Amgen v Sandoz: marketing exclusivity under the BPCIA

On February 16, 2016, Sandoz filed a petition for a writ of certiorari asking the US Supreme Court to review the case Amgen v Sandoz, in which the US Court of Appeals for the Federal Circuit interpreted key provisions of the Biologics Price Competition and Innovation Act (BPCIA) (codified at 42 USC §262[k]).

The BPCIA was passed as part of the Affordable Care Act in 2010. Its purpose is to balance innovation and consumer interests by creating an abbreviated pathway for a biosimilar applicant to enter the market by relying on safety and efficacy data contained in the Food and Drug Administration (FDA)-approved licence of a reference product.

Under the BPCIA, a biosimilar applicant cannot apply for an abbreviated licence until four years after the reference product was first licensed. Moreover, the FDA’s approval of the biosimilar product cannot be effective until 12 years after the reference product was first licensed, according to 42 USC §§262(k)(7)(A)–(B). So, a reference product sponsor (RPS) enjoys 12 years of marketing exclusivity, irrespective of its patent rights.

To encourage innovation while ensuring commercial availability of less expensive biosimilar products, the statute provides a procedure for disclosing information about a biosimilar product before its launch, followed by two possible ‘waves’ of litigation that allow the RPS to assert patent rights against the biosimilar applicant.

Under §262(l)(2) of the BPCIA, a biosimilar applicant “shall provide to the reference product sponsor a copy of the application” no later than 20 days after the FDA accepts the biosimilar application. Thereafter, the biosimilar applicant and the RPS engage in a complicated patent dispute-resolution scheme called the ‘patent dance’.

First, the biosimilar applicant and the RPS exchange lists of patents to determine which ones may be relevant to the proposed biosimilar product. The parties then negotiate which patents might be asserted in a first wave of litigation, as42 USC §§262(l)(2)−(6) explain.

The BPCIA also requires the biosimilar applicant to provide notice to the RPS no later than 180 days before the date of the first commercial marketing of the biosimilar product, as 42 USC §262(l)(8)(A) mandates. During that 180-day period, the RPS may seek a preliminary injunction in a second wave of litigation prohibiting the biosimilar applicant from the commercial manufacture or sale of the biosimilar product. That is provided none of the patents that could have been litigated in the first wave of litigation may be re-litigated in the second wave, according to 42 USC §262(l)(8).

But what if the biosimilar applicant fails to disclose its application to the RPS under §262(l)(2)? Are the parties still required to go through the patent dance steps? Subsection (l)(9)(C) allows the RPS to bring a declaratory judgment action asserting “any patent that claims the biological product or a use of the biological product”. The dispute between Amgen and Sandoz arose in this context, with Sandoz declining to disclose its biosimilar application to Amgen under §262(l)(2).

The case at hand

Amgen has marketed filgrastim under the brand name Neupogen since 1991. In May 2014, Sandoz filed an application to seek FDA approval of a biosimilar version of filgrastim, which Sandoz planned to market under the name Zarxio. On July 8, 2014, before FDA approval, Sandoz notified Amgen that it intended to commercially market Zarxio immediately after receipt of approval.

Later in July 2014, Sandoz informed Amgen that it had opted not to provide Amgen with Sandoz’s biosimilar application and that Amgen was entitled to sue Sandoz under §262(l)(9)(C). About eight months later, in March 2015, the FDA approved Zarxio as the first biosimilar filgrastim product in the US.

The issues before the federal circuit were (1) whether Sandoz’s disclosure of its biosimilar application to Amgen, along with the subsequent patent dance process, is mandatory; and (2) whether Sandoz’s July 2014 notice given before FDA approval was effective notice under §262(l)(8)(A).

The federal circuit, in a 2-1 opinion with two partial dissents, held that (1) disclosure of a biosimilar application and the subsequent patent dance process are voluntary processes that Sandoz may choose not to participate in; and (2) the pre-approval notice by Sandoz was defective. On the first issue, even though subsection (l)(2)(A) read in isolation seems to mandate that a biosimilar applicant should disclose certain information and go through the patent dance process, the majority (Judges Lourie and Chen) ultimately held that a biosimilar applicant may choose not to participate in that process.

The majority reasoned that 42 USC §262(l)(9)(C), along with 35 USC §271(e)(2)(C)(ii), set forth the consequence when a biosimilar applicant fails to disclose the required application under §(l)(2)(A)—the consequence being that the RPS may immediately bring a patent infringement action against the biosimilar applicant. Therefore, they said, mandating compliance with §(l)(2)(A) would render 42 USC §262(l)(9)(C) and 35 USC §271(e)(2)(C)(ii) superfluous. Judge Newman dissented and interpreted §§(l)(2)–(l)(7) as imposing mandatory disclosure and the patent dance requirements.

On the second issue of commercial marketing notice, the majority (Lourie and Newman) relied heavily on §262(l)(8)(A)’s language that “the subsection (k) applicant shall provide notice to the reference product sponsor not later than 180 days ... of the biological product licensed”, and held that such notice is effective only if it’s given after the biosimilar product is licensed by the FDA.

“Although it is premature to predict whether the Supreme Court will grant review, and if so what the court will decide, the federal circuit’s decision has some immediate implications.”

The rationale is that the statute contemplates that notice of a “licensed” biological product be given, which cannot occur until the FDA approves the application. The court further noted that §262(l)(8)(A) is the only paragraph in subsection (l) that refers to the biosimilar product as “the biological product licensed”, whereas the other provisions of the subsection all refer to the biosimilar product as “the biological product that is the subject of” the application. This differentiation, explained the majority, supports their interpretation.

Chen dissented on the ground that §262(l)(8)(A) comes into play only if the disclosure and patent dance in §§(l)(2)–(l)(7) are followed. Contrary to the majority’s view, Chen would not read §262(l)(8)(A) in isolation but as contingent on the steps in §§(l)(2)–(l)(7) that immediately precede it in the same subsection. According to Chen’s interpretation where, as here, a biosimilar applicant such as Sandoz does not disclose its application under §(l)(2), the 180-day commercial marketing notice under §262(l)(8)(A) is also not triggered, and the applicant is then entitled to commercially market its biosimilar product immediately after FDA approval.

Sandoz’s writ petition asks the Supreme Court to overturn the federal circuit’s interpretation of the provision on 180-days’ commercial marketing notice. Sandoz raised three principal arguments. One, the federal circuit’s interpretation of the statute in effect extends the 12-year exclusivity period of §262(k)(7)(A) by an additional 180 days, which “conflicts with the statutory text and upends the provision’s purpose”.

Next, the federal circuit’s interpretation frustrates “the BPCIA’s early patent resolution regime” because the RPS cannot seek a preliminary injunction under §262(l)(8)(B) until the biosimilar application has been approved. According to Sandoz, this outcome “is entirely inconsistent with a statute structured to maximise the chance that any patent disputes will be resolved beforeFDA approval”.

Third, the federal circuit’s interpretation creates “a private right of action for an automatic injunction” by “barring the marketing of the already approved biosimilar until 180 days after the post-approval notice—without regard to whether the sponsor could show any valid patent rights or any irreparable harm”.

Amgen opposed Sandoz’s writ petition, contending that the federal circuit faithfully applied Supreme Court precedent holding that where Congress uses two different terms, it intends different meanings. In addition, Amgen concurrently filed a conditional cross-petition and asked for the other part of the decision, which held that the patent dance process is not mandatory, to be overturned.

Future battles

Although it is premature to predict whether the Supreme Court will grant review, and if so what the court will decide, the federal circuit’s decision has some immediate implications. As it stands, the decision will in effect result in a de facto extension of the marketing exclusivity granted to certain biologic products, particularly older products that have been on the market for several years before the biosimilar application is filed.

Indeed, the federal circuit noted that the de facto extension will not be so problematic, on the ground that the “extra 180 days will not likely be the usual case, as [biosimilar applications] will often be filed during the 12-year exclusivity period for other products”. On the other hand, although it is true that the de facto extension occurs only if the biosimilar applicant does not obtain FDA approval before the 12-year exclusivity period, this 180-day waiting period is not likely to be rare because many current disputes involve biologics that were approved by the FDA 12 or more years ago.

This article is intended for educational and informational purposes only and does not constitute legal advice or services. These materials represent the views of and summaries by the authors. They do not necessarily reflect the opinions or views of Vinson & Elkins or of any of its other attorneys or clients.

Darryl Woo is an intellectual property partner in  Vinson & Elkins’ San Francisco office. He can be contacted at: dwoo@velaw.com

Erin Ator Thomson is a counsel in Vinson & Elkins’ Austin, Texas office. She can be contacted at: ethomson@velaw.com

Janice Ta is a senior associate in Vinson & Elkins’ Austin, Texas office. She can be contacted at: jta@velaw.com

Wendy Wang is an associate in Vinson & Elkins’ San Francisco office. She can be contacted at: wwang@velaw.com