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From Health Law Daily, April 26, 2017

SCOTUS, attempting to untangle biosimilar notice knot, suggests help from agency rulemaking

By Kathryn S. Beard, J.D.

On Wednesday, April 26, 2017, the Supreme Court heard the final oral arguments of the 2016 Term. One of the last matters before the Court is the dispute between Sandoz, Inc., and Amgen Inc. regarding the timing of giving notice of commercial biosimilar marketing. During oral arguments, the Court heard from attorneys on behalf of both companies, and an Assistant Solicitor General on behalf of the United States as amicus curie supporting Sandoz. The consolidated action is somewhat rare for the Court; it consists of a Sandoz petition appealing the Federal Circuit’s decision on two questions presented, and a conditional cross-petition from Amgen presenting a third question.

BPCIA. The dispute is rooted in the Biologics Price Competition and Innovation Act (BPCIA), passed as sections 7001-7003 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The BPCIA sought to streamline the FDA approval process for biosimilars—which are similar but not identical to biologics, and therefore, must be individually approved by the FDA unlike generic drugs which are identical to the brand-name drug—while also providing a process to address patent issues arising from biosimilar creation. Patent-holders for biologics receive a 12-year exclusivity period. The BPCIA created a way for a biosimilar manufacturer to exchange information with the patent-holder of the biologic, and also created a requirement for the biosimilar manufacturer to provide notice to the biologic manufacturer no later than 180 days (that is, six months) before the date of first commercial marketing for the biosimilar.

Factual background. Amgen has marketed its biologic filgrastim under the brand name Neupogen® since 1991. In 2014, Sandoz filed an application for a biosimilar filgrastim product referenced to Neupogen, and the FDA accepted the application for review. Sandoz notified Amgen that it anticipated obtaining approval for its biosimilar and that it intended to launch the product immediately upon approval. Sandoz did not provide Amgen with product information required under the patent-dispute provisions of the BPCIA. Upon receiving FDA approval of its biosimilar, Sandoz notified Amgen that it intended to take its biosimilar to market, and Amgen filed suit against Sandoz. The two issues were whether the BPCIA requires a biosimilar manufacturer to exchange information with the biologic’s patent-holder, and on the timing of the required notice. Specifically, whether the notice could be given before receiving FDA approval, therefore allowing marketing of the biosimilar upon receipt of approval as long as 180 days had passed, or whether notice could only be provided after the FDA approved the biosimilar, requiring the manufacturer to wait an additional 180 days to market.

The Federal Circuit’s decision held that the information exchange is optional despite statutory language saying "shall provide," and that Amgen was entitled to an additional 180-day marketing exclusivity period based on Sandoz’s late notification (see Court interprets biosimilar ‘enigma’ in favor of abbreviated biologic license applicant, July 22, 2015; Biosimilar dispute headed to the Supreme Court, January 17, 2017).

Sandoz. Sandoz’ attorney began the oral argument by saying that the Federal Circuit misread the BPCIA’s notice of commercial marketing provision, and claiming that the 180-day automatic stay provided to sponsors by the lower decision is not provided for by the statute. The first questions from the Court dealt with specific timing of biosimilar development, information exchange, and patent litigation, which Sandoz said is completely separate from the FDA’s approval process. However, Sandoz noted that the statute prohibits the FDA from making an approval effective during a biologic’s 12-year exclusivity period, regardless of when the application for biosimilar approval is made. There is also no process to provide for a tentative approval in advance of the end of the exclusivity period. Justice Breyer asked if, due to two possible interpretations of "very technical provisions" that Breyer finds "somewhat ambiguous," it would be proper to ask the FDA to issue regulations interpreting the statute.

Justice Sotomayor and Chief Justice Roberts built on earlier questions from Justices Kennedy and Breyer regarding an assumption that, until a biosimilar product is approved, the manufacturer of the biologic does not know exactly what is in the biosimilar. Therefore, the biologic manufacturer cannot know what will be approved or whether its own patent is being infringed by the biosimilar or not until the notice is provided. Justice Ginsburg added onto Breyer’s question line about agency deference by noting that the Patent and Trademark Office (PTO) could also be involved in clarifying rulemaking. Sandoz, however, suggested that clear statutory interpretation by the Court would effectively solve the dispute, believing that the notice is just that: a notice to allow the sponsor to litigate any other patents it might have before the end of the exclusivity period.

United States. The United States said the BPCIA includes a detailed process for early resolution of patent disputes while the FDA is evaluating a biosimilar application, and noted that certain procedural steps are expressly established by the statute. It warned of the consequences of the Federal Circuit’s interpretation, saying that such an interpretation would "muck up the statute" and allow courts to police each step of the process. Kennedy again asked whether the FDA could interpret the statute and issue regulations. The United States responded that the FDA’s position—and the position of the PTO—is that it declined to do any rulemaking about this issue because the BPCIA separates the FDA licensure process from the patent notice process. The Court’s newest member, Justice Gorsuch, asked his first question of the United States, asking for clarification about whether a declaratory-action judgment is the exclusive remedy for a violation of the information exchange. Other Justices quickly joined in on the line of questioning, with Breyer again suggesting that rulemaking would be the optimal way to resolve the dispute.

Amgen. Amgen argued that the required notice can only be given after the FDA approves a biosimilar, and that therefore, the biosimilar can be marketed at the earliest 180 days after the FDA’s approval is effective. Amgen’s counsel was allowed to speak uninterrupted about the timeline for development of a biosimilar, FDA approval, and patent litigation. He noted that without knowing what a patent-owner is seeking to enjoin from infringement, no preliminary injunction is available from the courts. Roberts asked whether the issue is more often the validity of a patent or the infringement of a patent, but Amgen did not have sufficient data to respond to that question due to the limited time in which biosimilar review has been available. To date, the FDA has only approved five biosimilars.

Gorsuch, often described as a strict textualist like his predecessor on the Court, Justice Scalia, offered a conditional agreement that "shall" means must, the usual statutory interpretation for that term, but then asked that the remedy for failure to exchange information remains a question, and posited that the only remedy is that provided by the statute, a declaratory-judgment action. Sotomayor followed up, saying that under Amgen’s interpretation, the provisions creating a declaratory judgment action would "become superfluous." Roberts also asked questions about preemption, saying that "the decisions of one party to waive the argument" was not a good basis upon which to interpret a federal statute. Justice Kagan suggested that the BPCIA contemplated the possibility of a round of litigation occurring before FDA approval is given, and therefore asked whether approval was a necessary piece of information to evaluating the existence of a patent infringement.

Rebuttal. Sandoz’ counsel finished the oral argument by saying that when Congress intended to provide injunctive relief in the BPCIA, it did so; therefore, adding a new remedy for injunctive relief where nor provided is contrary to Congressional intent. Further, Sandoz argued that Congress did not intend to provide a six-month extension to the existing 12-year biologic exclusivity period, and suggested that by delaying its suit, Amgen was improperly extending its own exclusivity period.

Companies: Sandoz, Inc.; Amgen Inc.

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