United States: Federal Circuit Finds That FDA Citizen Petition Could Give Rise To Antitrust Liability

In Tyco Healthcare Group LP v. Mutual Pharmaceutical Co., Inc., the Federal Circuit remanded-in-part for the district court to determine whether Tyco's citizen petition to the FDA gave rise to antitrust liability. Judge Newman wrote a dissenting opinion warning against the chilling effect that antitrust liability could have on a citizen's right to communicate with the FDA on matters relating to drug safety and efficacy.

Mutual's ANDA And Tyco's Citizen Petition

The case centered on Tyco's temazepam product, which it markets under the brand name Restoril, and Mutual's Abbreviated New Drug Application (ANDA) seeking FDA approval to market a generic version of Restoril. According to the Federal Circuit decision, the Tyco patents listed in the Orange Book all recite "7.5 mg formulations of temazepam having a specific surface area between 0.65 and 1.1 square meters per gram (m2/g)." In its ANDA, Mutual sought approval of a temazepam product having "a specific surface area of not less than 2.2 m2/g," e.g., outside of the range recited in the Tyco patents.

In the ensuing ANDA litigation, the district court granted judgment of non-infringement based on Mutual's ANDA, but the litigation continued on the issue of invalidity. The day after the non-infringement judgment, Tyco filed a citizen petition with the FDA that "urged the FDA to change the criteria for evaluating the bioequivalence of proposed generic temazepam products in order to 'help ensure therapeutic equivalence' of generic temazepam to Restoril."

In particular, Tyco alleged that "the safety and efficacy of Restoril was likely linked to its pharmacokinetic profile, and that changes to parameters such as specific surface area in a generic version could alter that profile and thereby affect the safety and efficacy of the generic version as compared to Restoril." Thus, Tyco urged the FDA to adopt proposed guidelines that "would require generic temazepam manufacturers to demonstrate bioequivalence to Restoril through a series of pharmacokinetic parameters considerably more extensive and complex than the parameters traditionally required by the FDA for a bioequivalence determination."

Barely one month later, while Tyco's citizen petition was still pending, the FDA approved Mutual's ANDA.

A few months later, FDA denied Tyco's citizen petition.

In the ongoing district court litigation, Mutual alleged that Tyco's citizen petition was a "sham" that constituted an antitrust violation. The district court rejected that line of argument, and ruled for Tyco on all of Mutual's antitrust counterclaims.

The Federal Circuit Decision

The Federal Circuit opinion was authored by Judge Bryson and joined by Judge Moore. Judge Newman filed a dissenting opinion.

Judge Bryson explained the antitrust liability for "sham" litigation as follows:

A party is ordinarily exempt from antitrust liability for bringing a lawsuit against a competitor. That principle is known as "Noerr-Pennington immunity," because it originated with the Supreme Court's decisions in Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), and United Mine Workers of Am. v. Pennington, 381 U.S. 657 (1965). There is a recognized exception to Noerr-Pennington immunity for "sham litigation," which the Supreme Court has defined as litigation that (1) is "objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits" (the objective element), and (2) is motivated by a desire "to interfere directly with the business relationships of a competitor" (the subjective element). Prof'l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60-61 (1993) ("PRE").

The district court had rejected the sham litigation claim related to the citizen petition on the ground that the entire doctrine applies only to litigation, but the Federal Circuit majority noted that the doctrine has been applied to administrative petitions, including citizen petitions. Thus, the Federal Circuit considered the claim under the two-part PRE test.

With regard to part (1), the Federal Circuit majority found that the FDA decision denying the petition raised a question as to whether it was "objectively baseless":

Particularly probative of whether the citizen petition was reasonable is the FDA's response, which denied the petition in terms indicating that, in the FDA's view, it was wholly without merit. The FDA found that Tyco had "provided no evidence from clinical trials, pharmacokinetic studies, bioequivalence testing, or any other source . . . . Instead the petition relies entirely on uncorroborated generalities and theoretical speculation to support its critical point." The FDA also concluded that the petition "fail[ed] to provide any evidence at all about the existence, extent, or significance of surface area variations for any other generic temazepam products at any dosage strength."

With regard to part (2), the Federal Circuit majority found that the timing of the citizen petition (filed one week before the expiration of the 30 month stay of approval of Mutual's ANDA) and an internal email between Tyco's research and development department and its vice president of intellectual property that the majority found could support a finding that "Tyco knew the theory in its citizen petition lacked merit" constituted "sufficient evidence from which a reasonable finder of fact could determine that Mutual had satisfied the subjective element necessary to show that Tyco's citizen petition was a sham."

Thus, the Federal Circuit majority found that the district court should not have granted summary judgment against Mutual on the citizen petition issue. However, the Federal Circuit questioned whether Mutual had proven any antitrust injury from the citizen petition. Thus, the Federal Circuit indicated that the district court "should determine whether Mutual suffered an anticompetitive harm in the form of a delay in the approval of its ANDA due to the filing of Tyco's citizen petition with the FDA." If not, Tyco would be entitled to summary judgment.

Judge Newman's Dissent

Judge Newman disagreed that a citizen petition can give rise to antitrust liability:

No antitrust law was violated by Tyco's communication to the FDA. The FDA is charged with establishing and securing drug safety and efficacy, for a new drug and for its generic counterparts. There can be no doubt as to a citizen's right to communicate with the government on matters of concern. .... Such right is not eliminated when the petitioner is in a competitive relationship.

Citizen Petition: Strategy Or Public Service?

Innovator drug companies may use citizen petitions to encourage the FDA to make it more difficult for competitors to enter the market, but they also may use citizen petitions to raise important safety and efficacy concerns. Innovator drug companies often are in the best position to recognize and understand the risks associated with the drug at issue and proposed generic versions (which, as this case illustrates, are not necessarily identical to the approved brand product). While innovator companies may not always be acting altruistically, their voices in these matters could be important to public health. If the FDA is able to review citizen petitions promptly (as it did here), do we really want every denial to carry a risk of antitrust litigation?

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