Addressing issues of first impression related to the Biologics Price Competition and Innovation Act of 2009 (BPCIA), which the U.S. Court of Appeals for the Federal Circuit labeled “a riddle wrapped in a mystery inside an enigma,” the Court affirmed dismissal of unfair competition and conversion claims under California law, but reversed the denial of a preliminary injunction. Amgen Inc., et al. v. Sandoz, Inc., Case No. 15-1499 (Fed. Cir., July 21, 2015) (Lourie, J.) (Newman, J. and Chen, J. each concurring in part and dissenting in part).

In 2014, Sandoz notified Amgen that it had filed a Biologics License Application (BLA) with the Food and Drug Administration (FDA) to produce a biosimilar of Amgen’s Neupogen and that it intended to launch its biosimilar immediately upon FDA approval of its follow-on product. Although BPCIA § 262(l)(2)(A) states that “[n]ot later than 20 days after . . . the application has been accepted . . . applicant shall provide to the reference product sponsor a copy of the application,” Sandoz told Amgen that they “opted” not to provide the application or any of the additional information required by § 262(l)(2)(A).

Amgen filed suit based on BPCIA §§ 262(l)(9)(C) and 271(e)(2)(C)(ii), which provide that failure to provide the application is an act of infringement and also allow the Reference Product Sponsor (RPS) to file for declaratory judgment of infringement. Amgen also filed claims of unfair competition and conversion, based on Sandoz’s failure to provide the information required by § (l)(2)(A), and for giving Amgen notice of commercial marketing prior to the FDA’s approval of Sandoz’s biosimilar product. The district court agreed with Sandoz, holding that the BPCIA requirement to provide a copy of the application was permissive rather than mandatory; and that Sandoz’s notice of its intent to commercially market its biosimilar product was effective despite being given prior to the FDA’s approval. Amgen appealed.

In a highly fractured decision, the Federal Circuit found that BPCIA applicants are not required to provide their applications to reference product sponsors (RPS), but reversed the district court with respect to notice, finding that BPCIA applicants must wait until after FDA approval to provide notice of commercial marketing to RPSs.

With respect to the first issue, the majority explained that although the word “shall” in § (l)(2)(A) implied a mandatory requirement, considered within the entire statute the word “shall” was intended to be permissive because §§ (l)(9)(C) and (e)(2)(C)(ii) contemplated non-compliance by providing remedies. Therefore, the Court explained, Sandoz’s failure to provide an application was not a violation of the BPCIA, and the district court properly dismissed Amgen’s unfair competition and conversion claims.

In dissent, Judge Newman argued that the majority’s interpretation undermined the statute’s purpose of averting and expediting of litigation, limited the RPS’s infringement claims and allowed the applicant to waive a provision that was designed to protect the rights of the RPS.

With respect to the second issue, however, the majority found that the language of § 262(l)(8)(A) required applicants to provide notice to the RPS only after the product had been licensed by the FDA, thereby triggering a 180-day delay in marketing the biosimilar product. The Federal Circuit also reversed the district court’s denial of preliminary injunction. According to the Court, § 262(l)(8)(A) requires notice only after FDA approval because the language of this specific section referred to the biological product as “licensed” and here the term “shall” was mandatory. The Court concluded that the “shall” in § (l)(8)(A) was mandatory because the law did not contemplate non-compliance with this provision.

Judge Chen dissented from this part, arguing that the 180-day delay is inapplicable after Sandoz violated§ (l)(2)(A) because the litigation management rules of §§ (l)(3)-(l)(8) are only set in motion by fulfilling § (l)(2)(A).

Practice Note: The Court’s decision in this case limits the information available to biologic drug makers regarding a competitor’s application for a biosimilar product, but extends the period of exclusivity for the original drug maker.