In a previous post, I discussed
a district court decision holding that the process for resolving patent
disputes under the Biologics Price Competition and Innovation Act
(BPCIA) is optional. That post contains extensive background on the
BPCIA and its purpose of providing an abbreviated pathway for “biosimilar”
drugs to get to market and compete with their branded analogs,
resulting in lower prices for consumers. The bottom line is that, under
the BPCIA, makers of biosimilar products can rely on the clinical trial
data developed for the branded (or “reference”) product in order to
accelerate FDA approval. Nevertheless, the BPCIA provides 12 years of
data exclusivity to the manufacturer of the reference product. And
beyond that period, even if the biosimilar garners FDA approval, the
brand owner can try to continue to keep it out of the market by
asserting claims of patent infringement. The BPCIA provides for a
procedure involving pre-suit information exchange between the brand and
biosimilar makers—the so-called “patent dance”—that is intended to
apprise the brand of the biosimilar’s manufacturing process and narrow
down the number of patents to be be asserted. But the district court,
and now the Federal Circuit on appeal, have held that the biosimilar can lawfully refuse to participate in the patent dance.
Of course, Amgen, the brand owner in this case, can still pursue
patent infringement claims against Sandoz, the biolisimilar maker, on
remand at the district court. But it appears that, given its eagerness
to skip the patent dance in this case, Sandoz is confident it can win
the patent infringement battle and is poised to launch its competing
product as soon as possible. How soon is that? Sandoz has already
obtained FDA approval, but it cannot launch just yet. This is because of
the second holding of the Federal Circuit in this case, which is that
the biosimilar’s notice to the brand of its intent to market its
competing product within 180 days, as provided by the statute, can only
be given after the biosimilar obtains FDA approval. In this
case, Sandoz’s product was approved on March 6, 2015, and, per the
Federal Circuit’s decision, that was the first day that Sandoz could
give Amgen a notice under the BPCIA. In other words, any previous
notices were not effective because they predated FDA
approval. Accordingly, September 2, 2015 (which is 180 days from March
6) is the first day that Sandoz can launch. As I reported earlier,
the Federal Circuit entered an injunction pending appeal preventing
Sandoz from launching its biosimilar product. Barring further
developments in this case, this injunction will be lifted on September
2.
As for the Federal Circuit’s reasoning, the court largely adopted the district court’s analysis (which I covered
in a previous post) in affirming its conclusion that the patent dance
was not mandatory. Thus, in spite of the word “shall” in the statute in
reference to the disclosure of the bioismilar’s FDA application to the
brand—which would include the description a manufacturing process that
might be covered by one or more of the brand’s patents—the Federal
Circuit held that the dance-initiating disclosure was not mandatory.
Looking at the structure of the statute as a whole, the Federal Circuit
concluded that the various patent-dance procedures become mandatory only
if the biosimilar maker opts into the scheme in the first place. The Federal
Circuit recognized that this interpretation contradicts the plain
language of 42 U.S.C. § 262(l)(1)(B)(i), which precedes the patent-dance
paragraph, (l)(2), and states in no uncertain terms that “[w]hen a
subsection (k) applicant [i.e., a biosimilar maker attempting to take
advantage of the abbreviated pathway] submits an application under
subsection (k), such applicant shall provide to the persons described in
clause (ii) [i.e., the brand manufacturer], subject to the terms of this paragraph,
confidential access to the information required to be produced pursuant
to paragraph (2) . . . ” In a sense, the Federal Circuit’s conclusion
appears to mean that “shall” means “shall,” and the procedures become
required, only if the biosimilar maker decides that they are required.
So how did the Federal Circuit get around this problem? It concluded
that, because the only remedy provided in the statute for the biosimilar
maker’s failure to disclose its application is an all-out (i.e.,
unrestricted by the patent-dance negotiations) patent infringement suit,
Congress must have meant that the disclosure is optional. In other
words, because “the BPCIA has no other provision [i.e., other than a
patent infringement suit] that grants a procedural right to compel
compliance with the disclosure requirement” (or as the court reiterated,
because “the BPCIA does not specify any non-patent-based remedies for a
failure to comply” with this requirement), “shall” really means “may.”
Perhaps this is mere semantics, but one way to avoid this unsatisfying
result would have been to hold that “shall” really does mean
“shall,” but that the remedy of the patent infringement suit preempts
all other possible remedies (such as state law causes of action under
which Amgen attempted to enforce this apparent procedural violation).
The court hinted at this when it cited the “only remedies” phrase in 35
U.S.C. § 271(e)(4), which in turn references the language in 35 U.S.C. §
271(e)(2)(C)(ii) that failure to comply with the disclosure requirement
as described in 42 U.S.C. § 262(l)(2)(A) is an act of infringement
(confused yet?), but ultimately avoided any preemption analysis because,
as it noted in footnote 5 of the opinion, Sandoz did not raise
preemption at the district court. As a result, there is odd internal tension in the Federal
Circuit’s opinion. The court appeared to conclude that “shall” means
“may,” and Amgen doesn’t have the right to see Sandoz’s application,
based on the maxim that there is no right without a remedy. But it then
recognized that there is in fact a remedy—the “no holds barred”
patent infringement suit. Perhaps, one way to avoid this problem would
have been to hold Sandoz to its waiver and then resolve the problem
through preemption analysis in a subsequent case. But maybe one can’t
really fault the Federal Circuit for finessing the waiver problem in
order to get to a result that it thought was ultimately right. Judge
Newman, by the way, dissented on the issue of whether the patent dance
is mandatory. She would have held that, by opting into the abbreviated
pathway, Sandoz committed itself to follow the disclosure and dance
procedure. She argued that “[w]hen a beneficiary of the statute
withholds compliance with provisions enacted to benefit others, the
withholder violates that balance.”
As discussed above, the other point of contention in this case was
the 180-day notice period. A different majority of Judges Lourie and
Newman, with Judge Chen dissenting from this portion of the opinion,
concluded that effective notice can be given only when, per 42 U.S.C. §
262(l)(8)(A), the biosimilar product is “licensed under subsection
(k)”—i.e., approved by the FDA. Judge Chen would have held that the
notice provision does not apply when the parties elect not to
participate in the patent dance. Arguing that the result he favored was
the logical consequence of the panel’s other holding, he concluded that
the majority mistakenly recognized “an inherent right to an automatic
180-day injunction” for the brand owner. And the 180-day delay does
matter in this case because Amgen’s 12-year exclusivity period has
expired. But if cases arise in the future where the biosimilar manufacturer obtains
approval well before the 12-year exclusivity period, the 180-day delay
won’t make a difference. As the majority noted, “[t]hat extra 180 days
will not likely be the usual case.” Judge Chen did agree in principle
with the majority’s observation in footnote 1 that, like Russia, the
BPCIA is “a riddle wrapped in a mystery inside an enigma.” He
explained that “[t]o fulfill our judicial obligation ‘to say what the
law is,’ we must choose from a series of imperfect choices.”
Note: Cross-posted on the Center for Law and the Biosciences Blog
