On December 14, 2017, the Federal Circuit issued an opinion in Amgen v. Sandoz,[i] holding that the Biologics Price Competition and Innovation Act of 2009 (“BPCIA,” the “Act”) preempts state law, and thus state laws cannot be used to enforce participation in the BPCIA’s patent dispute resolution procedures and disclosure process. In light of the Supreme Court’s holding earlier this year that such participation is not enforceable by an injunction under federal law and that biosimilar applicants need not wait for approval from the U.S. Food and Drug Administration (“FDA”) before providing the statutorily required notice of commercial marketing, this case is a major win for biosimilar applicants and manufacturers alike.

The instant case surrounds a dispute stemming from Sandoz’s filing of an abbreviated biologics license application (“aBLA”) in May 2014, seeking FDA approval for a biosimilar of Amgen’s filgrastim, marketed under the brand name Neupogen®. Following the FDA’s acceptance of Sandoz’s application for review, Sandoz notified Amgen that the application had been filed and accepted for review, but informed Amgen that it had opted not to provide the biosimilar application or its product’s manufacturing information according to § 262(l)(2)(A). Instead, Sandoz noted that Amgen was entitled to sue Sandoz under § 262(l)(9)(C) to force such a disclosure through an action for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product.

Accordingly, in October 2014, Amgen sued Sandoz in the Northern District of California, asserting claims of (1) unfair competition under California law, based on violations of the BPCIA for failing to disclose the information required under § 262(l)(2)(A); (2) conversion for allegedly wrongful use of Amgen’s approved license on Neupogen®; and (3) infringement of Amgen’s U.S. Patent 6,162,427, which claims a method of using filgrastim. Sandoz counterclaimed, in part, for a declaratory judgment that the BPCIA permitted its actions, and asserted as an affirmative defense preemption of the state law claims by the BPCIA. Following a final judgment dismissing Amgen’s state law claims, a subsequent appeal to the Federal Circuit, a writ of certiorari to the Supreme Court, and then a remand back to the Federal Circuit, the main question that remained before the court last Thursday was whether the BPCIA preempts any additional remedy available under state law for a biosimilar applicant’s failure to comply with § 262(l)(2)(A).

The Federal Circuit explained that the Supremacy Clause preempts state law by means of express preemption, field preemption, or conflict preemption, finding the latter two applicable in this case. With regard to field preemption, the court found that BPCIA’s complex and comprehensive scheme of federal regulation of biosimilars and of resolving patent disputes between licensed biologics and manufacturers of biologics indicated that the federal government has fully occupied the field, leaving no room for supplementation by the states. With regard to conflict preemption, the Federal Circuit found that Amgen sought to impose on Sandoz the penalties of injunctive relief and damages, for which the BPCIA does not provide. Thus, the permission of state law penalties would conflict with the regulatory framework envisioned by Congress. The court also noted that casting 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 beyond those contemplated by Congress in enacting the BPCIA.”[ii] Concluding 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, the Federal Circuit accordingly ruled that Amgen could not proceed with its state law claims.

This case ultimately makes clear that biosimilar applicants may choose to opt out of the patent resolution regime and information exchange described in the BPCIA without facing any legal liability aside from those provisions expressly set forth in the Act itself. Consequently, by deciding not to engage in this information exchange, biosimilar applicants can avoid a compelled disclosure of proprietary information that may be commercially sensitive for the applicant. In addition, brand name drug manufacturers will be forced to essentially “operate in the dark,” by asserting the entire patent portfolio for the drug against the biosimilar applicant, as opposed to the much more targeted and prepared attack that would result from a full disclosure of the biosimilar application and manufacturing process under the BPCIA.[iii]

[i] Amgen Inc. and Amgen Manufacturing Ltd. v. Sandoz Inc., Case No. 2015-1499 (Fed. Cir. Dec. 14, 2017), available at http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1499.Opinion.12-13-2017.1.PDF (last accessed Dec. 18, 2017).

[ii] Id. at page 22.

[iii] Kelly Davio, “Federal Circuit Sides with Biosimilar Developer Sandoz in Landmark Decision,” The Center for Biosimilars, December 14, 2017, available at http://www.centerforbiosimilars.com/news/federal-circuit-sides-with-biosimilar-developer-sandoz-in-landmark-decision (last accessed Dec. 18, 2017).