Sandoz v. Amgen: A Victory for Biosimilars

One June 12, 2017, the United States Supreme Court, in a unanimous opinion, reversed the Federal Circuit in Sandoz Inc. v. Amgen Inc., interpreting two provisions of the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”). This decision permits manufacturers of biosimilars to begin marketing their biosimilar product prior to U.S. Food and Drug Administration (“FDA”) approval and deprives the owner of the reference product of a means to force disclosure of the method used to manufacture the biosimilar. The Supreme Court’s decision is a victory for manufacturers of biosimilars who now have fewer obstacles to overcome in reaching the market.
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The BPCIA was passed on March 23, 2010 by Congress as part of the Affordable Care Act to provide an expedited approval pathway for biosimilars.  In addition to expediting FDA approval of biosimilar products, the BPCIA provides a means of resolving patent disputes between reference product sponsors and biosimilar applicants earlier in the drug process. The BPCIA sets forth several requirements for biosimilar applications, with the most litigated requirement being that of the “Patent Dance.” The Supreme Court’s decision on June 12th was the Court’s first interpretation of two key provisions of the Patent Dance.

Interpreting the “Patent Dance”
 
Amgen v. Sandoz is the pioneer case for interpreting the Patent Dance. This case involved the drug filgrastim, a biologic used to stimulate the production of white blood cells. Amgen claims to hold patents on the manufacture and use of filgrastim, which it sells under the name Neupogen®. Sandoz, the applicant, filed an application with the FDA seeking approval of a filgrastim biosimilar, Zarxio®.
 
At issue in the case were two provisions of the BPCIA aimed at facilitating early resolution of patent disputes between the sponsor and applicant; (1) whether a biosimilar applicant can choose to not disclose its biosimilar application and manufacturing information under 42 U.S.C. §262(l)(2)(A), and (ii) whether a biosimilar applicant can provide notice of commercial marketing of its product under 42 U.S.C. §262(l)(8)(A) prior to FDA approval, and whether such notice is mandatory.
 
District Court: In a decision issued on March 19, 2015, the District Court held that the Patent Dance is not mandatory, stating that §262(l) provides a “carrot of a safe harbor for applicants,” but “contain[ ] no stick to force compliance” if the applicant chooses to forgo that safe harbor and engage in litigation. One the second issue, the District Court held that biosimilar applicants can provide notice of commercial marketing before FDA approval, stating to hold otherwise “would tack an unconditional extra six months of market exclusivity onto the twelve years reference product sponsors already enjoy” under §262 (k)(7)(A). Amgen appealed the District Court’s decision to the United States Court of Appeals for the Federal Circuit.

Federal Circuit: In a split decision issued on July 21, 2015, the Federal Circuit affirmed the District Court’s holding that the Patent Dance is optional, but reversed its decision that notice of commercial marketing may be given prior to FDA approval. The Court agreed with Sandoz’s interpretation of §262(l)(2)(A) that an applicant can choose whether or not to disclose (k) application and manufacturing information. The Court emphasized that despite the use of “shall” in §262(l)(2)(A), other provisions, such as §262(l)(9)(C), 35 U.S.C. §271(e)(2)(C)(ii), and 35 U.S.C. §271(e)(4) “indicate that ‘shall’…does not mean ‘must’.” These provisions explicitly contemplate that a subsection (k) applicant might fail to disclose the required information by the statutory deadline.” As such, the BPCIA specifically sets forth the consequences for such failure – the reference sponsor may bring an infringement action.
 
On the second issue of commercial marketing under §262(l)(8)(A), however, the Federal Circuit agreed with Amgen that notice can only be given after FDA approval of the biosimilar product. The Court believed that “Congress intended the notice to follow licensure, at which time the product, its therapeutic uses, and its manufacturing processes are fixed.” Thus, when a subsection (k) applicant files its application, it will not be able to know for certain when, or even if, it will obtain FDA licensure. The FDA could very well request changes to the product, or only approve some but not all uses sought. Thus, if notice of commercial marketing could be given at any time before FDA licensure, the RPS would be left to guess the scope of approved license and as to when the commercial marketing would commence.
 
Both Sandoz and Amgen petitioned the Supreme Court to review the case and the Supreme Court granted certiorari on the cross-petitions in January 2017.

The Supreme Court’s Decision
 
Can the Biosimilar Applicant be Compelled to Disclosure Biosimilar Manufacturing Information? The Supreme Court first addressed the issue of whether a court could compel a biosimilar applicant to disclose its manufacturing information. The Supreme Court agreed with the Federal Circuit that an injunction under federal law is not available to enforce §262(l)(2)(A),” but disagreed with the Federal Circuit’s interpretation that 35 U.S.C. §271(e)(2)(c)(ii), and 35 U.S.C. §271(e)(4) provide remedies for failure to disclose. The Supreme Court instead focused on 42 U.S.C. §262(l)(9)(C) as providing the only federal remedy for failing to provide a copy of the biosimilar application and manufacturing information, which is to bring a declaratory judgment action for patent infringement and proceed outside of the BPCIA. The Supreme Court noted that “[t]he BPCIA’s carefully crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.” Thus, the Court held that the only federal remedy available to the reference product sponsor when a biosimilar applicant fails to disclosure its biosimilar application and manufacturing information is to bring an declaratory judgment action.

The Supreme Court, however, did not rule out the possibility that an injunction might still be available under state law. For a state law claim to be successful, Amgen would have to show that Sandoz’s failure to share its biosimilar application and follow 42 U.S.C. §262(l)(2)(A) is “unlawful” under Cali­fornia unfair competition law.  Moreover, any remedies available under the state law claim must not be preempted by the BPCIA. The Supreme Court remanded these issues to the Federal Circuit for further consideration.

When Can Effective Notice of Commercial Marketing be Given? On the issue of commercial marketing notice, the Supreme Court disagreed with the Federal Circuit that notice can only be given after FDA approval of the product. Instead, the Court concluded that only commercial marketing, but not notice to the reference product sponsor, must wait for FDA approval. The Court reasoned that the statute only requires the applicant to give notice “at least 180 days prior to marketing its biosimilar” and does not impose the additional requirement that the notice be “after the FDA licenses the biosimilar” as suggested by the Federal Circuit.
 
This decision allows biosimilar manufacturers to provide notice of commercial marketing to the reference product sponsor months in advance of FDA approval instead of six months after FDA approval, thus allowing them to reach the market immediately after obtaining approval.
 
What the Supreme Court’s Decision Means for Biosimilar Manufacturers
 
The Supreme Court’s decision is a win for biosimilar manufacturers on both issues. The Court’s decision gives biosimilar applicants more control over managing patent disputes. Not only can a biosimilar applicant decide when to initiate the dispute, the applicant can also determine the manner in which the dispute will proceed.
 
For instance, if a biosimilar applicant wants to resolve patent disputes early on in the process, the applicant could share its application with the reference product sponsor at the beginning of the Patent Dance and force the reference product sponsor to bring suit under the BPCIA.  On the other hand, if a biosimilar applicant wants to wait on resolving the patent issues, the applicant could decide not to share its application, forcing the reference product sponsor to bring suit outside the BPCIA. Alternatively, the biosimilar applicant may choose to challenge the patents in an inter partes review or post grant review proceeding at the U.S. Patent Office, where it could benefit from the lower burden of proof standard.  
 
This decision also grants biosimilar manufacturers more control when it comes to determining when they can begin marketing their product. Instead of waiting until six months after the FDA approves the biosimilar product, the biosimilar applicant can now provide notice in advance of approval, thus allowing them to enter the market immediately after obtaining FDA approval.