United States: Federal Circuit Issues Its First Decision Interpreting BPCIA

Last Updated: July 23 2015
Article by Andrew D. Cohen and Irena Royzman

The courts must "say what the law is," even when that law, as Judge Lourie described the BPCIA, is "a riddle wrapped in a mystery inside an enigma."  Today, in Amgen Inc. v. Sandoz Inc., No. 2015-1499 (Fed. Cir. July 23, 2015),1 an historic case of first impression, a divided panel of the Federal Circuit for the first time did just that.  The court (per Judges Lourie and Chen) held that a biosimilar applicant can opt out of the BPCIA's patent dance provisions by withholding its abbreviated biologics license application (aBLA) and manufacturing information, and that the only consequence of doing so is being subject to a patent infringement action on any patent that could have been listed during the patent dance.  The court (per Judges Lourie and Newman) also held that a biosimilar applicant is required to provide a notice of commercial marketing under the BPCIA, and that such a notice can only be provided after the FDA has approved the biosimilar product.  In short, both reference product sponsors and biosimilar manufacturers will find good and bad news in today's decision.

Amgen v. Sandoz (which this blog has covered here, here, here, here, and here) is one of the first BPCIA lawsuits, and relates to Sandoz's recently-approved aBLA to market Zarxio (filgrastim-sndz), a biosimilar version of Amgen's Neupogen (filgrastim).  Last year, when FDA formally accepted its aBLA for review, Sandoz provided to Amgen a purported notice of commercial marketing, but otherwise refused to participate in the BPCIA's information exchange provisions (the first step in the patent dance).  Amgen sued Sandoz in the Northern District of California, alleging that Sandoz's actions violated the BPCIA and thereby violated California's unfair competition and conversion laws.  The district court decided that participating in the BPCIA's patent dance was optional, not mandatory, and that Sandoz's pre-approval notice of commercial marketing was effective.  This expedited appeal followed.

Today, as Judge Lourie put it, the Federal Circuit did its "best to unravel the riddle, solve the mystery, and comprehend the enigma" that is the BPCIA.  Judges Lourie and Chen first concluded that the BPCIA's information exchange provisions are optional.  Though recognizing that the plain language of 42 U.S.C. § 262(l)(2)(A) ("shall provide") is mandatory, the court reasoned that "[i]n other provisions, the BPCIA explicitly contemplates that a subsection (k) applicant might fail to disclose the required information by the statutory deadline," and those other provisions "indicate that 'shall' in paragraph (l)(2)(A) does not mean 'must.'"  Specifically, "the BPCIA does not specify any non-patent remedies for a failure to comply with paragraph (l)(2)(A)."  Rather, according to the court, paragraph (l)(9)(C) provides a "direct consequence of failing to comply with paragraph (l)(2)(A)"—a biosimilar applicant cannot bring a "declaratory judgment action on patents that claim the biological product or its use."  In such a situation, 35 U.S.C. § 271(e)(2)(C)(ii) provides an "artificial 'act of infringement'" of any patent "'that could be identified' pursuant to paragraph (l)(3)(A)(i)," and therefore a reference product sponsor, with little or no information about the biosimilar product, can bring a patent infringement lawsuit and "access the required information through discovery."  To the court, the contrary, namely "mandating compliance with paragraph (l)(2)(A) in all circumstances, would render paragraph (l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii) superfluous, and statutes are to be interpreted if possible to avoid rendering any provision superfluous."

Judges Lourie and Newman, in the next part of the opinion, concluded that "under paragraph (l)(8)(A), a subsection (k) applicant may only give effective notice of commercial marketing after the FDA has licensed its product."  This conclusion flowed from the statutory language, which refers to the subject of the notice of commercial marketing as "the biological product licensed under subsection (k)," while numerous other provisions of the statute refer to "'the biological product that is the subject of' the application, even when discussing its commercial marketing."  Awaiting FDA approval before providing a notice of commercial marketing made sense to the court because that is when "the product, its therapeutic uses, and its manufacturing processes are fixed," thereby allowing the reference product sponsor (RPS) "to effectively determine whether, and on which patents, to seek a preliminary injunction from the court."

Requiring that a product be licensed before notice of commercial marketing ensures the existence of a fully crystallized controversy regarding the need for injunctive relief.  It provides a defined statutory window during which the court and the parties can fairly assess the parties' rights prior to the launch of a biosimilar product.

In other words, as Judge Newman wrote in her concurrence on this issue, the notice of commercial marketing, which cannot be effective prior to FDA approval, "starts the 180-day stay of commercial marketing."

One of Sandoz's principal arguments against this reading was that this is tantamount to an extra six months of exclusivity above the 12 years expressly provided for by the BPCIA.  The court disagreed:  "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."  In other words, the 180-days will typically run concurrently with the 12 years of exclusivity.

Judges Lourie and Newman also held that a notice of commercial marketing is mandatory under the BPCIA.  Again, the court noted the use of mandatory language in the statute ("shall provide"), but here found no other BPCIA provision that "contemplates, or specifies the consequence for, noncompliance with paragraph (l)(8)(A) here."  The court explained that "[p]aragraph (l)(8)(A) is a standalone notice provision in subsection (l)," and "nothing in paragraph (l)(8)(A) conditions the notice requirement on paragraph (l)(2)(A) or other provisions of subsection (l)."  The court therefore maintained and extended the injunction it issued pending appeal to last through September 2, 2015 (180 days from the date Sandoz gave "effective" notice of commercial marketing after FDA approved Zarxio).

Judge Newman dissented from the majority on the question of whether the patent dance was mandatory.  She explained that the BPCIA uses plain and ordinarily-mandatory language ("shall") to require exchange of information—consistent with the intent of Congress to "initiate patent-related activity, to exchange relevant information, to facilitate negotiations, and to expedite any litigation."

Judge Chen disagreed that paragraph (l)(8)(A) is a standalone notice provision and, in his dissent, argued that the notice of commercial marketing was optional.

Today's decision will be dissected by both reference product sponsors and biosimilar manufacturers alike.  Whether the court will take this case up en banc—something both parties may seek given the split decision and its importance to litigation under the BPCIA—remains to be seen.


1. Patterson Belknap represents Janssen Biotech in its amicus brief to the Federal Circuit supporting Amgen.

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