Order in Amgen v. Sandoz Provides First Judicial Interpretations of the BPCIA Patent Dispute Resolution Provisions

by Goodwin
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On March 19, 2015, the District Court for Northern District of California (Judge Seeborg), issued an order providing one of the first judicial interpretations of the patent dispute resolution provisions laid out in subsection 262(l) of the Biologics Price Competition and Innovation Act (“BPCIA”). Judge Seeborg held that a party cannot be required to follow the steps of the 262(l) provisions, and that a biosimilar applicant does not need to wait for FDA approval before it may provide the reference product sponsor notice that it intends to begin commercial marketing of its product no earlier than 180 days from the date notice is provided. This is the first decision to interpret the meaning of the steps laid out in 262(l), and to determine which, if any, of the steps are mandatory.

Background

The BPCIA, passed as part of the Affordable Care Act in March 2010, introduced an abbreviated licensure pathway for biological products shown to be “biosimilar” to, or “interchangeable” with, a reference product that has already been licensed by FDA. The BPCIA also introduced a new scheme to resolve patent disputes involving biosimilar products submitted for FDA review under this new pathway.

Codified at 42 U.S.C. § 262(l), the BPCIA’s patent dispute resolution scheme (commonly known as the “patent dance”) lays out a schedule of information exchanges whereby the biosimilar applicant and the reference product sponsor exchange lists and contentions regarding patents that may be the subject of litigation regarding the proposed biosimilar product. This series of information exchanges culminates in a first wave of “immediate patent infringement action” on an agreed-upon or restricted list of patents. A second wave of litigation is initiated when the biosimilar applicant provides notice to the reference product sponsor, “not later than 180 days before the date of the first commercial marketing” of its proposed biosimilar product. Upon receiving this notice of commercial marketing, the reference product sponsor may seek a preliminary injunction on any patents that it identified during its information exchanges with the applicant, if those patents have theretofore been barred from being the subject of declaratory judgment action as a result of the patent dance.

Sandoz’s application to market a biosimilar version of Amgen’s biologic product Neupogen® (filgrastim) was the first application to be accepted by FDA under the BPCIA’s abbreviated pathway for biosimilar products. After FDA accepted its application in July 2014, Sandoz wrote to Amgen stating that it would not be participating in the 262(l) patent dance. Sandoz also claimed that it provided notice of commercial marketing of its product at this time by notifying Amgen of its intention to launch its product immediately upon FDA approval.

On October 24, 2014, Amgen filed a complaint seeking, among other things, an order to compel Sandoz to comply with the patent dance provisions, and to declare that Sandoz could not provide notice of commercial marketing until after FDA approved its product. Since the key disputes presented primarily legal questions of statutory interpretation of the BPCIA, with the relevant facts being largely undisputed, both parties moved for judgment on the pleadings. Amgen also moved for a preliminary injunction to stop the commercial launch of Sandoz’s biosimilar product, which was licensed by FDA on March 6, 2015.

March 13 Hearing and March 19 Order

The two key questions presented at the March 13 hearing were:

  1. What is the effect of a biosimilar applicant’s failure to provide its § 262(k) application and manufacturing information to the reference product sponsor within 20 days of notification that FDA has accepted the application for review?
  2. When does the applicant’s 180-day notice of commercial marketing begin to run?

At the hearing, Judge Seeborg announced that he was tentatively inclined to rule in favor of Sandoz on both issues. The March 19 ruling adopts that tentative conclusion, and denies Amgen’s motions for judgment on the pleadings and for preliminary injunction. 

On the first issue, Amgen argued that the patent dance provisions are mandatory because the statute uses mandatory-sounding language such as the words “shall,” and “required” in describing the steps each party would take under the 262(l) provisions. According to Amgen, Congress provided this detailed patent dispute resolution procedure in order to encourage efficient and expeditious patent litigation, and to protect biologic innovators. In light of this statutory scheme, Amgen argued that it could redress Sandoz’s “violation” of the BPCIA through state law remedies and compel Sandoz to comply with the 262(l) provisions through those state law mechanisms.

Judge Seeborg was highly skeptical of this argument, finding it “untenable…that Congress intended not a self-contained statutory scheme under the BPCIA, but rather contemplated a hunt by reference product sponsors through the laws of the fifty states to find a predicate by which to litigate a claimed BPCIA violation.” [1] He instead agreed with Sandoz that the BPCIA patent dance only provides steps that the applicant “shall” take if it wishes to take advantage of the opportunities afforded under 262(l) to delay and restrict the reference product sponsor’s ability to initiate patent litigation. If the applicant engages and continues the patent dance, it may narrow the scope of patents subject to “immediate” litigation, and may delay litigation on other patents until it provides its 180-day notice of commercial marketing to the reference product sponsor. If the applicant alternatively decides not to follow the 262(l) provisions, it enables the reference product sponsor to seek immediate declaratory judgment on a broader scope of patents. As the Court stated, the 262(l) provisions provide a “carrot of a safe harbor for applicants,” but “contain[] no stick to force compliance” if the applicant chooses to forgo that safe harbor and invite immediate litigation.[2]

On the second issue regarding the 180-day notice provision, Amgen argued that as a matter of law, biosimilar applicants cannot provide the statutorily required notice until after FDA approves the product, because before that point there is no “biological product licensed under subsection (k)” for which the applicant can provide notice of commercial marketing.

Judge Seeborg found this reading “problematic” because it “would tack an unconditional extra six months of market exclusivity onto the twelve years reference product sponsors already enjoy under 42 U.S.C. § 262(k)(7)(A).”[3] At the hearing, he noted that the debated provision itself was titled “Notice of commercial marketing,” and reiterated in his ruling that  “[h]ad Congress intended to make the exclusivity period twelve and one-half years, it could not have chosen a more convoluted method of doing so.”[4]

The parties previously entered a stipulation agreeing that Sandoz would not market its product until the earlier of either April 10, 2015, or an order in Sandoz’s favor on Amgen’s motion. In the case of a ruling in favor of Sandoz before April 10, 2015, Sandoz also agreed to give Amgen five days’ notice before launching its product.

Given the importance of this pioneer case, an immediate appeal can be expected soon.

[1] Id. at 8, n.4.

[2] Id. at 10-11.

[3] Id. at 13.

[4] Id. at 13-14.

 

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Goodwin
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