By Kevin E. Noonan --
The Federal Circuit's decision in Amgen v. Sandoz, regarding litigation "under" (or at least based upon) the Biologics Price Control and Innovation Act (BPCIA), interpreted for the first time two provisions of the law. The first was whether the requirement in the law that the biosimilar applicant (BA) disclose its biosimilar application (aBLA) and other information to the reference product sponsor (RPS) was mandatory (as it appeared by Congress' use of the term "shall" in that provision of the statute); it is not according to the Court's decision. The second was whether the 180-day notice provisions of the statute permits a BA to give notice of commercial marketing prior to FDA approval of the aBLA; according to the Federal Circuit's decision the BA cannot provide such "early" notice. Sandoz petitioned for certiorari (and Respondent Amgen conditionally cross-petitioned), and the Supreme Court asked the Solicitor General for the government's views on whether or not to grant cert. Last week, Acting Solicitor General Ian Heath Gershengorn provided those views.
The SG recommended that the Court grant both cert petitions, counseling that the Court should overturn the Federal Circuit's determination that a BA cannot provide notice of commercial marketing under the statute prior to FDA approval, but to affirm the Federal Circuit's decision that the disclosure provisions of the statute are not mandatory. These recommendations are expressly policy-driven; the SG states that the reason the Court should hear the parties is based on the importance of biologic drugs and their cost:
"[B]iologic medicines are among the most important pharmaceuticals available today" and "are also among the most expensive, with costs often exceeding tens of thousands of dollars per year," citing FTC, Follow-On Biologics Workshop, Tr. 8 (Feb. 4, 2014), http://www.ftc.gov/system/files/documents/public_events/171301/140204biologicstranscript.pdf (statement of FTC Chairwoman Edith Ramirez). In 2013, biologics accounted for approximately $80 billion in spending in the United States, constituting approximately 25% of all pharmaceutical expenditures. FTC, Public Workshop: Follow-On Biologics: Impact of Recent Legislative and Regulatory Naming Proposals on Competition, 78 Fed. Reg. 68,841 (Nov. 15, 2013).
And as a matter of statutory interpretation, the SG's brief states that "[t]he BPCIA represents a carefully calibrated legislative effort to promote innovation and competition in this important field, and the questions presented address core questions governing how the BPCIA operates."
The SG's brief sets out it conclusions succinctly:
The court of appeals erred in interpreting Subsection (l)(8)(A) [the Notice provision], but it correctly construed Subsection (l)(2)(A) [the "patent dance" provision]. The proper interpretation of those provisions has a significant impact on the operation of the BPCIA and the ability of aBLA applicants promptly to bring their biosimilars to the public. And because the provisions are integrally related, the Court should consider all of the questions presented together. Both the certiorari petition and conditional cross-petition therefore should be granted.
The SG's analysis is expressly textual (if not hypertextual). The brief frames the notice provisions as a gatekeeper for initiation of a second round of patent infringement litigation, wherein said notice triggers the "stay" imposed on such litigation the SG says is part of the statutory scheme. Specifically:
The text and purpose of Section 262(l)(8)(A)'s notice provision and the BPCIA's broader statutory context demonstrate that the provision permits [but does not mandate] an applicant to give advance notice of the first commercial marketing of its biosimilar before FDA has licensed the biosimilar.
The SG advocates that the statute provides that the RPS "may seek a preliminary injunction to enjoin such marketing '[a]fter receiving the notice * * * and before [the] date of the first commercial marketing,'" citing § 262(l)(8)(B). In practice, however, should the BA (as Sandoz did in this case) give the required notice when the FDA accepts the aBLA for review, the RPS can either file suit (and seek a preliminary injunction immediately; as in this case, in the absence of anything other than the notice upon which to base its motion), or risk waiting for the FDA to approve the biosimilar (burdening the RPS with a surveillance responsibility not recited in the statute).
The brief provides this basis for its reading of the statute:
The timing of biosimilars' entry onto the market prohibits FDA from making its approval of an aBLA effective before 12 years after the reference product's first licensure. . . . Given the expressly granted exclusivity periods, it is particularly unlikely that Congress would have further delayed biosimilars' marketing in such an indirect manner.
This passage illustrates the overarching concern expressed by the brief, that biosimilar market entry could be delayed even if there was no basis for a delay, i.e., that the RPS did not have a patent that would preclude market entry.
The statute provides a balance, according to the SG's brief, between Round 1 litigation (as a consequence of the statute's provisions for aBLA filing as an artificial act of infringement), the timing and subject matter of which is controlled by the BA, and Round 2 litigation prompted by the notice of commercial marketing, which in the SG's view is under the RPS control.
Importantly, not only does the SG argue that notice of commercial marketing can be given before FDA approval, but the brief argues that injunctive relief is not available as a remedy after such notice is given. This is based on the principle that the right to an injunction must be conferred by statute, and the BPCIA does not do so (supposedly this proscription lies outside the scope of a preliminary injunction motion in the anticipated second round of litigation provided by the statute).
This means the BA will be able to market immediately upon approval, and the only recourse for an RPS is to file suit and apply for a TRO -- because unlike under the Hatch-Waxman Act there is no automatic stay upon filing suit under the provisions of the BPCIA. Alternatively, if as in this case the notice is given at the same time that the FDA accepts the aBLA for review, the RPS would need to initiate both Phase 1 and Phase 2 of the litigation at the same time.
With regard to the patent dance, the SG takes an interesting position: the Federal Circuit construed the statute incorrectly, but arrived at the correct conclusion:
The government agrees that the Federal Circuit misconceived the relevant inquiry [concerning whether the disclosure provisions are mandatory]. But Section 262(l)(2)(A) may properly be understood as imposing a mandatory condition for invoking Subsection (l)'s patent-dispute framework without concluding that an injunction is available to compel compliance with that condition. Even if the term 'shall' is understood as mandatory, the only consequences for failing to satisfy that condition are those expressly set forth by Congress in the BPCIA. That conclusion flows logically from essentially the same reasons discussed . . . in connection with [notice provisions] Section 262(l)(8)(A).
The SG also agrees with the Federal Circuit majority that the RPS has alternatives to protect its interests:
And as petitioner explains, a [reference product] sponsor can, after conducting a diligent investigation, file an infringement suit as contemplated by the BPCIA based on any patent it reasonably believes has been infringed, and it may seek additional information regarding that patent claim through discovery.
These recommendations are significant, because the Supreme Court asks the government for its views under those circumstances inter alia where there are important policy considerations at stake. What these recommendations have in common is a reading of the statute that materially disadvantages the RPS in favor of the BA. According to the government, the BA can "opt out" of the patent dance at any time, and the statutory remedy is immediate suit. But depending on the timing of the BA's opt out, the RPS may have but a brief time to decide whether and where to bring suit, and on what basis. At this stage of the process the balance of information is firmly in favor of the BA; the BA has all the information (from regulatory filings and patent disclosures) the RPS may use against her. On the other hand, the RPS may know little about how the BA will produce its biosimilar and the similarities and differences (structural, pharmacological, etc.) between the biosimilar and the reference product, considerations important in making these decisions regarding suit against the BA.
Deciding the questions before it as the SG recommends, the Supreme Court can permanently enshrine these disparities into the law (unless and until Congress intervenes, if it deigns to do so). While this may promote cheaper biosimilar drugs in the near term, an overemphasis on cost to the detriment of development may have unintended consequences. Principal among these is that these drugs may be produced elsewhere in countries having different drug development dynamics than in this country. (Europe's reticence to provide patent protection for biotechnology for almost twenty years left the field clear for U.S. biotechnology companies to prosper without European company competition.) But this eventuality doesn't mean biologic drugs will be cheaper in the U.S. (the "Congressional intent" expressly relied upon in the SG's brief). Such countries, having a deep reservoir of internal and international demand will be able to charge what the traffic will bear in the U.S., particularly if these misguided policies have driven U.S. producers from the market (compare for example the consumer electronic industries in the 1980's; with American companies like Philips, and RCA, and GE having been driven out of the market by cheap foreign competition, new technologies were initially controlled by Sony, and Mitsubishi, and Samsung). None of these outcomes is beneficial to keeping the American status quo, much less making it great. And while it is unlikely to be the case that Congress intended to shift the balance against RPS's to this degree, if the Court takes the government's recommendations it may take the eventuality that the country suffers the consequences set forth above for Congress to realize that the golden-egged goose has been well and thoroughly cooked.