Amgen v. Sandoz: What “Shall” Biosimilar Applicants Do?

On July 21, 2015, the Federal Circuit issued its decision in Amgen v. Sandoz in-terpreting two key provisions in the Biologics Price Competition and Innovation Act (BPCIA).¹ The case involved Sandoz’s Zarxio, a biosimilar drug to Amgen’s Neupogen and the first approved abbreviated biologics license application (ABLA) under the provisions of the BPCIA. Judges Newman, Lourie, and Chen were on the panel.

I. 42 U.S.C. § 262(l)(2)(A): A Follow-On Applicant does not have to give the Reference Product Sponsor access to the content of its ABLA

The BPCIA establishes a protocol for information exchange between the Follow-On Applicant (FOA, i.e. subsection (k) applicant) and the Reference Product Sponsor (RPS). The first step of the exchange is delineated by 42 U.S.C. § 262(l)(2):

Not later than 20 days after the Secretary notifies the subsection (k) applicant that the application has been accepted for review, the subsection (k) applicant—

(A) 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 . . .²

The consequences for not disclosing the application are provided in 42 U.S.C. § 262(l)(9)(C):

If a subsection (k) applicant fails to provide the application and information required under paragraph (2)(A), the reference product sponsor, but not the subjection (k) applicant, may bring an action under section 2201 of title 28, for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product.³

Additionally, 35 U.S.C. § 271(e)(2)(C)(ii) provides that:

It shall be an act of infringement to submit . . . if the applicant for the application fails to provide the application and information required under section 351(l)(2)(A) of such Act, an application seek-ing approval of a biological product for patent that could be identi-fied pursuant to section 351(l)(3)(A)(i) . . .⁴(emphasis added)

In Amgen’s view, the language “shall provide” in § 262(l)(2)(A) and the designa-tion of this information as “required” indicated that the FOA’s sharing of the ABLA was mandatory.⁵ Amgen contended that Sandoz was acting illegally by not sharing its ABLA.⁶

Sandoz, on the other hand, argued that the information sharing in § 262(l)(2)(A) was not mandatory, as the BPCIA provided an alternative procedure path: the RPS can bring an action under § 262(l)(9)(C), and obtain the information via discovery.⁷ Sandoz contended that it could not be unlawful to follow a procedural path explicitly laid out in the statutes.⁸

The Federal Circuit ruled in favor of Sandoz on this issue. The court reasoned that mandating compliance with § 262(l)(2)(A) would render the provisions in § 262(l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii) superfluous, which should be avoided when interpreting statutes.⁹

Judge Newman, however, was unconvinced that § 262(l)(9)(C) excused the performance of information sharing under § 262(l)(2)(A). She pointed out that § 262(l)(2)(A) emphasizes the “information that describes the process or processes used to manufacture the biological product,” whereas § 262(l)(9)(C) only provides a remedy for “any patent that claims the biological product or a use of the biological product.”¹⁰ In Judge Newman’s dissent, she opined that the information sharing under § 262(l)(2)(A) was mandatory.¹¹II. 42 U.S.C. § 262(l)(8)(A): A Follow-On Applicant may have to wait 180 days to market its biosimilar product after the approval of its ABLA

The BPCIA has another provision under 42 U.S.C. § 262(l)(8)(A) that the Follow On Applicant “shall” provide notice to the Reference Product Sponsor before the commercial marketing of a biosimilar product:

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).¹²

Amgen interpreted the statute to mean that the Follow On Applicant could not give the 180-day notice until the ABLA is approved by the FDA.¹³ Sandoz argued that such an interpretation would amount to “an automatic, additional, six-month bar against marketing of every licensed biosimilar product.”¹⁴ Sandoz’s position was that the word “licensed” merely required that the biosimilar product be licensed at the time of marketing.¹⁵

The court ruled for Amgen on this issue. The court examined the textual structure of the statute. The statute refers to the product as “the biological product that is the subject of” the application in many other places.¹⁶ The court therefore inferred from the choice of language that Congress intended for giving marketing notice after the FDA approval of the biosimilar product.¹⁷

Judge Chen was troubled by the fact that the majority treated the two “shall” obli-gations differently.¹⁸ In his dissent, he opined that the § 262(l)(8)(A) noticing ob-ligation was preconditioned on the earlier steps in § 262(l).¹⁹ Because Sandoz did not share its ABLA with Amgen under § 262(l)(2)(A) at the very beginning, all the subsequent steps, including the giving of marketing notice under § 262(l)(8)(A), simply would not apply.²⁰

The case is now remanded to the Northern District of California for other claims related to patent infringement.²¹