We don’t usually weigh in on commercial disputes like antitrust cases. But In re Merck Mumps Vaccine Antitrust Litigation, 2024 U.S. App. LEXIS 25271 (3rd Cir. Oct. 7, 2024), is a 2-1 appellate decision that dismisses Sherman Act violation claims by favorably resolving allegations of fraud on the FDA. We do like to talk about fraud on the FDA.
Plaintiffs were a group of end-user doctors who alleged that defendant prolonged its monopoly over its mumps vaccine by making false drug-label claims. The drug’s labeling, however, was approved by the FDA as a result of the manufacturer’s successful petitioning of the agency. So, defendant argued that it was entitled to summary judgment under the Noerr-Pennington doctrine. The district court rejected that argument, but that decision was reversed by the Third Circuit.
Defendant was the sole manufacturer of a certain vaccine from 1967 to 2022. Plaintiffs alleged that defendant prolonged its monopoly by fraudulently inducing the FDA to approve its license application which allowed defendant to maintain certain labeling claims regarding the vaccine’s shelf-life. Id. at *4-6. Because any new competitor would have to demonstrate that its vaccine was “not inferior” to defendant’s, the allegedly unsupported shelf-life claim raised a barrier to entrance into the U.S. vaccine market which delayed competition. Id.
While the Sherman Act makes monopolies, or attempts to monopolize, unlawful, it has exceptions. One such exception is petitioning immunity, also known as the Noerr-Pennington doctrine. The doctrine provides that “a party who petitions the government for redress generally is immune from antitrust liability even if their petitioning causes an anti-competitive effect.” Id. at *9 (citation omitted). The immunity is rooted in the First Amendment’s right to petition and the Supreme Court’s ruling that “Congress did not intend to proscribe harm to competition that is the result of valid government action, as opposed to private action.” Id. (citing Noerr, 365 U.S. 127, 136).
There are, however, exceptions to the exception. If a petition is “not genuinely aimed at procuring favorable government action,” it is deemed a sham and does not receive immunity. Id. In lay terms, courts draw a distinction between the petition process and the result of that process. To be a sham, the petition must be “objectively baseless”—no realistic expectation of success—and the petitioner must have intended to use the process to interfere with a competitor’s business. Id. at *10. If it is the result of the petition that has an anti-competitive effect, the sham exception does not apply.
Plaintiffs made three arguments why defendant in this case should not receive Noerr-Pennington immunity. First, defendant did not “petition” the FDA so much as provide answers in a regulatory proceeding. Id. at *12. The court disagreed, finding defendant’s application “sought to persuade the FDA to approve or refrain from changing” its label-claims.
Second, plaintiff alleged defendant’s petition was a sham because it contained misrepresentations that caused the FDA to approve defendant’s label. Also known as fraud on the FDA. But the Noerr-Pennington doctrine immunizes successful government petitions, whether or not the government was misled. A winning petition necessarily has “objective merit,” and therefore is not a sham but rather is protected by the First Amendment. As in products liability claims, it was important to the court that the FDA has not taken any action against defendant—has not found any fraud, ordered a label change, or issued a recall. Id. at *7. Nor could defendant have intended to commit a sham where it sought to use the result of petitioning the government (the FDA-approved drug shelf-life labeling claims) − as opposed to the petitioning itself − to harm competition. This was not an attempt to enmesh competitors in harassing litigation. Thus, summary judgment should have been granted.
Third, plaintiff argued that defendant’s misleading label claims were “private conduct, not government action.” Id. at *12. However, Noerr-Pennington is not an evidentiary privilege that simply bars the use of a petition to prove an antitrust violation. Rather, it is substantive law that shields defendants from liability when it is the government’s “exercise of regulatory discretion” that causes the competitive harm. Id. at *16. The FDA’s approval of defendant’s label bars plaintiffs’ claims because it was the FDA’s decision (regardless of its basis) not defendant’s private conduct, that delayed competition. Id. at *16-19.
Plaintiffs made a few additional arguments, none with any merit. For example, plaintiff argued that defendant engaged in private conduct every time if printed or distributed its allegedly misleading label. If that were the case, it would essentially overrule Noerr-Pennington in drug and device cases by switching the focus to the content of the label instead of the FDA’s approval decision. Id. at*20. That was a step too far for the court. Plaintiffs also tried to argue that omitting information in an FDA petition is different than actively misrepresenting facts to the FDA and that the former should be considered private conduct. The court also viewed this as creating a “vast” exception that would allow plaintiffs to evade the doctrine completely by focusing on omissions in petitions rather than on the petitions themselves. Id.at *22-23.
The Third Circuit concluded that defendant genuinely petitioned the FDA to obtain approval for its vaccine label claims and that plaintiffs’ antitrust injury flows from the FDA’s decision to approve the label, not from defendant’s private conduct. Therefore, defendant was entitled to summary judgment.