FTC Claims Abuse in the Citizen Petition Process

Judge Richard Andrews of the U.S. District Court in Delaware recently heard oral arguments in FTC v. Shire ViroPharma Inc., a potentially game changing case for the pharmaceutical industry.  The Federal Trade Commission (FTC) brought this suit to challenge the use of serial, abusive citizen petitions. A citizen petition requests the FDA to “issue, amend, or revoke a regulation or order or take or refrain from taking any other form of administrative action.”  Federal regulations require the FDA to review and respond to every citizen petition it receives.  As a result, “the simple act of filing a petition, no matter how meritorious or frivolous that petition may be, automatically delays the approval of a generic drug.” While citizen petitions can be vehicles for expressing valid concerns, they also can give unscrupulous companies the ability to delay potential competition by filing meritless citizen petitions.

According to FTC’s complaint, ViroPharma engaged in unfair competition by serially petitioning the FDA to delay generic approval of Vancocin HCl Capsules used to treat colitis in violation of Section 5(a) of the FTC Act.  Annual sales of Vancocin are estimated to have been $113 million in 2015.  The FTC is seeking an injunction against ViroPharma, which it alleges filed 46 petitions regarding Vancocin HCL over a six year period.  According to the FTC, that is “the most filings that any firm has ever made to the FDA concerning a single drug product.”

ViroPharma argues that the injunction that the FTC seeks would violate its First Amendment right to petition.  Courts recognize that the First Amendment does not protect sham petitioning, such as the FTC is alleging occurred with ViroPharma.  The ViroPharma case poses an undecided issue: whether a pharmaceutical brand company’s strategy to delay FDA approval of a competing generic product exceeds the bounds of constitutionally protected speech and becomes anticompetitive based primarily on the excessive volume of petitions filed rather than on the merits of each individual petition’s content and whether a court can restrain future petition filings without conducting any review of any particular filing. ViroPharma moved to dismiss the complaint claiming that even if everything FTC alleges is true, their actions were lawful.

However he decides these issues, Judge Andrews’ decision may have far-reaching consequences in the pharmaceutical industry.