Supreme Court Paves Way for Faster Marketing of Biosimilars
The Supreme Court in Sandoz Inc. v. Amgen, Inc., 15-1039, reversed the Federal Circuit on some of the most basic provisions of the Biologics Price Competition and Innovation Act of 2009 (BPCIA or the Act). In a unanimous opinion, the Supreme Court held that (1) an injunction is not available under federal law to enforce provisions of the BPCIA requiring disclosure of to the innovator of biosimilar application materials, and (2) the Act’s requirement of 180-days’ advance notice before commercial marketing of the biosimilar may be provided before obtaining a biologic license from the FDA, thereby triggering an earlier possible patent litigation. The major effect of the opinion should be to shorten the time to market for biosimilar applicants that can successfully challenge asserted patents.
The Court vacated in part, reversed and remanded a decision of the Court of Appeals for the Federal Circuit granting an injunction preventing the marketing of Sandoz’s commercial product, Zarxio, a biosimilar to Amgen’s Neupogen. Neupogen is a white blood cell stimulating factor that has been commercially marketed since 1991. In May 2014, Sandoz filed an application with the FDA seeking to market Zarxio. On July 7, 2014, the FDA notified Sandoz that it had accepted the application for review, setting in motion certain procedural “requirements” under the Act. The next day, Sandoz notified Amgen that it had filed the application and intended to begin commercial sale of Zarxio immediately upon FDA approval, which was expected in early 2015. Sandoz also informed Amgen that it would not provide the application and related materials as mandated by § 262(l)(2)(A) of the Act. In October 2014, Amgen sued Sandoz for patent infringement and for unfair competition under California state law. In March 2015, Sandoz received approval from the FDA to commercially market Zarxio.
The Court first addressed whether § 262(l)(2)(A)’s requirement that an applicant for a biosimilar provide the sponsor with the application and manufacturing information is enforceable by a federal injunction. Like the Federal Circuit, the Court held that the provision is not enforceable by a federal injunction, but arrived there on different grounds. The Federal Circuit premised its finding on § 271(e)(4) of the Act, finding that the failure to meet the mandatory disclosure of § 262(l)(2)(A) was an artificial act of infringement and therefore subject to the limited remedial provisions of § 271(e)(4), none of which are a federal court injunction mandating compliance with the scheme. The Supreme Court saw it differently. Parsing the language of § 271(e)(2)(C), the Court held that the filing of the application was the artificial act of infringement, regardless of whether the applicant met its burden under § 262(l)(2)(A).
The Court then looked back to the Act and found that § 262(l)(9)(C)limited the remedies for failure to disclose the application to the sponsor. Under that section, “[i]f [] applicant fails to provide the application and information required under paragraph (2)(A), the reference product sponsor, but not [] applicant, may bring an action under section 2201 of title 28, United States Code, for a declaration of infringement, validity, or enforceability of any patent that claims the biological or a use of the biological product.” The Court noted that the “remedy provided by § 262(l)(9)(C) excludes all other federal remedies, including injunctive relief.” Slip Op. at 12. The Court found further support for the “no injunction” position in Congress’s authorization of injunctive relief in another context in § 262(l), i.e., in the context of confidentiality breaches. Thus, the Court “assume[s] that Congress acted intentionally when it provided an injunctive remedy for breach of the confidentiality requirements but not for breach of § 262(l)(2)(A)’s disclosure requirements.” Id. at 13.
The absence of an injunctive remedy under federal law, however, does not preclude a state law injunctive remedy. For example, under California law penalizing “unlawful” conduct. The Federal Circuit had concluded that because the failure to supply the application was, in itself, an artificial act of infringement, it determined that the exclusive remedy was provided in § 271(e)(4) of the Act, a provision without an injunctive remedy. According to the Court, a separate state law question exists, whether the applicant’s required disclosure is “mandatory,” or whether it is merely a “condition precedent” to the information exchange process. If the latter, the argument is that the applicant has a choice provided by the Act and therefore the choice cannot be unlawful. But because that is a state law question, the Supreme Court declined to address it and remanded it to the Federal Circuit for consideration.
The Court then addressed the second question, i.e., whether notice under § 262(l)(8)(A) may only be provided after licensure by FDA. The timing of the notice is significant because it starts the 180-day clock after which the biosimilar, if licensed, may be made available for commercial marketing. Amgen argued that the plain meaning of the provision should govern and that the language of the subsection required the applicant to “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).” (emphasis added). Because the product had to be licensed, the notice could only be given after licensure. The Court disagreed and held that “the applicant may provide notice either before or after receiving FDA approval.” Slip Op. at 16.
Based on its determination, the Court further held that the Federal Circuit erred in granting an injunction based on the notice provision.
The Court’s ruling is a definite victory for biosimilar applicants, making it easier and faster for applicants to clear patents. Patent holders are not likely to take much comfort in the remand regarding a possible injunction under state law. Biosimilar applicants are likely to continue refusing to provide application and manufacturing information, and will certainly continue giving early notice to allow for commercial marketing of the biosimilar at the earliest possible date. Perhaps the only comfort for biologics innovators is that the shoe may be on the other foot in any given instance; many biosimilar applicants are also developing biologics themselves. Sandoz is a division of Novartis, for example. When the day comes for a Novartis biologic to be challenged, the Sandoz victory may not seem as complete.