Antitrust - Sham Pharmaceutical Citizen Petition Not Protected by Noerr-Pennington Doctrine: Louisiana Wholesale Drug Co. v. Aventis Pharm., 2008 U.S. Dist. LEXIS 3611 (S.D.N.Y., January 18, 2008)
Introduction
On January 18, 2008, the District Court for the Southern District of New York held that a pharmaceutical company’s filing of a Citizen Petition with the Federal Drug Administration (“FDA”)
was not immunized from antitrust liability under the Noerr-Pennington doctrine, when it was plausibly alleged that the Citizen Petition was an objectively baseless sham, intended solely to prevent competition for a branded
drug.
Background On Citizen Petitions
Drug manufacturers may submit an Abbreviated New Drug Application (“ANDA”) to the Federal Drug Administration (“FDA”) in order to seek approval to market a generic version of a branded drug. In response,
any citizen may then file a petition with the FDA to express safety, scientific, or legal concerns regarding the proposed generic drug. In that event, FDA practice is to delay approval of the ANDA until after the FDA rules upon the
Citizen-Petition.
Alleged Anticompetitive Behavior
Plaintiff Louisiana Whole Drug Co. (“Plaintiff”) alleged that Aventis Pharmaceuticals Inc. and its parent companies (collectively, “Aventis”) filed an “objectively baseless (i.e. sham)” Citizen
Petition with the FDA on the eve of final approval of five ANDAs for generic versions of Aventis’ branded drug Arava. Louisiana Wholesale Drug Co. v. Aventis Pharm., 2008 U.S. Dist. LEXIS 3611 (S.D.N.Y., January 18,
2008) (“Louisiana Drug”) at *5-6. This Citizen Petition delayed the marketing of generic versions of Arava and allowed Aventis to maintain supra-competitive prices for the drug. Id. at *2.
Defendants’ Claim of Noerr-Pennington Immunity
Aventis brought a motion to dismiss, claiming that its Citizen Petition was legitimate and therefore protected by the First Amendment under the Noerr-Pennington doctrine. Id. at *3. Under Noerr-Pennington, “conduct
aimed at persuading the government of a position or expressing views and wishes concerning government decisions is classic petitioning activity protected by the First Amendment that cannot be limited by the Sherman Act.” Id. at
*11, citing Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S. Ct. 523, 5 L. Ed. 2d 464 (1961) and United Mine Workers v. Pennington, 381 U.S. 657, 85 S. Ct. 1585 (1965).
The Court’s Analysis
The Court began its analysis with last year’s decision in Bell v. Twombly, 127 S.Ct. 1955 (2007), and the principle that “[w]hile detailed factual allegations are not needed, they must be enough to raise a
right to relief above the speculative level on the assumption that all of the complaint’s allegations are true to survive a Rule 12(b)(6) motion to dismiss.” Id. at *7-8, citing Bell v. Twombly, 127
S.Ct. 1955 (2007). The Court noted that, in order for the filing to be an “objectively baseless” sham (and therefore not protected by Noerr-Pennington), it must have had “no reasonable chance of success
and also must have been directed at harming the generic manufacturer’s interests in some manner distinct from preventing improper labeling” of the generic drug. Id. at *13.
The Court then turned to Louisiana Wholesale’s specific allegations that Aventis’ petition was intended solely to “delay and impede approval of generics so as to maintain its monopoly” and that Aventis
“could have had no reasonable belief that its Citizen Petition was viable.” Id. at *14. The Court considered the FDA’s letter rejecting Aventis’ Citizen Petition. The letter noted that Aventis
engaged in the same labeling practices that it supposedly opposed in its Citizen Petition. The FDA’s letter further stated that Aventis’ concerns regarding the ANDAs were “unfounded,” and from this, the
Court held that Plaintiff’s allegation that the petition was a sham was at least plausible. Id. at *14-15.
The Court limited its decision to the context of the motion to dismiss: “Drawing all inferences in favor of Louisiana Wholesale as I must, it cannot be established that Defendants are entitled to Noerr-Pennington immunity...If
it becomes apparent that Aventis indeed sought to protect the public [with its Petition], Defendants will likely be entitled to protection under Noerr-Pennington. However, if Louisiana Wholesale can establish that Aventis
never intended or could reasonably expect to affect FDA labeling policy with respect to the five ANDAs, and filed the Petition solely to delay or impede the approval of generics, Noerr-Pennington immunity will be unavailable.”
Id. at *16-17.
Conclusion
The Court’s decision in Louisiana Wholesale is interesting in that it applies Twombly to negate an affirmative defense (Noerr-Pennington immunity). It is not obvious from the Twombly decision
that, in order to survive a motion to dismiss, the pleadings must not only plead a plausible claim, but also contain sufficiently plausible facts to negate all affirmative defenses. In Louisiana Wholesale, there may be some
explanations for this. First, the potential for a Noerr-Pennington defense is obvious on the facts. Second, although Noerr-Pennington is an affirmative defense, the actual issue is arguably intertwined with the
merits: even if there were no Noerr-Pennington immunity, it is difficult to see an antitrust claim arising out of the pursuit of a reasonable, even if losing, petition to the Food and Drug Administration. And, in any event,
Louisiana Wholesale was going to succeed in defeating the motion to dismiss anyway. In another case, where the potential affirmative defenses are less clear (e.g., a fact-based state action immunity argument or a debatable
McCarran-Ferguson argument applying to one or two allegations in a complaint raising many others), imposing an obligation on the plaintiff to guess at, and negate, affirmative defenses at the initial pleading stage could be quite
a burden. It will be interesting to see if other cases seek to impose such a burden.