By Andrew Williams --
Last June, in Sandoz Inc. v. Amgen Inc., the Supreme Court handed down its interpretation of the Biologics Price Competition and Innovation Act ("BPCIA") for the approval of biosimilar drugs. As we reported at the time, the Court held that the 180-day notice-of-commercial-marketing provision of the statute may be provided either before or after receiving FDA approval. In addition, with respect to the so-called "Patent Dance," the Supreme Court held that a reference product sponsor ("RPS") cannot seek enforcement of the aBLA disclosure provision in 42 U.S.C. § 262(l)(2)(A) by injunction under federal law. This ruling all but made the Patent Dance optional for biosimilar applicants. Nevertheless, the Court left open a tiny ray of hope for patent owners by reversing and remanding the question whether the disclosure provision of the BPCIA was enforceable under state law. In a decision that came out earlier today, the Federal Circuit extinguished any hope. First, the Federal Circuit reasoned that it has discretion to address the preemption issue, and that it should exercise that discretion, notwithstanding the fact that the issue had not yet been addressed on the merits. Second, it held that the BPCIA's comprehensive framework demonstrates the intent of Congress that federal law would exclusively occupy the field of biosimilar patent litigation. And finally, the Federal Circuit held that any remedy provided for under state law would conflict with the careful balance struck by Congress in establishing the BPCIA. As a result, the Court affirmed the District Court's initial dismissal of Amgen's state law claims.
We provide this background possibly for the last time -- this case stemmed from the aBLA filing by Sandoz pursuant to the BPCIA to market a biosimilar version of Amgen's NEUPOGEN® (filgrastrim) biologic drug product. In the interim, the FDA approved the biosimilar known as ZarxioTM in March of 2015, and Sandoz (a Novartis company) has been selling the drug in the U.S. since September 3, 2015. However, despite availing itself of the BPCIA-abbreviated pathway for FDA approval, Sandoz refused to participate in the patent resolution component (the disclosure and information exchange provisions, also known affectionately as the "patent dance"), alleging that it was not a mandatory component. Amgen responded by filing suit in the Northern District of California, requesting in part a preliminary injunction to prevent Sandoz from entering the market. United States District Judge Seeborg of the Northern District of California denied Amgen's motion, the Federal Circuit (in a seriously fractured decision) essentially affirmed, and the case was taken up by the Supreme Court. In ruling as indicated above, the Supreme Court noted that the previous Federal Circuit decision that interpreted California's unfair competition law to not provide a remedy was based on an incorrect interpretation of federal law. With regard to whether Sandoz's failure to disclose its application and manufacturing information was "unlawful" under California's unfair competition law, the Supreme Court declined to resolve that dispute because it was not a question of federal law. The Federal Circuit, therefore, erred in attempting to answer the state-law question by referring to the BPCIA alone (according to the Supreme Court). Therefore, the Federal Circuit was charged with determining "whether California law would treat noncompliance with §262(l)(2)(A) as 'unlawful.'"
If the answer is yes, then the court should proceed to determine whether the BPCIA pre-empts any additional remedy available under state law for an applicant's failure to comply with §262(l)(2)(A) (and whether Sandoz has forfeited any pre-emption defense, see 794 F. 3d, at 1360, n. 5). The court is also of course free to address the pre-emption question first by assuming that a remedy under state law exists.
Sandoz Inc. v. Amgen Inc. (2017).
The Court first addressed the question whether Sandoz had waived the preemption defense. Sandoz has raised preemption as a defense in its answer, although it had not yet been addressed by the District Court or the Federal Circuit. As "'a general rule . . . a federal appellate court does not consider an issue not passed upon below.'" Amgen Inc. v. Sandoz Inc. (citing Singleton v. Wulff, 428 U.S. 106, 120 (1976)). Nevertheless, the Federal Circuit had previously articulated reasons to exercise discretion to address issues anyway. Relevant to this case is when the issue presents significant questions of general impact or of great public concern, specifically here "whether state law claims may play a role in enforcing compliance with § 262(l)(2)(A)." Moreover, because Sandoz had preserved its ability to assert preemption by including it as a defense in its answer, it could have raised it on remand, thereby lessening (or eliminating) any prejudice to Amgen. Finally, the preemption issue had been fully briefed. Of course, it didn't hurt the analysis that the Supreme Court had also directed the Federal Circuit to consider the issue on remand.
The Supremacy Clause of the Constitution (U.S. Const. art. VI, cl. 2), provides that federal law "shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby . . . ." Preemption can either be by express preemption, field preemption, or conflict preemption." The BPCIA did not expressly preempt state law, so the Federal Circuit addressed the other two forms.
Field preemption occurs when Congress intended the Federal Government to exclusively occupy a particular field. There is, however, a presumption against preemption in a field in which states have historically legislated. The Federal Circuit easily found no presumption against preemption for biosimilar patent litigation. The Court then noted that patents are 'inherently federal in character' and that the FDA has exclusive authority to license biosimilars. Moreover, the Court noted that the BPCIA is "comprehensive" and "'provide[s] a full set of standards governing' the exchange of information in biosimilar patent litigation, 'including the punishment for noncompliance.'" Amgen Inc. v. Sandoz Inc. (citing Arizona v. United States, 567 U.S. 387, 401 (2012)). Such a comprehensive and calibrated scheme makes the inference that Congress left no room for the States reasonable. Finally, the Court noted that the relief Amgen was seeking from California law was not provided for by the BPCIA. For example, Amgen was seeking an injunction that the Supreme Court made clear was unavailable under Federal law. "This conflict in available remedies between federal and state law 'underscore[s] the reason for field preemption.'" Id.
If state law conflicts with federal law, it can also be preempted. This "occurs 'where it is impossible for a private party to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Amgen Inc. v. Sandoz Inc. (citing Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). The Federal Circuit found that Amgen's state law claims "clash" with the BPCIA, and that the differences in available and sought-after remedies supports the conclusion that the state law claims are preempted. The Court reasoned that Congress acted intentionally when it did not provide for injunctive relief, and that if Amgen were able to seek such a remedy under state law, it "'would interfere with the careful balance struck by Congress.'" Amgen Inc. v. Sandoz Inc. (citing Arizona, 567 U.S. at 405-06). As the Court ultimately concluded on the issue: "the preemption analysis here demonstrates that Amgen's state law claims conflict with the BPCIA and intrude upon a field, biosimilar patent litigation, that Congress reserved for the federal government."
So will this be the last "Amgen v. Sandoz" case in this family? The Federal Circuit affirmed the dismissal of Amgen's unfair competition and conversion claims because they were preempted on both field and conflict grounds. Correspondingly, the case was not remanded back to the District Court. Therefore, unless a petition for either panel rehearing or rehearing en banc is granted, or the Supreme Court grants another petition for cert., it is very possible that we have just seen the last dance of Amgen v. Sandoz.