United States: Update: Sandoz And Celltrion Decline The Invitation To Dance: Biosimilars Challenge The Applicability Of The BPCIA’s Exchange Provisions Before Bringing Suit

In our previous blog post of November 11, 2014, we noted that Celltrion had filed a declaratory judgment action against Kennedy Trust for Rheumatology Research for invalidity of certain patents covering methods of treating rheumatoid arthritis.  Celltrion Healthcare Co. v. Kennedy Trust for Rheumatology Research, Case No. 1:14-cv-02256-PAC (S.D.N.Y. 2014).  Unlike the other cases in which the biosimilar applicants challenged patents owned by reference product sponsors, this case involved a biosimilar applicants' challenge to a patent that was not owned by the reference product sponsor (Janssen Biotech, Inc.), but by a licensor (Kennedy Trust for Rheumatology Research).  Janssen had a non-exclusive license to the Kennedy Trust patents in suit and Celltrion had voluntarily dismissed its declaratory judgment action of patent invalidity against Janssen on October 23, 2014.

On December 1, Judge Crotty of the U.S. District Court for the Southern District of New York dismissed Celltrion's action against Kennedy Trust.  In dismissing the case, Judge Crotty found no justiciable case or controversy that gives rise to declaratory judgment jurisdiction and that Celltrion's "dispute against Kennedy is truly unripe" as Celltrion had yet to properly engage in the BPCIA dispute resolution procedures:

While it is true that the BPCIA envisions the dispute resolution process to involve the applicant and the reference product sponsor, the BPCIA does provide for a level of involvement by the patent owner, see 42 U.S.C. § 262(1)(3)(A), (l)(l)(B)(iii).  Moreover, the procedures of the BPCIA are designed to enable the narrowing of patent disputes and the crystallization of infringement claims.  As Kennedy asserts, Celltrion's argument simply demonstrates that its dispute against Kennedy is truly unripe:  before Celltrion can market Remsima, it must resolve any disputes regarding the patents involved with Janssen, the reference product sponsor.

Notably, the court found that it lacked subject-matter jurisdiction for the additional reason that Celltrion had not yet participated in the BPCIA "patent dance."  The court noted that "Once the time for participation in the BPCIA dispute resolution process occurs, and once any disputes between Celltrion and Janssen arise and are clarified, then a ripe case or controversy may exist between Celltrion and Kennedy."

The same court issued a similar order the next day in a case also involving Remicade®, filed by Hospira.  The court reasoned:

Despite Hospira's best attempts  to twist the BPCIA to serve its interests without hindering  its pursuit of litigation, this effort fails. As the Court found in Celltrion, even if the Court were to find that Hospira had engaged in meaningful  preparation  and that Janssen had sufficiently demonstrated an intent to pursue its patent rights against Hospira, which it has not, the existence of the BPCIA mechanisms for dispute resolution counsels against the exercise of jurisdiction over this complaint.  The BPCIA purposefully ties the dispute resolution  process to events throughout  the biosimilar approval process, ensuring that full information  exchange occurs at relevant and crucial periods during the approval process. As defendants argue, adjudicating this case would enable any biosimilar developer  to partner with another distributor  and thereby skirt the dispute resolution  procedures Congress  purposefully enacted for use in such situations.  Indeed, Hospira's  argument that it is not an applicant  simply suggests that Hospira's claims are too attenuated  from any crystallized  dispute between the relevant  parties, further demonstrating the lack of a justiciable  case or controversy

See Hospira, Inc. v. Janssen Biotech, Inc. et al., Civil No. 14-7079 (B.D.N.Y. December 1, 2014).

Shortly thereafter, the Federal Circuit issued a ruling on the appeal by Sandoz from the order of the U.S. District Court for the Northern District of California in Sandoz vs. Amgen, discussed in our blog post of November 14, 2013.

This decision is the first from an appellate court involving the complex patent resolution provisions of the BPCIA.  Unfortunately for BPCIA-watchers, the Federal Circuit did not delve into the BPCIA's provisions, but instead affirmed a 2013 district court decision dismissing the case on the ground that the case was not an actual case or controversy and, hence, not open for declaratory judgment.

It affirmed the district court's dismissal of Sandoz's (the biosimilar applicant) declaratory judgment action of invalidity and unenforceability of a reference product sponsor's (Amgen) patents covering its blockbuster drug Enbrel®.  The district court had granted Amgen's motion to dismiss on two separate grounds: (1) that it lacked subject matter jurisdiction because no immediate, real controversy existed between the parties and (2) that the BPCIA prohibited Sandoz's suit as Sandoz had not yet filed an FDA biosimilar application and thus had not participated in the BPCIA "patent dance."

The Federal Circuit affirmed solely on the grounds that it lacked subject matter jurisdiction as there was not actual a case or controversy, but declined to address the district court's interpretation that the BPCIA precluded Sandoz's declaratory judgment suit, stating:

We are aware of no decision in which we have found a case or controversy when the only activity that would create exposure to potential infringement liability was a future activity requiring an FDA approval that had not yet been sought.

Sandoz Inc. v. Amgen Inc.,  Civil No. 2014-1695 (Fed. Cir. December 5, 2015), page 13.  It went on to note:

Congress has not specifically provided for suits where the potential infringer has not filed an FDA application for the approval required before it can undertake the activity that might expose it to liability.

Attempts by biosimilar applicants to avoid the "patent dance" provisions of the BPCIA have, to date, been unsuccessful.  In these cases, the biosimilar had not filed an application at the time of filing its declaratory judgment action, thus making it particularly easy for the court to dismiss on jurisdictional grounds.  As it appears that biosimilars are loathe to engage in the "patent dance," it will be interesting to see how the courts specifically address this issue in other contexts.

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