In the first Federal Circuit case involving the Biologics Price Competition and Innovation Act (“BPCIA” or “Biosimilars Act”), the Court of Appeals for the Federal Circuit affirmed Judge Maxine E. Chesney’s (N.D. Cal.) dismissal of Sandoz’s declaratory judgment action relating to its biosimilar version of Enbrel®. See Sandoz Inc. v. Amgen Inc., 2014-1603 (Fed. Cir. Dec. 5, 2014).

Amgen markets the biological-product etanercept as Enbrel®.  Sandoz is attempting to enter the market with its own version of etanercept, but first must obtain FDA approval.  The same year Sandoz began discussions with the FDA regarding its etanercept product, Congress passed the BPCIA, which sets forth a process for the abbreviated approval of biological products that are biosimilar to a previously FDA-approved biologic product.

On June 23, 2013 Sandoz announced a Phase III clinical trial for its product that had to be completed prior to filing an application for FDA approval of its etanercept product.  The trial was expected to run into 2015.  The same day that Sandoz began its Phase III trial, Sandoz filed a complaint in the Northern District of California seeking a declaratory judgment that its biosimilar product did not infringe two of Amgen’s patents and that the patents were invalid and unenforceable.  

The district court declined to exercise jurisdiction and dismissed Sandoz’s suit.  The district court reasoned that no real or immediate controversy existed between Sandoz and Amgen.  The court also reasoned that the BPCIA precluded Sandoz from obtaining declaratory relief because Sandoz had not followed the BPCIA’s procedures that applied to biosimilar applicants.  Sandoz appealed the district court’s decision.

On appeal, Sandoz argued that the Federal Circuit had jurisdiction over the suit because Amgen claimed to have patents over Enbrel®, Amgen planned to assert those patents against any drugs that compete with Enbrel®, and Sandoz sought to market a competitive product.

The Federal Circuit rejected Sandoz’s argument, and determined that no immediate or real controversy existed between Sandoz and Amgen.  The Federal Circuit concluded that Sandoz’s suit lacked immediacy because, at the time Sandoz filed the suit, “it was only conducting a Phase III trial of a drug it hope[d] to make the subject of an FDA application.”  The Court reasoned that any dispute about patent infringement was subject to significant uncertainties, such as the possibility that Sandoz could change its drug formulation and effectively “eliminate a genuine patent dispute” or that difficulties could arise in Sandoz’s Phase III clinical trials that would delay any biosimilar application that Sandoz may file.  The Court concluded that, in the pre-application context of this case, “the events exposing Sandoz to infringement liability may not occur as anticipated, or indeed may not occur at all” and that “further factual development would significantly advance a court’s ability to identify and define the issues for resolution.”  The Court also found that Sandoz failed to show that it would “suffer an immediate and substantial adverse impact from not being able to seek or secure a patent adjudication before filing an application for FDA approval” because Sandoz cannot “lawfully enter the market now anyway.”

The Federal Circuit declined to address Sandoz’s ability to seek a declaratory judgment if and when it files an FDA application under the BPCIA:

Our resolution of this case makes it unnecessary for us to address the district court’s BPCIA rationale.  We 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).  

See Op. at 15.  Although the Federal Circuit did not interpret the litigation provisions of the BPCIA, this decision indicates that biosimilar applicants will have difficulty challenging patent validity and non-infringement in a federal court action at an early stage in the development process.  Given the Federal Circuit’s ruling, biosimilar applicants are more likely to pursue avenues outside of court to challenge the validity of patents, such as reexamination or inter partes review proceedings at the U.S. Patent and Trademark Office (PTO).  Successful validity challenges before the PTO often allow applicants to gain more clarity on the patent landscape prior to undertaking significant investment developing a biosimilar product.