Sandoz v. Amgen: Interpretation of the Biosimilar Act Results in Dismissal for Lack of Subject Matter Jurisdiction for Declaratory Judgment

by Wilson Sonsini Goodrich & Rosati

On November 11, 2013, the U.S. District Court for the Northern District of California in Sandoz, Inc. v. Amgen, Inc. and Hoffman-La Roche, Inc., Docket No. C-13-2904,1 made the first-ever judicial interpretation of the Biologics Price Competition and Innovation Act (known as the "Biosimilar Act"). The district court granted Amgen's motion to dismiss for lack of subject matter jurisdiction. Key to the court's decision was the fact that Sandoz had filed its action for declaratory judgment of patent invalidity and non-infringement prior to submitting its application for regulatory approval by the U.S. Food and Drug Administration (FDA) and had not fulfilled its obligations to exchange drug and patent information under the Biosimilar Act.

Case Background

Enbrel (also known as etanercept) reduces inflammation in the body by binding to tumor necrosis factor (TNF). Developed in the early 1990s, Enbrel was approved by the FDA for the treatment of rheumatoid arthritis in 1998. Amgen, the patent licensee, and Roche, the patent owner, enjoyed more than 15 years of exclusivity based on U.S. Patent Nos. 5,395,760 and 5,605,690. The former expired in 2012; the latter is expected to expire in 2014. Sandoz, in anticipation of the patent expiry, began developing a biosimilar to Enbrel in 2004. Sandoz is currently conducting a Phase III clinical trial, and expects to launch its product in 2016.

However, unknown to Sandoz, Amgen was still prosecuting unpublished applications that could qualify for patent protection for an additional 17 years after issuance. In November 2011 and April 2012, Amgen announced that it had obtained U.S. Patent Nos. 8,063,182 and 8,163,522 covering Enbrel.

On June 24, 2013, Sandoz filed a complaint for declaratory judgment of invalidity and non-infringement of the two newly granted patents under 28 U.S.C. § 2201. On August 16, 2013, Amgen filed a motion to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction. The Amgen motion requested dismissal based on 1) lack of statutory authority to exercise subject matter jurisdiction and 2) lack of a case or controversy. Sandoz filed its opposition to the motion on September 13, 2013. The district court issued an order granting Amgen's motion to dismiss on November 12, 2013.


Amgen argued that Sandoz's declaratory judgment action was not ripe since many uncertainties remained with Sandoz's clinical development program. Amgen pointed out the following sources of uncertainty:

  1. Phase III enrollment could be insufficient.
  2. Sandoz may not be able to manufacture a product of sufficient quantity or quality for the Phase III trial.
  3. Sandoz may fail to demonstrate sufficient safety and efficacy of its biosimilar product.
  4. The FDA may require additional clinical testing.
  5. Sandoz could seek approval for a formulation different from that of the trial.
  6. The manufacturing process could be changed.
  7. A new method of administration may need to be developed.

Importantly, Amgen highlighted the fact that no Federal Circuit case has found subject matter jurisdiction before Phase III clinical trials have ended. Moreover, both the Hatch-Waxman and the biosimilar statutes tie the establishment of subject matter jurisdiction for the courts to the FDA filing.

In opposition to the motion, Sandoz argued that subject matter jurisdiction does not require an FDA filing, completion of clinical trials, or particular threats to sue. Sandoz stated that jurisdiction is appropriate because "Amgen has placed Sandoz in the position of either pursuing arguably illegal behavior or abandoning that which it claims a right to do."

Sandoz explained that it began work on its own etanercept product in 2004 and reported that it will be ready for launch in 2016. Sandoz argued that it has tested its product in several animal models, in a Phase I clinical trial, and in an ongoing Phase III clinical trial for plaque psoriasis, and believes it currently has a final product and a fixed manufacturing process. Upon completion of the Phase III trial, Sandoz stated that it intends to submit an application seeking FDA approval. Sandoz countered Amgen's arguments by asserting the following:

  1. After nine years of effort, the product is in the final stage of development.
  2. The product has been validated as identical or highly similar to Enbrel by a wide array of molecular studies and tests in animals and humans.
  3. The route of administration is required by law to be the same as Enbrel.
  4. Scale up of manufacturing has already occurred.
  5. The patents claim "the protein that is etanercept"; therefore, a change to formulation would be irrelevant.


The court found that it did not have subject matter jurisdiction either under the Biosimilar Act or under the case or controversy test for regular declaratory judgment jurisdiction. The court recognized that its discretion to enter a declaratory judgment with regard to drug patents is subject to limitations, including those set forth in Section 351 of the Public Health Service Act.2 Specifically, the court stated that under the controlling statute, 42 U.S.C. § 262 ("Regulation of biological products"), neither a reference product sponsor nor an applicant may file a lawsuit (with limited exceptions, not applicable) unless and until they have engaged in a series of statutorily mandated exchanges of drug and patent information.3

Under the statute, the information exchange is triggered by acceptance of a biologics application for review. The first item exchanged is the accepted application itself. Relevant patents and arguments for and against their validity and infringement follow within statutorily mandated time frames.

Sandoz relied on 42 U.S.C. § 262(I)(8) and argued that declaratory judgment actions can be filed by either party upon the biosimilar manufacturer's notice of commercial marketing, which Sandoz said it has given.4

First, the court rejected Sandoz's claim that it had provided commercial marketing notice to Amgen, stating that as a matter of law Sandoz could not have provided a notice of commercial marketing because its product is not licensed under subsection (k): "Licensure of biological products as biosimilar or interchangeable."5 Second, the court stated that even if Sandoz had provided notice of commercial marketing to Amgen, Sandoz had nevertheless failed to comply with its obligations under 42 U.S.C. § 262(I)(2)(A), which states:

Not later than 20 days after the Secretary notifies the subsection (k) applicant that the application has been accepted for review, the subsection (k) applicant shall provide to the reference product sponsor a copy of the application submitted to the Secretary under subsection (k), and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application . . .6

The court also found that Sandoz had not established a "real and immediate injury or threat of future injury." The court noted that Amgen has not advised Sandoz that it intends to sue and Sandoz provided no evidence of the same. The court concluded that mere existence of a potentially adverse patent does not cause injury.7 Finally, citing Federal Circuit case law holding that future FDA applications fail to establish the "immediacy and reality" required for a declaratory judgment, the court found that there was no "case or controversy" created with Sandoz's allegations that it intends in the future to file an application for approval with the FDA.8

Considerations for Biosimilar IP Strategy

The district court applied the Biosimilar Act strictly. Because each and every information exchange step required under the Biosimilar Act had not been carried out, the court did not find the statutory authority to exercise subject matter jurisdiction under the Biosimilar Act. If this case is followed, subject matter jurisdiction will not be obtainable under the Biosimilar Act until, at the earliest, provision to the innovator of an accepted application pursuant to 42 U.S.C. § 262(I)(2)(A). More likely, subject matter jurisdiction will not be obtainable until the entire statutory information exchange and good-faith negotiations are completed pursuant to 42 U.S.C. § 262(I)(2)-(6).

The district court found that no case or controversy was present because of the stage of the product and the lack of direct threats of an infringement suit.

This decision severely limits the availability of declaratory judgment actions to achieve patent certainty and increases the importance of alternative strategies such as inter partes review (IPR) and post-grant review (PGR) to clear the way for biosimilar products and gain earlier patent certainty.

1 N.D. Cal. Nov. 12, 2013.

2 Order Granting Motion to Dismiss at 2.

3 Id. at 3, citing 42 U.S.C. § 262(I)(2)-(6).

4 Id. at 3.

5 Id. at 3.

6 Id. at 3-4.

7 Id. at 4.

8 Id., citing to Benitec Australia. Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1346 (Fed. Cir. 2007); Telectronics Pacings Sys., Inc. v. Ventritex, Inc., 982 F.2d 1520, 1527 (Fed. Cir. 1992).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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