Does Amgen Have Viable State Law Claims Against Sandoz Arising From The Zarxio Biosimilar Patent Dispute?

In Sandoz Inc. v. Amgen Inc. (which you can read more about here), the Supreme Court held that 42 USC § 262(l)(9)(C) sets forth the exclusive federal remedy for failing to provide a copy of the biosimilar application to the reference product sponsor. Still, the Court directed the Federal Circuit to revisit Amgen’s state law claims to determine whether such conduct is “unlawful” under California’s unfair competition laws and/or whether the Biologics Price Competition and Innovation Act (BPCIA) preempts any remedies available under state law. Here, we consider how the Federal Circuit may address these issues.

Amgen’s state law claims were brought under California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq. As damages, Amgen asserted, among other economic injuries, “lost money that was spent to monitor and respond to Defendants’ acts of unfair competition” and “lost profits and increased costs if Defendants are permitted to commercially market the Sandoz biosimilar product without satisfying their obligations under 42 USC § 262(l).”

When the Federal Circuit first addressed Amgen’s state law claims, it noted that UCL law remedies based on a violation of another law “are not available when the underlying law expressly provides that the remedies in that law are exclusive.” The court determined that “because “35 USC § 271(e)(4) provides ‘the only remedies which may be granted by a court’ for the alleged violation” of §262(l)(2)(A), the district court had correctly dismissed Amgen’s unfair competition claim based on that provision of the BPCIA.

The Supreme Court, however, rejected the Federal Circuit’s reasoning based on 35 USC § 271(e)(4). In particular, the Supreme Court found that 35 USC § 271(e)(4) does not provide a remedy for violating §262(l)(2)(A). Rather, the Supreme Court explained, “§271(e)(4) provides remedies only for artificial infringement,” i.e., for filing an aBLA. “[I]t provides no remedy at all, much less an ‘expressly … exclusive’ one, for Sandoz’s failure to comply with §262(l)(2)(A),” which the Supreme Court emphasized is not itself an artificial act of infringement.

The Supreme Court also explained that whether Sandoz’s conduct is a violation of California’s UCL “is a state-law question,” and found that “the court below erred in attempting to answer that question by referring to the BPCIA alone.”

With regard to preemption, in its first decision the Federal Circuit specifically declined to address the issue, stating, “Sandoz did not argue preemption as a defense to Amgen’s state law claims, and thus the district court did not consider that issue. We therefore do not address preemption in this appeal.” That said, the Federal Circuit did conclude that (a) Amgen’s unfair competition claim was based solely on the notion that Sandoz acted unlawfully by violating the BPCIA, and (b) Sandoz took “a path expressly contemplated by” the BPCIA and, therefore, did not violate the BPCIA.

While the Supreme Court held that §262(l)(2)(A) is not enforceable by a federal injunction, it did not decide whether §262(l)(2)(A) is “mandatory”–such that failure to comply might be “unlawful”–or “conditional”–that is, simply “a condition precedent to the information exchange process” of the patent dance. The Supreme Court reasoned that because this question “matters only for purposes of California’s unfair competition law,” it need not decide the issue.

Although the Supreme Court directed the Federal Circuit to address this issue on remand, there is little reason to believe the Federal Circuit will move away from its prior findings. For example, in its first decision, the Federal Circuit rejected Amgen’s contention that the disclosure requirements of §262(l)(2)(A) are mandatory, rather than merely permissible. Instead, the Federal Circuit was persuaded by Sandoz’s contention that the disclosure requirements are “only a condition precedent to engaging in the information-exchange process of paragraphs (l)(3) through (l)(6)” of the BPCIA. Significantly, in looking at the statute as a whole, the Federal Circuit found that “mandating compliance with paragraph (l)(2)(A) in...