Supreme Court Boosts Biosimilars By Allowing Early Notice

The Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), codified in 42 U.S.C. § 262, ushered in a new wave of patent litigation for large molecules, and a bounty of questions regarding the application and interpretation of the statue.  In Sandoz v. Amgen, –U.S.–, June 12, 2017, The Supreme Court weighed in for the first time on certain questions presented by the Act.

The first question addressed by the Supreme Court concerned the remedies that may be available to a “reference product sponsor” or “sponsor” under § 262(l)(2)(A) when an applicant seeking FDA approval for a biosimilar product (“applicant”) fails to comply with certain disclosure requirements.  Under § 262(l)(2)(A), an applicant shall provide to the sponsor a copy of the FDA application for the biosimilar product and any other information describing the manufacturing process for the product within twenty days of receiving notice from the FDA that its biosimilar application has been accepted for review.  This is the first step in the so-called “patent dance” wherein the sponsor and the applicant engage in a process of disclosure and bifurcated patent litigation to resolve patent infringement, validity and enforcement issues with the ultimate goal of moving the biosimilar drug to market faster.

In the dual-phased patent litigation set up under the BPCIA, the first series of patent infringement actions is the result of collaboration between the applicant and the sponsor to identify patents that may be infringed by the applicant’s product, or the manufacturing or use thereof.  The goal of this “cooperative” effort is to identify patents for immediate litigation.

The second phase of patent litigation is triggered upon notice by the applicant under § 262(l)(8)(A), which provides the sponsor 180 days notice prior to the first commercial marketing of the biosimilar.  In this second phase, the parties have an opportunity to litigate any patents that were not litigated in the first phase.

As one might imagine, a critical step in the process to initiate the first phase of patent litigation is the provision of the FDA biosimilar application and associated information from the applicant to the sponsor.  Indeed, this first step allows the sponsor and the applicant to begin the dialogue that enables identification of patents that may be implicated in litigation.

Sandoz sought FDA approval for Zarxio, the biosimilar version of Amgen’s Neupogen, and received notice from the FDA on July 7, 2014 of acceptance of its biosimilar application.  Immediately, Sandoz provided notice to Amgen both of its submission of a biosimilar application to the FDA and of its intent to begin marketing Zarxio immediately upon FDA approval of its application.  Sandoz also informed Amgen that it would not be providing its biosimilar application or any other information concerning Zarxio to Amgen under § 262(l)(2)(A). Amgen, in turn, sued Sandoz for patent infringement and, relevant to the Supreme Court decision, asserted two claims under California’s unfair competition law which prohibits “any unlawful business act or practice.”  “Unlawful” under the California statute is any practice that violates a rule contained in some other state or federal statue.

Both the district court and the Federal Circuit dismissed the unfair competition claim asserting that the only remedy for violating the disclosure requirement under § 262(l)(2)(A) is to allow the sponsor to bring a patent infringement or declaratory judgment action as contemplated under other sections of the BPCIA.  The Federal Circuit also held that an injunction is not available under § 262(l)(2)(A) to allow a sponsor to compel the disclosure.

The Supreme Court agreed with the Federal Circuit, under different reasoning, that an injunction is not available and the only federal remedy for the applicant’s failure to comply with the disclosure requirement is via the declaratory judgment remedy available to the sponsor under § 262(l)(9)(C).  More importantly, however, the Supreme Court disagreed with the Federal Circuit’s conclusion that California’s unfair competition law was inapplicable and remanded the case to decide whether California law would treat noncompliance with § 262(l)(2)(A) as “unlawful,” and, if so, whether the BPCIA pre-empts additional state remedies.

The second question addressed by the Court is when the applicant may provide the notice of commercial marketing of the biosimilar product to the sponsor required under § 262(l)(8)(A).  The Federal Circuit interpreted this provision to mean that such notice must be provided after FDA approval of the biosimilar drug and 180 days prior to marketing of the biosimilar.  The Federal Circuit reasoned that licensing by the FDA was required in order to give certainty to the sponsor around the scope of FDA approval (for example, certain uses), timing and even whether approval would be granted.  This approach would allow the sponsor to ascertain which patents were implicated by approval and seek a preliminary injunction.  However, the downside to this approach is to effectively grant the sponsor an additional six months of exclusivity beyond FDA approval of a biosimilar.

The Court disagreed, relying only on the language of § 262(l)(8)(A) to determine that the 180 day pre-marketing notice may be provided either before or after the biosimilar is licensed by the FDA.  The Court did not consider any of Amgen’s policy arguments for post-licensure notification, saying those could not overcome the plain language of the statute.

In summary, the holding in Sandoz v. Amgen provides a pathway for a biosimilar applicant to begin marketing of a biosimilar immediately upon FDA approval.  It also presents the interesting conundrum that both phases of patent litigation may be triggered at the same time, as was implicated by Sandoz providing both notice of acceptance of its application for Zarxio and intent to market Zarxio to Amgen simultaneously.  Additionally, the Court left to be decided whether and to what extent remedies remain available under state tort claims for non-compliance with certain provisions of the BPCIA.