The Federal Circuit heard oral arguments in the Amgen v. Sandoz case on Wednesday, June 3, 2015. The three judges on the panel were Judge Newman, Judge Lourie, and Judge Chen. This case is on appeal from the U.S. District Court for the Northern District of California, where Judge Seeborg denied Amgen's motion for a partial judgement on the pleadings and for a preliminary injunction.
One of the main issues on appeal was whether the disclosure and patent exchange provisions (the so-called "patent dance") of the Biologics Price Competition and Innovation Act ("BPCIA") is mandatory or whether either party can opt out of the requirements and settle for the remedy specified in the statute. As a reminder, the patent dance kicks off with the disclosure of the biosimilar application, as well as the process of manufacture, by the subsection (k) applicant. The statute at subsection (l)(2) reads:
(2) SUBSECTION (k) APPLICATION INFORMATION.—Not later than 20 days after the Secretary notifies the subsection (k) [biosimilar] applicant that the application has been accepted for review, the subsection (k) applicant—
(A) shall provide to the reference product sponsor a copy of the application submitted to the Secretary under subsection (k), and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application; and
(B) may provide to the reference product sponsor additional information requested by or on behalf of the reference product sponsor. [emphasis added]
42 U.S.C. § 262(l)(2). The panel wasted no time in cutting to the chase, when Judge Lourie interrupted counsel for Amgen almost at the outset, noting "[w]hat you are going to tell us . . . is that 'shall' means 'shall' -- in fact it means 'must.'" This has, of course, been Amgen's position since it was first notified that Sandoz did not intend to participate in this disclosure process.
Sandoz, for its part, has maintained that the use of the term "shall" does not mean that a biosimilar applicant must provide a copy of its application in every instance, but only if it wishes to partake in the benefits of the patent dance. Judge Newman has a different take on that question -- it was not whether to partake in this particular subpart of the BPCIA, but rather whether to partake in the entirety of the BPCIA process -- including the abbreviated approval process:
If you want my data -- if you want to be a (k) applicant, which I gather Sandoz has done, right -- has used the data, hasn't gone through their own clinical trials or all the rest of it -- then this is what you "shall" do. You don't have to use the Amgen data, you can create your own, then you are home free.
While counsel for Sandoz disagreed, Judge Newman continued:
But why isn't it the question -- if you have a statute, this integrated statute, there were -- from the record it looks as if there were extensive hearings, tradeoffs, debates, connections with the pros and cons of Hatch Waxman for biosimilars -- and here we have a complicated statute and you say only some of it counts.
Of course, it is unfortunately not as simple as saying that this is an "integrated statute." Instead, once you start looking at the entirety of the statute, it gets a lot more complicated. As Judge Lourie noted -- the BPCIA should win the "Pulitzer prize for complexity or uncertainty." The patent dance is outlined in subsection (l)(2)-(6) of the statute, whereas subsection (l)(9)(c) purports to provide a remedy should the biosimilar applicant not disclose the requisite information:
If a subsection (k) applicant fails to provide the application and information required under paragraph (2)(A), the reference product sponsor, but not the subsection (k) applicant, may bring an action under section 2201 of Title 28, for a declaration of 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). Sandoz has maintained that because the remedy is already provided for in the statute, the subsection (k) applicant is free to disregard the seemingly mandatory disclosure provision, provided it is willing to accept the consequences.
Judge Chen clearly struggled with trying to reconcile the statute as a whole. On the one hand, he had one of the most quoted lines of the hearing: "I don't see through the language or the structure of (l) where there's a hint that it's a 'choose-your-own-adventure' situation for the (k) applicant." However, Judge Chen ran that thought to its logical conclusion, noting that even if the provision is determined to be mandatory, you might end up in the same situation -- with the patent infringement remedy outlined by the statute.
To this point, Amgen presented a compelling, yet somewhat buried, response. If § 262(l)(9)(C) were meant to be the exclusive remedy for non-compliance with the disclosure provision, the biosimilar applicant would be put into a much better position than it would have been otherwise. The statute envisions and anticipates patent litigation with regard to methods of manufacturing the biosimilar drug product -- indeed it is one of the specified types of information that must be disclosed by the subsection (k) applicant. However, if the biosimilar applicant refuses to "dance," § 262(l)(9)(C) only allows for a DJ action with respect to patents covering the biological product or the uses thereof (apparently in a nod to the Hatch Waxman statute). And this is to say nothing of the problem that, without the disclosure of the recited information, the reference product sponsor will have difficulty knowing with certainty just which patents are being infringed. With the biosimilar applicant facing such overwhelming incentives, it will likely be the rare situation where it will choose to make the appropriate disclosures and initiate the patent dance.
Part of the problem, as Judge Chen noted, is that there is really nothing tying subsection (l) to subsection (k). Instead, activities involving the FDA fall under subsection (k), while matters involving the resolution of patent infringement claims fall under subsection (l). Congress could have done a better job ensuring that progress of the application before the FDA could not continue (or at least be substantially delayed) unless the subsection (k) applicant participated in the patent dance. Indeed, Amgen was rebuffed when it requested that the FDA require biosimilar applicants to "certify" compliance with the subsection (l) disclosure requirements (see "Amgen Receives No Help from the FDA -- A Biosimilar Update"). A possible solution would be for the Federal Circuit to fashion some remedy that would leave the statute intact, but provide for the ability of district courts to enjoin the FDA if biosimilar applicants are non-compliant.
The other main issue argued before the Court was whether Sandoz's Notice of Commercial Marketing was effective when it was made shortly after the application was accepted, as opposed to making it after the application was approved. The questioning from the three judges seemed to suggest that the statute did not make sense unless the Notice was provided after the latter, or post-approval notice. For example Judge Chen suggested that: "it sounds a little nonsensical to say that that is an appropriate form of Notice of Commercial Marketing when you don't have any clue on whether your application will ever get approved," much less when. He used the term "aspirational" to refer to such notice just after acceptance. Nevertheless, the question was raised by the Court whether setting the "Notice" date after application approval would inappropriately extend the exclusivity period of the reference product sponsor -- at least in situations like this for Amgen.
The Court did ask what remedy Amgen was seeking on appeal. It is important to note that this is a somewhat atypical case, in which Amgen's composition-of-matter patent has already expired, and the data exclusivity period is well beyond the 14 years contemplated by the statute. Nevertheless, everyone appeared to be in agreement that any decision needed to be applicable not only to this case, but to all more "typical" cases that might arise. Amgen asked that it be put back in the position it would have been if Sandoz had complied with the statute at the outset. It also stressed that it did not want a "windfall." However, as for the particulars, it simply asked the Court to rule in Amgen's favor and remand to the District Court to fashion the appropriate remedy.
There was one particularly troubling tangential comment by Judge Newman, at least from the perspective of Hatch Waxman litigation. While discussing the artificial act of infringement related to the BPCIA, or 35 U.S.C. § 271(e)(2)(c)(ii), Judge Newman inquired whether it was correct that the comparable provision for Hatch Waxman, 35 U.S.C. § 271(e)(2)(a), set the act of infringement as the certification pursuant to paragraph IV. Counsel for Amgen correctly noted that the statute only mentions the submission of the ANDA application, and is silent as to the paragraph IV certification. However, this issue has already been addressed by the Federal Circuit in the Astra Zeneca v. Apotex case, where it concluded that, in order to establish subject matter jurisdiction pursuant to § 1338(a), nothing more than alleging infringement by the filing of an ANDA was required (see "AstraZeneca Pharmaceuticals LP v. Apotex Corp. (Fed. Cir. 2012)"). Moreover, almost every jurisdiction that has now considered this question has determined that a paragraph IV certification is not a prerequisite for jurisdiction under 271(e)(2). In fact, at least two jurisdictions that at one point had come to the opposite conclusion (the Northern District of Illinois and the District of New Jersey), have since conformed to this majority position. We can only hope that this case does not include some dicta on the subject that could create uncertainty moving forward.
We will continue to monitor this case for any unusual development, and we will of course report on the outcome of this appeal in due course.
