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Amgen Inc. v. Sandoz, Inc.

United States District Court, N.D. California

March 19, 2015

AMGEN INC., et al., Plaintiffs,
SANDOZ INC., et al., Defendants.


RICHARD SEEBORG, District Judge.


This dispute arises from conflicting interpretations of the Biologics Price Competition and Innovation Act ("BPCIA"), which established an abbreviated pathway for producers of biologic products deemed sufficiently similar to products already on the market ("biosimilars") to receive Food and Drug Administration ("FDA") license approval. See 42 U.S.C. § 262(k), ( l ). The BPCIA allows a drug maker who demonstrates the biosimilarity of its product to one which has already received FDA approval (the "reference product") to rely on studies and data completed by the reference product producer ("reference product sponsor"), saving years of research and millions in costs. Through its amendments to both 42 U.S.C. § 262 and 35 U.S.C. § 271, the BPCIA also enabled a process for resolving patent disputes arising from biosimilars, whereby applicants and sponsors may participate in a series of disclosures and negotiations aimed at narrowing or eliminating the prospect of patent litigation. While engagement in the process creates a temporary safe harbor from declaratory judgment actions, a party's failure to participate permits the opposing party to commence patent litigation.

Plaintiffs Amgen, Inc. and Amgen Manufacturing, Ltd. (collectively "Amgen") have produced and marketed the biologic product filgrastim under the brand-name Neupogen since 1991. They aver that defendants Sandoz, Inc., Sandoz International GMBH, and Sandoz GMBH, [1] who in July 2014 applied to the FDA to receive biosimilar status for their filgrastim product in order to begin selling it in the United States, behaved unlawfully under 42 U.S.C. § 262 by failing to comply with its disclosure and negotiation procedures. Amgen alleges these transgressions give rise to claims under California's Unfair Competition Law ("UCL") and for conversion, as well as patent infringement as to U.S. Patent No. 6, 162, 427 ("427 patent"). Sandoz counterclaims for declaratory judgment adopting its interpretation of the BPCIA and finding its conduct permissible as to Amgen's UCL and conversion claims; and for noninfringement and invalidity of the 427 patent. The parties each filed cross-motions for partial judgment on the pleadings.[2] Amgen, in addition, requests a preliminary injunction to forestall Sandoz's market entry until a disposition on the merits has issued.[3]

While there is no dispute that Sandoz did not engage in 42 U.S.C. § 262's disclosure and dispute resolution process, its decision not to do so was within its rights. Amgen's motion for partial judgment on the pleadings or partial summary judgment in the alternative is, accordingly, denied, and its UCL and conversion claims are dismissed with prejudice. As the BPCIA does not bar Sandoz's counterclaims for noninfringement and invalidity of the 427 patent, these claims may advance. In addition, Amgen's motion for preliminary injunction is, accordingly, denied.


A. Relevant Provisions of the BPCIA

The dispute presented in the pending motions exclusively concerns questions of law- specifically, of statutory interpretation, as to several provisions in 42 U.S.C. § 262 and 35 U.S.C. § 271(e), both amended in 2010 via Congress's enactment of the BPCIA. The Act's stated purpose was to establish a "biosimilars pathway balancing innovation and consumer interests." Biologics Price Competition and Innovation Act, § 7001(b), Pub. L. No. 111-148, 124 Stat 804 (2010). At issue in particular are two central provisions of 42 U.S.C. § 262: (1) paragraphs ( l )(2)-( l )(6), which lay forth the disclosure and negotiation process that commences with an applicant sharing its Biologic License Application ("BLA") and manufacturing information with the reference product sponsor within twenty days of receiving notice that the FDA has accepted the application for review; and (2) paragraph ( l )(8), requiring an applicant to give the sponsor at least 180 days' advance notice of the first commercial marketing of its biosimilar. Understanding these particular provisions requires a review of the statutory context.

Subsection (a) of 42 U.S.C. § 262 sets forth standards for FDA approval of biologic products. Among other requirements, applicants must demonstrate that their products are safe, pure, and potent. Subsection 262(k) establishes an abbreviated pathway by which a product "biosimilar" to one previously approved under subsection (a) (a "reference product") may rely on the FDA's prior findings of safety, purity, and potency to receive approval. According to subsection (k), any entity which demonstrates its biologic product is sufficiently similar to a reference product may apply for an FDA license to market its biosimilar product. Applications must include publicly available information as to the FDA's prior determination of the reference product's safety, purity, and potency, and may include additional publicly available information. 42 U.S.C. § 262(k)(2)(A).

The FDA may not approve a biosimilarity application until twelve years after the date on which the reference product was first licensed under subsection (a); in other words, reference products are entitled to twelve years of market exclusivity. Biosimilarity applicants are precluded from even submitting applications under subsection (k) until four years after the licensing of the reference product. 42 U.S.C. § 262(k)(7)(A), (B).

Subsection 262( l ) sets forth a process and timeline by which an applicant and reference product sponsor "shall" participate in a series of informational exchanges regarding potential disputes over patent validity and infringement. As long as both parties continue to comply with these disclosure and negotiation steps, neither may bring a declaratory action regarding patent validity, enforceability, or infringement against the other until the applicant provides notice of its upcoming first commercial marketing. 42 U.S.C. § 262( l )(9)(A)-(C).

The BPCIA also added to 35 U.S.C. § 271, which governs patent infringement, a provision rendering it "an act of infringement to submit" a subsection (k) application based on a patent the reference product sponsor identified (or could have identified) as infringed by the applicant's biosimilar product under subsection ( l )'s disclosure and negotiation procedures. 35 U.S.C. § 271(e)(2)(C). In addition to enabling a reference product sponsor to initiate an infringement action for an applicant's reliance on its product, subsection 271(e) sets forth remedies for instances in which liability for infringement is found. Where the sponsor identified or could have identified the infringed patent on its initial disclosure to the applicant under 42 U.S.C. § 262( l )(3), injunctive relief may be granted to prevent such infringement, while damages or other monetary relief may only be awarded if there has been commercial manufacture, use, offer to sell, or sale within the United States of an infringing product. Other than attorney fees, these are "the only remedies which may be granted by a court for [infringement of such a patent]." 35 U.S.C. § 271(e)(4)(B)-(D). Where, however, the infringed patent appears on the parties' agreed-upon list of patents that should be subject to an infringement action, 42 U.S.C. § 262( l )(4), or their respective lists of such patents, 42 U.S.C. § 262( l )(5)-and the sponsor did not sue within the time frame prescribed in subsection ( l ), had its suit dismissed without prejudice, or did not prosecute its suit to judgment in good faith-the "sole and exclusive remedy" for infringement "shall be a reasonable royalty." 35 U.S.C. § 271(e)(6).

Together, 42 U.S.C. § 262( l ) and 35 U.S.C. § 271(e) reflect an integrated scheme that provides consequences for the choice either party makes at each step of subsection ( l )'s information exchange to carry on the process, or end it and allow patent litigation to commence. At one step in this series of tradeoffs, for example, the applicant has sixty days to respond to a list of patents the sponsor flagged in the prior step as potential grounds for an infringement suit. The applicant, according to 42 U.S.C. § 262( l )(3)(B)(ii), must provide the factual and legal basis for its beliefs that any patents flagged by the sponsor are invalid, unenforceable, or not infringed by its biosimilar. If the applicant does not complete this step, however, the sponsor may bring a declaratory judgment action for any patents it flagged in the prior step. 42 U.S.C. § 262( l )(9)(B). Conclusion of the process yields a list of patents on which a sponsor may bring suit within thirty days. 42 U.S.C. § 262( l )(6). Should the sponsor elect not to do so, it may collect only a reasonable royalty. 35 U.S.C. § 271(e)(6)(A). Thus, to continue the process or to terminate it confers advantages and disadvantages the parties must weigh at each step.

B. Procedural Background

Since 1991, Amgen has produced and marketed the biologic product filgrastim under the brand-name Neupogen as a result of the FDA's approval of Amgen's application for a license to market the product pursuant to BLA No. 103353. Neupogen was originally approved for decreasing the incidence of infection, as manifested by febrile neutropenia, in patients with nonmyeloid malignancies receiving myelosuppressive anticancer drugs associated with a significant incidence of severe neutropenia with fever. The FDA subsequently approved additional therapeutic indications for the drug, such as aiding faster engraftment and recovery for bone marrow transplant patients.

On July 7, 2014, Sandoz received notice that the FDA had accepted for review its BLA for approval of a biosimilar filgrastim product under subsection (k). The next day, it mailed a letter to Amgen offering to share a copy of its BLA under the protection of a proposed Offer of Conditional Access; notifying Amgen that it believed it would receive FDA approval in the first or second quarter of 2015; and stating its intent to market its biosimilar product immediately thereafter. Sandoz sent Amgen a second letter on July 25 again offering conditional access to its BLA. It also asserted therein that the BPCIA entitled it to opt out of subsection ( l )'s procedures, and that Amgen could instead procure information via an infringement action. Amgen, it appears, declined both offers to view Sandoz's biosimilarity BLA under Sandoz's proposed terms. Only after a protracted dispute did the parties, on February 9, 2015, enter a stipulated protective order providing Amgen protected access to Sandoz's BLA and related application materials. They did not engage in any further patent information exchanges.

Amgen initiated this action on October 24, 2014, asserting claims of (1) unlawful competition under Cal. Bus. & Prof. Code § 17200 et seq. based on two alleged violations of the BPCIA; (2) conversion; and (3) infringement of Amgen's 427 patent. According to Amgen, failure to comply with subsection ( l )'s disclosure and negotiation procedures and its interpretation of subparagraph ( l )(8)(A)'s 180-day notice requirement each comprise an unlawful business practice actionable under the UCL. In addition, Amgen contends, Sandoz's use of ...

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