By Andrew Williams --
Last year, Sandoz filed a declaratory judgment action against Amgen and Roche related to its etanercept biosimilar drug product, which it developed to compete with Amgen's Enbrel® TNF inhibitor. Specifically, Enbrel® is a receptor fusion protein that binds TNF-α, thereby acting as a decoy receptor molecule. In the Sandoz complaint, it alleged that two Hoffman-LaRoche patents created a "cloud of legal uncertainty" over its drug product, and that it was entitled to a determination that the two patents were not infringed, invalid, and unenforceable. Of course, Congress enacted the Biologics Price Competition and Innovation Act of 2009 ("BPCIA") to address such uncertainty. Therefore, members of the biotech patent community viewed this as an attempt by Sandoz to sidestep the requirements of the BPCIA. The Northern District of California dismissed the case on jurisdictional grounds because Sandoz had not yet filed its application with the FDA, and there was no cognizable case or controversy. However, it did observe in the process that both Sandoz and Amgen were barred from filing a lawsuit unless they engaged in the BPCIA's statutorily-mandated patent exchanges (the so-called biosimilar "patent dance"). Last Friday, in Sandoz Inc. v. Amgen Inc., the Federal Circuit affirmed the lower court's dismissal because "Sandoz did not allege an injury of sufficient immediacy and reality to create subject matter jurisdiction." The Appeals Court, however, stopped short of addressing the District Court's interpretation of the statute ("Our resolution of this case makes it unnecessary for us to address the district court's BPCIA rationale"). Therefore, the biotech community is left to wonder whether such a course of action will end up being a viable mechanism to skirt the requirement of the BPCIA.
As way of background, Amgen's predecessor, Immunex, received a Biologics License to market Enbrel® in 1998. Subsequently, in 2011 and 2012, Hoffman-LaRoche received two patents that claimed specific proteins and related pharmaceutical compositions (U.S. Patent No. 8,063,182, or the '182 patent) and methods of using host cells that include specific polynucleotides, the polynucleotides themselves, and vectors and cells containing them (U.S. Patent No. 8,163,522 or the '522 patent). Amgen had identified these two patents as covering etanercept. Before these two patents issued, in 2004, Sandoz began developing its own etanercept product. In 2010, it began a series of meetings with the FDA to plan for the required application. After consultation from the FDA, Sandoz announced a large-scale Phase III trial in June of 2013, which was expected to run into 2015. At the same time, it filed the complaint currently at issue against both Amgen and Hoffman-LaRoche.
The Federal Circuit began by reviewing what is required for a Federal court to have jurisdiction pursuant to the Declaratory Judgment Act. Quoting the Supreme Court in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), the Court noted that for there to be a "case-or-controversy," a court must determine "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Id. at 127 (emphasis added). To determine whether there is immediacy, it is necessary to consider "how far in the future the potential infringement is, whether the passage of time might eliminate or change any dispute, and how much if any harm the potential infringer is experiencing, at the time of suit, that an adjudication might redress." Similarly, reality is assessed "by examining any uncertainties about whether the plaintiff will take an action that will expose it to potential infringement liability and, if so, exactly what action." The Court focused on the question of timing and contingency regarding whether a need for adjudication exists. In other words, quoting the Supreme Court again, the Court indicated that "[a] claim is not ripe for adjudication if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all." Texas v. United States, 523 U.S. 296, 300 (1998).
As already suggested, the Federal Circuit concluded that the Sandoz complaint did not present a case or controversy. The fact that Sandoz was still conducting clinical trials and had not even filed an application was significant in the Court's analysis: "Amgen has not suggested that anything Sandoz is currently doing exposes it to infringement liability, and there is no dispute that Sandoz cannot engage in the only liability-exposing conduct at issue with FDA approval of an application precisely defining the products it may market." The Court found "significant uncertainties" surrounding this case. For example, it could not assume that the Phase III trial would be successful. Instead, if it fails, Sandoz may be prevented from filing its application, or forced to modify the drug product in material ways. Such eventualities would either eliminate the need for a patent dispute, or alter it significantly. Because of these uncertainties, the Court concluded that in the pre-application context, the infringement liability that Sandoz may be facing "may not occur as anticipated, or indeed may not occur at all." Citing Texas, 523 U.S. at 300.
The Federal Circuit did focus on the content of Sandoz's complaint, or more accurately, what was missing from its complaint. For example, the complaint said nothing about specific patent claims, or how they might relate to the Sandoz drug product. Instead, it mainly relied on Amgen's assertions that the patents-at-suit cover Enbrel®, and that Amgen intends to enforce its rights. Practitioners faced with a related situation might be wise to include such specifics about the patent claims in the complaint. Moreover, the complaint should explain why there is no "potential for elimination or alteration of any needed adjudication."
Finally, the Court pointed out how this outcome is consistent with Hatch-Waxman Act jurisprudence. No declaratory judgment jurisdiction has been found in any case where an ANDA application had not yet been filed. In fact, the Court has often focused on whether such an application has been filed before holding that jurisdiction exists. The Federal Circuit noted that Congress established in the Hatch-Waxman act an "artificial" act of infringement which provides for early adjudication of the patent issues. Moreover, the Court suggested that Congress "borrowed" from the Hatch-Waxman Act when enacting the BPCIA. Correspondingly, it concluded, the filing of an application in the present context should also be required for conferring jurisdiction. The Federal Circuit did not say, however, that a DJ action would have been appropriate if an application had been filed. Instead, the Court specifically pointed out that it did "not decide whether, once an application is filed under the BPCIA, that statute forecloses a declaratory-judgment action concerning whether the ultimate marketing of the application-defined product would infringe under 35 U.S.C. § 271(a)."
This case, unfortunately, does not answer the question whether the "patent dance" of the BPCIA can be skirted by a biosimilar applicant through the use of a declaratory judgment action. Therefore, this continues to be of interest in the biotech patent community. In fact, last week Judge Crotty of the United States District Court for the Southern District of New York dismissed two such declaratory judgment cases related to the reference drug product drug Remicade®. Patent Docs will address these lower court's decisions and their implications for BPCIA litigation in a future post.
Sandoz Inc. v. Amgen Inc. (Fed. Cir. 2014)
Panel: Circuit Judges Dyk, Taranto, and Chen
Opinion by Circuit Judge Tranato
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