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The Federal Circuit’s First Foray into the BPCIA: “A Pulitzer Prize for Complexity”?

Yesterday, a Federal Circuit panel comprising Judges Newman, Lourie, and Chen heard oral argument in Amgen Inc. v. Sandoz Inc. (Fed. Cir. No. 2015-1499), the first ever case requiring the Appeals Court to address the meaning of various provisions of the Biologics Price Competition and Innovation Act (BPCIA). The appeal was fast-tracked because of the potentially imminent marketing of Sandoz’s Zarxio® (filgrastim-sndz), which is a biosimilar version of Amgen’s Neupogen® (filgrastim) and is the first biosimilar to receive FDA approval under the BPCIA.

As expected, the panel’s questions focused on two primary issues, both of which were decided largely in Sandoz’s favor during the district court proceedings:

  1. Whether the BPCIA’s patent exchange provisions – specifically, 42 U.S.C. § 262(l)(2)-(6) – are mandatory (Amgen’s view) or optional (Sandoz’s view), and what the consequences of non-compliance or “opting out” should be;

  2. Whether the 180-day pre-launch notice required under 42 U.S.C. § 262(l)(8) may be given immediately upon FDA’s acceptance of the biosimilar application (Sandoz’s view) or only upon FDA’s approval of the application (Amgen’s view).

The panel tested both sides of both arguments. With regard to the mandatory versus optional debate, the panel seemed concerned that use of the term “shall” in § 262(l)(2) – i.e., “the subsection (k) applicant 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” – could under Sandoz’s interpretation of the statute be disregarded, thus rendering much of the BPCIA’s complex patent exchange process a waste of legislative breath. The panel questioned why Congress would have created these patent exchange procedures if they could be circumvented entirely, or if selected procedures could be skipped like in a game of “choose your own adventure.” On the other hand, some members of the panel questioned Amgen’s basis for claiming a remedy different from that provided in § 262(l)(9)(C), which is specifically directed to the situation in which a biosimilar applicant “fails to provide the application and information required under [§ 262(l)(2)(A)].”

With regard to the timing of the 180-day notice of commercial marketing, the panel asked why it made sense for Amgen to enjoy what effectively would be an additional six months of exclusivity if the Court were to decide that 180-day notice could be given only after FDA’s approval of the biosimilar drug. On the other hand, the panel seemed perplexed that allowing the required 180-day notice to be given already upon FDA’s acceptance of the biosimilar application (which is what Sandoz and other biosimilar applicants appear to have done) would make the notice “entirely speculative” and merely “aspirational.” It is true, for example, that FDA approved Sandoz’s Zarxio® product relatively quickly and along the timeline that Sandoz seems to have anticipated. But that does not mean the same will hold for all biosimilar applications – and indeed FDA approvals of other applications, such as Celltrion’s application for a biosimilar infliximab product, have already been delayed due to requests from FDA for additional information.

The Federal Circuit panel also seemed interested in several questions related to “linkage.” First, the panel questioned whether there was any statutory linkage between § 262(k), governing “Licensure,” and § 262(l), governing “Patents.” Second, the panel asked about linkage between § 262(k) and (l) and 35 U.S.C. § 271(e)(2)(C), which, like the related provisions of the Hatch-Waxman Act, provides a statutory basis for asserting infringement even in the absence of a marketed product. The panel focused on understanding when infringement occurs given that § 271(e)(2)(C) generally provides a statutory basis for infringement upon submission of a § 262(k) application, and yet the predicate patents for such a suit can only be identified via an exchange process that necessarily occurs after submission of the application. These linkage questions, as well as issues of BPCIA preemption and private rights of action, likely will be the subject of future litigation – such as Janssen Biotech v. Celltrion Healthcare, No. 15-10698 (D. Mass.).

The panel was in full agreement on one conclusion: that the BPCIA sets forth a complicated statutory regime. One panel member went so far as to say that the statute deserves “a Pulitzer Prize for complexity.” The panel also seemed sensitive to the need to interpret the BPCIA not just for this particular case (which involves a reference product for which the statutory 12-year exclusivity has long since expired), but for all cases that might arise under the BPCIA, including ones in which there might be considerably more time for the parties to litigate patent issues prior to FDA’s first effective approval date of a biosimilar application.

Sorting through all of these issues will be no small task for the Federal Circuit panel, and thus possibilities remain for subsequent review by the Federal Circuit sitting en banc or even by the U.S. Supreme Court. For now, however, the Appeals Court has enjoined Sandoz from marketing its approved Zarxio® product, so we are unlikely to see the first biosimilar test the consumer market until the Appeals Court makes a decision. 

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