Citizen Petitions: Long, Late-Filed, and At-Last Denied

Posted by Social Science Research Network

Citizen Petitions: Long, Late-Filed, and At-Last Denied

Michael A. Carrier & Carl J. Minniti III (Rutgers Law School)

Abstract:      The pharmaceutical industry is ground zero for many of the most challenging issues at the intersection of antitrust and intellectual property (IP) law. It also presents a complex regulatory regime that is ripe for anticompetitive behavior. It thus should not be a surprise that the industry has been subject to rigorous antitrust scrutiny in recent years.

While settlements between brand and generic firms and “product hopping” from one version of a drug to another have received attention, one behavior has avoided serious scrutiny. Brand firms’ filing of citizen petitions with the U.S. Food and Drug Administration (FDA) has almost entirely slipped beneath the radar. While citizen petitions in theory could raise concerns that a drug is unsafe, in practice they bear a dangerous potential to extend brand monopolies by delaying approval of generics, at a potential cost of millions of dollars per day.

This Article offers an empirical study of “505(q)” citizen petitions, which ask the FDA to take specific action against a pending generic application. It analyzes every 505(q) petition filed with the FDA between 2011 and 2015, documenting (1) the number of petitions each year, (2) who files the petitions, (3) the success rate of the petitions, (4) the petitions’ length, (5) whether petitions were filed in close proximity to the expiration of a patent or data exclusivity date, and (6) occasions in which the FDA approved generics on the same day it decided petitions.

The study finds that brand firms file 92% of 505(q) petitions. And it concludes that the FDA grants an astonishingly low 8% of petitions, rejecting a full 92%. Why is the grant rate so low? We consider several reasons. First, in the past 5 years, the average length of petitions has more than doubled, and the FDA almost never grants petitions with a length above the mean. Second, 39% of petitions are filed within 6 months of the expiration of a patent or FDA exclusivity date, with almost all of these petitions denied. Third, the FDA resolved a number of petitions on the same day it approved the generic, likely delaying generic entry. These three settings result in grants of only 3%, 2%, and 0%, respectively.

The Article concludes by offering examples of serial petitions, late-filed petitions, and a combination of petitions with other behavior such as product-hopping and settlements. In short, citizen petitions represent a hidden tool in brands’ toolkit of entry-delaying activity, and when used inappropriately force consumers to pay high drug prices while providing no offsetting safety benefit.