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The Federal Trade Commission today announced two subpoena enforcement actions challenging tactics that delay agency investigations. First, the U.S. Circuit Court for the District of Columbia affirmed a district court decision enforcing three subpoenas to videotape testimony as part of the FTC’s investigation of generic Androgel competition. In a separate matter, the FTC petitioned the district court for an order requiring Boehringer Ingelheim Pharmaceuticals, Inc. to fully comply with a subpoena issued nine months ago for documents and data in an ongoing investigation. Both investigations concern potential “pay-for-delay” settlements between pharmaceutical companies that may delay generic drug entry.

“We were gratified to see the D.C. Circuit act so quickly on this appeal in Androgel,” said Richard Feinstein, Director of the FTC’s Bureau of Competition. “Both the appellate ruling and our subpoena enforcement action against Boehringer demonstrate that the Commission will not accept attempts to obstruct our investigations. In cases where we are examining whether pharmaceutical companies are paying to delay generic entry, each day our investigation is delayed could mean an additional day of consumers paying higher prices. We take that very seriously. ”

D.C. Circuit Upholds FTC’s Right to Videotape Testimony

During the FTC’s investigation of patent settlements concerning generic Androgel (see press release at http://www.ftc.gov/opa/2009/02/androgel.shtm), three subpoena recipients, Scott Tarriff, Edward Maloney, and Paul Campanelli, all current or former officers of two of the respondents – Par Pharmaceutical Cos., Inc. and Paddock Laboratories, Inc. – refused to testify at investigational hearings because the subpoenas provided that their testimony would be recorded by videotape, as well as by stenography.

After the FTC denied their petition to limit or quash the subpoenas, the three witnesses still refused to testify. As a result, in June 2008, the agency sought and obtained a court order requiring them to testify while being videotaped. Shortly after the court order was issued, the three complied, and their depositions were transcribed both stenographically and by videotape. Nonetheless, the three witnesses appealed the district court’s decision.

On October 23, 2009, the D.C. Circuit ruled in the FTC’s favor, 15 days after hearing oral arguments. In affirming the district court’s order enforcing the subpoenas, the Circuit Court rejected the witnesses’s contentions as “completely without merit.”

Action to Force Compliance with Commission Subpoenas

In the Boehringer matter, the FTC petitioned the court to enforce a subpoena issued in an ongoing investigation of patent settlements and related agreements between Boehringer and Barr Pharmaceuticals, Inc. involving generic versions of the drugs Mirapex and Aggrenox.

In January 2009, the Commission issued a resolution to investigate whether Boehringer’s conduct violated the FTC Act, and it subsequently subpoenaed Boehringer requesting documents and information related to its investigation. According to the FTC, after nearly nine months and several time extensions, Boehringer still has not fully complied with the subpoena.

“When companies fail to respond promptly and completely to agency subpoenas, we will not hesitate to go to court to seek enforcement,” said the FTC General Counsel Willard Tom. “Boehringer’s actions in responding to the subpoena at issue fall far short of what is acceptable.”

The FTC also alleges Boehringer has used a number of tactics to delay the Commission’s investigation, including redacting information responsive to the subpoena before producing documents; representing that the redacted material was not relevant to the Commission’s investigation, when some of the redacted material was, in fact, highly relevant; and failing to conduct a careful and thorough search to locate documents responsive to the subpoena. As a result, the Commission’s ability to conduct a thorough investigation and to assess the legality of the agreements at issue has been hindered.

The Commission is seeking a court order requiring Boehringer to fully comply with the subpoena within 10 days by producing all responsive documents, without any unauthorized redactions. The FTC filed its action in the U.S. District Court for the District of Columbia on October 23, 2009. It can be found on the agency’s Web site and as a link to this press release.

Copies of the documents related to these cases can be found on the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 091-0023)
(Subpoena Enforcement.final.)