The Supreme Court's Decision In Amgen v. Sandoz: More Questions Than Answers?

On June 12, the Supreme Court issued a unanimous opinion in Amgen v. Sandoz, penned by Justice Clarence Thomas. The Court addressed two questions, stemming from the Federal Circuit’s 2015 decision in the case, on which certiorari had been granted: 1) whether a biosimilar applicant may be compelled under either federal or state law to provide the reference product sponsor with its biosimilar application (aBLA) and manufacturing information; and 2) whether a biosimilar applicant must provide 180 days’ notice of commercial marketing of its biosimilar product only after the product has been licensed by the FDA.

The Supreme Court answered the first question in the negative with respect to federal law, but remanded to the Federal Circuit on the issue of whether a biosimilar applicant could be compelled to provide its aBLA under state law. On the second question, the justices held that the plain language of the BPCIA requires only that notice be given at least 180 days prior to commercial marketing, and that requiring prior FDA licensure would introduce an additional “timing requirement” that is absent from the statute. The Court’s decision leaves reference product sponsors with a host of unanswered questions that cloud the field with uncertainty moving forward.

No Injunctive Relief To Compel aBLA Production Under The BPCIA

The Supreme Court first considered the portion of the Federal Circuit’s decision below holding that neither the patent statute nor the Biologics Price Competition and Innovation Act of 2009 (BPCIA) provide a mechanism for compelling production of a biosimilar applicant’s aBLA and manufacturing information.¹

The Federal Circuit had reasoned that under the patent statute, the filing of a biosimilar application is an “artificial act of infringement,” and an applicant’s failure to provide its abbreviated Biologics License Application (aBLA) in compliance with the BPCIA is a part of that artificial act of infringement, making the remedies set forth in §271(e)(4) of the patent statute available to the reference product sponsor. Those remedies include a preliminary injunction to delay the launch of a biosimilar product, but not an injunction to compel the biosimilar applicant to produce its aBLA and manufacturing information. As the Federal Circuit put it, “Amgen alleged that Sandoz violated the BPCIA, but the alleged violation is precisely an act of infringement … for which §271(e)(4) provides the ‘only remedies.’” 

Nor, the Federal Circuit reasoned, does the BPCIA contemplate that production of the aBLA and manufacturing information could be compelled if the reference product sponsor failed to provide it. Instead, a reference product sponsor’s sole remedy under the BPCIA when an applicant declines to produce its aBLA and manufacturing information is the unilateral right to file a declaratory judgment action. 

Thus, in the Federal Circuit’s view, the remedy of compelling production of the aBLA, which is not expressly provided for in either statute, would render superfluous the remedies that are expressly provided.

In its written opinion, the Supreme Court agreed with the Federal Circuit’s conclusion that injunctive relief is not available to compel a biosimilar applicant to provide its aBLA, but disagreed with the Federal Circuit’s conclusion that relief, including a preliminary injunction, is available to the reference product sponsor under the patent statute. Instead, the Supreme Court concluded that the “artificial act of infringement” under §271(e)(2) is strictly limited to the act of submitting an aBLA. Subsequent acts — such as a biosimilar applicant failing to provide its aBLA or failing to give effective notice of commercial marketing (discussed below) — are not “acts of infringement” as contemplated by the patent statute, so relief under the patent statute is not available. The only remedy available to the reference product sponsor under federal law is the filing of a declaratory judgment action as specified in §262(l)(9)(C) of the BPCIA. (More about that below.)

The Supreme Court’s reasoning is perhaps unsurprising given that the BPCIA expressly grants to the reference product sponsor the unilateral right to file a declaratory judgment action when the biosimilar applicant fails to provide its aBLA. Nevertheless, the Supreme Court’s decision may be seen as forcing the reference product sponsor to proceed somewhat blindly with its declaratory judgment action, given that a biosimilar applicant’s manufacturing processes and even details regarding its proposed composition and formulation are not likely to be publicly available. While the biosimilar applicant may retort that the relevant product and manufacturing information would be provided in due course through the normal litigation discovery process, the timeframe for biosimilar approval could be much faster than the often plodding pace of a district court litigation. For example, Sandoz’s aBLA for its biosimilar of Amgen’s Neupogen® (filgrastim) product was filed on May 8, 2014, and was approved just 10 months later, on March 6, 2015. Litigators will recognize that in many venues, fact discovery may still be ongoing 10 months into a litigation, and even if fact discovery has been completed, expert discovery and trial may still lay months ahead. Thus, it still remains to be seen whether the optional nature of providing the aBLA and marketing information leaves the reference product sponsors at a significant disadvantage when pursuing a declaratory judgment action.

Interestingly, on the question of whether an injunction is available under state law to compel production of the aBLA, the Supreme Court remanded, tasking the Federal Circuit with determining whether California law would treat Sandoz’s failure to provide its aBLA under the BPCIA as “unlawful,” and if the answer to that question is yes, whether the BPCIA preempts any remedies available under state law. Though the idea of state law remedies in the patent context may seem far-fetched, it bears mentioning that in the past several years, several states have enacted legislation meant to combat deceptive patent enforcement by patent trolls, including legislation that provides state law relief for improper patent enforcement. For example, Vermont’s anti-troll law provides equitable relief in the case of bad-faith patent assertion. Though Vermont’s law was challenged on the basis that it was preempted by the U.S. Constitution and federal law, that case (MHPJ Tech. Investments v. Sorrell, D. Vt. Case No. 14-cv-191) was dismissed before any decision on the merits. It remains to be seen whether enforcement of state anti-troll laws will withstand preemption-based challenges, but their very existence suggests that state legislators and their attorneys feel that it is possible to stake out areas at the intersection of patent law and consumer protection that may not be preempted by federal law or regulations. With that in mind, it is not entirely clear that federal preemption will prevent states from compelling aBLA production if the biosimilar applicant is found to have violated a state consumer protection law.

Biosimilar Applicants May Provide Notice Of Commercial Marketing At Any Time

The Supreme Court next considered the Federal Circuit’s decision that a biosimilar applicant’s notice of commercial marketing under §262(l)(8)(A) of the BPCIA may be given only after the aBLA has been licensed by the FDA. In support of that holding, the Federal Circuit had cited the statute’s use of the past-tense — “the biological product licensed under subsection (k)” — in the notice provision, which stands in contrast to the language used in other provisions — “the biological product that is the subject of the application.” The Federal Circuit found that interpreting the notice provision to require prior licensure also comported with congressional intent, in part because the statute expressly contemplates that a reference product sponsor may seek a motion for preliminary injunction after receiving notice, and “[r]equiring that a product be licensed before notice of commercial marketing ensures the existence of a fully crystallized controversy regarding the need for injunctive relief.”

The Supreme Court rejected the Federal Circuit’s reasoning, and criticized the Federal Circuit’s decision as reading into the statute an additional “timing requirement” that the Court found to be absent from the plain language of the statute. Under a plain-language reading, the Supreme Court held that notice may be given at any time — including on the day after the aBLA is filed, as Sandoz did — or any other day. Importantly, because the BPCIA allows either party to file a declaratory judgment action once notice has been given, early notice effectively robs the reference product sponsor of the statute’s “unilateral” relief of filing an early declaratory judgment action. A biosimilar applicant may now simply file its aBLA, give notice, and file suit simultaneously. Or it may never give notice at all, and the sole remedy will be for the reference product sponsor to file suit when it learns a biosimilar launch is imminent. 

Plainly, this part of the Supreme Court’s opinion opens the door to the “chaos” that Amgen and its amici predicted, and leaves many open questions about how biosimilar applicants might use the timing of its notice to game the system. For example, will biosimilar applicants withhold notice altogether and launch at-risk on the theory that the reference product sponsor has no remedy other than filing a patent infringement lawsuit after the licensed biosimilar is already on the market? Or will applicants give very early notice — as Sandoz did — in an attempt to spur an early lawsuit encompassing all relevant patents? Those questions will only be answered by observing what biosimilar applicants do in the days to come.

Finally, in a one-paragraph concurrence, Justice Breyer stated that while he joins the Court’s opinion and finds its interpretation “reasonable,” in his view Congress “implicitly delegated” to the FDA authority to provide its own interpretation of the statute, and if the FDA “determines that a different interpretation would better serve the statute’s objectives,” it may have authority to depart from the Court’s interpretation. It remains to be seen if reference product sponsors will take Justice Breyer’s concurrence as an invitation to lobby the FDA for a different, more favorable interpretation of the statute.

Notes:

1. The relevant provisions of the patent statute are 35 U.S.C. §§271(e)(2) and (e)(4); the relevant provisions of the BPCIA are 28 U.S.C. §§262(l)(2)(A) and (l)(9)(C).

About The Author:

Brendan O’Malley is a partner at Fitzpatrick, Cella, Harper & Scinto and vice-chair of the firm’s Biotechnology & Biologics Practice Group. He has experience in all aspects of intellectual property law and represents clients in a broad range of pharmaceutical and biotechnology cases.

Image credit: "Supreme Court" (2009) by Mark Fischer. Licensed under CC BY-SA 2.0.