In SANDOZ INC. v. AMGEN INC. et al., the United States Supreme Court in a unanimous opinion ruled that biosimilar makers can give their required 180-day statutory notice of sales before their products win approval by the United States Food and Drug Administration (“FDA”). In short, the Court held a biosimilar maker “may provide notice either before or after receiving FDA approval.” If biosimilar makers had to await FDA approval before giving notice, this requirement would essentially delay the biosimilar’s lower priced offerings from reaching the market by six months. In the case of major biologics, when the biosimilar discounted version of a brand-name reaches the market, this completion can significantly reduce sales that can run in the billions of dollars annually.
At issue in the case is 42 U. S. C. §262(l), which was enacted as part of the Biologics Price Competition and Innovation Act of 2009 (BPCIA). The BPCIA governs a type of drug called a biosimilar, which is a biologicial product that is highly similar to a biologic product that has already been approved by the FDA. A biologic is type of pharmaceutical drug product manufactured in, extracted from, or semisynthesized from biological sources. Examples of commercial biologics include vaccines, blood, blood components, allergenics, somatic cells, gene therapies, tissues, recombinant therapeutic protein, and living cells used in cell therapy. For example, the biologic at issue in this case is filgrastim, which is used to stimulate the production of white blood cells. Amgen has marketed a filgrastim product called Neupogen since 1991 and claims to hold patents on methods of manufacturing and using filgrastim.
Most biologics are very large, complex molecules or mixtures of molecules. Many biologics are produced using recombinant DNA technology. In comparison, a standard synthetic drug is typically manufactured through chemical synthesis, which means that it is made by combining specific chemical ingredients in an ordered process. Synthetic drugs generally have well-defined chemical structures, and a finished drug can usually be analyzed to determine all its various components. By contrast, it is difficult, and sometimes impossible, to characterize a complex biologic by testing methods available in the laboratory, and some of the components of a finished biologic may be unknown.
Thus, to be approved as a biosimilar, a drug must have the same active ingredient, strength, dosage form, and route of administration as the reference drug, and it must also be “bioequivalent.” This means that generic drugs are the same chemically as their innovator counterparts and that they act the same way in the body. To gain FDA approval, 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.” 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. As a result, the manufacturer of a new biologic enjoys a 12-year period when its biologic may be marketed without competition from biosimilars.
The manufacturer or sponsor may also 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. However, the BPCIA facilitates patent litigation during the period preceding FDA approval so that the parties do not have to wait until commercial marketing to resolve their patent disputes. The BPCIA sets forth a carefully calibrated scheme for preparing to adjudicate, and then adjudicating, claims of patent infringement.
When the FDA accepts a biosimilar 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. The applicant also “may provide” the sponsor with any additional information that it requests. 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).
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. For example, 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.” Next, within 60 days of receiving the sponsor’s list, the applicant may provide to the sponsor a list of patents that the applicant believes are relevant but that the sponsor omitted from its own list, and “shall provide” to the sponsor reasons why it could not be held liable for infringing the relevant patents and why the patents may be invalid.
Following this exchange, the BPCIA channels the parties into two phases of patent litigation. In the first phase, the parties collaborate to identify patents that they would like to litigate immediately. The second phase is triggered by the applicant’s notice of commercial marketing and involves any patents that were included on the parties’ lists but not litigated in the first phase.
As to the issues in the case, the Court first had to decide whether the requirement that an applicant provide its application and manufacturing information to the manufacturer of the biologic is enforceable by injunction. The Court concluded that an injunction is not available under federal law, but remanded for the court below to decide whether an injunction is available under state law.
The second issue the Court considered is whether the applicant must give notice to the manufacturer after, rather than before, obtaining a license from the FDA for its biosimilar. In deciding the issue, the Court noted Section 262(l)(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).” The Federal Circuit had held that an applicant’s biosimilar must already be “licensed” at the time the applicant gives notice. But, the Supreme Court disagreed.
The Court reasoned the applicant must give “notice” at least 180 days “before the date of the first commercial marketing.” “[C]ommercial marketing,” in turn, must be “of the biological product licensed under subsection (k).” Because this latter phrase modifies “commercial marketing” rather than “notice,” “commercial marketing” is the point in time by which the biosimilar must be “licensed.” The statute’s use of the word “licensed” merely reflects the fact that, on the “date of the first commercial marketing,” the product must be “licensed.” Accordingly, the court held the applicant may provide notice either before or after receiving FDA approval.