving as a remedy for failure to abide by the information exchange. In the District Court, Amgen argued that a California state statute creates a state cause of action for any violation of a federal mandate. Here, Sandoz’s decision not to provide their biosimilar application and manufacturing information violated the “shall” mandate in the federal BPCIA. This claim was rejected by both the District Court and the Federal Circuit, and both Sandoz and the Government argued that the Supreme Court could not adjudicate the claim because this appeal was based on an interpretation of federal law. However, continued questioning by Justices Gorsuch, Sotomayor, and Roberts arguably indicates the Court’s belief that the remedy issue is intertwined with issues related to the application of state law that were not substantively argued in either party’s petition or in their briefing before the Court.
The Government spent much of its argument discussing the application disclosure provision in the BPCIA. It argued that the text of the statute provides a clear set of procedures for reference product sponsors and biosimilar applicants to follow, or not, and that courts should not police each of these steps. Instead, the Government argued, both parties recognize that there are no mandates at any point in the pre-suit process, and that each party understands the consequences if they decide to depart from the pre-suit statutory information exchange provisions and enter into litigation.