Earlier this week, the U.S. Supreme Court unanimously held, in its first case interpreting the Biologics Price Competition and Innovation Act of 2009, Sandoz Inc. v. Amgen Inc., that (i) biosimilar applicants cannot be forced under federal law to engage in the Biologics Act’s information exchange and (ii) that they need not await U.S. Food and Drug Administration (FDA) approval before providing the statutorily required notice of commercial marketing. This marks a major win for biosimilar manufacturers seeking to enter the market earlier and on their own terms.

The Biologics Act sets forth an information-sharing framework between biologic drug manufacturers (called “reference product sponsors”) and biosimilar applicants in order to structure and narrow patent litigation disputes. As a first step in this so-called “patent dance,” a biosimilar applicant “shall provide” a copy of its FDA application and related manufacturing information to the reference product sponsor within 20 days of the FDA’s acceptance of the application. 42 U.S.C. § 262(l)(2)(A). The biologic manufacturer then evaluates the application for potential infringement. The parties then exchange lists of potential patents-in-suit, swap contentions regarding the infringement, validity, and enforceability of those patents, and engage in license negotiations. The remaining disputed patents are then placed in one of two phases of litigation, with the first phase to be litigated immediately, and the second to follow after an applicant provides notice of commercial marketing. The biosimilar applicant “shall provide notice to the reference product sponsor no later than 180 days before the date of the first commercial marketing of the biological product licensed under subsection (k).”

The Biologics Act also provides specific penalties when a biosimilar applicant refuses to follow the prescribed framework. Where a biosimilar applicant either fails to transmit its application and related manufacturing information to the reference product sponsor, or otherwise does not meet its obligations at a later stage of the “patent dance,” the Biologics Act bars the applicant from bringing a declaratory judgment action for patents that were or could have been listed during the information exchange. The act thus vests the reference product sponsor with exclusive authority to sue on the relevant patents.  

This case involves just such a decision not to participate in the Biologics Act framework. In mid-2014, after the FDA accepted Sandoz’s application to market a biosimilar version of Amgen’s cancer-treatment-related product Neupogen (filgrastim), Sandoz did not provide Amgen its application. Sandoz also immediately notified Amgen of its intent to commercially market in 180 days. Amgen sued Sandoz in the Northern District of California, alleging patent infringement and violations of California’s unfair competition law based on Sandoz’s purportedly “unlawful” conduct of not participating in the information exchange and providing notice of commercial marketing before the FDA approved its application. Sandoz counterclaimed for declarations that it did not violate the Biologics Act. The district court sided with Sandoz, dismissing the unfair competition law claims and granting it judgment on the pleadings on its declaratory judgment claims.

A divided panel of the Federal Circuit agreed in part. The court concluded that Sandoz was not required to participate in the information exchange and that Amgen’s only remedy was the right to bring an immediate declaratory judgment action under the Biologics Act. But, siding with Amgen, it also held that Sandoz sent an ineffective notice of commercial marketing because the notice predated FDA approval of the proposed biosimilar product.

Writing for the Supreme Court, Justice Thomas first concluded that Congress selected a specific remedy for a biosimilar applicant’s failure to share its application, thus precluding all other federal remedies, including an injunction compelling compliance with the information sharing framework. Yet the court declined to decide “whether the § 262(l)(2)(A) requirement is mandatory in all circumstances, . . . or merely a condition precedent to the information exchange process,” reasoning that the issue did not present a question of federal law. Accordingly, the court remanded to the Federal Circuit to consider whether California law would treat noncompliance with § 262(l)(2)(A) as unlawful and whether the Biologics Act would preempt any available state law remedies. In so doing, the court left open the unlikely possibility that a reference product sponsor could obtain an injunction under state law against a biosimilar applicant who did not engage in the “patent dance.”

Next, the court reversed the Federal Circuit’s holding that a biosimilar applicant may provide effective notice of commercial marketing only after the FDA has approved its application. In a textual analysis, the court concluded that “licensed product” merely explains what the notice of commercial marketing must describe, and does not itself require the biosimilar product to be licensed when the notice is given. The court refused to create a “not earlier than” time limit for the notice, reasoning that Congress’s decision to use a “before” and “after” structure in an immediately following provision strongly evidenced its intent and ability to create a dual-timing requirement when it wanted. 

Justice Breyer separately concurred, writing that the FDA might be free to exercise its regulatory authority to render different interpretations of the Biologics Act to which the Court might owe deference. But since the Solicitor General filed an amicus brief that supported Sandoz’s interpretations, it seems unlikely that the FDA will promulgate any regulations modifying the court’s holdings in the near future.

The Supreme Court’s opinion undoubtedly helps biosimilar applicants. It eliminates the de facto patent extension that reference product sponsors enjoyed under the Federal Circuit’s interpretation of the 180-day notice rule and gives biosimilar manufacturers wider latitude to eschew the information exchange, at least under federal law. It now remains to be seen whether the Federal Circuit will conclude that the California unfair competition law provides biologics manufacturers with an injunction remedy.