Sandoz Inc. v. Amgen Inc.

Issues 

Does the Biologics Price Competition and Innovation Act require that an applicant must provide the sponsor with 180 days’ notice before the applicant starts to market its biosimilar product? In addition, if 180 days’ notice is required, may the sponsor seek an injunctive remedy precluding marketing of the biosimilar until the 180 days’ notice period runs?

Oral argument: 
April 26, 2017

This case presents the Supreme Court the opportunity to determine how to construe the Biologics Price Competition and Innovation Act (“BPCIA”). Specifically, this case focuses on the notice requirements of the BPCIA and asks whether notice of marketing a biosimilar must be provided 180 days after the approval of the biosimilar but before the marketing of the product. In addition, if the Court determines that notice is required after approval, but before marketing, the Court must decide what remedies are proper to correct the improper notice. Pointing to the BPCIA’s purpose, Sandoz Inc. argues that notice is only required 180 days before marketing; and, that injunctions are improper remedies to correct any potential notice-fault. In contrast, Amgen Inc. also points to the BPCIA’s purpose to argue that notice can only be effective if made after FDA approval; and, that the only way to provide a meaningful remedy would be to allow an injunction. Depending on the Court’s holding, this case could impact the balance between innovation and affordability in the biologics market.

Questions as Framed for the Court by the Parties 

The Biologics Price Competition and Innovation Act created a streamlined pathway for the licensure of biological products that are “biosimilar” to or “interchangeable” with a previously approved biological product, known as a reference product. 42 U.S.C. §262(k). Congress enacted a detailed procedure for the resolution of patent disputes between §262(k) applicants and reference product manufacturers, known as sponsors. Id. §262(l). The petitions present two questions concerning whether the §262(l) framework is mandatory or optional for applicants:

1. Is an applicant required to provide the sponsor with 180 days’ notice after licensure and before it be- gins marketing its biosimilar product, and may a court enforce that duty by ordering the applicant not to market its product until 180 days after a post-licensure no- tice?

2. Is an applicant required to provide the sponsor with a copy of its biologics license application and related manufacturing information, and may a court issue an order enforcing that duty?

Facts 

In 2010 Congress passed the Patient Protection and Affordable Care Act which enacted the Biologics Price Competition and Innovation Act (“BPCIA”). Under the BPCIA, when a manufacturer wants to market a biologic, that manufacturer must receive Food and Drug Administration (“FDA”) approval in the form of a biologics license. In order to receive a biologics license, the manufacturer provides the FDA with clinical data that demonstrates the efficacy and safety of the biologic. Upon FDA review and satisfaction, the FDA will grant the manufacturer a biologics license. This license grants the manufacturer both a four-year and twelve-year period of exclusivity—one that does not depend on any patents. The four-year exclusivity precludes the FDA from reviewing any biologic applications that are “highly similar” to the approved product while the twelve-year period precludes the FDA from granting any licenses on any “highly similar” products.

If a second manufacturer wants to market a biosimilar, a biologic that is highly similar to an already-licensed biologic, the BPCIA provides an abbreviated application process. This abbreviated process, known as an abbreviated biologics license application, (“aBLA”) allows a future manufacturer of a biosimilar to identify which approved biologic the biosimilar is highly similar to and then allows the future manufacturer to rely, in part, on information that was used for the original, biologic’s approval.

In order to balance the benefits to the first company marketing a biologic (the four- and twelve-year exclusivities) with eventually allowing production of a biosimilar product (the ability to use an aBLA), the BPCIA establishes special patent-litigation rules. These rules make the filing of an aBLA constitute an act of patent infringement and allow for the reference product sponsor (“RPS”), the manufacturer whose BLA is being referenced in the aBLA, to sue the aBLA applicant. These rules also require certain information exchange between the RPS and the biosimilar applicant.

42 U.S.C. § 262(l) requires that the biosimilar applicant provide the RPS access to “its aBLA and the manufacturing information regarding the biosimilar product no later than 20 days after the FDA accepts its application for review.” The parties are then required to exchange information about what patents they believe are at issue and ultimately form the “listed patents.” The listed patents become the patents involved in the infringement action. Section 262(l) also requires that the biosimilar applicant provide “notice of commercial marketing to the RPS at least 180 days prior to commercial marketing.” The RPS, using this information, is then allowed to seek a preliminary injunction to prevent the biosimilar’s launch.

In this case, Amgen Inc. (“Amgen”), the RPS, has a biologics license for Neupogen®, a treatment for white blood cell growth useful in cancer recovery. Sandoz Inc. (“Sandoz”), in May 2014, filed an aBLA to market a biosimilar to Neupogen and the FDA accepted the application for review on July 7, 2014. Sandoz notified Amgen on July 8, 2014 and stated that it believed the FDA would approve the drug in the first or second quarter of 2015 and that Sandoz planned to launch upon approval. Sandoz “opted not to” provide Amgen with its aBLA or its product’s manufacturing information. On March 6, 2015 the FDA approved Sandoz’s biosimilar, which Sandoz intended to market as Zarixo.

Amgen sued Sandoz for, among other issues, “failing to disclose the required information under § 262(l)(2)(A) and . . . giving a premature, ineffective, notice of commercial marketing under § 262(l)(8)(A) before FDA approval of its biosimilar product.” The trial court found, among other things, that Sandoz’s decision to not disclose its aBLA and manufacturing information to Amgen was permissible and would only result in the discipline outlined in 42 U.S.C. § 262(l)(9)(C), which does not include an injunction. The Court of Appeals for the Federal Circuit granted review and found that Sandoz could opt out of providing its aBLA information but that injunctions are a proper remedy for the court to consider.

Analysis 

THE TEXT OF THE BPCIA

Sandoz argues that the plain text of BPCIA § 262(l)(8)(A) does not require Sandoz to wait until FDA approval to provide notice to the RFP. Rather, Sandoz notes that the BPCIA has only one timing requirement for notice, and that requirement states, “180 days before the date of first commercial marketing.” Sandoz argues that this requirement is satisfied at any time before commercial marketing and has no dependency on FDA approval. To support this argument, Sandoz looks at neighboring provisions in the BPCIA. Sandoz points to subsection (l)(8)(B) to show that if Congress wanted timing to be based on “after” FDA approval but “before” marketing, it could have just mirrored the language in (l)(8)(B). Sandoz points out that (l)(8)(B)’s text—“[a]fter receiving the notice . . . and before such date of . . .”—shows that Congress knew how to use “after” and “before” language. Therefore, Sandoz argues that Congress, by not employing the language of “before” and “after” makes it clear that the text of (l)(8)(A) does not need an “after” requirement read into it. In addition, Sandoz points to the use of the term “applicant” in (l)(8)(A). By employing the term “applicant,” Sandoz posits that the text notes that approval has not yet been granted. With this, Sandoz again argues that the text of (l)(8)(A) should be construed based on the words present in the section. Thus, Sandoz contends that there is no requirement that notice be provided to an RPS 180 days after approval, rather just that notice be given 180 days before marketing.

On the other hand, Amgen argues that the plain text of BPCIA § 262(l)(8)(A) requires that for notice to be effective it must be provided after the FDA has approved the biosimilar. To make this argument, Amgen points to the term “licensed” in (l)(8)(A). Because the term “licensed” is present, Amgen posits that (l)(8)(A), in its entirety, refers to a product that has been approved by the FDA. To further support this argument, Amgen looks to other portions of the statute. For example, Amgen notes that in § 262(d)(1), the text authorizes a recall of “a batch, lot, or other quantity of a product licensed under this section.” Amgen maintains that this section only makes sense if “product licensed” is read to require FDA approval. To further bolster its argument, Amgen also addresses weaknesses in Sandoz’s argument. For example, Amgen points out that Sandoz’s argument about 262(l)(8)(A)’s use of the term “applicant” is misplaced. Amgen notes that the term “applicant” is broadly defined by the statute to include anyone who has submitted an application and is not merely limited to someone who has submitted an application but has yet to be approved. Because “applicant” is a broad, encompassing term, Amgen contends that Sandoz’s argument, that the term “applicant” precludes the need to wait for FDA approval, is misplaced.

THE PURPOSE OF THE BPCIA

Sandoz argues that the purpose of the BPCIA ensures that Sandoz does not have to wait until after FDA approval to provide its 180-day marketing notice. Sandoz claims that the purpose of the 180-day notice period is to provide the RPS with enough time and information so as to allow the RPS to make a decision on whether it should seek a preliminary injunction over patents that have not yet been litigated over. In addition, Sandoz contends that patent litigation should be finished before the twelve-year FDA exclusivity period such that biosimilars should be able to launch earlier rather than later. Sandoz posits that the Federal Circuit’s holding that the period of notice starts after FDA approval could give rise to situations where the 180-day notice requirement acts as a delay and extends the RPS’s exclusivity even though there are no patents left to be litigated over.

Amgen, on the other hand, argues that the purpose of the 180-day notice requirement is to allow for declaratory judgment to be reached on ‘listed patents’ and to allow for a preliminary injunction until the litigation is finished. Amgen, agreeing with the Federal Circuit, notes that by requiring the notice to be made after FDA approval allows for the litigation to be more precise and crystalized. Amgen posits that the 180-day delay allows the parties and the courts to know exactly what is being litigated over, which Amgen argues, is a purpose of the BPCIA—efficient and proper litigation.

CONGRESS’S REMEDIAL INTENT REGARDING INJUNCTIONS

Sandoz argues that even if the 180-day notice requirement depended on FDA approval, the Federal Circuit’s grant of an injunction was erroneous. Sandoz contends that injunctions are improper because the congressional intent of the BPCIA does not create a private remedy for the violation of the notice requirement. To make this argument, Sandoz notes that for there to be a private remedy, there must also be a private right. Sandoz maintains that there is no private right here because there is no “right-creating” language in the BPCIA. To support this, Sandoz points out that the notice requirements of the BPCIA function in a procedural, rather than substantive, way. Sandoz also notes that the only substantive function and rights involved in the BPCIA are those of patent rights. Patent rights, including declaratory judgment and infringement actions, would only allow for preliminary injunctions depending on the strength of the patents and likelihood of success. Therefore, Sandoz posits that there is no injunction-based remedy for failing to follow procedural notice guidelines.

Amgen counters, arguing that the court should have granted an injunction under state law or federal law. Amgen then goes on to discredit Sandoz’s argument that Congress’s intent precludes a court from granting an injunction. First, Amgen notes that § 262(l)(9)(B) is meant to ensure that applicants and RPS cannot skip over the mandated ‘listed patents’ phase of the litigation and thus not meant to limit remedies for improper notice. Second, Amgen argues that disallowing injunctions would create a race-to-the-courts for future RPSs because as soon as a biosimilar launches the RPS would need to act hastily to challenge its legal status. On the other hand, Amgen contends, if an injunction was granted the RPS would have a greater opportunity to plan out a litigation strategy rather than proceeding directly to the merits of the infringement suit. Third, Amgen maintains that the Court should not even consider § 262(l)(9)(B). Amgen argues that § 262(l)(9)(B) only applies when an applicant complies with § 262(l)(9)(A) and in this instance, Sandoz’s failing to provide the aBLA or marketing information does not constitute complying with § 262(l)(9)(A).

Discussion 

COST VS. INNOVATION

Supporters of Sandoz argue that agreement with Sandoz is necessary to ensure that patients can receive affordable and effective biologic products. AARP and the other organizations joining its brief point out that prescription drug spending and drug prices themselves have drastically increased over the last couple of years. Because of the increase in spending and the cost of drugs, AARP notes that consumers cannot afford the prescriptions they need and often fail to follow the proper treatments to save money. AARP argues that the price of prescription drugs is exceptionally high in the biologic field. For example, AARP notes that some biologics cost over $200,000 a year for a prescription of a life-saving drug. AARP contends that biosimilars provide a method for pricing competition. However, AARP points out that tacking on a 180-day notice period after FDA approval would not help get biosimilars on the market, but just increase the length of market exclusivity the RPS receives. Furthering AARP’s argument, Apotex points out that the FTC has noted the importance of biologics and has stated that competition in the field of biologics could save consumers $250 billion in prescription costs. And while Apotex recognizes the existence of the innovation versus affordability argument, Apotex notes that Congress has decided that this balance is best reached in the twelve-year exclusivity period Congress provided in the BPCIA. Apotex argues that a longer period, such as the one that Amgen argues for, would disrupt this balance.

In contrast to AARP and Apotex, eleven professors in support of Amgen argue that protecting RPSs is required to ensure biological innovation in the United States. The professors point out that discovering and producing a new, effective biologic is more expensive than traditional drugs and thus must be ensured proper protection to allow innovators to recuperate costs. The professors cite to empirical research to show that the American pharmaceutical industry succeeds when it is afforded proper patent protections. In addition, the professors contend that it takes between 12.9 to 16.2 years of marketing the drug for a pharmaceutical company to recuperate its costs. With this background in mind, the professors argue that the 180-day notice requirement after FDA approval is required to both lengthen patent protection and allow a more full-picture litigation. In addition, the professors assert that once a generic drug manufacturer (or in this case a biosimilar manufacturer) starts marketing a product, the RPS will never be able to regain its market share. Thus, the professors point out that it is important to allow RPSs to meaningfully enforce their patent rights. This meaningful enforcement, the professors argue, comes when an RPS is provided 180 days after FDA approval to determine which litigation route to take.

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