June 12, 2017

Supreme Court Decides Sandoz, Inc. v. Amgen, Inc.

On June 12, 2017, the Supreme Court decided Sandoz, Inc. v. Amgen, Inc., Nos. 15-1039, 15-1195, in which it held that (a) a manufacturer of a licensed biological product cannot obtain federal injunctive relief to enforce 42 U.S.C. § 262(l)(9)(C), a subsection of the Biologics Price Competition and Innovation Act, but may be able to do so utilizing state law remedies; and (b) a manufacturer seeking approval for a biosimilar under the Act may provide commercial-marketing notice required under 42 U.S.C. § 262(l)(8)(A) either before or after the FDA has approved the biosimilar.

Under the Biologics Price Competition and Innovation Act (BPCIA), a manufacturer can follow abbreviated procedures to obtain Food and Drug Administration (FDA) approval of a drug that is “biosimilar to an already licensed biological product (the reference product).” 42 U.S.C. § 262(k). The abbreviated procedures include a mechanism for resolving patent disputes between the manufacturers of the biosimilar and the reference products. 42 U.S.C. § 262(l). Specifically, once the FDA notifies the biosimilar manufacturer that it has accepted the manufacturer’s application for review, the applicant must provide to any reference-product manufacturer within 20 days the biosimilar’s licensing application and manufacturing information. Any patent disputes are then resolved in two rounds of litigation: first, the manufacturers exchange patent information and collaborate to agree on those patents that should be the subject of immediate litigation; then, after the biosimilar-manufacturer applicant provides the reference-product manufacturer with notice at least 180 days before commercially marketing the biosimilar, 42 U.S.C. § 262(l)(8)(A), the manufacturers litigate any remaining patent disputes not addressed during the first round of litigation. 

A biosimilar applicant who follows these procedures is able to litigate any patent disputes before marketing the biosimilar. If a biosimilar-manufacturer applicant fails to provide the reference-product manufacturer with initial notice of the biosimilar’s application, the reference-product manufacturer may seek a declaratory judgment concerning any “infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product.” 42 U.S.C. § 262(l)(9)(C). If the applicant satisfies the initial notice requirement but fails to engage in the patent analysis, the reference-product manufacturer may seek a declaratory judgment concerning any of its relevant patents. 42 U.S.C. § 262(l)(9)(B).

Amgen, Inc. markets a filgrastim product called Neupogen, and it claims to hold patents related to methods for manufacturing and using filgrastim—a biologic that encourages the production of white blood cells. Sandoz, Inc. applied for FDA approval of Zarxio, a biosimilar filgrastim product, and it identified Neupogen as a reference product in its application. After the FDA accepted Sandoz’s application in July 2014, Sandoz notified Amgen that it had applied for FDA approval of Zarxio and intended to market the product as soon as it obtained that approval, but it declined to provide Amgen with the Zarxio application and manufacturing information under 42 U.S.C. § 262(l)(2)(A) and confirmed that Amgen could immediately sue for patent infringement under 42 U.S.C. § 262(l)(9)(C).

Consequently, Amgen sued Sandoz for infringement in October 2014 and asserted two unfair-competition claims under California law for Sandoz’s “unlawful” conduct in failing to comply with 42 U.S.C. §§ 262(l)(2)(A) and (8)(A). Amgen sought injunctions that required Sandoz to comply with both statutory requirements; Sandoz sought declaratory relief that it had not violated the BPCIA and Amgen’s asserted patent was invalid and not infringed.

While Amgen’s suit was pending in the U.S. District Court for the Northern District of California, the FDA approved Zarxio, and Sandoz provided Amgen with additional notice of commercial marketing under 42 U.S.C. § 262(l)(8)(A). The district court then granted partial judgment on the pleadings on Sandoz’s BPCIA counterclaims and dismissed Amgen’s state law claims with prejudice. 

After Amgen appealed, the Federal Circuit enjoined Sandoz’s commercial marketing of Zarxio, pending appeal. The appeals court then affirmed the district court’s dismissal of Amgen’s state law claim premised on 42 U.S.C. § 262(l)(2)(A) and held that the BPCIA provides the exclusive remedies for an applicant’s failure to comply with that statutory subsection. It further held that 42 U.S.C. § 262(l)(8)(A) requires an applicant to provide commercial-marketing notice after the FDA has licensed the biosimilar and enjoined Sandoz from marketing Zarxio until after it had complied with this statutory subsection. The court remanded the case for further proceedings, and Amgen and Sandoz cross-petitioned for certiorari.

The Supreme Court vacated the appeals court’s opinion in part, reversed in part, and remanded the case for further proceedings. The Court concluded that 42 U.S.C. § 262(l)(9)(C) provides the exclusive remedy for an applicant’s failure to comply with 42 U.S.C. § 262(l)(2)(A); it thus agreed with the Federal Circuit that Amgen could not obtain injunctive relief to enforce that statutory subsection. The Court then reversed the appeals court’s ruling on Amgen’s state law claims. It held that California law, not federal law, answers the question of whether Sandoz’s failure to comply with 42 U.S.C. § 262(l)(2)(A) constitutes an “unlawful” business practice, and it instructed the Federal Circuit to make this determination on remand. It also instructed the appeals court to consider whether the BPCIA pre-empts any additional state law remedies for an applicant’s failure to comply with 42 U.S.C. § 262(l)(2)(A).

The Court also disagreed with the appeals court’s interpretation of 42 U.S.C. § 262(l)(8)(A) and held that the plain language of the statute confirms that an applicant can provide commercial-marketing notice to a reference-product manufacturer either before or after obtaining FDA approval. It reasoned that because Sandoz had complied with 42 U.S.C. § 262(l)(8)(A), the Federal Circuit’s injunction prohibiting Sandoz from marketing Zarxio for a period of time was improper and Amgen’s state-law claim premised on Sandoz’s failure to comply with 42 U.S.C. § 262(l)(8)(A) fails. The Court thus reversed the appeals court’s decision as it pertained to this statutory subsection.

Justice Thomas delivered the unanimous opinion of the Court; Justice Breyer filed a concurring opinion.

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