ITC Institutes Investigation Based on Allegation of Drug Sales Without FDA Approval

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Normally, it is the FDA that monitors the improper distribution of drugs. But, as it turns out, the International Trade Commission (“ITC”) might be able to enter the fray too. On April 18, 2018, the ITC issued a notice instituting an investigation in Certain Clidinium Bromide & Products Containing Same, Inv. No. 337-TA-1109. The investigation is based on an allegation that a number of companies were importing a drug and then selling it without proper FDA approval. In addition, the ALJ was ordered to decide within 100 days “whether the complainants have demonstrated an injury or threat of injury to an industry in the United States.”

The Institution Decision

Valeant Pharmaceuticals International, Inc. and its U.S. subsidiary Valeant Pharmaceuticals North America LLC sell Librax®, a drug that is used to treat certain ulcers and other diseases. Valeant’s complaint alleges that a number of generic drug companies are importing the components of Librax® and then marketing them in the U.S. in ways that falsely suggest the drugs were approved by the FDA. According to Valeant, that marketing violates the Food, Drug, and Cosmetic Act (FDCA). The FDA has not yet taken any action to prohibit these generic drugs from being marketed.

As Valeant recognized, its claims to the ITC “overlap . . . with the FDA’s regulatory scheme.” Thus, Valeant needed to show that the ITC’s jurisdiction was not preempted by the FDCA. Valeant analogized to Allergan, Inc. v. Athena Cosmetics, Inc., 738 F.3d 1350 (Fed. Cir. 2013), where the Federal Circuit held that state-law, unfair-competition claims are not preempted by the FDCA. Valeant also distinguished two cases, Certain Hydroxyprogesterone Caproate and Prods. Containing the Same and Certain Synthetically Produced, Predominantly EPA Omega-3 Products, where the Commission dismissed a complaint on the grounds that it was unclear whether there was a violation of the FDCA. Here, Valeant argued, the violation was clear.

Although the ITC instituted the complaint, it also ordered the ALJ to decide, within 100 days, “whether the complainants have demonstrated an injury or threat of injury to an industry in the United States.” Valeant’s complaint argues that the entry of unauthorized generic competition is harm enough. However, the ITC’s interest in the issue suggests that those allegations may not be sufficient.

Takeaway

The ITC is becoming a more popular forum for complainants to bring actions alleging unfair competition in the importation of products into the United States. While patent infringement continues to be the most common basis for unfair trade, complainants may also rely on other unfair methods of competition, as this investigation potentially demonstrates.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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