On June 12, 2017, the U.S. Supreme Court issued a unanimous decision in Sandoz Inc. v. Amgen Inc., Nos. 15-1039, 15-1195,1 interpreting two provisions of the Biologics Price Competition and Innovation Act (BPCIA).2 Below, a divided Federal Circuit panel held that: (1) a biosimilar applicant is not required to provide its application and manufacturing information to the Reference Product Sponsor (RPS), and the BPCIA contains the “exclusive” remedies for any such failure to comply with this disclosure provision; and (2) a biosimilar applicant may only provide its 180-day notice of commercial marketing after the FDA has licensed the biosimilar.3 On appeal, the Court vacated in part and reversed in part, remanding the cases back to the Federal Circuit for further proceedings.
Justice Thomas authored the opinion with Justice Breyer concurring. The opinion affirmed the portion of the Federal Circuit’s decision that an injunction forcing disclosure of an abbreviated Biologics License Application (aBLA) under federal law is unavailable if the biosimilar applicant fails to comply with the “information exchange” provision of the BPCIA. However, the Court declined to rule on what, if any, remedies are available under a state law claim, leaving that issue for remand. The Court also reversed the Federal Circuit’s determination 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, holding instead that the applicant may provide notice either before or after receiving FDA approval. The Court’s decision still leaves uncertain the question as to whether disclosure of a biosimilar applicant’s aBLA prior to commencement of a patent infringement suit is mandatory.
Echoing statements made during oral argument and the Federal Circuit’s decision, the Supreme Court’s opinion provided a concise, yet detailed, overview of the “complex statutory scheme at issue in these cases.”4 Justice Breyer, in his concurrence, noted that while “[t]he Court’s interpretation of the statutory terms before us is a reasonable interpretation,” the FDA has the Congressional authority to engage in a similar interpretation—to either “depart from, or to modify” the Court’s ruling.5
1. The “information exchange” provision does not provide for a federal injunction as a remedy and the issue of what, if any, remedies are available is a question under state law.
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 question addressed by Justice Thomas’s opinion was whether the “information exchange” requirement is enforceable by injunction. In answering this question, the Court held that a failure to abide by this provision does not allow for the grant of a federal injunction, but for different reasons than those articulated by the lower court.7 Below, the Federal Circuit held that noncompliance with 42 U.S.C. § 262(l)(2)(A) constituted an act of artificial infringement with remedies available under 35 U.S.C. § 271(e)(4),8 but that § 262(l)(9)(C) provides the exclusive remedies for such a violation.9 The Supreme Court disagreed with this underlying basis of artificial infringement. Stating that the submission of the application itself is the catalyst for artificial infringement, the Court noted that the information to be exchanged merely “assists in identifying which patents will be the subject of the artificial infringement suit.”10 The Court further observed that both clauses of § 271(e)(2)(C) support its determination: following the submission of the application, an act of artificial infringement occurs under clause (i) if the applicant made the disclosures; if not, infringement still occurs under clause (ii).11 The Court therefore concluded that an applicant’s failure to provide its application and manufacturing information is not an act of artificial infringement, with neither § 271(e)(4) nor § 262(l)(9)(C) providing any remedy for this failure.12 The Court, however, agreed with the Federal Circuit that an immediate declaratory-judgment action under § 262(l)(9) is the appropriate form of federal relief.13 The Court noted that the BPCIA’s enforcement scheme is sufficiently detailed to evidence Congress’ intent for declaratory-judgment actions to be the RPS’s sole remedy, “at least as a matter of federal law.”14
While addressing the appropriate remedy under federal law, the Supreme Court declined to resolve the question of whether the information exchange provision is mandatory or conditional, stating that the BPCIA does not “require [them] to decide whether § 262(l)(2)(A) is mandatory or conditional,” only whether the applicant supplied the required information.15 Instead, the Court stated that this issue must be addressed in the context of Amgen’s state law claims. More specifically, in their first complaint, Amgen brought two claims—both arising under California’s unfair competition law—against Sandoz for its failure to abide by § 262(l)(2)(A).17 The Federal Circuit dismissed both claims, holding that California’s unfair competition law does not provide a cause of action when a violation of the underlying federal statute specifies the “exclusive” remedy, and that such a failure to disclose is not otherwise “unlawful,” as the BPCIA provides a regulatory pathway that expressly contemplates this procedural deviation.18 The Supreme Court held otherwise and remanded. The Court reiterated that any failure by the biosimilar applicant to disclose its application and manufacturing information is not an act of artificial infringement; rather, the act of filing the aBLA itself is the infringing act.19 Therefore, the Court disagreed with the Federal Circuit that § 271(e)(4) and § 262(l)(9)(C) provides the only “exclusive,” or even appropriate, remedy for Sandoz’s failure to comply with the statute.20 Further, the question of whether Sandoz’s failure to participate in the information exchange is “unlawful” under California law also involves the application of state law and cannot be adequately addressed by the provisions of the BPCIA alone.21 Thus, the Federal Circuit erred in its decision by only applying federal law to a state law issue.22
On remand, the Supreme Court requested that the Federal Circuit determine whether California law would view a biosimilar applicant’s failure to abide by the information exchange as “unlawful.”23 If that answer is yes, or if the court assumes that a state law remedy exists, the Justices believe that the Federal Circuit should next address whether the BPCIA preempts a state law remedy.24 The Court also suggested the Federal Circuit could simply assume a state remedy is available and decide only the issue of preemption.25
2. The “notice” provision does not require biosimilar applicants to give RPSs 180-days advance notice of commercial marketing following FDA licensure.
The second question addressed by the Court was whether an applicant may provide effective notice before FDA licensure, or whether it must wait, as held by the Federal Circuit, until after the biosimilar is licensed. 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).”26 Below, the Federal Circuit held that a notice by the biosimilar applicant is only effective after the FDA has licensed the biosimilar.27 The Supreme Court reversed.
In reaching the unanimous decision, Justice Thomas employed a textualist analysis. Finding that the phrase “of the biological product licensed under subsection (k)” modifies “commercial marketing,” not “notice,” the Court held that the biosimilar applicant “may provide notice either before or after receiving FDA approval.”28 To bolster its interpretation, the Court observed that the Federal Circuit improperly added a second requirement—“[t]he applicant must provide notice after the FDA licenses the biosimilar and at least 180 days before the applicant markets the biosimilar.”29 Further, Justice Thomas observed that a neighboring provision allows for this dual-timing requirement and Congress expressly chose not to implement a similar scheme for § 262(l)(8)(A).30
The Court declined to address Amgen’s and Sandoz’s policy arguments.31 Although the oral argument featured questions concerning the pragmatic effects of the timing of the notice provision, the Court wrote that “[t]he plausibility of the contentions on both sides illustrates why such disputes are appropriately addressed to Congress, not the courts.”32 Specifically noting Amgen’s policy arguments may have been more persuasive, the Court concluded that the statute’s plain language is the “‘primary guide’ to Congress’ preferred policy.”33
While the Supreme Court’s decision in Sandoz v. Amgen provides much needed guidance that the 180-day notice of commercial marketing can be provided either before or after FDA approval, and confirms that an injunction forcing compliance with the application disclosure provision of the BPCIA is not available under federal law, it still leaves open the question as to whether disclosure is required. That question will remain open until the Federal Circuit has an opportunity to further consider Amgen’s state law unfair competition claims on remand.