The biologics industry has been eagerly awaiting the Federal Circuit’s ruling on Sandoz Inc.’s (“Sandoz”) appeal from the United States District Court for the Northern District of California’s dismissal of its declaratory judgment action due to lack of Article III jurisdiction. In particular, the industry has been waiting to see whether the Federal Circuit would uphold the district court’s ruling that Sandoz’s lawsuit was barred by the Biologics Price Competition and Innovation Act (“BPCIA”). Unfortunately, the Federal Circuit declined to address the district court’s interpretation of the BPCIA, providing no further guidance on the topic. Instead, the Federal Circuit simply affirmed the district court’s ruling that there was no subject matter jurisdiction, relying on Hatch-Waxman generic drug cases as precedent.

This appeal stemmed from a 2013 lawsuit Sandoz filed against Amgen Inc. (“Amgen”) et al. seeking declaratory judgment that two patents exclusively licensed to Amgen were invalid, unenforceable, and would not be infringed by Sandoz’s use, offer for sale, sale, or import of a biosimilar to Amgen’s Enbrel®. Sandoz Inc. v. Amgen Inc. et al., Case No. 3:2013 cv 02904 (N.D. Cal. 2013). Amgen successfully moved to dismiss the lawsuit by making two arguments: (1) the district court lacked statutory authority to consider a patent dispute involving a biosimilar product until after an application for FDA approval has been filed; and (2) the court lacked subject matter jurisdiction because no case or controversy existed. See id., Dkt. 101 at 2. The district court agreed, finding that Sandoz had not yet complied with its obligations under the BPCIA, there was no immediate threat of injury, and that Sandoz’s intent to file a future biosimilar application under the BPCIA pathway was insufficient to create a case or controversy. Id. at 3-4. Sandoz appealed.

On December 5, 2014, the Federal Circuit ruled on Sandoz’s appeal, affirming the district court’s dismissal of the case for lack of jurisdiction because no Article III case or controversy existed. Sandoz Inc. v. Amgen Inc. et al., Case No. 2014-1693 (Fed. Cir. 2014). In finding a lack of jurisdiction, the Court specifically noted that there was no evidence that any of Sandoz’s current actions would potentially expose it to infringement liability. Id. at 9. Sandoz is conducting clinical trials outside of the United States and cannot engage in liability-exposing conduct because it has not yet received or applied for approval of its biosimilar product. Id. The Federal Circuit further observed that because Sandoz’s clinical trials are ongoing, any potential patent dispute that could arise was subject to significant uncertainties, including whether any dispute will actually arise and what specific issues would require adjudication. Id. at 11. The Court also found that Sandoz could not “invoke any statutory relaxation of otherwise-applicable immediacy and reality requirements,” such as those provided in the Hatch-Waxman Act. Id. at 13-14. Thus, Sandoz could not show that it met the Article III jurisdiction requirements.

However, the Court explicitly declined to address the district court’s ruling that the BPCIA barred the lawsuit. The Federal Circuit stated “we do not address distinct questions that may arise as Sandoz continues its efforts to develop and obtain approval to market an etanercept product.” Id. at 8. The Court made clear that “[i]n particular, we do not address Sandoz’s ability to seek a declaratory judgment if and when it filed an FDA application under the BPCIA.” Id. Nor did the Federal Circuit “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).” Id. at 15.

The Federal Circuit’s refusal to address the interpretation of the BPCIA has left open the question of whether the Court will permit a biosimilar applicant to file a declaratory judgment action after filing its biosimilar application in an attempt to circumvent the patent exchange requirements of the BPCIA. District courts seem to be taking the position that compliance with the BPCIA is mandatory and a prerequisite to filing any lawsuits. See our previous client alert regarding the Celltrion Healthcare Co., Ltd. et al. v. Kennedy Trust for Rheumatology Research decision, Case No. 14 Civ. 2256 (PAC) (December 1, 2014), Declaratory Judgment Action Premature: Decision Suggestion “Patent Dance” Mandatory for Biosimilar Applicants. It will be interesting to see whether the Federal Circuit will eventually opine on the BPCIA in view of the lower courts’ rulings.

K&L Gates will continue to monitor any developments regarding BPCIA litigation to see if any additional insight is gained into courts’ interpretation of the BPCIA.