The Federal Circuit issued a ruling on July 21, 2015 in the Amgen Inc. et al. v. Sandoz Inc., Case No. 2015-1499, appeal after hearing oral arguments on June 3, 2015. See BPCIA: A “Choose Your Own Adventure” Statute? (describing the parties’ oral arguments before the Federal Circuit). Amgen Inc. (“Amgen”) appealed the Northern District of California’s decision holding that the Biologics Price Competition and Innovation Act’s (“BPCIA’s”) “patent dance” provisions are optional and that the 180-day notice provision does not require licensure. See Dancing Not Required: District Court Denies Amgen’s Bid for Preliminary Injunction, Finds BPCIA “Patent Dance” Optional.

Failure to Disclose Biosimilar Application and Manufacturing Information Does Not Violate the BPCIA

A divided Federal Circuit, quoting Winston Churchill, described the BPCIA as “a riddle wrapped in a mystery inside an enigma” and explained that the Court did its “best to unravel the riddle, solve the mystery, and comprehend the enigma.” Amgen Inc. et al. v. Sandoz Inc., Case No. 2015-1499, fn.1 (July 21, 2015). In doing so, the Federal Circuit interpreted the “patent dance” provision 42 U.S.C § 262(l)(2)(A)[1], which states that a biosimilar applicant “shall provide” the branded biologic holder a copy of its biosimilar application and information describing the manufacturing process for its biosimilar product. Id. at 10.

The Federal Circuit observed that the BPCIA expressly contemplates that a biosimilar applicant might fail to disclose its biosimilar application and manufacturing information by the statutory deadline. Id. at 12. The BPCIA provides a consequence for such a failure by allowing the branded biologic holder (“brand holder”) to bring an infringement action under 42 U.S.C § 262(l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii). Id. at 12–13. These are the only remedies available to the brand holder when a biosimilar applicant fails to provide its biosimilar application and manufacturing information. Id. at 15. The Federal Circuit explained that § 271(e)(2)(C)(ii) creates an artificial act of infringement if a biosimilar applicant fails to disclose required application and manufacturing information. Id. at 13. Similarly, under § 262(l)(9)(C), a biosimilar applicant’s failure to comply with paragraph 2(A) allows the brand holder, but not the biosimilar applicant, to file a declaration judgment action on any patent claiming the biosimilar or using the biosimilar. Id. Additionally, the Federal Circuit noted that although § 262(l)(9)(C) does not appear to include process patents, § 271(e)(2)(C)(ii) contemplates an infringement action that does not specifically exclude process patents. Id. at fn 3.

Thus, Sandoz Inc. (“Sandoz”) did not violate the BPCIA by failing to disclose its biosimilar application and manufacturing information to Amgen by the statutory deadline because Sandoz opted to choose its own adventure by taking a path “expressly contemplated by the BPCIA,” the path involving litigation. Id. at 15.

Notice of Commercial Marketing Must Be Given After Licensure

The Federal Circuit next determined when notice of commercial marketing can be given by the biosimilar applicant under § 262(l)(8)(A). Id. Paragraph (l)(8)(A) provides that the biosimilar applicant shall provide notice to the brand holder “not later than 180 days before the date of first commercial marketing of the biological product licensed under subsection (k). Id. The Court, siding with Amgen, concluded that a biosimilar applicant “may only give effective notice of commercial marketing after the FDA has licensed its product.” Id. at 16. The Court explained that “[t]he statutory language compels such an interpretation.” Id. When analyzing this interpretation in view of Sandoz’s conduct, the Federal Circuit concluded that where a biosimilar applicant fails to provide its biosimilar application and manufacturing information by the statutory deadline, the requirement of paragraph (l)(8)(A) is mandatory. Id. at 21. Therefore, Sandoz “may not market Zarxio before 180 days from March 6, 2015, i.e., September 2, 2015.” Id.

Dismissal of Amgen’s Unfair Competition and Conversion Claims Affirmed

In view of its interpretation of the BPCIA, the Federal Circuit affirmed the District Court’s dismissal of Amgen’s unfair competition and conversion claims under California law. Id. The Federal Circuit held that Sandoz did not violate the BPCIA by failing to disclose its biosimilar application and manufacturing information; thus, the District Court’s dismissal of Amgen’s unfair competition claim based on such a violation was affirmed. Id. at 22. Similarly, the Federal Circuit found that only Sandoz’s second notice of commercial marketing, provided March 6, 2015, after receiving licensure, was effective, precluding Sandoz from marketing Zarxio prior to September 2, 2015. Id. Accordingly, the Federal Circuit extended the injunction pending appeal through September 2, 2015, mooting Amgen’s appeal based on Sandoz’s violation of this section of the BPCIA. Id. Additionally, the Federal Circuit concluded that Amgen failed to establish the elements required to support a claim of conversion because it failed to show a “wrongful act,” since Sandoz did not violate the BPCIA, and also failed to show that it has an exclusive right to possession of its approved license on Neupogen®. Id. at 23–24.

Amgen’s Appeal of Denial of Preliminary Injunction Is Moot

Finally, the Federal Circuit held that Amgen’s appeal from the denial of its preliminary injunction is moot because its requested injunction was limited to Amgen’s state law claims and was limited until the District Court’s decision on the parties’ motions for judgment on the pleadings. Id. at 25. Because the District Court resolved those motions against Amgen, Amgen’s preliminary injunction appeal is moot. Id.

Judge Newman’s Dissent: Disclosure of Biosimilar Application and Manufacturing Information Is Mandatory

However, not all of the Federal Circuit judges were in agreement with these rulings. Judge Newman, concurring in part, dissenting in part, agreed with the majority that the notice of issuance of the FDA license is mandatory and starts the 180-day stay of commercial marketing. However, Judge Newman disagreed that disclosure of a biosimilar applicant’s application and manufacturing information is not mandatory under § 262(l)(2)(A) and stated that Sandoz’s “deliberate violations of the requirements of the BPCIA forfeit Sandoz’ access to the benefits of the BPCIA.” Id. at 28.

In reaching this opinion, Judge Newman stated that the term “shall” is “ordinarily the language of command.” Id. at 30. She further pointed out that not only was “shall” used in the statute, but so was the term “may” and pointed to Supreme Court caselaw that stated “[W]hen the same Rule uses both ‘may’ and ‘shall’, the normal inference is that each is used in its usual sense-the one act being permissive, the other mandatory.” Id. at 33. Therefore, according to Judge Newman, the majority was incorrect to rule that § 262(l)(2)(A) was not mandatory.

Judge Chen’s Dissent: Amgen Should Not Receive 180-Day Injunction Beyond 12-Year Statutory Exclusivity

Judge Chen, also dissenting in part, agreed with the majority that Sandoz’s failure to provide its biosimilar application and manufacturing information to Amgen did not violate the BPCIA. However, he disagreed with the majority that Amgen should receive a 180-day injunction beyond the express twelve-year statutory exclusivity period.  Id. at 37.

His opinion relied on the interpretation of the word “shall” in the BPCIA statute. According to Judge Chen, § 262(l)(8)(A) should not be read in a vacuum, and while the majority properly interpreted the word “shall” in the context of § 262(l)(2)(A) as not meaning “must,” they improperly applied a different meaning to “shall” in the context of § 262(l)(8)(A). He further stated that unless an applicant performs the steps in § 262(l)(3)-(5), section (l)(8) lacks meaning, as it is part of and contingent upon the preceding steps in the (l)(2)-(l)(8) litigation management regime. Therefore, it cannot act as a “standalone notice provision” as the majority views it. Id. at 42.

At this point, it is unclear whether Amgen or Sandoz will seek an en banc review of this decision. However, K&L Gates will continue to monitor this litigation to see what further developments may arise.

Notes:

[1] We note, as the Federal Circuit did, that 42 U.S.C. § 262(l)(2)(A) corresponds to 35 U.S.C. § 351(l(2)(A) of the Public Health Act.