Third Circuit Affirms Denial of Injunction Blocking Cigna Unit's Stelara Biosimilar

The panel — Circuit Judges Thomas Hardiman, Cheryl Ann Krause and Arianna Freeman — rejected each of Janssen's four arguments for why the District Court erred. Judge Krause wrote the opinion.

"Rarely do courts grant injunctive relief before the plaintiff secures a judgment," Krause wrote. "And even more rarely is that relief granted in contract cases, where it is usually the case that monetary damages can later be quantified."

The dispute traces to a settlement ending earlier litigation over Samsung's SB17, a biosimilar of Janssen's ustekinumab, which is marketed as Stelara and generated more than $70 billion in sales over a fifteen-year effective patent life. The settlement gave Samsung a limited patent license that barred sublicensing except to "commercialization partners to import, sell and offer to sell SB17 Product on behalf of" Samsung.

Samsung used that exception to sublicense to Sandoz AG, which markets SB17 as Pyzchiva. It then entered a Private Label Distributor Agreement and a separate Sublicense Agreement with Quallent Pharmaceuticals Health LLC, a subsidiary of Cigna Group. Quallent was designated "as a commercialization partner" and granted a "non-exclusive, non-transferable sublicense" to sell SB17 "under Quallent's own label."

Janssen sued, arguing the Quallent arrangement fell outside the "on behalf of" exception and would irreparably harm its market share, pricing and negotiating leverage because Cigna controls roughly 23% of the U.S. prescription market. U.S. District Judge Georgette Castner found Janssen likely to succeed on its breach-of-contract and implied covenant claims but concluded the asserted harms were compensable or "too speculative."

The panel rejected Janssen's contention that loss of market share in a complex market is categorically irreparable. Janssen relied on Novartis Consumer Health Inc. v. Johnson & Johnson-Merck Consumer Pharmaceuticals Co., but Krause wrote that the case arose "in the distinct context of the Lanham Act during an era in which this Court and others applied a presumption of irreparable harm," a presumption the Third Circuit "subsequently disavowed" in Ferring Pharmaceuticals Inc. v. Watson Pharmaceuticals Inc. "Damages are always the default remedy for breach of contract," Krause wrote, quoting the Supreme Court's plurality opinion in United States v. Winstar Corp.

On Janssen's argument that the District Court wrongly required damages to be "impossible" rather than merely difficult to calculate, the panel said the District Court had applied the standard from ECRI v. McGraw-Hill Inc., which asks whether calculation is "impracticable" — meaning "practically impossible." Krause called Janssen's position "an odd argument, to say the least, given that Janssen itself embraced 'impossibility' as the proper standard below."

The panel also upheld the District Court's finding that the claimed loss of negotiating leverage against Cigna was "too speculative." "The bald assertion of irreparable harm from a loss of negotiating leverage and the 'domino effect' that loss allegedly would have on a movant's business does not clear that threshold," Krause wrote, citing Acierno v. New Castle County.

Janssen's expert, Dr. Robert Popovian, pointed to the effect of private-label biosimilars on Humira, testifying that "[i]f Quallent introduces its STELARA biosimilar, the results will be similar." Samsung's expert, Dr. DeForest McDuff, characterized Humira's market-share losses as "relatively modest, and at the very least . . . measurable." The District Court credited McDuff and the panel found no clear error.

Finally, the panel rejected the argument that the District Court imposed an improper "severity" threshold when it declined to find that Quallent's entry would "crush the market." Krause wrote that the court was distinguishing an Illinois district court case and "was not adopting a particular percentage threshold for lost market share."

"Janssen has not established that it is so reliant on Stelara sales that it would not be able to 'easily absorb any short-term harm before a trial on the merits,'" Krause wrote, quoting McDuff's declaration.

Lisa S. Glasser of Irell & Manella argued for Janssen. Hagan Scotten of Hueston Hennigan argued for Samsung Bioepis.

The case is Johnson & Johnson v. Samsung Bioepis Co. Ltd., No. 25-1831, in the U.S. Court of Appeals for the Third Circuit.