BPCIA Federal Circuit Follies, or Can We All Agree to Disagree? A Divided Federal Circuit Finds the Patent Dance Voluntary, But Rules that Notice of Commercial Marketing Can Occur Only After Licensure

July 22, 2015

By James C. Shehan & Kurt R. Karst

On July 21, 2015, a fractured Federal Circuit issued its decision in the dispute between Amgen and Sandoz concerning various statutory issues under the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”).  In a result that few would have predicted, the Court upheld Sandoz’s position that the complicated exchange of information provisions known as the “patent dance” is a voluntary process that biosimilar (also referred to as an “aBLA”, or abbreviated Biologics License Application) applicants may or may not partake in, but also upheld Amgen’s position that a biosimilar applicant’s notice to the holder of the reference product of an intention to begin commercial marketing in 180 days can occur only after the biosimilar is licensed.  The implications of this decision are manifold, including potentially freeing Zarxio, Sandoz’s biosimilar version of Amgen’s Neupogen (filgrastim), for a September launch; however, the implications will only be fully fleshed out in future court decisions and approvals.  And among those court decisions may be an en banc decision of the Federal Circuit on an appeal of this decision, and perhaps even a Supreme Court decision. 

We’ve extensively covered the Amgen-Sandoz melee in previous posts (see here and here).  In essence, it’s a patent infringement lawsuit that cannot be litigated until certain regulatory law matters are settled first.  Two main issues were in front of the Federal Circuit, on an appeal of a March 19, 2015 decision by U.S. District Court for the Northern District of California.  One was the district court’s determination that the patent dance is a voluntary process that a biosimilar applicant may or may not choose to follow.  The other was the district court’s determination that a biosimilar applicant may give notice of commercial marketing under 42 U.S.C. § 262(l)(8)(A) before FDA approval.

The decision of the Court was written by Judge Lourie.  Judge Lourie’s respect for the complexity of the BPCIA may my gleaned from his first footnote.  In it, he calls Winston Churchill’s characterization of Russia as “a riddle wrapped in a mystery inside an enigma” as an apt description of the BPCIA and then notes his desire to “unravel the riddle, solve the mystery, and comprehend the enigma.”  Alas, that effort seems to have failed.  On the patent dance issue, he conceded that the relevant language read in isolation indicates that the patent dance is mandatory.  But he found that the provision must be viewed in the context of the entire statute, and in that matter he found two other provisions dispositive – 42 U.S.C. § 262(l)(9)(C) and 35 U.S.C. § 271(e).  

The first provision (42 U.S.C. § 262(l)(9)(C)) provides that if a biosimilar applicant fails to provide the reference product sponsor with its application and the other patent dance information, then the reference product sponsor (but not the biosimilar applicant), may bring a declaratory judgment action for patent infringement.  The second provision (35 U.S.C. § 271(e)) states that it is an act of infringement for a biosimilar applicant to fail to provide the biosimilar application and other information required by the patent dance provisions to the reference product sponsor.  Taken together, these provisions were found by Judge Lourie to indicate that biosimilar applicants have two options under the law: exchange information with the reference product sponsor, or forego the patent dance and take the chance that the sponsor will sue under any applicable patent.  Specifically, Judge Lourie wrote that:

read in isolation, the “shall” provision in paragraph (l)(2)(A) appears to mean that a subsection (k) applicant is required to disclose its aBLA and manufacturing information to the RPS by the deadline specified in the statute.  Indeed, the BPCIA refers to such information as “required” in other provisions.  See 42 U.S.C. § 262(l)(1)(B)(i), (l)(9)(A), (l)(9)(C); 35 U.S.C. § 271(e)(2)(C)(ii).  Particularly, paragraph (l)(1)(B)(i) provides that “[w]hen” a subsection (k) applicant submits an aBLA to the FDA, “such applicant shall provide . . . confidential access to the information required to be produced pursuant to paragraph (2) and any other information that the subsection (k) applicant determines, in its sole discretion, to be appropriate” (emphases added).  Thus, under the plain language of paragraph (l)(1)(B)(i), when an applicant chooses the abbreviated pathway for regulatory approval of its biosimilar product, it is required to disclose its aBLA and manufacturing information to the RPS no later than 20 days after the FDA’s notification of acceptance, but not when the “when” criterion is not met. . . .

We therefore conclude that, even though under paragraph (l)(2)(A), when read in isolation, a subsection (k) applicant would be required to disclose its aBLA and the manufacturing information to the RPS by the statutory deadline, we ultimately conclude that when a subsection (k) applicant fails the disclosure requirement, 42 U.S.C. § 262(l)(9)(C) and 35 U.S.C. § 271(e) expressly provide the only remedies as those being based on a claim of patent infringement. Because Sandoz took a path expressly contemplated by the BPCIA, it did not violate the BPCIA by not disclosing its aBLA and the manufacturing information by the statutory deadline.

Judge Lourie’s decision on 180-day notice follows similar logic.  He found licensure is required before an “operative notice” of commercial marketing can be given.  Addressing whether such notice is mandatory or optional, he stated that because the statute provides no option for what happens if notice is not given (unlike, in his opinion, the patent dance provisions), the 180-day notice is mandatory.  Specifically, according to Judge Lourie: 

We believe that Congress intended the notice to follow licensure, at which time the product, its therapeutic uses, and its manufacturing processes are fixed. When a subsection (k) applicant files its aBLA, it likely does not know for certain when, or if, it will obtain FDA licensure.  The FDA could request changes to the product during the review process, or it could approve some but not all sought-for uses.  Giving notice after FDA licensure, once the scope of the approved license is known and the marketing of the proposed biosimilar product is imminent, allows the RPS to effectively determine whether, and on which patents, to seek a preliminary injunction from the court. . . .

We therefore conclude that, under paragraph (l)(8)(A), a subsection (k) applicant may only give effective notice of commercial marketing after the FDA has licensed its product. The district court thus erred in holding that a notice of commercial marketing under paragraph (l)(8)(A) may effectively be given before the biological product is licensed, and we therefore reverse its conclusion relating to its interpretation of § 262(l)(8)(A) and the date when Sandoz may market its product.

Judge Newman concurred in part and dissented in part.  She agreed essentially without comment with Judge Lourie on the 180-day notice issue.  But she disagreed with Judge Lourie on the patent dance issue, stating that the process is mandatory.  In support of her position, she found that the balance in the BPCIA “requires the statutorily identified disclosures at the threshold, in order both to avert and to expedite litigation.”  Her rejoinder to Judge Lourie’s argument regarding subsection (l)(9)(c) is that that clause exists to distinguish product and use patent infringement claims from method of manufacturing claims, not to provide a wholly separate option to the patent dance. 

Judge Chen dissented from Judge Lourie’s ruling on 180-day notice, believing that that it is “part and parcel” of the patent dance and, like the rest of the patent dance, is optional.

The holdings of the three Circuit Court Judges on each of the two significant issues on appeal are summarized in the following table:





Patent Dance Mandatory




Notice of Marketing After Licensure




Where do we go from here?  In harmony with its opinion, the Federal Circuit has continued the injunction against a Zarxio launch through September 2, 2015.  Absent further court orders, Sandoz could launch Zarxio in the United States after that injunction expires. 

The implications of this case – and the Federal Circuit’s decision (if it stands) – are fascinating.  At a glance, it seems to point to an easier path to market for biosimilars by making a lengthy and uncertain patent dance merely an option.  And that might be true for the initial batch of biosimilar applications for which there is not a particularly robust patent portfolio remaining.  However, for newer biological products with a robust patent portfolio, biosimilar applicants may, in fact, choose to engage in the patent dance in an effort to winnow down the number of patents to litigate.  In this respect, the Federal Circuit’s decision enures to the benefit of reference product sponsors, because the lasting effect of the Court’s decision on the patent dance may be far less than that of the commercial notice part of the decision, which seems to result in a de facto 12.5-year period of exclusivity for reference product sponsors (or, in the case where there is no longer a 12-year period in effect, a new 6-month exclusivity period).  (Judge Lourie apparently does not think that this is the case.  He notes that some but not all biologics will have a 12.5-year period of exclusivity and makes reference to applications filed “during the 12 year exclusivity period.”  From this, one can speculate that he believes that FDA can approve an application during the 12 years, or perhaps that notice of commercial marketing could be given after a tentative approval a la Hatch-Waxman.)  During the 180-day notice period there presumably would be ample time for a reference product sponsor to seek and obtain an injunction against launch of a biosimilar, with the added weight of being able to argue that such an injunction would not disturb the status quo.  

Further court orders are certainly possible, if not likely.  A decision as fractured as this one greatly increases the likelihood of a successful appeal by one or both parties asking the Federal Circuit to re-decide this case en banc.  Whether an en banc appeal request is granted or not, a certiorari request to the U.S. Supreme Court is also likely, and this case may well be interesting enough to draw the closer scrutiny of the Justices.