On December 14, 2017, the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”), in a unanimous opinion, ruled in favor of Sandoz in Sandoz Inc. v. Amgen Inc., when it prevented reference product sponsors from using state laws to punish biosimilar manufactures for not disclosing information about they biosimilar products. The Federal Circuit’s decision is a victory for biosimilar manufacturers who now have fewer obstacles to overcome in reaching the market. At issue in the lawsuit was whether Amgen could use state laws, namely California’s unfair competition law, to force Sandoz to disclose its manufacturing information under the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”).
As a way of background, the BPCIA was passed on March 23, 2010 by Congress as part of the Affordable Care Act to provide an expedited approval pathway for biosimilars. In addition to expediting FDA approval of biosimilar products, the BPCIA provides a means of resolving patent disputes between reference product sponsors and biosimilar applicants earlier in the drug development process. The BPCIA sets forth several requirements for biosimilar applications, with the most litigated requirement being that of the “Patent Dance.”
Sandoz v. Amgen is the pioneer case for interpreting the Patent Dance. This case involved the drug filgrastim, a biologic used to stimulate the production of white blood cells. Amgen claims to hold patents on the manufacture and use of filgrastim, which it sells under the name Neupogen®. Sandoz, the biosimilar applicant, filed an application with the FDA seeking approval of a filgrastim biosimilar, Zarxio®.
In June 2017, the Supreme Court ruled, in part, that the only federal remedy available to the reference product sponsor when a biosimilar applicant fails to disclose its biosimilar application and manufacturing information is to bring a declaratory judgment action for patent infringement. The Supreme Court noted that “[t]he BPCIA’s carefully crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.” The Supreme Court, however, did not rule out the possibility that an injunction might still be available under state law. For its state law claim to be successful, Amgen would have to show that Sandoz’s failure to share its biosimilar application and follow 42 U.S.C. §262(l)(2)(A) of the BPCIA is “unlawful” under California’s unfair competition law.
In the eagerly-awaited decision in the remand of Amgen v. Sandoz from the U.S. Supreme Court, the Federal Circuit unsurprisingly held that Amgen’s state law claims “are preempted on both field and conflict grounds.” To this end, the court noted that patents are “inherently federal in character” because a patent “originates from, is governed by, and terminates according to federal law.” The Federal Circuit thus found that Congress “fully occupied” the field of biosimilar litigation through its creation of the BPCIA and as a result, state laws must give way to federal laws. While the decision does not address specifics of California law, it does seem to foreclose any attempts to enforce BPCIA provisions on state law grounds.
The Federal Circuit’s decision is a win for biosimilar manufacturers because it reduces some of the obstacles faced by biosimilars in reaching the market. In fact, Sandoz called the ruling “an important win for patient access to life-changing medication.” Not only does the ruling streamline the Patent Dance process by reducing potential state law claims, it also eliminates the possible uncertainty that could have been created as a result of having different state remedies being applied. The Federal Circuit acknowledged that concern, writing that “compliance with the BPCIA’s detailed regulatory regime in the shadow of 50 states’ tort regimes and unfair competition standards could dramatically increase the burdens on biosimilar applicants.”
For reference product sponsors, on the other hand, the decision may act to discourage sponsors from engaging in the Patent Dance. By removing the possibility of seeking state law remedies, including damages or an injunction, sponsors may not be able to compel biosimilar applicants to disclose critical manufacturing information that may be needed to determine whether infringement occurred. As a result, sponsors are left with the only recourse available to them under federal law, which is to sue -- a very costly and timely endeavor. Thus, the Federal Circuit may have removed a very important incentive for sponsors to dance. Nevertheless, there may be other factors -- including the potential profitability of the biosimilar, the strength and number of patents protecting the innovator product, and the patent term remaining on the innovator product -- that determine whether a sponsor wants to engage in the Patent Dance so it will be important to monitor how companies manage their strategies when it comes to the BPCIA.
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