The FTC Takes Action for Alleged Anticompetitive Citizen Petitioning Activities Surrounding Generic VANCOCIN

It is often said that companies have an absolute right to petition the government to take or not take action without fearing exposure to an antitrust suit.  This “right” is thought to be based on a series of Supreme Court decisions that are collectively commonly referred to as the “Noerr-Pennington doctrine.”  In fact, this “right” is not an absolute right, particularly in the context of Citizen Petitions filed with FDA.  A lawsuit filed and announced on February 7, 2017 demonstrates that the government can, and in appropriate cases will, take enforcement actions against companies that file what the government believes are sham Citizen Petitions.  This lawsuit thus serves as a warning that the government is concerned about the misuse of FDA’s Citizen Petition process.

The lawsuit in question was filed by the Federal Trade Commission (“FTC”) in the U.S. District Court for the District of Delaware and is styled as a Complaint for Injunctive and Other Equitable Relief.  The FTC alleges that ViroPharma Inc. (“ViroPharma”), before it was acquired by another company, abused FDA’s Citizen Petition process in violation of Section 5(a) of the FTC Act (15 U.S.C. § 45(a)) when ViroPharma used that process to petition FDA not to approve ANDAs for generic versions of VANCOCIN (vancomycin HCl) Capsules (approved under NDA No. 050606). The FTC had been investigating ViroPharma’s VANCOCIN petitioning activities for quite some time (see here and here).

“Facing the threat of generic competition to its lucrative franchise, ViroPharma inundated the FDA with regulatory and court filings—forty-six in all—to delay the FDA’s approval of generic Vancocin Capsules. That number is, by far, the most filings that any firm has ever made to the FDA concerning a single drug product,” writes the FTC in its Complaint.  “These repetitive, serial, and meritless filings lacked any supporting clinical data, which ViroPharma understood it needed to have any chance of persuading the FDA of its positions.  Even after a panel of sixteen independent experts unanimously rejected its unsupported claims in August 2009, ViroPharma continued its petitioning campaign to obstruct and delay the FDA’s generic approval review process.”  Although “FDA disposed of ViroPharma’s challenges as being ‘unsupported’ and ‘lack[ing] merit,’” in a Citizen Petition Response, “by that point, ViroPharma’s campaign had succeeded in delaying generic entry at a cost of hundreds of millions of dollars to patients and other purchasers,” says the FTC.

As readers of this blog might recall, ViroPharma’s petitioning activity resulted in what might be the longest Citizen Petition response of all-time: a monster 87-page response from FDA in April 2012 (see our previous post here).  A ViroPharma lawsuit against FDA followed (see our previous posts here and here), where the company was ultimately unsuccessful in challenging FDA’s bioequivalence requirements for generic VANCOCIN, as well as FDA’s denial of 3-year exclusivity for a VANCOCIN Supplement NDA the Agency approved on December 14, 2011. (Our firm represented ANDA applicant and intervenor Akorn in that lawsuit.) (We also note that ViroPharma found itself embroiled in years-long class action securities litigation after making certain statements about the prospect of FDA granting a period of 3-year exclusivity.)

Although there’s a lot that’s interesting in FDA’s Citizen Petition Response (Docket No. FDA-2006-P-0007), what’s particularly interesting for our purposes here is FDA’s admonition of ViroPharma’s petitioning activity. FDA comments as follows on pages 74-75 of the response:

FDA notes that you have petitioned FDA in a fashion analogous to interrogatories in civil discovery, demanding answers to more than 170 individual factual questions related to the Agency’s development of the vancomycin bioequivalence recommendation. This is an improper use of the citizen petition process.  The petition procedure enables parties to “petition the Commissioner to issue, amend, or revoke a regulation or order, or to take or refrain from taking any other form of administrative action.”  “Administrative action” is defined in relevant part as “every act, including the refusal or failure to act, involved in the administration of any law by the Commissioner.”  The “action” you request the Agency to take here – to respond directly to factual questions regarding certain Agency decisions – is secondary to your underlying challenge of those decisions.  In the interest of a thorough evaluation of the many issues you raise, however, FDA has incorporated these questions and the events referenced therein in its consideration of your petition.

Since then, we’ve seen other (and bolder) admonitions from FDA over a company’s petitioning activity, and even referrals to the FTC to investigate a company’s petitioning activity. For example, in a February 2013 denial of a September 2012 505(q) Citizen Petition (Docket No. FDA-2012-P-1028) concerning the approval of generic Buprenorphine drug products, FDA said that the Agency “referred this matter to the Federal Trade Commission, which has the administrative tools and the expertise to investigate and address anticompetitive business practices.”  Also, in an August 2013 denial of a March 2013 Citizen Petition (Docket No. FDA-2013-P-0247) concerning the approval of generic Zoledronic Acid Injection, in a section titled “Misuse of Petition Process,” FDA comments: “This Petition represents a particularly egregious misuse of the FDA citizen petition process for what appears to be the purpose of delaying generic competition.”  Most recently, in a January 2017 denial of a December 2016 505(q) Citizen Petition (Docket No. FDA-2016-P-4585) concerning FDA’s approval of generic versions of AMPYRA (dalfampridine) Extended-release Tablets, FDA comments, in part, in a section titled “Timing of the Petition” that:

As stated in FDA’s annual report to Congress required under section 505(q)(3) of the FD&C Act, FDA continues to be concerned that section 505(q) is not discouraging the submission of petitions that are intended primarily to delay the approval of competing drug products. This Petition was submitted on December 26, 2016, seventeen business days before the expiration of orphan-drug exclusivity associated with Ampyra, on January 22, 2017 (i.e., the earliest date on which ANDAs referencing Ampyra could be approved, provided that all other applicable requirements for approval are met). . . .  In short, under these circumstances, this Petition was submitted inappropriately close to the date of expiry of Ampyra’s orphan-drug exclusivity and the date on which ANDAs referencing Ampyra would become eligible for approval.

The FTC, in its Complaint against ViroPharma, paints quite the picture of alleged obstructionism, with a litany of actions and lawsuits that the FTC says “harmed competition and consumer welfare”:

Between March 2006 and April 2012, ViroPharma made at least forty-three submissions to the FDA and initiated three more proceedings in federal court to obstruct and delay the FDA’s approval of generic Vancocin Capsules, including:

• Twenty-four citizen petition filings submitted to the FDA;
• Seventeen public comments submitted to the FDA regarding the FDA’s in vitro dissolution guidance for generic Vancocin Capsules;
• A public comment submitted to the FDA regarding the FDA’s process related to publishing bioequivalence guidances;
• An sNDA for Vancocin Capsules claiming a three-year marketing exclusivity;
• A lawsuit challenging the FDA’s document production in response to ViroPharma’s Freedom of Information Act document requests;
• A lawsuit challenging the FDA’s in vitro dissolution guidance for another generic drug; and
• A lawsuit challenging the FDA’s response to ViroPharma’s Citizen Petition and related amendments and supplements, and the FDA’s approval of generic Vancocin Capsules.

The FTC is seeking declaratory and injunctive relief, including “a court order permanently prohibiting ViroPharma from submitting repetitive and baseless filings with FDA and the courts, and from similar and related conduct as well as any other necessary equitable relief, including restitution and disgorgement.”

The FTC’s action against ViroPharma is not the first to challenge a company’s petitioning activity as anticompetitive.  Over the years we’ve seen several lawsuits (usually from direct or indirect purchasers).  You can read up on some of those lawsuits in articles here and here, as well as in our previous posts here and here.