Supreme Court Decides Amgen v. Sandoz: Patent Dance Cannot Be Enforced by Federal Injunction, Notice of Commercial Marketing Can Be Given at Any Time
On June 12, 2017, the Supreme Court decided Amgen v. Sandoz, the landmark case about the meaning of the Biologics Price Competition and Innovation Act (BPCIA). First, the Supreme Court held that no federal injunction is available to force biosimilar applicants to participate in the BPCIA’s patent dispute resolution procedures (a/k/a the patent dance); but it remanded to the Federal Circuit to address whether such an injunction is available under state law. Second, the Court held that under the BPCIA, a biosimilar applicant may provide 180-day notice of commercial marketing before the biosimilar product is licensed, meaning that as a practical matter, the 180-day notice period need not affect the timing of the biosimilar product’s launch.
As the first BPCIA case to make its way to the Federal Circuit and then the Supreme Court, Amgen v. Sandoz has been much discussed throughout the biopharmaceutical industry for over two years, and it attracted extensive amicus briefing in the Supreme Court. The Court, however, made quick work of the case, resolving both of the questions presented in a unanimous decision by Justice Thomas of 18 pages, 10 of which were introductory and background discussion. The Court’s analysis focuses almost exclusively on the language of the statute and expressly declines to engage with the policy arguments presented by parties.
No Federal Injunction for Failure to Initiate Patent Dance
On the first question presented, the Federal Circuit had held that although the BPCIA calls for biosimilar applicants to provide information about their product to the maker of the innovative biologic (42 U.S.C. § 262(l)(2)(A)), failing to provide this information is not a violation of the BPCIA: the “’shall’ in paragraph (l)(2)(A) does not mean ‘must.’” The Supreme Court affirmed, but “for slightly different reasons than those provided by the court below.” The Supreme Court disagreed that 35 U.S.C. 271(e)(2)(c)(ii), which creates an artificial cause of action for patent infringement when an applicant submits a biosimilar application without making the disclosures required by section 262(l)(2)(A), is an express statutory remedy that forecloses injunctive relief. The Court concluded, however, that a “separate provision of §262,” section 262(l)(9)(C), “does provide a remedy for an applicant’s failure to turn over its application and manufacturing information.” Section 262(l)(9)(C) states that if the applicant does not provide the statutory information, the innovator, but not the applicant, may bring an immediate declaratory-judgment action for artificial infringement. This remedy, the Supreme Court held, “excludes all other federal remedies, including injunctive relief.”
By framing the issue in terms of the availability of federal injunctive relief, the Supreme Court sidestepped the question, vigorously disputed by the parties, as to whether compliance with section 262(l)(2)(A) is mandatory or optional. “The BPCIA, standing alone, does not require a court to decide whether §262(l)(2)(A) is mandatory or conditional,” the Court reasoned; all the court must decide is whether or not the applicant complied with the provision, and the statutory consequences follow as a matter of course. Because “[t]here is no dispute about how the federal scheme actually works,” the Court wrote, there was no need to decide as a matter of federal law whether failing to provide the statutory information is a prohibited violation or a permissible choice.
In an interesting twist, the Court went on to suggest that this question may nevertheless need to be decided as a matter of state law. In its complaint, Amgen pleaded a claim for unfair competition under California law, alleging that Sandoz had violated the BPCIA and that state law provided a cause of action for this “unlawful act.” If failing to comply with section 262(l)(2)(A) is indeed an “unlawful act,” then injunctive relief, although not available under the BPCIA standing alone, may be available under California law. In other words, the Court suggested, state law – assuming it is not preempted by the BPCIA – may require addressing whether section 262(l)(2)(A) is mandatory or permissive in a way that federal law does not. The Supreme Court declined to address this question, however, instead remanding to the Federal Circuit to decide in the first instance whether Sandoz’s conduct was unlawful under California law and whether any state-law remedy is preempted by the BPCIA.
Notice of Commercial Marketing May Be Provided Before Biosimilar Approval
On the second question presented, the Supreme Court reversed the Federal Circuit and held that the BPCIA’s 180-day notice of commercial marketing, 42 U.S.C. § 262(l)(8)(A), can be provided before a product is licensed. Although both parties had analyzed this question primarily on the basis of statutory structure and purpose, the Supreme Court resolved it as a simple matter of statutory language.
Section 262(l)(8)(A) states 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).” The Federal Circuit thought that this meant the product must be “licensed under subsection (k)” at the time of the notice, so that an effective notice could not be served – and the 180-day period could not begin – until after the product had been licensed. The Supreme Court disagreed. The Court reasoned that the phrase “of the biological product licensed under subsection (k)” modified “commercial marketing,” not “notice.” Therefore, the Court went on, the “statute’s use of the word ‘licensed’ merely reflects the fact that, on the ‘date of the first commercial marketing,’ the product must be ‘licensed’” – not that the product must be licensed at the time of notice. Having read the statutory language to support Sandoz’s position, the Supreme Court rejected Amgen’s argument that because other provisions of the statute referred to the commercial marketing of biosimilar products without using the term “licensed,” the phrase “licensed” product in section 262(l)(8)(A) cannot simply be a reference to the fact that products must be licensed before they are commercially marketed.
As for the parties’ policy arguments, the Court was not interested in them. Noting that Amgen had advanced “a host of policy arguments that prelicensure notice is undesirable” and that Sandoz and the Government had “respond[ed] with their own bevy of arguments that Amgen’s concerns are misplaced and that prelicensure notice affirmatively furthers Congress’ intent,” Justice Thomas explicitly refused to decide who had the better argument. Instead, he noted that the “plausibility of the contentions on both sides illustrates why such disputes are appropriately addressed to Congress, not the courts.” In the Court’s view, Sandoz’s pre-licensure notice of commercial marketing was consistent with the statutory text, and that was all that mattered.
Although the Court did not address policy, its interpretation of section 262(l)(8)(A) has significant policy implications. Under the Federal Circuit’s interpretation of the statute, biosimilar applicants, at least in the short run, had to wait 180 days after approval to launch their products. By permitting applicants to provide notice before approval, the Supreme Court’s decision eliminates this 180-day post-licensure notice period and allows biosimilar products to be marketed immediately upon approval. In other words, the Supreme Court’s decision allows biosimilar products to reach the U.S. market faster than they could under the Federal Circuit’s decision.
Open Issues: State Law, Preliminary Injunction Standards, and Discovery
Although the Supreme Court’s decision was quite clear in resolving the questions presented, the decision leaves a number of issues to be resolved in future cases. Most obviously, the Federal Circuit must decide on remand whether California state law provides the remedy for failure to follow section 262(l)(2)(A) that the Supreme Court held to be absent from federal law. If the Federal Circuit concludes that such a remedy is available under California law and not preempted, future cases would need to address questions such as whether the laws of other states provide such a remedy, which state’s law should be applied under applicable conflict of law principles, and (under the Supreme Court’s recent decision in TC Heartland) where venue should lie in a question raising state-law questions such as these.
Another question, alluded to in a footnote in the Supreme Court’s opinion, is whether an innovator can rely on an applicant’s failure to provide the required information to argue for a preliminary injunction. The footnote – a somewhat conspicuous one given the general concision and narrow focus of the Court’s opinion – states that in holding that there is no federal injunction for failure to initiate the patent dance, “we express no view on whether a district court could take into account an applicant’s violation of §262(l)(2)(A) (or any other BPCIA procedural requirement) in deciding whether to grant a preliminary injunction under 35 U. S. C. §271(e)(4)(B) or §283 against marketing the biosimilar. See Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20 (2008) (court should consider ‘balance of equities’ in deciding whether to grant a preliminary injunction).” Although the Court “express[ed] no view” on this question, the footnote suggests that failure to comply with the patent dance might be an equitable consideration weighing in favor of granting a preliminary injunction in a patent infringement lawsuit. Innovators are sure to make this argument in the coming years.
Finally, the Supreme Court’s decision does not address the circumstances under which an innovator, having brought a patent infringement lawsuit after the biosimilar applicant’s failure to provide the information required by section 262(l)(2)(A), may obtain that same information in discovery. That question is currently before the Federal Circuit in Amgen v. Hospira (No. 16-2179), which is apparently being held pending the Supreme Court’s decision in Amgen v. Sandoz. Had the Supreme Court held that applicants could be enjoined to follow 262(l)(2)(A), the questions presented in Amgen v. Hospira would have been largely moot. But now that the Court has concluded that federal law does not allow for injunctive relief to enforce section 262(l)(2)(A), it remains an open question what sort of discovery orders are available in BPCIA cases.