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In Re Flonase Antitrust v. Smithkline Beecham

June 2, 2011


The opinion of the court was delivered by: Anita B. Brody, J.




Flonase is a steroid nasal spray containing the active pharmaceutical ingredient fluticasone propionate ("FP") produced by Defendant SmithKline Beecham Corporation, doing business as GlaxoSmithKline PLC ("GSK").*fn1 Until recently, Flonase was one of the nation's top-selling drugs. Three different suits have been filed against GSK, alleging various antitrust violations stemming from GSK's conduct delaying the entry of generic FP nasal sprays into the market. The three suits are brought by: (1) direct purchasers of Flonase in American Sales Co.,Inc. v. SmithKline Beecham Corp., No. 08-cv-3149 (E.D. Pa. filed July 3, 2008); (2) indirect purchasers of Flonase in IBEW-NECA Local 505 Health & Welfare Plan v. SmithKline Beecham Corp., No. 08-cv-3301 (E.D. Pa. filed July 14, 2008); and (3) Roxane Laboratories, Inc., a manufacturer of a generic FP nasal spray and competitor of GSK in Roxane Laboratories, Inc. v. SmithKline Beecham Corp., No. 09-cv-1638 (E.D. Pa. filed April 17, 2009). GSK has now moved for summary judgment under Fed. R. Civ. P. 56 in all three suits, arguing that its conduct is protected from antitrust liability under the First Amendment and the Noerr-Pennington doctrine. (No. 08-3149 (Direct), ECF No. 151; No. 08-3301 (Indirect), ECF No. 190; No. 09-1638 (Roxane), ECF No. 98). For the following reasons I will DENY this Motion.*fn2


A. The Hatch-Waxman Act

Under the Federal Food, Drug, and Cosmetic Act, a company intending to market a drug in the United States must file a "New Drug Application" ("NDA") with the United States Food and Drug Administration ("FDA"). Federal Food, Drug, and Cosmetic Act, Pub. L. No. 75-717, 52 Stat. 1040 (1994) (codified at 21 U.S.C. § 301 et seq.). An NDA is a detailed technical document that includes clinical data demonstrating the safety and effectiveness of the new drug.

The FDA approves the NDA if it meets certain standards. Initially, manufacturers of "generic" drugs were required to file NDAs before they could enter the market.*fn4 This forced generic drug manufacturers to spend significant amounts of time and money conducting clinical tests.

In 1984, Congress created an expedited approval process for generic drugs by enacting the Hatch-Waxman Act ("Hatch-Waxman"). Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585 (1984) (codified in various sections of titles 15, 21, 35, and 42 of the U.S. Code), as amended by Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, tit. XI, subtits. A-B, 117 Stat. 2066, 2448-64 (codified at 21 U.S.C. § 355). Under Hatch-Waxman, generic manufacturers need only file an Abbreviated New Drug Application ("ANDA") that includes: (1) a demonstration of a certain level of bioequivalence ("BE")*fn5 to an approved drug, and (2) a Chemistry and Manufacturing Controls ("CMC") section that describes the active and inactive pharmaceutical ingredients used, as well as the quality controls in place to ensure that the product meets certain quality and consistency standards. See 21 U.S.C. § 355(j); 21 C.F.R. § 314.94.

B. The FDA Guidance Process

Under Hatch-Waxman, the FDA holds a broad degree of discretion in approving ANDAs. In order to keep pharmaceutical manufacturers informed of the FDA's positions on topics related to ANDA approval, the FDA occasionally issues public "guidances." These guidances identify standards and policies that manufacturers can use to develop their products. The FDA issues guidances in accordance with its "good guidance practices." 21 C.F.R. § 10.115. According to those practices, the FDA must solicit public comments on a draft guidance by publishing a notice in the Federal Register. Id. After receiving comments, the FDA can either: (1) issue an updated draft guidance, soliciting further comments; or (2) issue a final guidance. Id.

The FDA is not required to issue guidances. When it chooses to do so, the guidance represents the FDA's view on a given subject, and FDA employees generally may not deviate from a final guidance without "appropriate justification and supervisory concurrence." Id.§ 10.115(d)(3). Even a final guidance, however, does not "create or confer any rights for or on any person and does not operate to bind FDA or the public." Def.'s Ex. 10 at 2 (Draft Guidance for Industry: Bioavailability and Bioequivalence Studies for Nasal Aerosols and Nasal Sprays for Local Action).

C. The Citizen Petition Process

In order to facilitate the drug approval process, the FDA permits private entities to provide comments and opinions on draft guidances by filing "citizen petitions." 21 C.F.R. § 10.30. A petition can request that the FDA "issue, amend, or revoke a regulation or order or take or refrain from taking any other form of administrative action." Id. A citizen petition must describe the FDA action the petitioner requests and must include a certification by the petitioner that the petition "includes all information and views on which the petition relies, and that it includes representative data and information known to the petitioner which are unfavorable to the [petition]." Id. Until 2007, the FDA refrained from approving any ANDA while a citizen petition relating to the ANDA was pending.*fn6 See Meltzer Decl., App'x Ex. 1 ¶¶ 20-21 (Expert Report of James Morrison).

D. The FDA Approves Flonase

Flonase is a suspension-based steroid nasal spray. Suspension-based sprays contain undissolved solid particles that are dispersed throughout a liquid compound. Suspension-based sprays are distinct from solution-based sprays, where the solid is completely dissolved in a solvent.

In 1981, GSK filed a patent for Flonase in the United States. GSK subsequently filed an NDA, requesting FDA approval to market Flonase. In October 1994, the FDA approved Flonase to treat the nasal symptoms of seasonal allergic rhinitis, perennial allergic rhinitis, and perennial non-allergic rhinitis. Rhinitis is an inflammation of the nasal mucous membrane. Def. Mot. Summ. J. App'x A at 3 [hereinafter "GSK Glossary"]. Allergic rhinitis is a general term used to denote any allergic reaction of the nasal mucous membrane, and can occur seasonally (e.g., hay fever) or perennially. Id. at 1. Perennial rhinitis occurs continuously or intermittently throughout the year, while seasonal rhinitis occurs during specific times of the year. Id. at 3.

GSK released Flonase in the United States in 1995, and it quickly became the most prescribed suspension-based steroid nasal spray in the United States. By 2000, Flonase commanded 38% of brand-name steroid nasal spray sales nationally, resulting in over $600 million in sales. By 2005, the peak year for Flonase sales and the last full year of GSK's market exclusivity, Flonase sales exceeded $1.3 billion.

By May 2004, GSK had identified a number of generic pharmaceutical manufacturers, including Plaintiff Roxane Laboratories, Inc. ("Roxane"), that intended to file ANDAs for generic FP nasal sprays. This case concerns GSK's alleged "brand maturation strategy," crafted to maintain Flonase's market dominance in the face of inevitable generic competition. Plaintiffs argue that GSK's brand maturation strategy included filing several citizen petitions with the FDA, as well as a lawsuit in the District of Maryland, in order to restrain Flonase's generic competition.

E. Roxane Files First FP Nasal Spray ANDA in 2002

Until 1999, the FDA had not provided a framework for how an ANDA applicant might demonstrate BE compliance for nasal sprays such as Flonase that are intended for local action, rather than systematic absorption into the bloodstream. In 1999, the FDA solicited public comments on a draft guidance entitled Draft Guidance for Industry: Bioavailability and Bioequivalence Studies for Nasal Aerosols and Nasal Sprays for Local Action (the "1999 Draft Guidance"). This guidance provided "recommendations to applicants who are planning product quality studies to measure bioavailability (BA) and/or establish bioequivalence (BE) in support of new drug applications (NDAs) or abbreviated new drug applications (ANDAs) for locally acting drugs in nasal sprays . . . ." Def.'s Ex. 9 at 1 (1999 Draft Guidance).

Between August 2000 and November 2001, the FDA was still considering comments to the 1999 Draft Guidance, and so its position on how ANDA applicants could show BE compliance remained uncertain. During this period, Roxane met regularly with the FDA to discuss how Roxane could demonstrate BE compliance in its soon-to-be-filed ANDA. On October 3, 2002, after several such meetings, Roxane filed the first ANDA for a generic suspension-based FP nasal spray following the protocols outlined in the 1999 Draft Guidance and discussed with the FDA.

F. The FDA Issues its Second Nasal Spray Guidance in 2003

In April 2003, after considering comments on the 1999 Draft Guidance, the FDA issued a revised draft guidance entitled Draft Guidance for Industry: Bioavailability and Bioequivalence Studies for Nasal Aerosols and Nasal Sprays for Local Action (the "2003 Draft Guidance"). The 2003 Draft Guidance noted that it was not complete, and that a "series of attachments [were] being developed and [would] be posted with this draft guidance . . . ." Def.'s Ex. 10 at 3 (2003 Draft Guidance). The FDA did not issue a final guidance document.

G. GSK Files Citizen Petitions Commenting on the 2003 Draft Guidance, and the FDA Responds to those Petitions

1. GSK's May 19, 2004 Citizen Petition

On May 19, 2004, GSK submitted a citizen petition (the "May Petition") making five requests in response to the 2003 Draft Guidance. On February 22, 2006, the FDA responded to the May Petition and rejected each of GSK's five requests:

Request 1:

That the FDA refrain from approving ANDAs prior to issuing final guidance and a statistical appendix The May Petition requested that the FDA refrain from approving any ANDAs before issuing a finalized guidance. The FDA unequivocally rejected this request, stating:

Neither the [Federal Food, Drug, and Cosmetic Act] nor FDA regulations require FDA to issue final guidance prior to approving an ANDA. As in the new drug approval process, FDA is required to make decisions based on the information provided by individual applicants and evaluate the scientific content of ANDAs to determine if the application meets the statutory and regulatory requirements (section 505(j) of the Act). GSK has cited no authority to support its position that the Agency must complete a guidance document prior to approving an ANDA for a fluticasone propionate nasal spray product. . . . Whether or not FDA issues final guidance does ...

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