By Kevin E. Noonan --
On Wednesday, April 26, the Supreme Court will hear oral arguments in Sandoz Inc. v. Amgen Inc, involving interpretation for the first time of the Biologics Price Competition and Innovation Act ("BPCIA"), which was enacted in 2010 to facilitate the entry of biosimilar drug products into the marketplace. Yesterday's post considered the parties' and amici's arguments with regard to whether disclosure of a biosimilar applicant's biosimilar application (or aBLA) was mandatory or optional (see "Supreme Court Preview -- Sandoz Inc. v. Amgen Inc."). This post considers the other question before the Court: whether a biosimilar applicant must give notice of commercial marketing only after FDA has approved its aBLA, or whether such notice is effective at any time provided it is at least 180 days before commercial marketing commences.
The District Court agreed with Sandoz that the latter interpretation was the correct meaning to give this provisions of the statute (42 U.S.C. § 262(l)(8)(A)):
The subsection (k) 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).
The Federal Circuit disagreed, in a opinion by Judge Lourie joined by Judge Newman, with Judge Chen dissenting (see "Amgen v. Sandoz (Fed. Cir. 2015)"). The Federal Circuit majority agreed with Amgen that notice can only effectively be given after the biosimilar product has been approved by the FDA. According to the opinion, this is because while in other portions of the statute, the biosimilar product is referred to as "the biological product that is the subject of the application," in subsection (l)(8)(A) the statute reads "the biological product licensed under subsection (k)." The change in language indicates to the Court that "[i]f Congress intended paragraph (l)(8)(A) to permit effective notice before the product is licensed, it would have used the 'subject of' language." The Court appreciated that Congress made this distinction at least in part because it is only after licensure that "the product, its therapeutic uses, and its manufacturing processes are fixed," something that even the biosimilar applicant does not know with certainty when it applies for FDA approval. The Court also recognized that "[g]iving notice after FDA licensure, once the scope of the approved license is known and the marketing of the proposed biosimilar product is imminent, allows the RPS to effectively determine whether, and on which patents, to seek a preliminary injunction from the court." This permits "a fully crystallized controversy" between the parties to have arisen when suit is filed, and "provides a defined statutory window during which the court and the parties can fairly assess the parties' rights prior to the launch of the biosimilar product." Interpreting the statute as advanced by Sandoz would, on the contrary, result in a situation where "the RPS would be left to guess the scope of the approved license and when commercial marketing would actually begin." The Court dismissed the argument that Amgen would receive unfairly an additional 180 days of exclusivity as being serendipitous under these particular circumstances (Sandoz having filed its aBLA 23 years after Amgen received market approval) which will not be the usual case.
Judge Chen, in his dissent on this issue, was concerned that the majority's opinion gave Amgen another 180 days of exclusivity that is outside the statutory 12-year exclusivity term and thus should not be permitted (because it gives Amgen "an extra-statutory exclusivity windfall"). He believed that a biosimilar applicant could give notice of intent to market prior to obtaining FDA approval of its biosimilar product. Stated in statutory construction terms, Judge Chen believed that subsection (l)(8)(A) becomes a nullity when, as here, the biosimilar applicant has not complied with subsection (l)(2)(A)'s provisions. This is because he viewed the provisions of subsection (l)(8)(A) to be intended to give the reference product sponsor time to obtain an injunction when the other provisions have been complied with and, as a result, the reference product sponsor has not been able to assert all its patents prior to biosimilar product launch. He stated in this regard his opinion that "[t]he interwoven structure of subsection (l) indicates that Congress viewed the procedures of (l)(8) as inseverable from the preceding steps in [section] (l)."
Sandoz presented this question to the Court in its certiorari petition:
Whether notice of commercial marketing given before FDA approval can be effective and whether, in any event, treating Section 262(l)(8)(A) as a stand-alone requirement and creating an injunctive remedy that delays all biosimilars by 180 days after approval is improper.
The Court, before granting Sandoz' petition asked the Solicitor General for the government's views, which succinctly stated were that:
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 was expressly textual and framed 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 advocated 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), or risk waiting for the FDA to approve the biosimilar.
The brief provided 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.
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 did the SG argue that notice of commercial marketing can be given before FDA approval, but the brief argued that injunctive relief is not available as a remedy after such notice is given. This was 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 would be able to market immediately upon approval, and the only recourse for an RPS would be 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.
The party briefs generally followed these principles and arguments. Sandoz adopted a textual approach, wherein the various provisions of the BPCIA could be woven together into an integrated whole. In its view, the notice provision is just one aspect of a requirements/ remedies scheme set forth in the statute:
The Biosimilars Act specifies consequences for not following its procedural steps. Yet the Federal Circuit erroneously added its own remedy: a mandatory, 180-day injunction against commercial marketing of the biosimilar, even after it is licensed by the FDA. In addition, rather than reading the statutory provisions in context and as part of a coherent design, the Federal Circuit erroneously read the notice provision as a freestanding requirement, divorced from the role it plays in the statute's patent resolution regime.
The upshot of all these errors is a windfall for sponsors at the expense of competition and patients.
[T]he statute pairs the notice provision with an alternative procedural path. If the applicant does not provide the notice, the sponsor (but not the applicant) may bring a declaratory judgment action for any patents on the sponsor's original patent list (as well as any patents newly issued or licensed after the sponsor provided its original patent list). 35 U.S.C. § 271(e)(2)(C)(i); 42 U.S.C. § 262(l)(9)(B).
In addition to the policy bases (with regard to the "extra" six months of exclusivity) the brief also attacks the "extra-statutory" remedy of an injunction fashioned by the Federal Circuit, and asserts that the court did not satisfy the traditional requirements for injunctions in violation of the Supreme Court's eBay v. MercExchange decision:
Regardless of whether notice can be provided only after approval, the Federal Circuit independently erred by fashioning a private right of action for an extra-statutory injunction to enforce subsection (l)(8)(A). It is up to Congress, not the courts, to create private rights and remedies for their enforcement. The Biosimilars Act reflects no congressional intent to do so for the notice provision.
Congress created no private right in subsection (l)(8)(A). That provision plays only a procedural role by affecting the timing of certain patent infringement suits. Even if subsection (l)(8)(A) conferred a right, no extra-statutory remedy may be inferred for violating it. Congress already provided a remedy.
As an example of the Federal Circuit's error advocated by Sandoz, its brief argues that under the appellate court's interpretation, the notice (and additional 6-month "delay") would be required even where there were no patents remaining:
The Federal Circuit's ruling gives sponsors an additional 180-day injunction beyond that statutory period—thus effectively rewriting a central provision of the Biosimilars Act. And it does so even where the sponsor has no patent protection for its product.
In Sandoz view, so long as that "180 days before" condition is satisfied, so too is Section 262(l)(8)(A).
Amgen's brief also provides a textual exegesis of the statute, reaching the opposite conclusions. According to Amgen, the use of the term "licensed product" in the statute by its plain meaning mandates that notice cannot be given before approval. With regard to the structure of the statutory provisions as a whole, Amgen argues that the two "phases" of litigation (i.e., the first phase commonly referred to as the "patent dance" and the second phase that commences after notice of commercial marketing is given) could be inverted if notice could be given as Sandoz did, upon FDA acceptance of the application. Using Sandoz' logic, that notice provides a reference product sponsor the opportunity to immediately bring suit on any patent, listed by the parties or not in the patent dance.
With regard to the practical realities, Amgen voices the concern expressed by the Federal Circuit majority about the uncertainties that could arise following Sandoz' interpretation of these provisions of the statute (and notes in this regard that Sandoz' application was amended 30 times before obtaining FDA approval):
A notice given in such circumstances is a notice in name only. In practice, it tells the sponsor nothing about when the biosimilar will be approved or, indeed, whether it is likely to be approved at all. A sponsor cannot seek injunctive relief against such a hazy risk of the biosimilar's launch; instead, it will have to rush to the courthouse to seek emergency injunctive relief after learning of the biosimilar's licensure.
Under Sandoz's approach, a sponsor could be left totally in the dark about the existence of a pending application until the applicant launched its competing product upon receiving FDA approval. The sponsor would then have to rush to court to seek emergency injunctive relief on every potentially relevant patent, without having time to analyze the nature of the biosimilar and the scope of the FDA's approval, and without knowledge of the manufacturing process. The resulting proceedings would burden the courts by forcing them to decide complex disputes almost instantaneously. As experience with the Hatch-Waxman Act demonstrates, such compressed proceedings are arduous for the judiciary and unnecessarily prone to error.
The chaos caused by Sandoz's and the government's interpretation is reason enough to reject it. Amgen's interpretation of the statutory scheme is not merely more consistent with the statutory text and structure. It is also the only one that serves Congress's goal of promoting the orderly and efficient resolution of patent disputes.
Amgen's brief also argues that this chaos is exacerbated where, as here, the biosimilar applicant has failed to make its § 262(l)(2)(A) disclosures, exemplified by situations where a biosimilar applicant "seek[s] approval for a different formulation than the reference product, a different delivery device, a subset of the reference product's routes of administration and conditions of use, or different manufacturing techniques." In addition, under these circumstances the statutory relief which Sandoz assures the Court remains as a remedy (such as a preliminary injunction) could be much less robust, because "[t]he sponsor could have trouble articulating why it was 'likely to suffer irreparable harm in the absence of preliminary relief,' why it was 'likely to succeed on the merits,' or why an injunction was 'in the public interest,'" citing City of Los Angeles v. Lyons, 461 U.S. 95, 111 (1983) (injunctive relief requires "a 'likelihood of substantial and immediate irreparable injury'"). Finally, Amgen argues that the regime advanced by Sandoz would "impose extraordinary burdens on district courts" because "emergency proceedings [] would be necessary under Sandoz's view [that] would afford courts little time to examine potentially voluminous factual records and complex questions of patent law. Patents relating to biosimilars are among the most technical that a generalist judge is ever likely to encounter. . . . It is difficult to imagine how a court conducting emergency proceedings, with no more than a few days or perhaps hours to issue a ruling, could sufficiently master the relevant issues to adjudicate patents like these."
Fourteen amicus briefs were filed, nine supporting Sandoz:
• AARP, AARP Foundation, Citizens against Government Waste, UAW Retiree Medical Benefits , National Health Law Program, and Coalition to Protect Patient Choice (addressing only the 180 day notice question)
• Adello Biologics (addressing only the 180 day notice question)
• America's Health Insurance Plan (addressing both questions)
• Apotex (addressing only the 180 day notice question)
• Biosimilars Council (addressing only the 180 day notice question)
• Coherus Biosciences (addressing both questions)
• Mylan (addressing both questions)
• Pharmaceutical Care Management Association, National Association of Chain Drug Stores, and Healthcare Supply Chain Association
• The United States (addressing both questions)
And five supporting Amgen:
• AbbVie (addressing both questions)
• The Biotechnology Innovation Organization (BIO)(addressing both questions)
• Genentech (addressing only the 180 day notice question)
• Janssen Biotech (addressing both questions)
• 11 Law Professors (addressing only the mandatory disclosure question)
Many of these amicus briefs concentrated on the deleterious consequences of the purported additional 180 days of market exclusivity; for example, the AARP's brief set forth these consequences in the context of their study showing (somewhat dubiously) that the development costs for a biologic drug could be recouped by a reference product sponsor in only one year and stating that "Congress did not intend to penalize biosimilars manufacturers for their readiness to bring their products to market immediately upon their approval by the FDA." The briefs by Adello Biologics, America's Health Insurance Plans, the Biosimilars Council, and the Pharmaceutical Care Management Association raised similar concerns as the basis for the Court to reverse the Federal Circuit. The Coherus brief follows the reasoning that the notice is provided in the statute only as a "safety valve," saying:
The statute's 180-day period is meant to give the reference product sponsor adequate time to seek an injunction, not itself serve as an injunction. . . . [T]he statute is designed to resolve some or all of the parties' patent disputes before the biosimilar application is approved, so that, if it turns out the proposed product will not infringe any valid patents, it can be launched—and the public can enjoy the befits that come with it—immediately upon expiration of the 12 year exclusivity. Section 262(l)(8) simply provides a safety valve that permits a reference sponsor who has engaged in the statutory patent identifications to immediately sue on any patent that the parties initially include on their lists of potential implicated patents under § 262(l)(3), yet do not include in the first-wave of litigation.
The Apotex's brief adopts Sandoz's argument about extra-statutory injunctive relief and argues that no notice of commercial marketing is required if the applicant complies with the patent dance, saying it serves no purpose if there are no remaining patents, while Mylan's brief asserts in the context of the statutory framework that "[t]here is no basis in the BPCIA, equity, or common sense to delay patient access to lower-cost biosimilars for even a day—much less 180 days— without a full consideration of the equities and justification on the merits of a patent claim." Finally in support of Sandoz, the government's brief reiterates much of what was in its earlier brief in support of the Court granting certiorari, but also contains the following argument with regard to the purported transparency of the biosimilar application process, which transparency was relied upon by Sandoz and several amici with regard to the need for notice at all:
Although 21 C.F.R. 601.51(b) constrains FDA from revealing the existence of an undisclosed aBLA, petitioner correctly explains . . . that a surprise-launch strategy would be infeasible given the amount of public information available by the time FDA approves a biosimilar. An applicant, moreover, would be quite unlikely to engage in a surprise launch in the face of a potentially viable patent claim, given the applicant's substantial and ongoing monetary investments in its biosimilar[], which would be put at significant risk by the monetary-damages and injunctive sanctions for actual (not artificial) patent infringement. . . . Finally, if an applicant were nevertheless to launch without notice, the district court could take any failure to give notice under Section 262(l)(8)(A) into account when exercising its equitable discretion to award preliminary injunctive relief while a sponsor's actual patent-infringement claims are being litigated.
BIO's brief in support of Amgen provides legislative history context for its arguments that subsection (l)(8)(A) of the BPCIA is mandatory as the "triggering mechanism" for the second wave of patent infringement litigation. Notice provides a minimum of six months for the reference product sponsor to assert all relevant patents (remaining after the patent dance) and seek a preliminary injunction to block biosimilar market entry. The brief argues that the 180-day notice cannot be given before FDA approval, both because of the statutory language and the possibility that the biosimilar product, its manufacture, or its intended uses are subject to change. The brief also adopts the Federal Circuit's proposal from Amgen v. Apotex that the FDA could issue tentative approval which would become effective at the end of the 12-year period.
Janssen's brief focuses on the "premature and ineffective" nature of "early" (pre-approval) notice, stating that such notice of commercial marketing "leaves the innovator uncertain of the nature of the product that will finally be approved or whether the product will be approved at all. The diseases that a product will eventually be approved to treat, the methods of manufacture that will ultimately be approved, and even the precise composition of the product can change from those disclosed in the initial aBLA."
Both AbbVie and Genentech's briefs argue against the notion that the Federal Circuit had created a private right of action that does not exist in the statute, with Genentech arguing "if not private litigant, then who?":
Sandoz's argument also is unmoored from the considerations and concerns that animate the Court's implied-right-of-action cases. Its brief relies on cases in which private lawsuits were excluded because Congress had created other mechanisms for enforcing its statutes. Here, however, Sandoz points to no other way to enforce the Biologics Act. This is not a situation in which Congress created a statutory scheme for an administrative agency to enforce.
According to Genentech's brief:
Sandoz wants to take the statutory shortcut without paying the toll. It seeks to reap the benefits of the abbreviated licensing procedure while disregarding the accompanying requirements. The Court should prevent Sandoz—and the scores of biosimilar applicants who would mimic its approach—from ignoring Congress's explicit instructions. As Amgen explains, the Biologics Act makes clear that notice of commercial marketing must follow the FDA's issuance of a license.
In addition, AbbVie argues that this question is not properly before the Court because Amgen sought an injunction in state court, not Federal Court and so the proper issue is whether the BPCIA preempted the state cause of action (a position that AbbVie argues Sandoz abandoned and that, even if properly before the Court should be held did not preempt).
The effects of these arguments may become more evident tomorrow.
Hey Kevin,
Sigh. Why am I not surprised that we've got an interpretational "mess" when it comes to the biosimilar provisions (e.g., "patent dance") of the ACA (aka "Obamacare")? The ACA itself is an utter mess, so that the biosimilar provisions are too is completely predictable. And I've got no confidence that SCOTUS will do any better than the Federal Circuit did in trying to render order out of this biosimilar chaos.
Posted by: EG | April 26, 2017 at 08:14 AM