FTC Sues Shire ViroPharma Inc. for Interfering with FDA Approval of Generic Competitors | Practical Law

FTC Sues Shire ViroPharma Inc. for Interfering with FDA Approval of Generic Competitors | Practical Law

On February 7, 2017, the Federal Trade Commission (FTC) filed antitrust charges against Shire ViroPharma Inc. alleging anticompetitive tactics aimed at delaying entry of generic drug competition for its antibiotic Vancocin HCl. The complaint alleges that ViroPharma misused government processes by engaging in repetitive and baseless filings to the US Food and Drug Administration (FDA) to block approval of generic competitors and maintain its monopoly.

FTC Sues Shire ViroPharma Inc. for Interfering with FDA Approval of Generic Competitors

by Practical Law Antitrust
Published on 09 Feb 2017 • USA (National/Federal)
On February 7, 2017, the Federal Trade Commission (FTC) filed antitrust charges against Shire ViroPharma Inc. alleging anticompetitive tactics aimed at delaying entry of generic drug competition for its antibiotic Vancocin HCl. The complaint alleges that ViroPharma misused government processes by engaging in repetitive and baseless filings to the US Food and Drug Administration (FDA) to block approval of generic competitors and maintain its monopoly.
On February 7, 2017, the FTC filed a complaint in the US District Court for the District of Delaware alleging that Shire ViroPharma Inc. (ViroPharma) violated Section 5(a) of the FTC Act by abusing government processes to delay entry of generic competitors for the sale of the antibiotic Vancocin HCl. The enforcement action confirms recent comments made by Acting FTC Chairman Maureen Ohlhausen indicating that the FTC will focus on healthcare and anticompetitive abuse of government processes under her leadership.

Complaint Allegations

Vancocin is used to treat C. Difficile-associated diarrhea (CDAD), a life threatening bacterial infection. From 2004 until 2012, the FTC alleges that ViroPharma enjoyed a monopoly in the CDAD drug market, and significantly raised prices for the drug, as there were no alternative medications that could effectively treat CDAD.
The complaint alleges that from at least 2006 through 2012, ViroPharma engaged in an anticompetitive campaign of repetitive and meritless filings with the FDA and litigation against the FDA to delay entry of generic competitors. According to the FTC, these actions constituted an unfair method of competition in violation of Section 5(a) of the FTC Act (15 U.S.C. § 45(a)).

Bioequivalency Testing

To approve generic drugs, the FDA requires a showing of bioequivalency, meaning that the generic is effectively equivalent to an already-approved branded drug. The FDA determines whether a company seeking generic approval may prove bioequivalency through in vitro dissolution testing or if it will be required to conduct in vivo clinical studies. In vitro dissolution testing is less onerous that in vivo studies.
According to the FTC complaint, when ViroPharma became aware that the FDA was considering approving in vitro dissolution testing for approval of a generic to compete with Vancocin, it began a campaign to interfere with the FDA approval process. The FTC complaint notes that Vancocin's own approval was based on in vitro dissolution data.

ViroPharma's Abuse of the FDA Generic Drug Approval Process

The complaint alleges that ViroPharma took advantage of the fact that the FDA will not approve a generic drug until all pending relevant complaints have been resolved. Over a six-year period, from 2006 until 2012, the FTC claims that ViroPharma:
  • Submitted 43 filings with the FDA, including citizen petitions and public comments.
  • Initiated three lawsuits against the FDA in federal court.
The complaint alleges that these filings were made with the knowledge that they contained unsupported theoretical arguments and were unlikely to persuade the FDA to block generic entry based on in vitro dissolution data.
The FTC claims that the effect of these filings was significant delay in the entry of a generic competitor in the relevant market. The complaint alleges that the FDA completed its review of the application of a generic competitor in 2010, but because of the pending citizen filings, approval was delayed until 2012. Three generic applications were eventually approved on April 9, 2012, the same day that the FDA cleared all of ViroPharma's citizen petition filings. The FTC alleges that this delay cost patients and other purchasers hundreds of millions of dollars.

Prayer for Relief

The FTC is seeking a court order to:
  • Permanently prohibit ViroPharma from engaging in similar activity in the future by submitting repetitive and unsupported filings with the FDA or the courts.
  • Receive additional equitable relief, including restitution and disgorgement.
The FTC voted 3-0 to initiate the complaint.

Noerr-Pennington Defense

In defending against the FTC's claims, ViroPharma is likely to invoke the Noerr-Pennington doctrine, which holds that government petitioning is immune from antitrust liability. This includes petitions to courts and administrative agencies, such as a company asserting its patent rights through litigation or by filing arguments with the FDA regarding a competitor's drug application. However, there are exceptions to the Noerr-Pennington doctrine for sham petitions and fraud.
For more information on antitrust issues in the pharmaceutical industry, including further discussion of the Noerr-Pennington doctrine, see Practice Note, Healthcare Competition: Pharmaceuticals.