Sandoz Inc. v. Amgen Inc. and Its Implications
Background of the Case:
Sandoz Inc v. Amgen Inc., 137 S. Ct. 1664 (2017) is a case that involved statutory construction of the Biologics Price Competition and Innovation Act of 2009 (“BPCIA” or “Biosimilars Act”), which is codified in 42 U.S.C. § 262. The BPCIA is quite similar to the Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Amendments which created procedures to facilitate more affordable generic drugs to enter the market. Like the Hatch-Waxman Amendments, the BPCIA seeks to make it easier for “generic” versions of biologics – drugs that is produced from living organisms or containing components of living organisms such as recombinant proteins, tissues, genes, allergens, cells, blood components, blood, and vaccines – to enter the market at significantly reduced costs. Enactment of BPCIA was perhaps necessary as biologics are currently at the forefront of medicine. Many diseases that small molecule drugs – those covered under the Hatch-Waxman Amendments – could not treat are being treated by biologic drugs. One key example is a drug called Trastuzumab (brand name: Herceptin®), which is used for treating breast cancer. The Court’s interpretation of the BPCIA, thus, may have huge public health implications. Therefore, it is imperative that the Court balances two conflicting interests. If the BPCIA operates to make it too easy for biosimilars – “generic” versions of biologic drugs – to enter the market, then it may certainly increase affordability and accessibility of these valuable drugs. At the same time, however, it may effectively decrease the overall production of original biologic drugs because many companies will not undergo exorbitantly expensive production of original biologic drugs if they are not guaranteed their patent rights.
Facts of the Case:
Since 1991, Amgen has marketed a filgrastim – a biologic used to stimulate the production of white blood cells – known as Neupogen under its patents on methods of manufacturing and using filgrastim. Sandoz sought to market a filgrastim biosimilar under the brand name Zarxio and it was informed by the FDA on July 7, 2014 that its application has been accepted for review.
Under the BPCIA, when the FDA accepts an application for review and notifies the applicant (Sandoz), the applicant “shall provide” to the sponsor (Amgen) a copy of the application and information about how the biosimilar is manufactured within 20 days. § 262(l)(2)(A). In addition, the applicant “may provide” any additional information that the sponsor requests. § 262(l)(2)(B). The information the applicant provides is protected under strict confidentiality rules, enforceable by injunction. § 262(l)(1)(H). The BPCIA, thus, sets up a calibrated scheme that allows for the sponsor to assess the applicant’s biosimilar for possible infringement of its patents on the original biologic product. Furthermore, the BPCIA provides that the applicant “shall provide” notice of commercial marketing to the sponsor “not later than 180 days before the date of the first commercial marketing of the biological product licensed under subsection (k).” § 262(l)(8)(A).
One day after Sandoz received the notification from the FDA that its application has been accepted for review, Sandoz proceeded to notify Amgen (i) that it had submitted an application and (ii) it intended to market Zarxio as soon as the FDA approval is issued. Furthermore, Sandoz informed Amgen that it did not intend to provide the application and manufacturing information as required under § 262(l)(2)(A) and that Amgen could sue for infringement immediately pursuant to § 262(l)(9)(C).
In October 2014, Amgen filed suit against Sandoz for patent infringement. In its complaint, Amgen asserted two claims. First, it alleged that Sandoz’s conduct violated California’s state law which prohibits “any unlawful… business or practice.” Cal. Bus. & Prof. Code Ann. § 17200. Amgen contended that Sandoz’s refusal to provide the application and manufacturing information constitutes “unlawful” business or practice as it failed to adhere to the BPCIA requirements set out in § 262(l)(2)(A). Furthermore, it argued that Sandoz violated § 262(l)(8)(A) when it provided notice of commercial marketing before the FDA licensed its biosimilar.
Procedural History:
The District Court granted partial judgment on the pleadings to Sandoz on its BPCIA counterclaims and dismissed Amgen’s unfair competition claims with prejudice. Amgen Inc. v. Sandoz Inc., 2015 WL 126475 (N.D. Cal. 2015).
Subsequently, the Federal Circuit affirmed the dismissal of Amgen’s state-law claims based on Sandoz’s alleged violation of the BPCIA. Amgen v. Sandoz, 794 F.3d 1347 (Fed. Cir. 2015). Also, the Federal Circuit held that Sandoz may provide effective notice of commercial marketing only after the FDA licenses the biosimilar, agreeing with Amgen.
Holding and Reasoning:
The Supreme Court of the United States had to address two questions. First question was whether § 262(l)(2)(A)’s requirement for application and manufacturing information is enforceable by an injunction under either federal or state law. The Court held that under federal law, injunction is not available to enforce § 262(l)(2)(A). It reasoned that the BPCIA’s carefully crafted and detailed enforcement scheme expressly provides remedies under § 262(l)(9)(C) and excludes all other federal remedies, including injunctive relief. The Court reasoned that this “provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.” Hence, the explicitly provided remedies under § 262(l)(9)(C) taken together with the absence of any other textually specific remedies, the Court concluded that Congress did not intend sponsors like Amgen to assert claims for injunctive relief under the federal law to enforce applicants to disclose application and manufacturing information. Nevertheless, the Court does not answer the question whether the § 262(l)(2)(A) requirement is mandatory in all circumstances or merely a condition precedent to the information exchange process. As to any remedies under the state law, the Court remanded the case to the Federal Court advising the court to determine whether noncompliance with § 262(l)(2)(A) would be treated under California law as “unlawful.” In doing so, the Court rejected the Federal Circuit’s prior reasoning that noncompliance with § 262(l)(2)(A) is an act of artificial infringement.
Second question the Court had to address was whether an applicant must provide notice of commercial marketing after the FDA licenses its biosimilar, or if it may also provide effective notice before licensure § 262(l)(8)(A), which provides that the 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).” In its interpretation of the BPCIA, the Court rejected the Federal Circuit’s construction. The Court held that the phrase “licensed under subsection (k)” modifies “commercial marketing” rather than “notice.” The Court went on to discuss that the licensure requirement merely mandates that the biological product must be properly licensed before the first date of commercial marketing. Therefore, Sandoz could have provided notice either before or after receiving FDA approval. Accordingly, the Federal Circuit’s decision as to the notice provision of the BPCIA was reversed.
Implications:
After Sandoz, several things still remain unanswered. First, as mentioned above, the Court did not make a decision as to whether the § 262(l)(2)(A) requirement is “mandatory” or a “condition precedent” to the information exchange process between the applicant and the sponsor. This arguably favors applicants because now they, like Sandoz, may withhold their application and manufacturing information and simply tell sponsors to file suits instead of going through the scheme of information exchange provided by the BPCIA.
Second, it must be noted that lots of things are still left uncertain. As J. Breyer noted in his concurrence, the FDA is free to interpret the BPCIA and exercise its rule-making authority delegated to it by Congress. For example, if the FDA believes that applicants must adhere to the § 262(l)(2)(A) requirement, then it may promulgate a rule that requires all applicants to submit a statement that verifies their compliance with the § 262(l)(2)(A) requirement.
David Suh is a J.D. candidate, 2019, at NYU School of Law.
