First Round of BPCIA Litigation: Declaratory Judgment Act Can’t Be Used to Avoid the “Patent Dance”
As the 1984 Hatch-Waxman Act did for generic small-molecule drugs, the Biologics Price Competition and Innovation Act of 2009 created a new regulatory pathway for the approval of biosimilar or interchangeable versions of biological medicines. The BPCIA also created a new legal framework for resolving associated patent disputes, sometimes called the “patent dance” because of its intricate sequence of exchanges. Five years after the passage of the BPCIA, litigation concerning the statute’s patent procedures has recently begun to reach the courts. To date, there have been four reported decisions (arising from three cases) addressing patent disputes between biosimilar makers and patent holders: a Northern District of California decision (Sandoz Inc. v. Amgen Inc., 2013 U.S. Dist. LEXIS 161233 (N.D. Ca. Nov. 12, 2013) that was affirmed by the Federal Circuit (773 F.3d 1274 (2014)) and two cases from the Southern District of New York (Celltrion Healthcare Co., Ltd. v. Kennedy Trust for Rheumatology Research, 2014 U.S. Dist. LEXIS 166491 (S.D.N.Y. Dec. 1, 2014) and Hospira, Inc. v. Janssen Biotech, Inc., 2014 U.S. Dist. LEXIS 166498 (S.D.N.Y. Dec. 1, 2014)).*
Although these are the first cases addressing BPCIA patent disputes, in none of them did the parties actually follow the statutory patent dispute resolution procedures. Rather, all were declaratory judgment actions filed by biosimilar makers (or their marketing partners), before the statutory patent dance had begun, seeking declarations that their anticipated biosimilar products would not infringe valid patents. The biosimilars makers contended that though their applications had not yet been accepted for review by FDA (the event which triggers the patent dance), they were far enough along to create concrete and immediate disputes with the holders of patents on the biological products.
The biosimilars makers’ efforts to bypass the BPCIA patent dance provisions have not been successful. In each of the reported cases, the patent holders moved to dismiss on the ground that the actions were premature. And in each case, the courts agreed and dismissed the complaints for lack of subject matter jurisdiction.
All three district court decisions relied on the same two grounds: first, there was no justiciable case or controversy under the Declaratory Judgment Act and Article III of the Constitution, and second, the biosimilar maker could not file a declaratory judgment action without first exhausting the BPCIA patent dispute resolution procedures. In the only case to reach the Federal Circuit, Sandoz v. Amgen, the Federal Circuit affirmed on justiciability grounds, and expressly declined to address the BPCIA. The other two dismissals, in the Celltrion and Hospira cases, were not appealed. The existence of a statutory exhaustion requirement therefore remains an open question as far as binding Federal Circuit precedent is concerned.
The reasoning of the cases, however, leaves little room for declaratory judgment actions before a biosimilar application is accepted for review by FDA.
The BPCIA expressly limits the ability of biosimilar applicants to bring declaratory judgment actions in certain circumstances (see 42 U.S.C. § 262(l)(9)). These express limitations, however, are conditioned on the completion, or failure to complete, particular steps in the statutory patent dance. The biosimilars makers contended that because the patent dance begins only after FDA accepts an application for review, the statute does not prohibit declaratory judgment actions filed before the patent dance starts. The district courts rejected this statutory argument, holding that the BPCIA procedures cannot be circumvented by filing an early declaratory judgment action.
Although the Federal Circuit did not address the statutory question in Sandoz v. Amgen, it relied on the fact that Sandoz had not yet filed its application to hold that there was no justiciable case or controversy. The Federal Circuit said that it was not “adopting a categorical rule” that no case or controversy could be demonstrated when no application had been filed. But it also said that it was “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.” In the Celltrion and Hospira cases, Judge Crotty of the Southern District of New York was similarly skeptical that a biosimilar maker could establish a ripe controversy before its application had been accepted for review. In light of this reasoning, it may end up being a moot point whether the BPCIA independently prohibits pre-application declaratory judgment actions. Based on the case law so far, such actions do not appear to be justiciable under Article III.
Because Article III justiciability is a fact-intensive inquiry, and because BPCIA’s patent dance contains permutations that have not yet been addressed by the courts, there is likely to be further litigation over the availability of declaratory judgments under the BPCIA. The first round of BPCIA litigation, however, suggests that biosimilar makers – or, for that matter, patent holders – may not avoid the BPCIA patent dance simply by filing declaratory judgment actions before it starts.
*Patterson Belknap was co-counsel for the declaratory judgment defendants in the Hospira action. As discussed in the text, the action was dismissed and the dismissal was not appealed.