The FTC and its Seven-Year Subpoena Fight Against Boehringer Ingelheim

FTC vs. Boehringer IngelheimIt has been nearly seven years since the FTC began its fight with Boehringer Ingelheim Pharmaceuticals Inc. to get documents from the drugmaker as it relates to an antitrust investigation related to the company’s stroke-prevention drug Aggrenox.  The case has its roots in 2005, when Barr, A Teva Pharmaceuticals subsidiary, secured approval from the FDA to make a lower-cost, generic version of Aggrenox — a drug that is prescribed for people who have had a stroke.  However, before Barr could begin selling the drug, Boehringer sued the company for patent infringement.  The case settled in 2008, when Barr agreed to delay rolling out generic Aggrenox until July 2015.  In turn, Boehringer agreed to pay Barr about $100 million to promote Aggrenox to women’s health care professionals.

Following the settlement, in 2009, the FTC issued a resolution to investigate whether Boehringer’s conduct violated the FTC Act.  Subsequently, the FTC subpoenaed Boehringer requesting documents and information related to the investigation.  However, Boehringer didn’t comply with the FTC’s subpoena.  As a result, the petitioned a court to enforce the subpoena they issued to Boehringer.

Ultimately, the subpoena issue made its way to the U.S. Court of Appeals for the District of Columbia, after the lower district court refused to enforce the administrative subpoena issued to Boehringer.  First, the D.C. Court of Appeals, in its opinion, held that:

[A] settlement term may have independent economic value and still be considered part of a settlement for purposes of work product protection. In addition, we find that the District Court reasonably concluded that the bulk of the contested co-promotion materials were prepared “in anticipation” of the Boehringer-Barr litigation. The sole exception is a small group of documents drafted after the settlement was executed, which the District Court did not explicitly address. Accordingly, we generally affirm the District Court’s findings on this issue but remand for further consideration with respect to the post-settlement documents.

The next argument set forth by the FTC was that the district court erred by applying an overly expansive definition of “opinion” work product, which is highly protected, as opposed to “fact” work product, which is substantially less so.  On that issue, the D.C. Court of Appeal agreed with the FTC’s view that the District Court misapprehended the proper distinction between fact and opinion work product.  On the issue, the court said:

Where it appears that the focus or framework provided by counsel is obvious or non-legal in nature, it is incumbent upon the party claiming opinion work product protection to explain specifically how disclosure would reveal the attorney’s legal impressions and thought processes.  The District Court failed to demand such a showing from Boehringer and instead concluded categorically that the contested documents were highly protected opinion work product.  This was error.

As a result, the D.C. Court reversed and remanded the issue back to the lower district court.

Unsatisfied with the decision, Boehringer petitioned the court for rehearing en banc.  The FTC issued a response, claiming that:

The petition should be denied because the unanimous panel opinion correctly applied that doctrine to the facts of this case in compliance with all relevant precedent in this and other circuits; the matter presents no “question of exceptional importance.” Fed. R. App. P. 35(a). Boehringer’s contrary arguments distort the panel’s holding and the underlying facts, and they warrant no further review. As the FTC’s investigation enters its seventh year, the agency should finally have access to the documents at the heart of this antitrust inquiry—financial spreadsheets and similar materials that were prepared by non-lawyer businesspeople and that cast no light on any lawyer’s legal judgments.

While it remains to be seen what will come of the petition for rehearing en banc, this case focuses on how broadly a company can define attorney work product.  If the panel decision stands, Boehringer warns it will create “an untenable position that will impede compliance and businesspeoples’ trust in their counsel,” Lawrence Rosenberg, Boehringer’s lawyer, wrote in a court filing in May.

For the German drugmaker, there’s more at stake than the FTC investigation. The company also faces multidistrict litigation in Connecticut over the same underlying conduct: a $100 million “reverse payment” deal with Barr Pharmaceuticals Inc. to push back the introduction of generic Aggrenox.  Those arrangements may violate antitrust laws, the U.S. Supreme Court ruled in 2013 in FTC v. Actavis.

In light of the Actavis decision, penalties can and have been formidable.  Recently, the FTC announced Teva will refund $1.2 billion to customers who purchased its sleep disorder drug Provigil. Cephalon Inc., which Teva bought, illegally blocked generic competition through a reverse payment deal, the agency said.  The settlement was the first FTC case resolved since the high-court ruling in Actavis.  “Pay-for-delay” arrangements “burden patients, American businesses, and taxpayers with billions of dollars in higher prescription drug costs,” FTC Chairwoman Edith Ramirez said.

Boehringer Ingelheim Pharmaceuticals Inc.