According to the BPCIA, within 20 days of receiving notice that the U.S. Food and Drug Administration (FDA) has accepted the aBLA for review, the biosimilar applicant "shall provide to the reference product sponsor [RPS] a copy of the application . . . and such other information that describes the process or processes used to manufacture the biological product." 42 U.S.C. § 262(l)(2)(A) (emphasis added). These disclosures to the RPS initiate an exchange of information between the applicant and the RPS, coined by the industry as the "patent dance," which serves to establish a list of patents that will be the subject of an infringement action brought by the RPS, as well as each party's positions on infringement, validity, and enforceability of the patents. The purpose of the dance is to resolve patent issues early, prior to commercialization of an approved "biosimilar," thus eliminating an "at risk" launch by the applicant. The patent dance procedure also is designed to reduce the issues to be decided in this early infringement action. Because the BPCIA does not otherwise require a biosimilar applicant to alert the RPS that a biosimilar application has been filed, the initial disclosure of the aBLA and manufacturing information serves as notice to the RPS that an aBLA relying on the approved license of its reference product has been filed.
Another key aspect of the BPCIA is the notice of commercial marketing provision, which states that a biosimilar applicant "shall provide notice to the [RPS] not later than 180 days before the date of the first commercial marketing of the biological product licensed under" the BPCIA. 42 U.S.C. § 262(l)(8)(A) (emphasis added). Compliance with this provision not only serves to notify the RPS that the applicant intends to market the product upon FDA approval of "biosimilar" status, but also triggers a period for the RPS to seek a preliminary injunction on the basis of any patents exchanged during the patent dance but not asserted by the RPS in the infringement action. 42 U.S.C. § 262(l)(8)(B).
The Amgen v. Sandoz Dispute
In May 2014, Sandoz filed its aBLA seeking approval of its biosimilar version of Amgen's filgrastim product Neupogen®. On July 8, 2014, the day after the FDA notified Sandoz that it had accepted the application for review, Sandoz alerted Amgen that it intended to market Zarxio "immediately" upon approval of its application. Sandoz did not, however, provide Amgen with a copy of the aBLA or any other manufacturing details for its product. In October 2014, Amgen brought suit against Sandoz in district court, asserting that Sandoz's failure to provide its aBLA and manufacturing information, the disclosure of which, according to Amgen, is mandatory under the BPCIA, constituted unfair competition. Sandoz, on the other hand, took the position that this exchange of information, and the entire patent dance for that matter, is optional. Amgen also asserted that Sandoz's July 8, 2014, communication could not satisfy the notice of commercial marketing provision because the product was not then "licensed" by the FDA.
On March 6, 2015, the FDA announced its approval of Sandoz's aBLA. Sandoz again alerted Amgen that it intended to market its approved biosimilar product under the name Zarxio. In its suit, Amgen argued that it was not until the March 6 approval of Sandoz's aBLA that a notice of commercial marketing would be legally effective to start the 180-day clock.
The Amgen v. Sandoz Appellate Decision
On July 21, 2015, a divided panel of the Federal Circuit ruled that the information exchange and "patent dance" procedures were optional and that a biosimilar applicant could choose not to engage in them. Amgen, 794 F.3d at 1355–57. In reaching this decision, the majority (Judges Lourie and Chen) focused on the consequences for noncompliance set forth in the BPCIA and 35 U.S.C. section 271(e)(2)(C), which authorize the RPS to bring an action for patent infringement if the biosimilar applicant fails to provide its aBLA and manufacturing information. According to the majority, those sections would be rendered superfluous if the patent dance was mandatory in all situations. Amgen, 794 F.3d at 1356. Thus, according to the majority, Sandoz's decision to opt out of the patent dance did not violate the BPCIA.
A different majority (Judges Lourie and Newman) also ruled that, for biosimilar applicants who have opted out of the patent dance, the 180-day notice of commercial marketing requirement was mandatory. Amgen, 794 F.3d at 1359–60. The majority stated that paragraph (l)(8)(A) of the BPCIA is a standalone notice provision that is not conditioned upon the patent dance or any other provision of subsection (l) of the BPCIA. In doing so, it noted that no provision in the BPCIA contemplates the consequence for noncompliance with the notice of commercial marketing provision except in situations when an applicant has opted to engage in the patent dance. See 42 U.S.C. § 262(l)(9)(B). Because there are no consequences for noncompliance with the notice of commercial marketing provision when an applicant opts out of the patent dance, the majority ruled that the notice provision is mandatory in those situations. Amgen, 794 F.3d at 1359. Regarding when notice is effective, the majority ruled that a notice of commercial marketing would only be effective after the FDA approved the aBLA, and therefore Sandoz's July 8, 2014, "notice of commercial marketing" was not effective because the FDA had not yet licensed the product. Amgen, 794 F.3d at 1357–59.
The importance of the two provisions at issue in Amgen v. Sandoz is evidenced by the fact that both parties requested rehearing of the respective issue that was decided against them. The Federal Circuit, however, declined rehearing. Amgen Inc. v. Sandoz Inc., 794 F.3d 1347, reh'g denied, No. 2015-1499, slip. op. at 2 (Fed. Cir. Oct. 16, 2015).
Remaining Issues after the Decision
On February 16, 2016, Sandoz filed a petition for a writ of certiorari, asking the Supreme Court to review the Federal Circuit's interpretation of the BPCIA's notice of commercial marketing provision. Even if the Court hears the case, however, several issues that were raised, but not decided, by the Federal Circuit's decision will likely remain unresolved and await further case law development.
The meaning of "licensed" as used in the BPCIA and its effect on extra exclusivity for the RPS. The BPCIA provides that the applicant shall provide notice of commercial marketing to the RPS not later than 180 days before "the first commercial marketing of the biological product licensed under subsection (k)." 42 U.S.C. § 262(l)(8)(A) (emphasis added). The BPCIA further provides, however, that an aBLA may not be approved until 12 years after the reference product was first licensed. Thus, irrespective of the RPS's patent status, an RPS obtains an automatic 12 years of exclusivity. 42 U.S.C. § 262(k)(7)(A). Because the biosimilar applicant cannot provide notice of impending sale until its product is "licensed," but the aBLA cannot be approved until 12 years after the RPS's product is licensed, the question remains as to whether or not the 180-day notice serves as an additional exclusivity period for the RPS. Although this particular aspect of the notice issue was not present in the Amgen v. Sandoz case because the 12-year period of Amgen's exclusivity had expired, the Federal Circuit majority stated:
Furthermore, requiring FDA licensure before notice of commercial marketing does not necessarily conflict with the twelve-year exclusivity period of § 262(k)(7)(A). It is true that in this case, as we decide infra, Amgen will have an additional 180 days of market exclusion after Sandoz's effective notice date; that is because Sandoz only filed its aBLA 23 years after Amgen obtained FDA approval of its Neupogen product. Amgen had more than an "extra" 180 days, but that is apparently the way the law, business, and the science evolved. That extra 180 days will not likely be the usual case, as aBLAs will often be filed during the 12-year exclusivity period for other products.
Amgen, 794 F.3d at 1358. Although the court's comments appear to be indicative of how it might rule if the issue were actually before it, they do not address the issue of when the "license" is effective to enable a valid, clock-starting notice to be given. If the aBLA cannot be approved until 12 years after the reference product was first licensed, how would filing an application during the 12-year exclusivity period effect licensing of the biosimilar applicant's product? Can the FDA provide a "conditional approval" such that the applicant can commercialize as soon as the exclusivity period expires? Or would the FDA delay review of the aBLA until the end of the 12-year exclusivity period, as if the application were not filed during that period? After all, the law does state that an aBLA "may not be made effective" until the 12 years are up (42 U.S.C. § 262(k)(7)(A))—so that the 180-day clock may not be started until then. The issue depends on the meaning of the term "licensed" as used in the BPCIA.
Is the notice of commercial marketing provision always mandatory? According to the majority, "where, as here, a subsection (k) applicant completely fails to provide its aBLA and the required manufacturing information to the RPS by the statutory deadline, the requirement of paragraph (l)(8)(A) is mandatory." Amgen, 794 F.3d at 1360 (emphasis added). In reaching this conclusion, the majority focused on the lack of consequences within the BPCIA for applicants that opt out of the patent dance and fail to provide notice. For example, the majority noted that section (l)(9)(B) of the BPCIA only applies when the applicant complies with at least part of the patent dance, and not when an applicant, like Sandoz, opts out of the patent dance completely: "If a subsection (k) applicant fails to complete an action required . . . under . . . paragraph (8)(A), the reference product sponsor . . . may bring an action . . . for a declaration of infringement, validity, or enforceability of any patent included in the list described in paragraph (3)(A)." 42 U.S.C. § 262(l)(9)(B) (emphasis added). When a biosimilar applicant opts out of the patent dance, the majority ruled, the notice of commercial marketing provision is mandatory. Amgen, 794 F.3d at 1360.
Although the Federal Circuit majority did not directly state that the notice of commercial marketing provision is mandatory when an applicant complies with at least part of the patent dance, the rationale used to reach its decision that the patent dance is optional is informative of how it would rule. For example, in reaching its decision that the patent dance is optional, the majority focused on the consequences for noncompliance set forth in the BPCIA and 35 U.S.C. section 271(e)(2)(C), stating that these sections would be rendered superfluous if the patent dance was mandatory. Amgen, 794 F.3d at 1356. Section (l)(9)(B) of the BPCIA also authorizes the RPS to bring an action for patent infringement if the applicant enters the patent dance but fails to provide notice of commercial marketing. Under the majority's rationale, this section would also be rendered superfluous if the notice of commercial marketing provision is mandatory when the applicant enters the patent dance.
The Amgen dissent appears to argue that the notice of commercial marketing provision is mandatory only when the applicant follows the patent dance. According to Judge Chen, when an applicant fails to comply with the patent dance, the notice provisions (as well as the provisions in (l)(3)–(7)) "cease to matter," because the notice provision is not a standalone provision but rather "part and parcel to, and contingent upon, the preceding steps in the (l)(2)–(l)(8) litigation management regime." Amgen, 794 F.3d at 1367, 1370 (Chen, J., dissenting in part). Regarding the lack of consequences for applicants that opt out of the patent dance and fail to provide notice, Judge Chen stated that "[n]ot only is compliance with [the notice provision] unnecessary [when an applicant opts out of the patent dance], but no additional remedy is needed" because (l)(9)(C) and section 271(e)(2)(C)(ii) already provide the RPS with authorization to file an immediate infringement action if the applicant opts out of the patent dance. Amgen, 794 F.3d at 1370.
This issue is at the heart of a recently filed lawsuit by Amgen against Apotex, in which Amgen alleged that Apotex complied with the patent dance but failed to satisfy the notice provision by failing "to specify a date on or after which it intend[ed] to commence commercial marketing of" its biosimilar. Complaint for Patent Infringement at 11, Amgen Inc. v. Apotex Inc., No. 0:15-cv-61631 (S.D. Fla. Oct. 2, 2015). In its answer, Apotex asserted:
[W]here a biosimilar applicant has provided the reference product sponsor with the required information pursuant to § 262(l)(2)(A), the BPCIA gives such biosimilar applicant the option to either provide the reference product sponsor a Notice of Commercial Marketing under 42 U.S.C. § 262(1)(8)(A) or to face an action under 28 U.S.C. § 2201 for a declaration of patent infringement.
Defendants Apotex Inc. and Apotex Corp.'s Answer, Affirmative Defenses, and Counterclaims to Plaintiffs' Complaint at 12, Amgen v. Apotex, No. 0:15-cv-61631 (S.D. Fla. Oct. 5, 2015). According to Apotex, "[a]ny other interpretation of the BPCIA would render superfluous subsection (l)(9)(B)." Id.
The district court granted Amgen a preliminary injunction prohibiting Apotex from launching its biosimilar product until 180 days after Apotex receives FDA approval and gives notice of commercial marketing. Amgen Inc. v. Apotex Inc., No. 0:15-cv-61613 (S.D. Fla. Dec. 9, 2015). The court, agreeing with Judge Chen's dissent, held that the 180-day notice provision is mandatory: "It 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. That defined statutory window exists for all biosimilar products that obtain FDA licenses, regardless of whether the subsection (k) applicant complies with § 262(l)(2)" (emphasis added). The court reasoned that its interpretation did not render subsection (l)(9) superfluous because filing a declaratory judgment action if the applicant fails to provide notice "is not an exclusive remedy." Another available remedy is "an injunction to compel compliance with the 180-day notice provision of § 262(l)(8)(A)." Apotex appealed the order to the Federal Circuit. Oral argument is scheduled for April 4, 2016.
Process vs. composition claims. According to the BPCIA, if the applicant fails to provide its application and other information under paragraph (l)(2)(A), the RPS can seek "a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product." 42 U.S.C. § 262(l)(9)(C) (emphasis added). Missing from this paragraph is the right to seek declaratory relief on patents directed to manufacturing processes, which, according to Judge Newman, "the legislative record makes clear that for biosimilars such patents may be highly material." Amgen, 794 F.3d at 1364. In disagreeing with the majority's holding that the patent dance is optional, Judge Newman argues that, even if the act excuses compliance with the patent dance, such noncompliance only extends to patents claiming products and uses, and "it does not excuse compliance as to manufacturing and process claims." Amgen, 794 F.3d at 1366.
The majority recognizes that the declaratory relief available to the RPS under paragraph (l)(9)(C) "does not appear to include process patents," but notes that section 271(e)(2)(C)(ii) authorizes the RPS to file an infringement action based on "a patent that could be identified pursuant to [paragraph] (l)(3)(A)(i)." Amgen, 794 F.3d at 1356 n.3. Thus, it appears that the majority interprets section 271 to provide an RPS with authority to assert patents directed to manufacturing and process claims if the applicant opts out of the patent dance.
The inconsistent meaning of "shall" in the patent dance and notice of commercial marketing provisions. The Amgen case inconsistently interprets the term "shall" as used in the patent dance and notice of commercial marketing provisions. As used in the patent dance provision, the term is found by Judges Lourie and Chen to be permissive, whereas the term is found by Judges Lourie and Newman to be mandatory in the notice of commercial marketing provision. Compare Amgen, 794 F.3d at 1355, with id. at 1359. Both dissents disagree with one of the majority's inconsistent interpretations of the term, but come out on opposite sides of the issue. Whereas Judge Newman agrees with the majority that the notice of commercial marketing provision is mandatory and argues that the patent dance should also be mandatory, id. at 1362–63 (Newman, J., concurring in part, dissenting in part), Judge Chen agrees with the majority that the patent dance is optional and argues that the notice of commercial marketing provision is not required when the applicant opts out of the patent dance, id. at 1367 (Chen, J., dissenting in part). Further biosimilar litigation may be required to address the inconsistent interpretation of "shall" provided by the majority.
Will a biosimilar applicant be foreclosed from seeking declaratory relief against the RPS if it opts out of the patent dance? If a biosimilar applicant fails to provide the aBLA and information required under paragraph (l)(2)(A) of the BPCIA, or provides the aBLA and necessary information but fails to comply with another section of the patent dance, "the reference product sponsor, but not the subsection (k) applicant, may bring an action . . . for a declaration of infringement, validity, or enforceability." 42 U.S.C. § 262(l)(9)(B)–(C) (emphasis added). Thus, if the biosimilar applicant opts out of the patent dance completely, or provides its aBLA and processing information to the RPS but later fails to meet one of its obligations under the patent dance, the applicant is precluded from seeking declaratory relief. But to what extent are biosimilar applicants precluded from seeking a declaratory judgment? If the biosimilar product is ultimately licensed by the FDA and marketed by the applicant, and the RPS, at a later date, threatens the applicant with an infringement action, is the applicant precluded from seeking declaratory judgment at that later date?
Although the Amgen v. Sandoz decision provides insight into certain aspects of how the Federal Circuit interprets the BPCIA, the decision has left open, and has created, many other questions, the answers to which will require clarification from the courts in subsequent actions.