Amgen Inc. v. Sandoz Inc.
877 F.3d 1315 (Fed. Cir. 2017)
Authored by Jack Meyer
Statement of Facts: The Food and Drug Administration (“FDA”) approves biological products for commercial licensing under 42 U.S.C. § 262(a). For substances that are biologically similar to products already approved, the entity seeking a license from the FDA files an abbreviated biologics license application (“aBLA”) under the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”). The applicant submits information to demonstrate that its product is “biosimilar” or “interchangeable” with a previously approved product. Under BPCIA, the biosimilar applicant sends the existing product owner access to its aBLA application and to its manufacturing information no later than 20 days after the FDA accepts the aBLA application for review. The parties then negotiate any potential patent infringement and the existing product owner may sue the producer of the biosimilar product within 30 days. Additionally, the producer of the biosimilar product must give the existing product owner notice of commercial marketing at least 180 days prior to its commercial release. 42 U.S.C. § 262 (l)(9)(C) permits the existing product owner to seek declaratory relief for certain patents if the biosimilar applicant fails to comply with certain provisions, and this remedy preempts other federal remedies.
Amgen Inc. and Amgen Manufacturing Ltd. (collectively, “Amgen”), has marketed the product Neupogen since 1991. In May of 2014, Sandoz Inc. (“Sandoz”) filed an aBLA, seeking FDA approval of a biologically similar product to Neupogen. On July 8, 2014, Sandoz informed Amgen that it had filed the aBLA, but Sandoz did not disclose its aBLA or its product information as required by § 262 (l)(2)(A). On March 6, 2015, the FDA approved the aBLA and Sandoz gave notice of commercial marketing to Amgen. Amgen then sued in the United States District Court for the Northern District of California alleging: (1) unfair business practices and competition in violation BPCIA (2) conversion for the wrongful use of Amgen’s approved licenses and (3) infringement on Amgen’s patent. Sandoz counter-claimed that the BPCIA permitted its actions and asserted Amgen’s state law claims were preempted. Amgen Inc. v. Sandoz Inc., 2015 WL 1264756 (N.D. Cal. Mar. 19, 2015)
Procedural History: Amgen originally filed suit against Sandoz in the district court. The district court granted partial judgement on Sandoz’s counter-claims interpreting the BPCIA, dismissed with prejudice Amgen’s unfair competition and conversion claims, and denied Amgen’s motion for a preliminary injunction. Amgen Inc. v. Sandoz Inc., 2015 WL 1264756 (N.D. Cal. Mar. 19, 2015). Amgen appealed the decision to the Federal Circuit. The Federal Circuit affirmed the dismissal of Amgen’s unfair competition and conversion claims, vacated the judgement on the counterclaims and remanded for further proceedings. Amgen Inc. v. Sandoz Inc., 794 F.3d 1347 (Fed. Cir. 2015), rev’d in part, vacated in part. Both parties petitioned for a rehearing en banc, which the court denied. Amgen Inc. v. Sandoz Inc., No. 15-1499, slip op. (Fed. Cir. Oct. 16, 2015). Sandoz then filed a petition for a writ of certiorari and Amgen filed a conditional cross-petition for a writ of certiorari. Sandoz Inc. v. Amgen Inc., 137 S. Ct. 1664 (2017). The Supreme Court granted certiorari for both the petition and the cross-petition. Sandoz Inc. v. Amgen Inc., 137 S. Ct. 808 (2017). The Supreme Court reversed the Federal Circuit decision in part, vacated in part, and remanded back to the Federal Circuit for further proceedings. Sandoz Inc. v. Amgen Inc., 137 S. Ct. 1664 (2017).
Questions Presented: First, did Sandoz waive its preemption defenses? Second, does the BPCIA preempt any remedy available under state law for an applicant’s failure to comply with 42 U.S.C. § 262 (l)(2)(A)? Third, does California Law treat noncompliance with 42 U.S.C. § 262(l)(2)(A) as unlawful?
Holdings: (1) No. The preemption issue presents a “significant question of public concern” and so the court used its discretion to answer the question. Additionally, Sandoz preserved its preemption defense in its original answer, allowing Sandoz to argue the issue in district court upon remand, so Amgen will not be harmed by the court’s decision to decide the issue. (2) Yes. BPCIA preempts state law remedies for failure to comply with § 262 (l)(2)(A). (3) Not answered. Because the court determined that Sandoz did not waive its preemption defense and Amgen’s state law claims are preempted, the court did not reach the arguments relating to whether failure to comply with § 262 (l)(2)(A) is unlawful.
Reasoning: First, the Federal Circuit looked at whether or not Sandoz waived its affirmative preemption defense. The prior courts had not ruled on the preemption claims’ merits and, usually, a federal appellate court will not consider an issue not argued below. However, the court stated it had the authority to deviate from this general practice because the issue “presents significant questions of general impact or of great public concern”, and reached the merits of the preemption claim. Amgen Inc. v. Sandoz Inc., 877 F.3d 1315, 1324 (Fed. Cir. 2017).
The court then turned to whether Amgen’s state law claims are preempted by BPCIA. The court applied federal law to maintain uniformity in the field of patent law and to determine if the claims were preempted. There exists in the statute no express preemption, so the court focused on field and conflict preemption. The court found both forms of preemption exist. Amgen argued that state law claims are not preempted because “the federal statute does not provide a meaningful remedy for the state-recognized interests that have been injured.” 877 F.3d 1315, 1327. Sandoz argued that Congress occupied the field with the creation of the BPCIA’s vast regulatory framework for dispute resolution of biosimilar patent claims. The court found state-law does not traditionally occupy the field of patents, a field inherently federal in character, and therefore there is no presumption against preemption. BPCIA is a complex statutory scheme that creates processes for ascertaining FDA approval and resolving disputes between parties. This vast scheme is strong evidence, and thus it is a reasonable inference to conclude, that Congress did not intend to allow for other remedies outside of the federal framework. Section 262 (l)(9)(C) provides the exclusive remedy for failure to comply with the statute and, thus, Amgen’s request for injunction and damages under state law are not permissible remedies under § 262(l)(9)(C).
Amgen also argues there is no conflict preemption between the BPCIA and the state law claims. Amgen asserts that the state law claims include additional elements that are not covered by BPCIA and that the relief sought is both different and independent from the redress provided by BPCIA. The court held that the differences in remedies created a conflict with the federal framework by subjecting BPCIA to potentially 50 different iterations of tort regimes. Allowing BPCIA to be subject to state law tort practices would run counter to Congress’s intent of having BPCIA govern the biosimilar industry. Amgen’s desire for a state law measure of enforcement is in conflict with the statutory scheme Congress chose to create. Therefore, Amgen’s state law claims are preempted on both field and conflict grounds. The court found Amgen’s further arguments unpersuasive.