Two pharmaceutical companies seeking to swap a Federal Trade Commission case over paying to delay the release of generic drugs with an administrative remedy were disappointed by a federal judge Tuesday.
In a declaratory judgment lawsuit filed against the FTC by Watson Laboratories and Allergan Finance, U.S. District Judge Paul S. Diamond of the Eastern District of Pennsylvania dismissed the plaintiffs’ claims, noting that they had largely repeated their arguments used in a previous motion to dismiss the enforcement action.
The original enforcement case was brought by the FTC over a group of pharmaceutical defendants’ alleged agreement to delay the release of the generic version of the drugs Opana ER and Lidoderm. The FTC voluntarily dismissed its case against Watson and Allergan and then refiled in California. The other defendants had settled by this time.
The plaintiffs claimed they were entitled to relief under the Administrative Procedure Act. According to Diamond’s opinion, the FTC responded that the plaintiffs could not proceed under the APA because there was no final FTC action in place and they have an adequate remedy in another court; the APA can not be used to circumvent APA requirements; and the plaintiffs’ claims are not ripe.
Diamond sided with the FTC, holding that the plaintiffs failed to state a claim under the APA.
For an APA claim to move forward, “’the action must mark the consummation of the agency’s decision-making process’; and (2) ‘the action must be one by which rights or obligations have been determined, or from which legal consequences will flow,’” Diamond said.
“Although plaintiffs correctly note that they face ‘an enforcement suit seeking disgorgement and restitution,’” Diamond said, “this is ‘different in kind and legal effect from the burdens attending what heretofore has been considered to be final agency action.’”
He added, “Moreover, plaintiffs ‘cannot satisfy the second prong of the APA requirement, for almost by definition they have an adequate remedy in a court’: moving to dismiss the commission’s California enforcement action on the same grounds they have raised here.”
Despite that, Diamond called the relocation of the underlying case to California “unsavory.”
“Had the commission in the first instance filed its enforcement action in another district, its venue choice would have been unremarkable. It chose to proceed in this district, however, and threatened to withdraw and refile only after it anticipated the possibility of an unfavorable ruling. In carrying out its threat, the FTC has wasted the resources of plaintiffs and this court, and may well have abused Rule 41,” Diamond said.
However, that issue was not raised by the plaintiffs, Diamond said.
George Gordon of Dechert represents Watson and Brian Gant of White & Case represents Allergan. Neither responded to requests for comment.
FTC lawyer Bradley Albert also did not respond to a request for comment.