United States: Federal Circuit Speaks Regarding State Law Remedy For BPCIA's "Patent Dance"

On December 14, 2017, the Federal Circuit issued a unanimous decision in Amgen Inc. v. Sandoz Inc., No. 2015-1499,1 interpreting whether the Biologics Price Competition and Innovation Act (BPCIA) is subject to state law claims.2  Previously, the U.S. Supreme Court held that: (1) “an injunction under federal law is not available to enforce 42 U.S.C. § 262(l)(2)(A)”;3 and (2) “a biosimilar applicant may provide the notice required by 42 U.S.C. § 262(l)(8)(A) either before or after receiving FDA approval.”4  However, the Court declined to rule on what, if any, remedies are available under a state law claim for a biosimilar applicant’s failure to engage in the information exchange under 42 U.S.C. § 262(l)(2)(A) and remanded this issue to the Federal Circuit.5  The Federal Circuit, on remand, determined that the BPCIA preempts Amgen’s state law claims.

Judge Lourie authored the opinion, with Judges Newman and Chen sitting on the panel.  As an initial matter, the panel assumed that a remedy existed under state law.  Both Amgen and Sandoz had asked the panel to determine whether: (1) Sandoz waived its preemption appeal defense to its state law claims; (2) the BPCIA preempts state law remedies for a failure to comply with § 262(l)(2)(A); (3) such failure is “unlawful” under the California Unfair Competition law or an act of conversion; and (4) Sandoz preserved its conversion claims.6  But the Federal Circuit declined to rule on the latter two issues, quoting the prior Supreme Court opinion that it is “free to address the pre-emption question first by assuming that a remedy under state law exists.”7 

With this assumption in place, the panel affirmed the district court’s dismissal of Amgen’s claims.  The Federal Circuit determined that while Sandoz did not forfeit its preemption defense, the BPCIA preempts state law remedies for an applicant’s failure to comply with the information exchange.  In reaching its ultimate decision regarding preemption, the Federal Circuit held that both field and conflict preemption exist to bar any state law remedy. 

I. Sandoz Did Not Waive its Preemption Arguments Regarding State Law Claims

On appeal, Amgen first contended that Sandoz had waived its preemption argument by failing to argue it at the district court level, and this failure precluded any additional assertions by Sandoz.  The Federal Circuit disagreed. 

Judge Lourie’s opinion found that Sandoz did not waive its preemption argument, even though neither the district court nor the appellate court had addressed preemption on the merits.  Noting that an affirmative defense is usually waived if not raised in a pleading, motion, or at trial, the panel stated that “[a]ppellate courts . . . have discretion to decide when to deviate from this general waiver rule.”8  Under Federal Circuit precedent, an issue not raised below may be considered on appeal if it falls within one of five reasons.9  Here, Judge Lourie found that the fifth reason, whether “the interest of substantial justice is at stake,” was “especially compelling” in the context of preemption and the BPCIA.10 

The Federal Circuit supported its decision to exercise its discretion by stating that “[t]he Supreme Court expressly invited [them] to do so.”11  Moreover, it found that the issue of preemption had been fully briefed, and it presented a “significant question[] of general impact or of great public concern.”12  Finally, the panel observed that Sandoz had “preserved its ability to assert preemption by pleading the defense in its answer.” 13 

II. Field and Conflict Preemption Abrogate State Law Remedies Under the BPCIA

Paragraph (l)(2)(A) (the “information exchange” provision) of the BPCIA provides that:

Not later than twenty 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.14

The Supremacy Clause states that federal law “shall be the supreme Law of the Land,” and state law is therefore preempted through express preemption, field preemption, or conflict preemption.15  The Federal Circuit noted that express preemption was not at issue on appeal and devoted its analysis as to whether the latter forms of preemption apply.  The Court determined they do.

Beginning with the applicability of field preemption, Amgen argued that the BPCIA does not provide “a meaningful remedy for the state recognized interests” impacted by Sandoz’s failure to engage in the information exchange.16  Sandoz countered, stating the BPCIA’s framework exhibits clear Congressional intent that federal law occupies the field of biosimilar patent litigation.17  The Federal Circuit agreed with Sandoz.

Judge Lourie observed that biosimilar litigation is “hardly a field which the States have traditionally occupied.”18  This is because: (1) “patents are inherently federal in character”; (2) federal courts have exclusive jurisdiction over patent matters; (3) the exclusive authority to license biosimilars rests with the FDA; and (4) the statutory framework of the BPCIA, as described by the Supreme Court, is carefully calibrated to resolve complex questions of patent infringement.19  The panel also drew a parallel to a recent Supreme Court decision where a similarly comprehensive federal act addressing alien registration preempted that field.20 

The Federal Circuit further rejected Amgen’s arguments, noting that the penalties Amgen seeks to impose on Sandoz through state law are not provided for in the BPCIA for failure to comply with § 262(l)(2)(A).21  The Court stated that “[b]ecause § 262(l)(9)(C) provides the exclusive federal remedy for failure to comply with § 262(l)(2)(A), federal law does not permit injunctive relief or damages for such failure.”22  Likewise, the Court determined that Amgen’s reliance on past precedent where patent law did not preempt related state law claims was misplaced.23  Judge Lourie observed that the field at issue in this case is not patent law in general, but biosimilar patent litigation—a field “fully occupied” by the federal government.24  “Assuming . . . that there are any state-recognized interests in play here, California law must give way to federal law.”25

With respect to conflict preemption, Amgen argued that the BPCIA does not conflict with its state law claims, as these two bodies of law are not inapposite.26  Further, Amgen contended that state law claims supplement the statutory framework of the BPCIA and are independent of the remedies provided by the federal act.27  The Federal Circuit disagreed, finding that “conflict preemption also bars Amgen’s state law claims.”28 

The panel held that Amgen’s state law claims do “clash” with the BPCIA and the differences between the two regimes’ remedies, in fact, support a conclusion that “those claims are preempted.”29  In the Court’s opinion, allowing state law claims “could ‘dramatically in-crease the burdens’ on biosimilar applicants beyond those contemplated by Congress in enacting the BPCIA.”.30  As such, the Court held that “state laws imposing those penalties ‘would interfere with the careful balance struck by Congress.’”31

III. Conclusion

The Federal Circuit’s decision in Amgen v. Sandoz provides some clarity regarding the consequences of a biosimilar applicant’s failure to abide by the information exchange provision of § 262(l)(2)(A)—state law causes of action are not available. 


1 No. 2015-1499 (Fed. Cir. Dec. 21, 2017).

2 Pub. L. No. 111-148, §§ 7001-7003, 124 Stat. 119, 804-21 (2010); see also 42 U.S.C. § 262(k), (l).

3 Slip op. at 5; see also 42 U.S.C. § 262(l)(2)(A).

4 Slip op. at 5; see also 42 U.S.C. § 262(l)(8)(A).

5 Slip op. at 5.

6 Id. at 12. 

7 Id. at n.1. (quoting Sandoz, 137 S. Ct. at 1677).

8 Id. at 13.

9 Id. (quoting L.E.A. Dynatech, Inc. v. Allina, 49 F.3d 1527, 1531 (Fed. Cir. 1995)). 

10 Id. at 13-14.

11 Slip op. at 14.

12 Id. at 14-15 (internal quotations omitted). 

13 Id. at 15.

14 42 U.S.C. § 262(l)(2)(A) (emphasis added).

15 U.S. Const. art. VI, cl. 2; Slip op. at 16-17. 

16 Slip op. at 18. 

17 Id. 

18 Id. at 18-19 (internal quotations omitted). 

19 Id. at 19 (internal quotation omitted). 

20 Id. (discussing Arizona v. United States, 567 U.S. 387, 401 (2012)).

21 Id. at 20.

22 Slip op. at 20 (citing Sandoz, 137 S. Ct. at 1675).

23 Id. at 20-21.

24 Id. at 21.

25 Id. (internal quotations omitted).

26 Id.

27 Slip op. at 22.

28 Id.

29 Id.  

30 Id. (quoting Buckman Co. v. Platingiffs’ Legal Comm., 531 U.S. 341, 350 (2001).

31 Id. (quoting Arizona, 567 U.S. at 405-06).

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