Sandoz v. Amgen: A landmark ruling, but state law claims still undecided

The U.S. Supreme Court’s recent decision in Sandoz v. Amgen was a watershed moment in the interpretation of the patent provisions of the Biologics Price Competition and Innovation Act, but the decision left open certain state law claims, which are still pending in the U.S. Court of Appeals for the Federal Circuit on remand.

The act, signed into law in 2010, provides a new biosimilar product pathway for the approval of large molecule (or biologic) drugs.

A biosimilar is “highly similar” to a biologic already approved by the Food and Drug Administration regardless of any minor differences in clinically inactive components. The safety, purity and potency of the biosimilar must also not be clinically different from the previously approved biologic.

The act is essentially the biosimilar counterpart to the 1984 Hatch-Waxman Act, which established a generic product pathway for small molecule drugs.

In Sandoz v. Amgen, the court addressed certain provisions related to the requirement of notice of commercial marketing and the so-called patent dance.

The court ruled that biosimilar applicants may provide the required 180-day notice of its intent to commercially market its biosimilar product even before obtaining FDA approval, meaning that the biologic originator (“the sponsor”) would not enjoy an extra six-month exclusivity period upon FDA approval of the biosimilar.

The court also held that the act does not provide for any federal injunctive relief to force biosimilar applicants to disclose application and manufacturing information under the patent dance provisions of the act (42 U.S.C Section 262(l)(2)(A)), but that the sponsor could pursue a declaratory judgment action against the biosimilar applicant.

Notably, however, the court declined to decide whether such an injunction is available under California state law. Instead, the court remanded the matter to the Federal Circuit to address the state law claims, including whether California law would treat noncompliance with Section 262(l)(2)(A) of the act as “unlawful,” and if so, whether the act pre-empts any additional remedy available for Amgen under state law and whether Sandoz has forfeited any pre-emption defense. Amgen and Sandoz filed supplemental briefs with the Federal Circuit on Aug. 28 of this year.

In its supplemental brief, Amgen argued that Sandoz’s failure to provide application and manufacturing information according to Section 262(l)(2)(A) of the act is “unlawful” under California’s Unfair Competition Law and an act of conversion because it was a violation of the act to not produce the application and manufacturing information.

Amgen also argued that Sandoz waived its pre-emption defense after affirmatively stating during oral argument that it had not argued pre-emption of the state law claims.

Moreover, Amgen argued that the act does not pre-empt state law remedies for failure to comply with Section 262(l)(2)(A). In this regard, Amgen pointed out that the act does not contain any language dictating express pre-emption.

Amgen further argued there is no conflict pre-emption because Amgen’s state law claims do not clash with the objectives of the act while including additional elements that are not addressed by the act.

Lastly, Amgen asserted that there is no field pre-emption because the federal remedy under the act to bring a declaratory judgment action “does not remedy the competitive, but unlawful, advantage given to Sandoz by not complying with the act disclosure requirement.”

In its supplemental brief, Sandoz argued that the case should be remanded to the California-based district court and doing so would make it unnecessary to address the waiver question since Sandoz preserved pre-emption by including it in its answer. If, however, the Federal Circuit were to address the issues, Sandoz argued that the act bars Amgen’s state law claims under both field and conflict pre-emption.

Sandoz took the position that the act’s comprehensive framework demonstrates congressional intent for federal law to exclusively occupy the field of patent dispute resolution. Similarly, under conflict pre-emption, Sandoz argued that state law claims are pre-empted due to the interplay between a “comprehensive scheme” at issue and the federal law’s own enforcement tools.

Further, Sandoz argued that Congress’ deliberate omission of an injunction to compel disclosure of an application would be frustrated if state law overrode that choice with its own injunctive (or other) relief.

Finally, Sandoz argued that the state law claims fail under California law. The UCL claim fails because the act does not make nondisclosure of a biosimilar application “unlawful” and the conversion claim fails because not only did Amgen abandon it, but because Amgen failed to establish that Sandoz’s withholding of its application was a “wrongful act.”

Interestingly, the U.S. solicitor general submitted an amicus brief to the Federal Circuit that generally supports the position taken by Sandoz that Amgen’s state law claim for an injunction under the UCL is pre-empted by federal law and is therefore unenforceable.

In conclusion, the U.S. Supreme Court’s ruling in Sandoz v. Amgen was a landmark decision with respect to the unavailability for a federal injunction remedy due to a biosimilar applicant’s non-compliance with the patent dance, and with respect to the timing of the biosimilar applicant’s 180-day notice of commercialization.

However, the pending California state law claims provide for significant legal issues which are hotly contested, and for which we await the outcome.