CAFC sides with Sandoz, Amgen’s State Claims Preempted by BPCIADecember 26, 2017 – Articles
Originally filed in October 2014, the long-running and high-stakes battle between two powerhouse companies, Amgen and Sandoz, continues to lay out the ground rules for a growing biosimilar industry. The Federal Circuit’s first decision under the Biologics Price Competition and Innovation Act (BPCIA) involved Zarxio, Sandoz’s Neupogen biosimilar product. Amgen v. Sandoz, 794 F.3d 1347 (Fed Cir. 2015). The BPCIA provides for an orderly exchange of IP information meant to streamline patent suits (referred to as the “patent dance”). The patent dance begins when the biosimilar applicant provides a copy of its application and manufacturing information to the innovator and ends when the reference product sponsor provides its infringement contentions.
For Zarxio, Sandoz declined to provide its regulatory application or manufacturing information to Amgen, thus opting out of the patent dance. In response, Amgen filed suit. In July 2015, the Federal Circuit held that biosimilar applicants do not violate the BPCIA by opting out of the “patent dance” and choosing not to provide a sponsor with their biosimilar application and manufacturing information as described in 42 U.S.C. §262(l)(2)(A).
Amgen then took this issue to the Supreme Court of the United States. The question presented was: “Is an Applicant required by 42 U.S.C. §262(l)(2)(A) to provide the Sponsor with a copy of its biologics license application and related manufacturing information, which the statute says the Applicant ‘shall provide,’ and, where an Applicant fails to provide that required information, is the Sponsor’s sole recourse to commence a declaratory-judgment action under 42 U.S.C. §262(l)(9)(C) and/or a patent-infringement action under 35 U.S.C. §271(e)(2)(C)(ii)”?
In June 2017, the Supreme Court delivered its first biosimilars ruling under the BPCIA. In doing so, it affirmed the Federal Circuit’s decision. Specifically, the Court found that a reference product sponsor may not pursue an injunction under federal law if the biosimilar applicant refuses to engage in the “patent dance” information exchange. Specifically at issue was §262(l)(2)(A) of the BPCIA, which instructs that a biosimilar applicant “shall provide” to the reference product sponsor a copy of the application and information describing the biosimilar product manufacturing processes.
In arriving at this decision, the Supreme Court found that an applicant’s failure to comply with §262(l)(2)(A) provides the reference product sponsor with a different and exclusive remedy under §262(l)(9)(C) – an immediate declaratory judgment action for patent infringement under § 271(e)(2)(C)(ii). Thus, while a biosimilar applicant may refuse to participate in the information exchange without subjecting itself to an injunction, that refusal is not without consequence. Indeed, once §262(l)(9)(C) is in play, the reference product sponsor’s ability to bring a declaratory judgment action on any patent that claims the biological product or a use of the biological product is no longer limited to the applicant-controlled list of patents. Under this scenario, the reference product sponsor, and not the biosimilar applicant, is able to control the scope and timing of the ensuing patent litigation.
The Supreme Court also found that no injunctive relief is permitted under the BPCIA for an applicant’s failure to comply with §262(l)(2)(A). In contrast with this section of the statute, §262(l)(1)(H) expressly allows for an injunctive remedy. The Court then reasoned that Congress knew how to provide for injunctive relief in the event of an applicant’s failure to follow BPCIA provisions, but deliberately chose not to provide such relief when a biosimilar applicant fails to engage in the §262(l)(2)(A) information exchange.
The remaining issue as to whether an applicant’s failure to engage in the §262(l)(2)(A) information exchange is “unlawful” under California’s unfair competition law was remanded to the lower courts. On December 14, 2017, the Federal Circuit’s unanimous ruling sided with Sandoz and affirmed the District Court’s dismissal of Amgen’s unfair competition and conversion claims. Consequently, state law claims are preempted by the BPCIA on both field and conflict grounds.
The practical outcome is that the only remedy available against biosimilar applicants refusing to engage in the patent dance is filing for a declaration of infringement, validity, or enforceability of a patent that claims the biological product or its use. Notably, this must be done before receiving manufacturing information from the biosimilar company. Patent lawsuits are notoriously costly so, in the short term, the decision will have the greatest impact on innovator start-ups with limited financial resources. In the long term, relying on costly litigations to keep biosimilar drugs off the market will likely increase the consumer price for any biologic drug.
The fight between Sandoz and Amgen specifically involves anti-infection drug Zarxio, a copy of Amgen’s Neupogen drug, the first biosimilar approved under the BPCIA. Patent infringement litigation related to the product is still pending in California federal court.