IP Law Daily Federal law preempts Amgen’s California conversion and unfair competition claims in biosimilar case against Sandoz
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Thursday, December 14, 2017

Federal law preempts Amgen’s California conversion and unfair competition claims in biosimilar case against Sandoz

By Cheryl Beise, J.D.

The Biologics Price Competition and Innovation Act of 2009 (BPCIA) preempts state law conversion and unfair competition claims brought by Amgen, Inc., against competing drug manufacturer Sandoz, Inc., over its failure to comply with the BPCIA’s notice requirements in connection with its biosimilar filgrastim product referenced to Amgen’s Neupogen brand product, the U.S. Court of Appeals for the Federal Circuit has ruled, following remand from the Supreme Court. Because the federal government has fully occupied the field of biosimilar patent litigation, Amgen could not seek remedies outside the federal statutory scheme. The court also found that Sandoz did not waive its preemption defense. In July, the Supreme Court held that the exclusive remedy for a biosimilar applicant’s violation of the BPCIA is an immediate declaratory-judgment action for artificial infringement. The Court directed the Federal Circuit on remand to determine whether the BPCIA preempts state remedies (Amgen Inc. v. Sandoz Inc., December 14, 2017, Lourie, A.).

The BPCIA established a streamlined FDA approval process for follow-on biological products that are "highly similar" to a previously approved product ("reference product"). The BPCIA provides a four-year and a 12-year exclusivity period to a reference product, both beginning on the date of first licensure of the reference product. The BPCIA also established a unique and elaborate process codified at 42 U.S.C. § 262(l) for information exchange between the biosimilar applicant and the reference product sponsor ("RPS") in order to help resolve biosimilar patent disputes. The BPCIA also amended the Patent Act to create an artificial "act of infringement," similar to that of 35 U.S.C. § 271(e)(2)(A), and to allow infringement suits to begin based on the filing of a biosimilar application prior to FDA approval and prior to marketing of the biological product.

Amgen had marketed its biologic filgrastim under the brand name Neupogen since 1991. In 2014, Sandoz filed an application for a biosimilar filgrastim product referenced to Neupogen, and the FDA accepted the application for review. Sandoz notified Amgen that it anticipated obtaining approval for its biosimilar and that it intended to launch the product immediately upon approval. However, Sandoz did not provide Amgen with product information required under the patent-dispute provisions of the BPCIA. Upon receiving FDA approval of its biosimilar, Sandoz notified Amgen that it intended to take its biosimilar to market, and Amgen filed suit, asserting claims for patent infringement, unfair competition by engaging in unlawful business practices under California’s UCL, based on two alleged violations of the BPCIA, and conversion for allegedly wrongful use of Amgen’s approved license on Neupogen.

In July 2015, the Federal Circuit affirmed the district court’s dismissal of Amgen’s state law claims, vacated the judgment on Sandoz’s counterclaims, and directed the district court to enter judgment on those counterclaims. The parties filed cross-petitions with the U.S. Supreme Court. The Supreme Court granted both petitions and consolidated the cases. On June 12, 2017, the Supreme Court unanimously held that an injunction under federal law is not available to enforce 42 U.S.C. § 262(l)(2)(A); and a biosimilar applicant may provide the notice required by 42 U.S.C. § 262(l)(8)(A) either before or after receiving FDA approval, i.e., the applicant need not defer giving notice of commercial marketing until FDA licensure of the biosimilar in order to begin the running of the 180-day clock. The Court partially remanded the case to the Federal Circuit, instructing it to determine "whether the BPCIA preempts any additional remedy available under state law for an applicant’s failure to comply with § 262(l)(2)(A)" and whether Sandoz had forfeited any preemption defense.

Waiver of preemption defense. Amgen argued that Sandoz had waived its preemption defense by not arguing it before the district court. Under the general rule of waiver, an affirmative defense is deemed waived if it was not raised in a pleading, by motion, or at trial. However, an appellate court may consider an issue that was not argued before the district court in some circumstance, the court noted. In this case, overlooking the question of waiver was warranted because the issue of preemption presented a significant question regarding the interpretation of the BPCIA. Moreover, Amgen was not prejudiced because Sandoz had preserved its preemption defense in its answer, the issue of preemption was fully briefed, and the Supreme Court expressly invited the Federal Circuit to address the issue on remand. The court held that Sandoz did not forfeit its preemption defense.

BPCIA preemption of state law claims. The court next addressed whether Amgen’s state law claims were preempted by the BPCIA. The case raised issues of field and conflict preemption.

Amgen argued that field preemption did not apply to its state law claims because "the federal statute does not provide a meaningful remedy for the state-recognized interests that have been injured by Sandoz’s failure to comply with 42 U.S.C. § 262(l)(2)(A)." Amgen also argued that the BPCIA does not conflict with Amgen’s state law claims because the regimes serve different objectives and provide for different remedies.

The Federal Circuit disagreed with Amgen. Based on the complex federal statutory scheme, it was clear that the federal government has fully occupied the field of biosimilar patent litigation. The BPCIA’s comprehensive, carefully calibrated scheme of federal regulation "was so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it," the court said. In addition, Amgen was seeking injunctive relief and damages that the BPCIA does not provide. Permitting a state to impose its own penalties for a violation of federal law would conflict with the careful framework Congress adopted, the court added.

Holding that the BPCIA preempts state law claims predicated on an applicant’s failure to comply with § 262(l)(2)(A), the court affirmed the dismissal of Amgen’s unfair competition and conversion claims.

The case is No. 2015-1499.

Attorneys: Nicholas P. Groombridge (Paul, Weiss, Rifkind, Wharton & Garrison LLP) for Amgen Inc. Deanne Maynard (Morrison & Foerster LLP) for Sandoz Inc.

Companies: Amgen Inc.; Sandoz Inc.

MainStory: TopStory Patent FedCirNews

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