Appeals Court Slaps Down FTC in Shire Case
In a decision that may ultimately affect FDA as well, the 3rd Circuit Court of Appeals has issued a ruling in FTC v. Shire ViroPharma that attorney Jennifer Thomas (Hyman, Phelps & McNamara) says “could set the Federal Trade Commission’s litigation authority back decades.” Writing in her firm’s FDA Law Blog, Thomas says the case involved Shire filing numerous “sham” citizen petitions to FDA and lawsuits against the agency to allegedly keep generic versions of its Vancocin (vancomycin) off the market.
Thomas says FTC prefers to litigate cases in federal court rather than administrative proceedings because the potential for monetary relief is significant. She says the appeals court took the position that Congress intended the relevant portion of the FTC Act cited by the agency to bring its cases against unfair and deceptive practices to be used only while an administrative case was pending. The court, noting that Shire stopped its allegedly illegal practice five years before FTC brought its case, said the law should only be used when a company is violating or about to violate the law, not years after the alleged violations occurred, Thomas says.
“In dicta that is likely to haunt both FTC and FDA in future litigation,” Thomas says, “the 3rd Circuit also questioned whether FTC’s belated suit against Shire based on the company’s FDA citizen petitions had ‘the potential to discourage lawful petitioning activity bey interested citizens, activity that is protected by the First Amendment.’”
The attorney says that given the bad facts of the Shire case, FTC may decide not to seek a rehearing or to ask the Supreme Court to hear the case. It also could ask Congress to give it additional authority to impose civil monetary penalties in administrative proceedings, additional litigation authority, or additional rulemaking authority.
“Short of action by Congress,” Thomas concludes, “if the Shire decision stands and other circuits agree with the 3rd, FTC will face a more complicated path to obtaining monetary relief in cases involving past conduct.”