Amgen v. Sandoz Federal Circuit Appeal: Highlights from Oral Arguments

We joined a packed courtroom at the Federal Circuit Court of Appeals yesterday to observe oral arguments in the Amgen v. Sandoz appeal. Judge Newman, Judge Lourie, and Judge Chen were on panel for the hearing.

As we’ve covered in other posts (here and here), this case has drawn a lot of attention as the first case to interpret the patent dispute resolution provisions of the BPCIA, and to answer (at least preliminarily) two critical questions concerning biosimilars and related patent litigation:

(1) What is required of biosimilar applicants and reference product sponsors under the § 261(l) information exchange provisions of the BPCIA, and what happens if a party does not meet those obligations?

(2) Must a biosimilar applicant wait until after FDA licenses its biosimilar product in order to provide sufficient “notice of commercial marketing,” which under § 262(l)(8) must be given to the reference product sponsor “not later than 180 days before the date of the first commercial marketing” of the licensed biosimilar product?

Sandoz won handily at the district court level with its positions that (1) the 262(l) provisions are “optional” in that a biosimilar applicant can choose to face an immediate action for declaratory judgment of patent infringement instead of engaging in the patent dance to narrow and delay patent litigation, and (2) notice of commercial marketing can be given before FDA licensure of the biosimliar product.

But the arguments have continued to develop on both sides, and the statutory text is far from clear, (Judge Lourie noted that the statute should be awarded a Pulitzer Prize for its complexity or lack of clarity), so there was much to debate, and more questions to be raised, at the oral argument.

Question 1: the § 262(l) information exchange provisions

After yesterday’s hearing, it appears likely that the Court will split in Sandoz’s favor on at least the first question regarding the obligations and consequences imposed by the information disclosure provisions of § 262(l)(2)-(7).

Judge Newman appeared to be wholly on Amgen’s side on both issues, based on the tenor and frequency of the questions she posed to Sandoz as compared to the few—mostly clarifying—questions she asked of Amgen. Judge Newman challenged Sandoz to explain why the statute uses the word “shall” instead of “may,” and characterized Sandoz’s argument as cherry-picking which elements of the complicated BPCIA “count”—i.e. that Sandoz’s argument credits the (k) provisions enabling it to rely on Amgen’s data for regulatory approval, but does not similarly honor the (l) information disclosure provisions requiring it to provide information to Amgen.

Judges Lourie and Chen, however, seemed wary about reading subsection (l)(9) out of the statute, which Amgen’s interpretation would seem to do. Subsection (l)(9)(C) provides: “If a subsection (k) applicant fails to provide the application and information required under paragraph (2)(A), the reference product sponsor, but not the subsection (k) applicant, may 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.”

Judge Chen noted that if the disclosure provisions in (l)(2)-(l)(7) are “mandatory” in the sense that Amgen seems to propose, then that would seem to ignore (l)(9)(C) and its reinforcing provision in 35 U.S.C. § 271(e)(2)(C)(ii), which provides that is an applicant “fails to provide the application and information required under [the first step of the disclosure provisions],” then the submission of the biosimilar application shall be considered an artificial act of infringement of any patent that could have been identified (and asserted) by the reference product sponsor during the patent dance. Although he noted that nothing in the (l) provisions suggests that it’s a “choose-your-own-adventure” scheme, he seemed to think that the provisions were nonetheless “mandatory” only insofar as if an applicant fails to meet its obligations under the scheme, then it will face the consequences specified by (l)(9).

Judge Lourie also appeared concerned about ignoring (l)(9), suggesting that “failing” the applicant’s compliance with the disclosure provisions, subsection (l)(9) applies.  Like Judge Chen, he also seemed dissatisfied with the implications of Amgen’s “shall means shall” argument and what it would mean if the Court construed the disclosure provisions as “mandatory” upon the parties. He asked Amgen to explain what would happen if the provisions were ruled mandatory—what would the district court do on remand if this were the case? Would the parties have to go back to the beginning of the information exchange process? What sort of remedy would the district court have to fashion to put Amgen in the position it would have been in had Sandoz engaged in the patent dance? The implications of enabling Amgen to seek a court order to compel compliance with the patent dance seemed, for Judge Lourie, to weigh in favor of Sandoz’s interpretation of the disclosure provisions.

Interestingly, while the parties presented the (l)(8) notice provision as distinct from the rest of the (l) disclosure provisions, the judges’ questions suggested that this might not be the case as a general matter in interpreting the statute: Judge Newman asked Amgen whether it would address the notice issue as part of the “mandatory or optional” question concerning the rest of the disclosure provisions, and Judge Chen asked Sandoz whether (l)(8) is a freestanding provision, or whether it should fall away with the other disclosure provisions if the applicant has triggered (l)(9)(C).

Question 2: 180-day notice of commercial marketing

The second issue, regarding the 180-day notice provision, seemed to present a closer question for the judges on the panel. Judge Newman again appeared to side with Amgen on this issue, challenging Sandoz to explain how reference product sponsors could be assured that they would be notified of an infringing product application if the disclosure provisions are not read as mandatory upon the biosimilar applicants.

Judges Lourie and Chen appeared more conflicted. Their concerns appeared to boil down to the following dilemma: on one hand, it seems wrong that notice cannot be given until after FDA approval, because this would effectively extend the reference product’s exclusivity period by six months when the statute specifically provides only 12 years of exclusivity (and Amgen, Judge Lourie noted, has already enjoyed more than twenty years of effective market exclusivity for its Neupogen product). Moreover, as Judge Chen noted, nothing in the statute appears to link the (l) disclosure provisions to the (k) approval process, in contradistinction to Amgen’s apparent argument that if the disclosure “requirements” are not met, then the biosimilar product cannot be approved.

But on the other hand, it seems wrong that a biosimilar applicant can provide notice immediately upon FDA acceptance of the application, because at that time any noticed “date” of first commercial marketing is merely speculative and “aspirational,” and the precise nature of the proposed product at that stage is similarly subject to change. Only after approval can the applicant actually provide a definite “date” of commercial marketing—rather than a mere prediction of an otherwise undetermined “date” of first commercial marketing.

What’s next?

Regardless of which way this comes down, it seems likely that the losing (or more unhappy) party on this appeal will ask for an en banc review of this panel’s decision. From the way oral arguments went, it looks like that party will be Amgen, but Sandoz may also have something to take issue with if the panel rules in Amgen’s favor on the notice issue.  In any case, we will continue to closely monitor any updates, and will share them here on the Big Molecule Watch!