Federal Circuit Affirms Dismissal of First BPCIA “Patent Dance” Challenge, But Remains Mum on BPCIA Interpretation . . . At Least for Now

December 8, 2014

By Kurt R. Karst

Last Friday, the U.S. Court of Appeals for the Federal Circuit issued its highly anticipated decision in Sandoz Inc. v. Amgen Inc. and Hoffman-La Roche Inc., Case No. 2014-1693 (Fed. Cir. 2014).  The case involves two patents Roche licensed to Amgen – U.S. Patent Nos. 8,063,182 (“the ‘182 patent”) and 8,163,522 (“the ‘522 patent”) – that purportedly cover Amgen’s biological product ENBREL (etanercept), which FDA initially licensed in November 1998 under BLA No. 103795, and for which Sandoz is seeking approval to market a biosimilar version pursuant to PHS § 351(k), as added by the the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”).  The decision is the first from an appellate court involving the complex patent resolution provisions of the BPCIA.  Unfortunately for BPCIA-watchers, the Federal Circuit did not delve into the BPCIA’s provisions, but instead affirmed a 2013 district court decision dismissing the case on jurisdictional grounds. 

As we previously reported, in November 2013, the U.S. District Court for the Northern District of California issued a 5-page decision in Sandoz Inc. v. Amgen Inc. and Hoffman-La Roche Inc., Case No. 3:13-cv-02904-MMC (N.D. Cal.), granting a Motion to Dismiss Sandoz’s June 2013 Complaint for Declaratory Judgment and Patent Invalidity and Non-infringement concerning the ‘182 and ‘522 patents.  According to the district court, there was not yet Article III controversy between the parties because Sandoz had not (at the time) submitted a Section 351(k) application for the company’s biosimilar version of ENBREL.  In addition, the district court ruled that the declaratory judgment action was barred by the BPCIA. Noting that the BPCIA “sets specific limitations on the timing of any litigation arising from the filing” of a biosimilar application under PHS Act § 351(k), and that “with limited exceptions not applicable here, neither a reference product sponsor, . . . nor an applicant, . . . may file a lawsuit unless and until they have engaged in a series of statutorily-mandated exchanges of information,” District Court Judge Maxine M. Chesney wrote that “Sandoz does not contend, and cannot contend, it has complied with its obligations under [PHS Act §§ 351(l)(2)-(6)], because . . . it has not, to date, filed an application with the FDA.”  The “obligations” referenced to are the BPCIA’s multi-step “patent dance” procedures that kick in once a Section 351(k) biosimilar application has been accepted by FDA. 

Sandoz timely appealed the decision to the Federal Circuit (briefs available here, here, and here), arguing, among other things, that the California District Court erred in dismissing the declaratory judgment complaint “based on a sua sponte construction of the [BPCIA], which (a) cannot be reconciled with the specific language of the statute, (b) makes a declaratory judgment action essentially useless for resolving patent disputes involving biosimilar drug products, and (c) threatens to create a six-month period of additional marketing exclusivity for all reference biologic products that Congress never envisioned in drafting the statute?”  (See our previous post here.)

While the Sandoz biosimilar ENBREL case was pending before the Federal Circuit, other lawsuits were testing the metes and bounds of the BPCIA’s patent dance procedures.  As we previously reported, Celltrion Healthcare Co., Ltd. and Celltrion, Inc. (collectively “Celltrion”) filed a Complaint for Declaratory Judgment in the U.S. District Court for the District of Massachusetts against Janssen Biotech, Inc. (“Janssen”) seeking a judgment with respect to certain patents allegedly covering the company’s biological product REMICADE (infliximab).  A second lawsuit filed by Celltrion, which is seeking approval to market a biosimilar version of REMICADE, called REMSIMA, against the patent owner, the Kennedy Trust for Rheumatology Research (“Kennedy Trust”), was also filed in the U.S. District Court for the Southern District of New York.  Celltrion’s case against Janssen was voluntarily dismissed in late October 2014, but Celltrion’s case against the Kennedy Trust progressed (briefs available here, here, and here).  Early last week, the New York District Court granted the Kennedy Trust’s Motion to Dismiss, ruling that there is no declaratory judgment jurisdiction and “in light of the existence of the BPCIA statutory framework for the resolution of patent disputes in the licensing of biosimilars.” 

Finally, as we previously reported, yet another lawsuit is challenging an alleged failure by Sandoz to comply with the initial disclosure under PHS Act § 351(l)(2)(A) in connection with Sandoz’s Section 351(k) application for a biosimilar version of Amgen’s NEUPOGEN (filgrastim).  (Sandoz recently filed its Answer to Complaint and Affirmative Defenses and Counterclaims, including a counterclaim for a declaratory judgment “that the BPCIA means what it says.”)  Amgen followed up on that action with an October 29, 2014 Citizen Petition (Docket No. FDA-2014-P-1771), asking FDA to adopt policies and procedures to require biosimilar applicants – before their applications are accepted for review by FDA – to certify to the Agency that they will comply with PHS Act § 351(l)(2)(A) by providing the reference product sponsor with a copy of the 351(k) application “and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application” within 20 days after FDA informs the biosimilar applicant that its 351(k) application has been accepted for review.  (See our previous post here.)

Moving back to the Federal Circuit’s December 5th decision in Sandoz Inc. v. Amgen Inc. and Hoffman-La Roche Inc., Case No. 2014-1693 (Fed. Cir. 2014),  speculation was running high that the Court would resolve whether or not the BPCIA precludes pre-application declaratory judgment actions.  (At least one legal scholar has argued – see here – that pre-application declaratory judgment actions “are an important tool in the fight against submarine patents and will enhance competition.”)  But it was not to be.  The three-judge panel (Judges Dyk, Taranto, and Chen) noted upfront that while the Court was affirming the California District Court decision concluding that Sandoz did not allege an injury of sufficient immediacy and reality to create subject matter jurisdiction, “[w]e do not address the district court’s interpretation of the BPCIA.”  At least not “yet,” as the court states in a parenthetical on page one of the decision.  Later in the decision, the Court notes that while “[o]ur resolution of this case makes it unnecessary for us to address the district court’s BPCIA rationale,” “[w]e also do 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).” 

According to the three-judge panel, “[a]ny dispute about patent infringement is at present subject to significant uncertainties—concerning whether it will actually arise and if so what specific issues will require decision,” including wether or not “Sandoz’s Phase III trial may fail in material ways.”  “If so, perhaps Sandoz will not file for approval, thereby eliminating altogether the patent dispute it has asked the district court to adjudicate,” wrote the panel.  As such, “Sandoz has not demonstrated that these possibilities for changing or eliminating the patent dispute are so unlikely to arise that they should play no significant role in the Article III determination.”

Drawing from the Court’s significant experience with Hatch-Waxman disputes, the panel states that its conclusion is consistent with decisions made under that law:

[W]e have found no justiciability where a declaratory-judgment plaintiff had not filed an application for the FDA approval required to engage in the arguably infringing activity.  On the other hand, where we have found a case or controversy in the Hatch-Waxman setting, we have focused on the presence of an application for the required FDA approval. . . .  In the Hatch-Waxman Act, Congress did provide for certain early adjudications of patent issues that would be presented by future market-entry activity in the FDA setting. It created an “artificial” act of infringement to allow suit by a patent holder; and in the BPCIA, Congress extended the provision to biological products.  The essential requirement for such actions, however, is the defendant’s filing of the FDA application needed for market entry—an application that defines what the applicant would be permitted to do (upon approval) and thus circumscribes and dominates the assessment of potential infringement.  Sandoz has not filed such an application.  Accordingly, no congressional judgment aids Sandoz in diminishing the significance of the present uncertainties about whether and when an adjudication will be needed and what issues it will involve if it occurs. [(Internal citations omitted.)]

We expect that the Federal Circuit will soon be asked to revisit its December 5th decision.  Indeed, even the U.S. Supreme Court may ultimately be asked to weigh in.