Analysis of Amgen v. Sandoz Federal Circuit Opinion

Earlier today, the Federal Circuit Court of Appeals issued its long-awaited decision in the remand of Amgen v. Sandoz from the U.S. Supreme Court.  In that decision, the Federal Circuit held that Amgen’s state law claims, based on the failure to follow procedures of the BPCIA patent dance, “are preempted on both field and conflict grounds.”  The decision does not address specifics of California law and seems to foreclose any attempts to enforce BPCIA provisions on state law grounds.

By way of background, Amgen had argued that (1) Sandoz waived any argument with regard to preemption by failing to pursue it before the District Court; and (2) the BPCIA does not preempt any existing state law remedies for the failure to comply with the patent dance provisions in § 262(l)(2)(A); and (3) Sandoz’s failure to comply with § 262(l)(2)(A) is both “unlawful” and an act of conversion under California state law.

On the issue of waiver, the Federal Circuit first decided that the preemption issue deserved immediate resolution because it presented a significant question of general impact or great public concern and, therefore, it exercised its discretion to address the issue without a lower court decision.  The court noted that Sandoz had preserved preemption as a defense in its answer, and Sandoz could thus raise the issue on remand.  While Amgen emphasized that Sandoz had not relied on preemption in its successful motion for judgment on the pleadings in the district court, the Federal Circuit thought the issue sufficiently important to address without a district-court decision on the subject:  “The issue of preemption is a significant question regarding the interpretation of the BPCIA.”  The court concluded that there was no prejudice to Amgen from deciding the preemption issue now rather than later.

Turning to the substantive issue of whether Congress had preempted any state law remedy for the failure to engage in § 262(l)(2)(A), the Federal Circuit concluded that there was a field preemption.  The court first noted that there is no presumption against preemption in this context.  States have not traditionally occupied the field of biosimilar patent litigation.  Patents exist under federal law, and federal courts have exclusive jurisdiction over patent cases.

The Federal Circuit then analyzed the BPCIA, finding the law to be a complex statutory scheme that carefully balances innovation and consumer interests.  Like the federal alien registration system in Arizona v. United States, 567 U.S. 387 (2012), the patent dance has complete governing standards for information exchanges and penalties for noncompliance.  The Federal Circuit held that the BPCIA leaves “no room for States to supplement it.”  The injunctive relief and damages that Amgen sought were not permitted under federal law and would conflict with the careful framework that Congress adopted.  Differing remedies between federal and state law as here are the very reason for field preemption according to the Federal Circuit.  The federal government thus fully occupied the field of biosimilar patent litigation.

The Federal Circuit also concluded that conflict preemption barred Amgen’s state law claims.  The court reasoned that Amgen’s state law claims clashed with the BPCIA, and the differences between the federal statutory scheme and the state law claims supported the conclusion that any state law claims otherwise available were preempted.  The court further reasoned that Congress must have acted intentionally in not providing for injunctive relief for a breach of the § 262(l)(2)(A) disclosure requirements.  The court held that state laws imposing such penalties would interfere with the “careful balance struck by Congress” and are preempted.  The Federal Circuit also noted that “compliance with the BPCIA’s detailed regulatory regime in the shadow of the 50 States’ tort regimes and unfair competition standards could dramatically increase the burdens on biosimilar applications beyond those contemplated by Congress.”

The Federal Circuit’s decision makes clear that there is no legal or equitable remedy, under either federal or state law, when a biosimilar applicant opts not to comply with § 262(l)(2)(A).