Recent Rulings Once Again Shine the Light on Sham Citizen Petition Antitrust IssuesFebruary 9, 2010
By Kurt R. Karst –
Two recent rulings out of the U.S. District Court for the Eastern District of Pennsylvania stemming from allegations about antitrust violations from the submission of citizen petitions have once again raised the issue of so-called “sham” citizen petitions and, insofar as there are allegations of violation of Section 2 of the Sherman Act, Noerr-Pennington immunity. In each case – In Re: Flonase Antitrust Litigation and Roxane Laboratories v. Smithkline Beecham – the plaintiffs allege that GlaxoSmithKline, Inc. (“GSK”) submitted a series of “sham” citizen petitions several years ago that delayed and restrained competition for generic versions of GSK’s FLONASE (fluticasone propionate) in violation of competition laws. And in each case the court denied (here and here) motions from GSK to dismiss the actions. The underlying competition issues have yet to be decided. Based on the recent track record of challenging “sham” citizen petitions, however, the plaintiffs in each case have a difficult road ahead.
Under the Noerr-Pennington doctrine, private entities are immune from antitrust liability in petitioning the government to influence the passage or enforcement of laws, even if the laws they advocate for would have anticompetitive effects. See Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers v. Pennington, 381 U.S. 657 (1965). Immunity extends to citizen petitions submitted to FDA. The Noerr-Pennington doctrine is grounded in the First Amendment protection of political speech, and “upon a recognition that the antitrust laws, ‘tailored as they are for the business world, are not at all appropriate for application in the political arena.’” City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 380 (1991) (quoting Noerr, 365 U.S. 127, 141 (1961)).
Noerr-Pennington immunity is not absolute, however. When petitioning activity “ostensibly directed toward influencing governmental action is a . . . sham to cover what is . . . nothing more than an attempt to interfere directly with the business relationships of a competitor[, then] the application of the Sherman Act would be justified.” Noerr, 365 U.S. at 144. The sham exception requires that a petition be “(i) ‘objectively baseless,’ and (ii) ‘an attempt to interfere directly with the business relationships of a competitor through the use of the governmental process – as opposed to the outcome of that process – as an anticompetitive weapon.’” Primetime 24 Joint Venture v. Nat’l Broad. Co., 219 F.3d 92, 100-01 (quoting Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60 (1993)).
In 2009, the U.S. District Court for the Southern District of New York declined to find that a March 2005 citizen petition submitted on behalf of Sanofi-aventis concerning generic versions of ARAVA (leflunomide) was “objectively baseless” and denied the plaintiff’s – Louisiana Wholesale Drug Co., Inc. (“LWD’s”) – Motion for Judgment as a Matter of Law. The ruling followed a jury verdict concluding that the petition was not “objectively baseless.”
LWD argued that the ARAVA petition is a prime example of a sham citizen petition. In the petition, Sanofi-aventis requested that:
(1) if an ANDA applicant is not seeking approval of a 100-mg leflunomide tablet that is bioequivalent to Arava 100-mg tablets, [FDA] require the applicant to perform in viva bioequivalence testing to confirm that five of its 20-mg tablets are bioequivalent to one Arava 100-mg tablet, and (2) the Agency withhold final approval of any leflunomide ANDA that either (a) does not seek approval of a 100-mg leflunomide tablet that is bioequivalent tom Arava 100-mg tablets or (b) does not establish in vivo bioequivalence between five 20-mg lleflunomide tablets and one Arava 100-mg tablet.
FDA uncharacteristically (at least at that time) denied the petition less than six months after it was submitted to the Agency and simulteneously approved ANDAs for generic ARAVA. FDA ruled that it “will require the labeling for generic leflunomide products to include the labeling approved for the RLD, Arava, conceming the use of a 100-mg loading dose,” and that Sanofi’s concern about certain generic labeling omissions or changes “is unfounded.”
In ruling for Sanofi, the court commented that “[i]n short, there was ample evidence introduced at trial that tended to show that the issue raised by the Citizen Petition was sufficiently novel and unsettled to permit an objectively reasonable drug company to ‘perceive some likelihood’ that the FDA would grant the relief requested.” A pretty high sham citizen petition standard to meet indeed!