Amgen v. Sandoz – Did the Federal Circuit Just Doom the New Biosimilar Approval Pathway?

Article co-written by Yuri Levin-Schwartz, Ph.D., a law clerk at MBHB.

Congress passed the Biologics Price Competition and Innovation Act (“BPCIA”) in 2009 in an effort to bring biosimilar drug products to market.[1] The goal was for the BPCIA to mimic for biologic drugs the Hatch-Waxman statute for small molecules, including both an abbreviated drug approval process and a mechanism to address any potential patent challenges during the approval process.[2] Nevertheless, due at least in part to the increased complexity in manufacturing and patent protection of biosimilars (as compared to small molecules), unique provisions were necessary for the BPCIA. Interpretation of these unique provisions, however, has proven to be equally complex. In the highly fractured Amgen v. Sandoz decision, the Federal Circuit, in part, concluded that the BPCIA patent resolution procedure was not mandatory, leaving open the distinct possibility that no biosimilar applicant will ever use the new biosimilar approval pathway.

Sandoz was the First Biosimilar Applicant to Test the Language of the BPCIA

The dispute between the parties in Amgen v. Sandoz began in July 2014 when Sandoz, a division of Novartis, filed an application under the BPCIA with the Food and Drug Administration (“FDA”) for a biosimilar known under the brand name ZARXIO™.[3] The drug is a biosimilar form of the protein filgrastim that is sold by Amgen under the brand name NEUPOGEN®.[4] The FDA ultimately approved the biosimilar application on March 6, 2015 for the same indications as Amgen’s NEUPOGEN®, specifically for treating cancer patients.[5]

Sandoz’ decision to avail itself of the first part of the BPCIA afforded it several advantages, including a reduction in the time and cost required to obtain approval for its drug. Following acceptance of its biosimilar application, however, Sandoz intentionally chose not to comply with the disclosure provisions of the BPCIA, reasoning that Congress intended these provisions to be optional.[6] Namely, Sandoz opted not to timely disclose a copy of the application it submitted to the FDA and other related information to Amgen after receiving notice of its acceptance by the FDA.[7]

Sandoz maintained that these disclosure provisions of the BPCIA are optional due to the existence of a remedy for the reference product sponsor (in this case, Amgen) should the biosimilar applicant choose not to comply with the disclosure provisions.[8] Sandoz also noted that it chose not to provide Amgen with a copy of the application because it did not want to share its BPCIA application or manufacturing process with a future competitor.[9]

In response to Sandoz’ non-compliance, Amgen filed suit in the Northern District of California requesting, among other things, an injunction preventing Sandoz from marketing its biosimilar product.[10] Importantly, Amgen alleged that Sandoz infringed U.S. Patent No. 6,162,427 (directed to the use of G-CSF in combination with a chemotherapeutic agent), but reserved the right to assert additional patents based on information obtained in discovery.[11] On March 19, 2015, Judge Seeborg of the Northern District of California denied Amgen’s motion for a preliminary injunction, paving the way for review by the Federal Circuit.[12]

The BPCIA Provisions at Issue

In a decision on July 21, 2015, the Federal Circuit interpreted two sections of the statute, accompanied by two dissenting opinions (at least in part).[13] Judge Newman joined Judge Lourie writing for the court with regard to whether the provision requiring “Notice of Commercial Marketing” had to occur after the FDA approved (or licensed) the biosimilar drug product — it does. But, Judge Chen joined Judge Lourie with regard to whether the aBLA (abbreviated biologics license application) disclosure and patent exchange provisions are mandatory — they are not. With regard to this last point, the court determined that, in isolation, “shall” normally means “shall,” but in the context of this provision of the BPCIA, “shall” does not mean “must.”

This latter provision has been referred to as the “patent dance,” and can be found at 42 U.S.C. § 262(l)(2). Specifically, no later than 20 days after a biosimilar application is accepted for review, the biosimilar applicant:

(A) shall provide to the reference product sponsor a copy of the application submitted to the Secretary under subsection (k), and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application; and (B) may provide to the reference product sponsor additional information requested by or on behalf of the reference product sponsor.[14]

The statute limits the recipients of this information to at least one outside counsel and one in-house counsel that do not engage, formally or informally, in patent prosecution relevant to the reference product.[15]

Important in the outcome, the statute provides the reference product sponsor with an optional remedy should the biosimilar applicant fail to comply with § 262(l)(2). Namely, 42 U.S.C. § 262(l)(9)(C) provides that:

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 under section 2201 of title 28 for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product.

The Court ultimately held that when the “shall” provision in paragraph (l)(2)(A) is read in isolation, the biosimilar applicant would be required to comply with the disclosure provisions. The Court went on to hold, however, that when a biosimilar applicant fails to comply with the disclosure requirement, the statute expressly provides a remedy to address the precise path that Sandoz chose.[16] Thus, failure to disclose is not a violation of the BPCIA.

Did Congress Intend the Disclosure and Exchange Provisions to be Mandatory?

An important question remains whether Congress meant this pathway to be optional. Amgen stressed that the language of the BPCIA indicates the intent of Congress that the disclosure provisions of the BPCIA be mandatory, evidenced inter alia by the fact that when Congress intended optional provisions, it recited them in the statute.

For example, Congress used the term “shall” as opposed to “may” in paragraph (2) with respect to the disclosure of the application, which suggests that section (A) is mandatory while section (B) is optional. Indeed, “shall” is generally interpreted in statutes as meaning mandatory:

Use of “shall” and “may” in statutes also mirrors common usage; ordinarily “shall” is mandatory and “may” is permissive. These words must be read in their broader statutory context, however, the issue often being whether the statutory directive itself is mandatory or permissive. Use of both words in the same provision can underscore their different meanings, and often the context will confirm that the ordinary meaning of one or the other was intended. Occasionally, however, context will trump ordinary meaning.[17]

Congress further clarified its intent in § 262(l)(1) when it defined that the application shall be provided to persons that do not engage in patent prosecution as is “required to be produced pursuant to paragraph (2).”

It is likely that Congress included these provisions as mandatory because without knowledge of the nature of the biosimilar drug and the methods for manufacturing it, the reference product sponsor must essentially guess which patents it should assert. This could result in premature generic competition without any avenue to prevent it. Clearly, Congress attempted to minimize the risks associated with disclosing confidential information regarding the manufacturing process by limiting disclosure to individuals not engaged in patent prosecution relevant to the reference product.

Biosimilar Applicants May Choose to Sit This Dance Out

In light of Congress’ apparent intent to render the disclosure provisions mandatory for biosimilar applicants taking advantage of the abbreviated approval process, it is curious that Congress failed to include a provision linking the two. Indeed, it is easy to imagine a process where final FDA approval of the biosimilar drug would be contingent on the outcome of the patent resolution pathway. But unlike the Hatch-Waxman statute, the BPCIA does not contain such a correlation.

As Amgen has discovered, biosimilar applicants may not be sufficiently deterred for failing to comply with the disclosure requirement. A favorable outcome for Sandoz could have a major economic impact. Neupogen® is a $1.2-1.4 billion dollar per year product for Amgen. Indeed, on September 4th Sandoz entered the biosimilars market with its ZarxioTM product priced at a 15% discount over Amgen’s Neupogen® price; Amgen can be expected to reduce the cost of the drug by an equivalent amount once Sandoz’ biosimilar is accepted by physicians. Of course, this damage may be tempered somewhat because Zarxio™ does not have “interchangeability” status. As a result, physicians would be required to specifically prescribe the biosimilar, which they may be hesitant to do for patients already on Neupogen®. Such may not always be the case, however, for other biosimilar applicants.

More broadly, if a biosimilar applicant chooses not to disclose its application and related documents, or sits out the patent dance, the reference product sponsor will likely have no insight as to which of its patents cover the biosimilar product. If this uncertainty is not resolved prior to approval, or the 180-day notice period, it may be unable to assert its patents in federal court before the launch of the biosimilar drug. Further, district courts may be reticent to grant injunctions because of the “assumption” that infringement has not occurred. With the deck stacked against the original biologic license holder, this case raises a real concern that no biosimilar applicant will ever choose to comply with the disclosure provisions of the BPCIA.

[1] See 42 U.S.C. § 262(k), (l).

[2] Id.

[3] Amgen Inc. v. Sandoz Inc., Case No. 14-cv-04741, 2015 WL 1264756, *3 (N.D. Cal. Mar. 19, 2015).

[4] U.S. Food and Drug Administration, FDA approves first bio-similar product Zarxio, FDA.GOV, (March 6, 2015),

[5] Id.

[6] Amgen, 2015 WL 1264756 at *5-6.

[7] Id. at *5.

[8] Id. at *5-6; Non-Confidential Brief for Defendant-Appellee at 30, Amgen Inc. v. Sandoz Inc., Appeal No. 2015-1499 (Fed. Cir. 2015), ECF No. 73.

[9] Non-Confidential Brief for Defendant-Appellee at 13, Amgen Inc. v. Sandoz Inc., Appeal No. 2015-1499 (Fed. Cir. 2015), ECF No. 73.

[10] Complaint, Amgen Inc. v. Sandoz Inc., Case No. 14-cv-04741 (N.D. Cal. 2015), ECF No. 1; Amgen, 2015 WL 1264756 at *4.

[11] Complaint, Amgen Inc. v. Sandoz Inc., Case No. 14-cv-04741 (N.D. Cal. 2015), ECF No. 1.

[12] Amgen, 2015 WL 1264756 at *10-11.

[13] Amgen Inc. v. Sandoz Inc., No. 2015-1499, 2015 WL 4430108 (Fed. Cir. 2015).

[14] 42 U.S.C. § 262(l)(2) (emphasis added).

[15] 42 U.S.C. § 262(l)(1)(B)(ii).

[16] Amgen, 2015 WL 4430108.

[17] Statutory Interpretation: General Principles and Recent Trends, Congressional Research Service Report for Congress, August 31, 2008 internal citations omitted.



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