Supreme Court Dictates How Long Biosimilar Applicants Must Wait Before Bringing Approved Products to Market

June 13, 2017

Introduction

Over seven years after the Biologics Price Competition and Innovation Act (BPCIA) was signed into law, the Supreme Court has answered two fiercely disputed questions about how certain rules set forth under 42 U.S.C. § 262(l) should be interpreted. Overall, yesterday’s holding streamlines the litigation piece of biosimilar approval, at least with respect to the commercial marketing notice requirement set forth in the Act.

First, the Court ruled that a biosimilar applicant may provide notice of commercial marketing of its product even before that product has been formally licensed (i.e., approved) by the FDA. Section 262(l)(8)(A) states that the applicant “shall 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).” Yesterday’s decision confirms that the applicant need not wait until FDA approval before providing the requisite 180-day notice.

Second, the Court ruled that, while § 262(l)(2)(A) requires the biosimilar applicant to provide the reference product sponsor with a copy of its application for biosimilar product approval and other information about the product manufacturing process, the biosimilar applicant cannot be compelled to do so via injunction under federal law. It remains an open question whether, under state law, an injunction would be available to enforce § 262(l)(2)(A).

Background

Signed into law on March 23, 2010, the BPCIA establishes an abbreviated pathway for the approval of biologic drugs which have been deemed “biosimilar” to an existing and already approved reference product. The framework allows a biosimilar to use the safety and efficacy data for a previously approved reference biologic, and is commonly likened to the Hatch-Waxman process for approval of generic pharmaceuticals. However, the complexity of biologic substances necessitates a more nuanced and intricate set of rules both for approving such drugs and for addressing disputed intellectual property issues.

Since many reference products will be covered by existing patent rights, the BPCIA sets forth a detailed protocol for the biosimilar applicant (“subsection k applicant”) and the reference product sponsor to identify and litigate patent disputes. This protocol involves an elaborate exchange of information (i.e., “the patent dance”), beginning with § 262(l)(2)(A)’s directive that the subsection k applicant “shall provide to the reference product sponsor a copy of the application submitted to the Secretary under subsection (k), and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application.” Moreover, because patent disputes contemplated by the BPCIA take place in the context of competitive market structures, the Act provides a 180-day waiting period between when the biosimilar applicant notifies the reference product sponsor of its intent to commercially market the biosimilar product and when that product can be made available for commercial marketing and sale. This six-month waiting period is designed to allow the reference product sponsor to seek a preliminary injunction prohibiting the sale of the biosimilar while any patent disputes are resolved.

Litigation History

Amgen markets and sells the product Neupogen, a drug comprising a large protein, administrable by injection and designed to stimulate the production of white blood cells. In May 2014, Sandoz submitted an application with the FDA seeking approval to market a biosimilar of Neupogen under the brand name Zarxio. Sandoz immediately notified Amgen that it had submitted its application and, per § 262(l)(8)(A), that it intended to commercially market its as-yet unapproved product upon approval. Despite the directive set forth in § 262(l)(2)(A) that an applicant “shall provide” the sponsor with a copy of its biosimilar application, Sandoz declined to provide Amgen with its application and manufacturing information, avoiding triggering the remainder of the “patent dance” requirements.

Amgen sued Sandoz in the Northern District of California, asserting patent infringement and state law claims for unfair competition. Amgen argued that § 262(l)(8)(A) required notice of commercial marketing only after Sandoz’s product had been approved by the FDA and that Sandoz’s failure to comply with § 262(l)(2)(A) warranted an injunction compelling it to produce the requisite materials.

Sandoz secured approval for Zarxio while the district court case was pending and again provided Amgen with its 180-day commercial marketing notice. The district court granted partial judgment on the pleadings to Sandoz on its BPCIA counterclaims and dismissed Amgen’s unfair competition claims with prejudice. Amgen appealed to the Federal Circuit, where a divided panel ruled that an applicant may provide effective notice of commercial marketing only after the FDA has licensed the biosimilar. The Federal Circuit also held that the remedies contained in the BPCIA are the exclusive remedies for an applicant’s failure to comply with § 262(l)(2)(A).

SCOTUS Decision

In a unanimous decision, the Supreme Court answered two questions. With respect to the commercial marketing notice provision under § 262(l)(8)(A), the Court took a textual approach, holding that because the phrase “of the biological product licensed under subsection (k)” modifies “commercial marketing” rather than “notice,” the biosimilar product must be licensed at the time of “commercial marketing” but need not be licensed at the time of “notice.” That is, the Court reversed the Federal Circuit’s interpretation of the word “licensed,” and ruled that the “statute’s use of the word ‘licensed’ merely reflects the fact that, on the ‘date of the first commercial marketing,’ the product must be ‘licensed’ . . . Accordingly, the applicant may provide notice either before or after receiving FDA approval.” Though both sides provided a variety of policy arguments in support of their respective interpretations, the Court found the plain text of the statute clear enough to resolve the dispute without resorting to extraneous information about Congress’ intent.

With respect to the availability of injunctive relief for failure to provide application and manufacturing information under § 262(l)(2)(A), the Court took a straightforward approach: that the BPCIA already provides a remedy for the reference product sponsor when an applicant fails to comply with § 262(l)(2)(A). In such a case, under § 262(l)(9)(C), the reference product sponsor is entitled to bring an immediate declaratory judgment action for artificial infringement as defined in § 271(e)(2)(C)(ii). Because this remedy, amounting to control over venue and timing, is available to the reference product sponsor in the event that the biosimilar applicant violates § 262(l)(2)(A), all other federal remedies are excluded, including injunctive relief. The Supreme Court remanded the case to the Federal Circuit to determine whether noncompliance with § 262(l)(2)(A) would be “unlawful” under California state law.

Takeaways

Yesterday’s Supreme Court decision in Sandoz v. Amgen resolves the open question of how long a biosimilar applicant must wait before bringing an approved product to market. Under prior Federal Circuit law, a biosimilar applicant was required to wait for approval before providing commercial marketing notice and then required to wait another 180 days, during which time a reference product sponsor could seek a preliminary injunction. But the Court’s ruling makes clear that the BPCIA does not contemplate an additional six-month period of exclusivity that begins only after approval. Now, if desired, such notice may be given much earlier in the approval process and, if given at least 180 days prior to approval and assuming no injunction issues, a biosimilar may be ready to market immediately upon FDA licensure.

In addition, biosimilar applicants cannot be compelled, under federal law, to produce application and manufacturing information under § 262(l)(2)(A). Of course, it remains to be seen whether Sandoz will be subject to an injunction compelling the same under California state law. Ultimately, and depending on how the Federal Circuit remand is resolved, the requirement to provide application and manufacturing information may be state-specific and vary depending on the state unfair competition law at issue.

Please feel free to contact us if you have any questions or would like to discuss how this decision affects your IP strategy.