Amgen v. Sandoz: Federal Circuit Weighs In on the BPCIA Riddle

The Federal Circuit ruled yesterday in Amgen Inc. v. Sandoz Inc. (2015-1499) and provided its interpretation of key aspects of the Biologics Price Competition and Innovation Act of 2009 ("BPCIA"). Specifically, the Court weighed in on (1) whether or not the "patent dance" was mandatory, and (2) when and under what circumstances effective notice of commercial marketing must be given.

Issue #1: The "Patent Dance" — The patent dance provision of section (l)(2)(A) was held to be optional for subsection (k) applicants—not mandatory. The majority stated that "when an applicant chooses the abbreviated pathway for regulatory approval of its biosimilar product, it is required to disclose its abbreviated biologics license application and manufacturing information to the reference product sponsor ("RPS") no later than 20 days after the FDA's notification of acceptance, but not when the 'when' criterion is not met." (Majority opinion at 12.)

The majority concluded section (l)(2)(A)'s use of "shall" must be read in the context of section (l)(2)(B), which provides that a biosimilar applicant "may" provide additional information to the RPS by the statutory deadline. According to the Court, other provisions of the BPCIA explicitly contemplate that a biosimilar applicant might fail to disclose the required information and set forth consequences for that failure-specifically that the RPS can bring an infringement action under 42 U.S.C. § 262(l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii). (Id. at 14-15.) The majority expressly noted that an alternate finding would render "paragraph (l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii) superfluous, and statutes are to be interpreted if possible to avoid rendering any provision superfluous." (Majority opinion at 14.)

Dissent: In Judge Newman's opinion, the designated exchange of information is not optional, but rather "fundamental to the BPCIA purposes of efficient resolution of patent issues." (Newman dissenting opinion at 5.) Judge Newman pointed out "subsection (l)(9) provides jurisdiction in the district court when a subsection (k) applicant fails to comply with subsection (l), but it does not ratify non-compliance." (Id. at 8.)

The result is that biosimilar applicants (i.e., subsection k applicants) are not obligated to provide the information under sections (l)(2)(A)-(l)(7)(A) after filing for approval of a biosimilar or interchangeable with the FDA.

Issue #2: Notice of Commercial Marketing — The Court agreed with Amgen and concluded that a biosimilar applicant choosing not to engage in the patent dance may only give effective notice of commercial marketing after the FDA has licensed its product. (Majority opinion at 16.) "Requiring that a product be licensed before notice of commercial marketing ensures the existence of a fully crystallized controversy regarding the need for injunctive relief." (Id. at 17.) Applicants who disclose their BLA do not have to provide the 180-day notice.

Departing from its interpretation that section (l)(2)(A) is not mandatory, the majority concluded that paragraph (l)(8)(A)'s notice requirement is mandatory. (Id. at 20.) According to the Court, because section (l)(8)(A) is a "standalone provision," the use of "shall" in section (l)(8)(A) obligates the subsection (k) applicant to provide notice to the RPS of intent to commercially market a biosimilar or interchangeable 180 days before commercial launch, and it can only do so after it has received FDA licensure. (Id. at 18-20.)

Dissent: Judge Chen disagreed with the majority's interpretation that section (l)(8)(A) is a standalone provision and thus, mandatory. In Judge Chen's opinion, "[t]he practical consequence of the majority's interpretation is that (l)(8)(A) provides an inherent right to an automatic 180-day injunction." (Chen dissenting opinion at 9.) Such an "exclusivity windfall" is unsupported by the statutory language and "in tension with the defined purpose of (l)(8)." (Id. at 2, 9-10.) Judge Chen pointed out "the majority's opinion creates an uncomfortable result in which the language of (l)(8)(A) is interpreted in two different ways" based on the biosimilar applicant's actions. (Id. at 10.)

Holding: The Federal Circuit vacated the judgment on Sandoz's counterclaims, directed the district court to enter judgment consistent with the Circuit's interpretation of the BPCIA, and remanded the case for further proceedings consistent with the opinion.

Amgen also appealed the dismissal of its unfair competition and conversion claims based on the denial of a preliminary injunction. Based on the Court's interpretation of the BPCIA statute, the Court affirmed the dismissal of Amgen's state law claims and dismissed Amgen's appeal for a preliminary injunction as moot. (Majority opinion at 21, 25.)

As a result of the Court's holding, Sandoz is prohibited from marketing ZARXIO until September 2, 2015.

Authors: Michael Amon, Tasha Francis