United States: Supreme Court Hears Oral Arguments In Sandoz Inc. v. Amgen

On April 26, 2017, the U.S. Supreme Court heard oral argument in Sandoz Inc. v. Amgen Inc. (Nos. 15-1039, 15-1195), on appeal from the Federal Circuit's July 21, 2015, opinion interpreting various provisions of the Biologics Price Competition and Innovation Act ("BPCIA"). The parties presented two main issues to the Supreme Court: (i) whether the BPCIA's required 180-day "notice of commercial marketing" is effective if given before FDA approval of the abbreviated biologics license application ("aBLA"); and, (ii) whether, under 42 U.S.C. § 262(l)(2)(A), an aBLA applicant (here, Sandoz) is required to provide the reference product sponsor (here, Amgen) with a copy of its aBLA and related manufacturing information. At oral argument, the Court provided each side with an additional five minutes of argument time, underscoring the complexity of the statutory scheme at issue.

The dispute stems from Sandoz's aBLA under 42 U.S.C. § 262(k), seeking approval of a biosimilar product for Amgen's Neupogen®. In the decision below, the Federal Circuit held that an aBLA applicant may only give effective notice of commercial marketing after the FDA had approved the license. Here, Sandoz had provided its 180-day notice of commercial marketing before approval of its aBLA. Additionally, the Federal Circuit held that Sandoz did not violate the relevant provisions of the BPCIA by refusing to provide Amgen with its aBLA and its manufacturing information by the statutory deadline. According to the Federal Circuit, even though § 262(l)(2)(A) uses the language "shall provide," the statute expressly contemplates a situation where the aBLA applicant might not participate in the information exchange by including a remedy for the reference product sponsor: a declaratory judgment action of infringement, validity, or enforceability under § 262(l)(9)(C) on "any patent that claims the biological product or a use of the biological product." In so holding, the appellate court affirmed dismissal of Amgen's state law claims of unfair competition and conversion against Sandoz for noncompliance with the BPCIA.

A significant portion of the oral argument at the Supreme Court was dedicated to the timing of the notice of commercial marketing. Sandoz argued that the Federal Circuit's interpretation provides an additional six months of exclusivity not contemplated by the statute, which already gives the reference product sponsor 12 years of exclusivity. The Justices, however, expressed skepticism regarding the effectiveness of a preapproval notice, because the specifics of the manufacturing process and therapeutic uses of the biosimilar product are uncertain during the pendency of the application. Justices Breyer, Sotomayor, and Roberts questioned how, in the absence of such certainty, the reference product sponsor could bring a preliminary injunction action in good faith. Much of the questioning focused on the logistics of the approval process. Justice Breyer also questioned whether the FDA should issue regulations to interpret the "technical provisions" at issue, particularly with respect to the meaning of the word "notice." The government noted that the FDA had been petitioned for rule-making in the context of the BPCIA, but the agency declined the petition.

As to the issue of whether an aBLA applicant must participate in the information exchange, the Court questioned what the effect would be of interpreting the relevant "shall provide" language in § 262(l)(2)(A) as mandatory. Particularly, the Justices questioned what the remedy would be if the aBLA applicant fails to provide the required disclosures, noting that the statute provided the remedy of the declaratory judgment action under § 262(l)(9)(C). Amgen argued that § 262(l)(9)(C) is a clarification of § 262(l)(9)(A), not a remedy for the aBLA applicant's noncompliance with § 262(l)(2)(A). Under § 262(l)(9)(A), if the aBLA applicant does provide its aBLA and manufacturing information to the reference product sponsor, neither party may bring a declaratory judgment action until the notice of commercial marketing is given (thereby restricting the parties' background right to bring a declaratory judgment action based on the filing of the aBLA). According to Amgen, § 262(l)(9)(C) merely clarifies that in the event the aBLA applicant does not participate in the information exchange, the reference product sponsor's background right to bring a declaratory judgment action is reinstated.

Because Amgen's original complaint included state law claims of unfair competition and conversion, the Justices also questioned whether they could avoid the question of state law preemption. Sandoz and the government both argued that the preemption claim could not be adjudicated because the appeal was based on interpretation of federal law. The parties had not briefed the issue, and the Federal Circuit had not considered it in its decision. Justice Gorsuch agreed with the government that enforcement of the "highly detailed scheme" on a state-by-state basis "might wreak some havoc." Additionally, Chief Justice Roberts remarked that he would not "interpret a Federal statute based on the decisions of one party to waive the argument or not."

The oral argument leaves open the possibility of the Court dismissing the petition as improvidently granted, particularly in light of the Justices' remarks regarding the need for notice-and-comment rulemaking from the FDA, and the state law preemption issue. A decision is expected by the end of the current Supreme Court term, June 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Jennifer J. Chheda
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