Federal Circuit Sides With Biosimilar Developer Sandoz in Landmark Decision

The federal circuit ruled today in Amgen v Sandoz that state law cannot compel drug makers to participate in the so-called “patent dance” provided for in the Biologics Price Competition and Innovation Act (BPCIA) because state law cannot preempt federal law.

The decision in the case comes after the Supreme Court, in its ruling in Sandoz v Amgen, found that there is no injunction available under federal law to force compliance with the patent dance, and remanded to the federal circuit the question of whether any remedy might be available under state law.

In its appeal, Amgen argued that Sandoz had waived its preemption defense to its state law claims, and that the BPCIA did not preempt any state law remedies for failure to comply with the patent dance. Amgen also argued that failure to comply with the BPCIA was itself an unlawful act. Sandoz, however, held that preemption barred Amgen from making state law claims.

In today’s decision, the court ruled that Sandoz did not waive its preemption defense, and that Amgen’s claims under state law are preempted by federal law. The court did not address whether failure to comply with the BPCIA is unlawful, however.

The court generally took a similar position to that of the Department of Justice (DOJ) in its September 2017 amicus brief, in which Acting Assistant Attorney General Chad A. Readler and colleagues argued that the BPCIA preempts any state-law remedy for a biosimilar applicant’s failure to comply with the patent dance. Like the federal circuit and the Supreme Court, the DOJ did not weigh in on the lawfulness of failure to comply with the patent dance.

Today’s decision brings up new questions as to whether biosimilar applicants will choose to engage in the BPCIA patent dance in the future. In an interview with The Center for Biosimilars^®, conducted prior to the federal circuit’s decision, Ha Kung Wong, JD, said, “If the initial disclosures under the BPCIA are essentially optional, biosimilar applicants may decide there isn’t enough of an incentive to participate, and may choose to force brand drug makers to operate in the dark as they assert basically all patents at once after they receive notice of commercial marketing.”

In response to the ruling, Michael Cottler, JD, partner at Goodwin, told The Center for Biosimilars^® in an email, "In its decision on remand in Amgen v Sandoz, the Federal Circuit strongly indicated that any state law claim attempting to enforce compliance with the patent dance, or penalizing a biosimilar manufacturer for failing to dance, would be preempted by the BPCIA. Consequently, to the extent further state law claims are brought against other biosimilar manufacturers for failure to comply with the patent dance, such claims are likely to be dismissed as a matter of law. Moreover, biosimilar manufacturers may have less to worry about if they decide not to engage in the patent dance. There may be a resulting uptick in BPCIA litigations in which the biosimilar manufacturer opts out of dancing, and 'first wave' litigations, therefore, may not be as frequent."

Kevin Nelson, JD, partner at Schiff Hardin's Hatch-Waxman and biosimilars practice, added, also in an email, "The decision helps biosimilar applicants with their strategic decision making when looking at the prospect of filing a biosimilar application. Now, applicants have back under their control the types of information that they can produce if they choose to participate in the information exchange, instead of the prospect of uncertainty that a state law may compel production of confidential information that is commercially sensitive to the applicant."