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Sandoz Inc. v. Amgen Inc.

United States Supreme Court

June 12, 2017

SANDOZ INC., PETITIONER
v.
AMGEN INC., ET AL. AMGEN INC., ET AL., PETITIONERS
v.
SANDOZ INC.

          Argued April 26, 2017

         ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

         The Biologies Price Competition and Innovation Act of 2009 (BPCIA or Act) provides an abbreviated pathway for obtaining Food and Drug Administration (FDA) approval of a drug that is biosimilar to an already licensed biological product (reference product). 42 U.S.C. §262(k). It also provides procedures for resolving patent disputes between biosimilar manufacturers (applicants) and manufacturers of reference products (sponsors). §262(I). The Act treats the mere submission of a biosimilar application as an "artificial" act of infringement, enabling parties to bring patent infringement actions at certain points in the application process even if the applicant has not committed a traditional act of patent infringement. See 35 U.S.C. §§271(e)(2)(C)(i), (ii).

         Under §262(Q(2)(A), an applicant seeking FDA approval of a biosimilar must provide its application and manufacturing information to the sponsor within 20 days of the date the FDA notifies the applicant that it has accepted the application for review. This triggers an exchange of information between the applicant and sponsor designed to create lists of relevant patents and flesh out potential legal arguments. §262(Z)(3). The BPCIA then channels the parties into two phases of patent litigation. In the first, the parties collaborate to identify patents on the lists for immediate litigation. The second phase-triggered when the applicant, pursuant to §262(Z)(8)(A), gives the sponsor notice at least 180 days before commercially marketing the biosimilar-involves any listed patents not litigated in the first phase. The applicant has substantial control over the timing and scope of both phases of litigation.

         Failure to comply with these procedural requirements may lead to two consequences relevant here. Under §262(Q(9)(C), if an applicant fails to provide its application and manufacturing information to the sponsor under §262(Q(2)(A), then the sponsor, but not the applicant, may immediately bring an action "for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product." And under §262(T)(9)(B), if an applicant provides the application and manufacturing information but fails to complete a subsequent step in the process, the sponsor, but not the applicant, may bring a declaratory-judgment action with respect to any patent included on the sponsor's list of relevant patents.

         Neupogen is a filgrastim product marketed by Amgen, which claims to hold patents on methods of manufacturing and using filgrastim. Sandoz sought FDA approval to market a biosimilar filgrastim product under the brand name Zarxio, with Neupogen as the reference product. A day after the FDA informed Sandoz that its application had been accepted for review, Sandoz notified Amgen that it had submitted an application and that it intended to market Zarxio immediately upon receiving FDA approval. It later informed Amgen that it did not intend to provide the application and manufacturing information required by §262(Q(2)(A) and that Amgen could sue immediately for infringement under §262(7)(9)(C).

         Amgen sued Sandoz for patent infringement and also asserted that Sandoz engaged in "unlawful" conduct in violation of California's unfair competition law. This latter claim was predicated on two alleged violations of the BPCIA: Sandoz's failure to provide its application and manufacturing information under §262(T)(2)(A), and its provision of notice of commercial marketing under §262(Q(8)(A) prior to obtaining licensure from the FDA. Amgen sought injunctions to enforce both BPCIA requirements. Sandoz counterclaimed for declaratory judgments that the asserted patent was invalid and not infringed and that it had not violated the BPCIA.

         While the case was pending, the FDA licensed Zarxio, and Sandoz provided Amgen a further notice of commercial marketing. The District Court subsequently granted partial judgment on the pleadings to Sandoz on its BPCIA counterclaims and dismissed Amgen's unfair competition claims with prejudice. The Federal Circuit affirmed in part, vacated in part, and remanded. The court affirmed the dismissal of Amgen's state-law claim based on Sandoz's alleged violation of §262(Z)(2)(A), holding that Sandoz did not violate the BPCIA in failing to disclose its application and manufacturing information and that the BPCIA provides the exclusive remedies for failure to comply with this requirement. The court also held that under §262(f)(8)(A) an applicant must provide notice of commercial marketing after obtaining licensure, and that this requirement is mandatory. It thus enjoined Sandoz from marketing Zarxio until 180 days after the date it provided its second notice.

         Held:

Section 262(f)(2)(A) is not enforceable by injunction under federal law, but the Federal Circuit on remand should determine whether a state-law injunction is available. An applicant may provide notice under §262(f)(8)(A) prior to obtaining licensure. Pp. 10-18.

         (a) Section 262(f)(2)(A)'s requirement that an applicant provide the sponsor with its application and manufacturing information is not enforceable by an injunction under federal law. The Federal Circuit reached the proper result on this point, but its reasoning was flawed. It cited §271(e)(4), which expressly provides the "only remedies" for an act of artificial infringement. In light of this language, the court reasoned that no remedy other than those specified in the text-such as an injunction to compel the applicant to provide its application and manufacturing information-was available. The problem with this reasoning is that Sandoz's failure to disclose was not an act of artificial infringement remediable under §271(e)(4). Submitting an application constitutes an act of artificial infringement; failing to disclose the application and manufacturing information required by §262(f)(2)(A) does not.

         Another provision, §262(f)(9)(C), provides a remedy for an applicant's failure to turn over its application and manufacturing information. It authorizes the sponsor, but not the applicant, to bring an immediate declaratory-judgment action for artificial infringement, thus vesting in the sponsor the control that the applicant would otherwise have exercised over the scope and timing of the patent litigation and depriving the applicant of the certainty it could have obtained by bringing a declaratory-judgment action prior to marketing its product. The presence of this remedy, coupled with the absence of any other textually specified remedies, indicates that Congress did not intend sponsors to have access to injunctive relief, at least as a matter of federal law, to enforce the disclosure requirement. See Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209. Statutory context further confirms that Congress did not authorize courts to enforce §262(f)(2)(A) by injunction. Pp. 10-13.

         (b)The Federal Circuit should determine on remand whether an injunction is available under state law to enforce §262(f)(2)(A). Whether Sandoz's conduct was "unlawful" under California's unfair competition statute is a question of state law, and the Federal Circuit thus erred in attempting to answer that question by referring only to the BPCIA. There is no dispute about how the federal scheme actual- ly works on the facts of this case: Sandoz failed to disclose the requisite information under §262(Q(2)(A), and was accordingly subject to the consequence specified in §262(Q(9)(C). As a result, there is nothing to decide on this point as a matter of federal law. The court on remand should determine whether California law would treat noncompliance with §262(Z)(2)(A) as "unlawful, " and whether the BPCIA pre-empts any additional state-law remedy for failure to comply with §262(7)(2)(A). Pp. 13-15.

         (c) An applicant may provide notice of commercial marketing before obtaining a license. Section 262(Z)(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)." Because the phrase "of the biological product licensed under subsection (k)" modifies "commercial marketing" rather than "notice, " "commercial marketing" is the point in time by which the biosimilar must be "licensed." Accordingly, the applicant may provide notice either before or after receiving FDA approval. Statutory context confirms that §262(T)(8)(A) contains a single timing requirement (180 days before marketing), rather than the two requirements posited by the Federal Circuit (after licensing, and 180 days before marketing). "Had Congress intended to" impose two timing requirements in §262(Z)(8)(A), "it presumably would have done so expressly as it did in the" adjacent provision, §262(Z)(8)(B). Russello v. United States, A&A U.S. 16, 23. Amgen's contrary arguments are unpersuasive, and its various policy arguments cannot overcome the statute's plain language. Pp. 15—18.

794 F.3d 1347, vacated in part, reversed in part, and remanded.

          THOMAS, J., delivered the opinion for a unanimous Court. BREYER, J., filed a concurring opinion.

          OPINION

          Thomas Justice.

         These cases involve 42 U.S.C. §262(Z), which was enacted as part of the Biologies Price Competition and Innovation Act of 2009 (BPCIA), 124 Stat. 808. The BPCIA governs a type of drug called a biosimilar, which is a biologic product that is highly similar to a biologic product that has already been approved by the Food and Drug Administration (FDA). Under §262(Z), an applicant that seeks FDA approval of a biosimilar must provide its application materials and manufacturing information to the manufacturer of the corresponding biologic within 20 days of the date the FDA notifies the applicant that it has accepted the application for review. The applicant then must give notice to the manufacturer at least 180 days before marketing the biosimilar commercially.

         The first question presented by these cases is whether the requirement that an applicant provide its application and manufacturing information to the manufacturer of the biologic is enforceable by injunction. We conclude that an injunction is not available under federal law, but we remand for the court below to decide whether an injunction is available under state law. The second question is whether the applicant must give notice to the manufacturer after, rather than before, obtaining a license from the FDA for its biosimilar. We conclude that an applicant may provide notice before obtaining a license.

         I

         The complex statutory scheme at issue in these cases establishes processes both for obtaining FDA approval of biosimilars and for resolving patent disputes between manufacturers of licensed biologies and manufacturers of biosimilars. Before turning to the questions presented, we first explain the statutory background.

         A

         A biologic is a type of drug derived from natural, biological sources such as animals or microorganisms. Biologies thus differ from traditional drugs, which are typically synthesized from chemicals.[1] A manufacturer of a biologic may market the drug only if the FDA has licensed it pursuant to either of two review processes set forth in §262. The default pathway for approval, used for new biologies, is set forth in §262(a). Under that subsection, the FDA may license a new biologic if, among other things, the manufacturer demonstrates that it is "safe, pure, and potent." §262(a)(2)(C)(i)(I). In addition to this default route, the statute also prescribes an alternative, abbreviated route for FDA approval of biosimilars, which is set forth in §262(k).

         To obtain approval through the BPCIA's abbreviated process, the manufacturer of a biosimilar (applicant) does not need to show that the product is "safe, pure, and potent." Instead, the applicant may piggyback on the showing made by the manufacturer (sponsor) of a previously licensed biologic (reference product). See §262(k)(2)(A)(iii). An applicant must show that its product is "highly similar" to the reference product and that there are no "clinically meaningful differences" between the two in terms of "safety, purity, and potency." §§262(i)(2)(A), (B); see also §262(k)(2)(A)(i)(I). An applicant may not submit an application until 4 years after the reference product is first licensed, and the FDA may not license a biosimilar until 12 years after the reference product is first licensed. §§262(k)(7)(A), (B). As a result, the manufacturer of a new biologic enjoys a 12-year period when its biologic may be marketed without competition from biosimilars.

         B

         A sponsor may hold multiple patents covering the biologic, its therapeutic uses, and the processes used to manufacture it. Those patents may constrain an applicant's ability to market its biosimilar even after the expiration of the 12-year exclusivity period contained in §262(k)(7)(A).

         The BPCIA facilitates litigation during the period preceding FDA approval so that the parties do not have to wait until commercial marketing to resolve their patent disputes. It enables the parties to bring infringement actions at certain points in the application process, even if the applicant has not yet committed an act that would traditionally constitute patent infringement. See 35 U.S.C. §271(a) (traditionally infringing acts include making, using, offering to sell, or selling any patented invention within the United States without authority to do so). Specifically, it provides that the mere submission of a biosimilar application constitutes an act of infringement. §§271(e)(2)(C)(i), (ii). We will refer to this kind of preap-proval infringement as "artificial" infringement. Section 271(e)(4) provides remedies for artificial infringement, including injunctive relief and damages.

         C

         The BPCIA sets forth a carefully calibrated scheme for preparing to adjudicate, and then adjudicating, claims of infringement. See 42 U.S.C. §262(Z). When the FDA accepts an application for review, it notifies the applicant, who within 20 days "shall provide" to the sponsor a copy of the application and information about how the biosimilar is manufactured. §262(Z)(2)(A). The applicant also "may provide" the sponsor with any additional information that it requests. §262(/)(2)(B). These disclosures enable the sponsor to evaluate the biosimilar for possible infringement of patents it holds on the reference product (i.e., the corresponding biologic). §262(Z)(1)(D). The information the applicant provides is subject to strict confidentiality rules, enforceable by injunction. See §262(Z)(1)(H). The first question presented by these cases is whether §262(Z)(2)(A)'s requirement-that the applicant provide its application and manufacturing information to the sponsor-is itself enforceable by injunction.

         After the applicant makes the requisite disclosures, the parties exchange information to identify relevant patents and to flesh out the legal arguments that they might raise in future litigation. Within 60 days of receiving the application and manufacturing information, the sponsor "shall provide" to the applicant "a list of patents" for which it believes it could assert an infringement claim if a person without a license made, used, offered to sell, sold, or imported "the biological product that is the subject of the [biosimilar] application." ...


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