FTC, FDA provide testimony on manipulation of generic drug approval process
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Thursday, July 27, 2017

FTC, FDA provide testimony on manipulation of generic drug approval process

By Jeffrey May, J.D.

The House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a hearing today to consider antitrust concerns raised by anticompetitive conduct in the Food and Drug Administration (FDA) drug approval process. Representatives from the FTC and FDA were present at the hearing to offer testimony on agency efforts to address the issues.

Subcommittee Chairman Marino (R-Pa.) kicked off the hearing with a discussion of legislative efforts intended to prevent pharmaceutical companies from blocking more affordable generic alternatives from coming to the market. In April, Marino and Rep. David Cicillini (D-R.I.), Ranking Member of the Regulatory Reform, Commercial and Antitrust Law Subcommittee, introduced the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act (H.R. 2212). The measure is intended to crack down on delay tactics by branded drug companies. Specifically, the CREATES Act would address anticompetitive concerns associated with the FDA’s Risk Evaluation and Mitigation Strategy or REMS Program. Marino said that he was hoping to learn from the hearing more about "abuses that are involved in the REMS Program and other ways patients lose on account of these and other anticompetitive practices."

FDA Commissioner Scott Gottlieb testified about the policies the agency was considering and the steps it was taking to promote generic drug competition. First, the agency is improving the efficiency of the generic drug approval process to help new generic drugs reach consumers more quickly. Second, the FDA is improving its policies and scientific approach to the approval of generic competitors to complex or difficult-to-duplicate brand-name drugs. Third, the FDA is attempting to make sure that companies are not gaming the rules to extend their monopolies on brand drugs and maintain their monopoly pricing by forestalling competition Congress intended when it crafted the Hatch-Waxman Amendments.

According to the testimony, the FDA in an effort to promote competition is focusing on: (1) restricted distribution systems and access to necessary reference listed drugs for bioequivalence testing; (2) requirements for single-shared systems in the context of drugs with REMS ; (3) the citizen petition process and efforts to reduce the unnecessary burden these petitions can place on the generic drug program; (4) the unapproved drug initiative, which is an attempt to bring marketed unapproved drugs into the FDA approval process, ensuring that they meet modern standards and bear labeling for safe and effective use; and (5) "pay-for-delay" agreements, which enable brand companies to extend the period of time during which the brand drug is the only drug on the market.

Gottlieb said that the FDA's goal is to "to do all that [it] can to make sure that markets are efficient and to close loopholes that are letting a handful of market participants game the rules in ways that hurt consumers."

FTC testimony. FTC Bureau of Competition Acting Director Markus H. Meier testified about his agency’s efforts to stop anticompetitive conduct in the pharmaceutical industry, which is one of the Commission’s top priorities.

With respect to the FDA drug approval process, Meier explained the FTC has identified three types of abuses: (1) abuses that occur when brands use FDA-mandated REMS or when they use voluntary distribution systems either to prevent a generic company from gaining access to samples needed to go through the FDA approval process or by refusing to negotiate a single share of the REMS distribution system; (2) abuses arising from so-called "pay-for-delay" agreements; and (3) abuses that can occur with the FDA citizens petition process to delay entry of lower-cost generics. The agency brought has actions to address the "pay-for-delay" and citizens petition abuses and utilized amicus briefs with respect to REMs issues, it was noted.

Among the enforcement actions identified by Meier was a recent action brought against Shire ViroPharma. The company was charged by the FTC with illegally maintained its monopoly over Vancocin Capsules by filing 43 repetitive and unsupported (or sham) petitions with the FDA, as well as three lawsuits, between 2006 and 2012, all in an effort to obstruct and delay approval of a generic version of its branded drug. That matter remains pending in federal district court in Delaware.

On the topic of pay-for-delay legislation, Meier said that the agency would be happy to provide technical assistance to congress on legislation to address the issue. He noted that the agency had provided such assistance on measures that had been introduced in past congresses.

Meier also noted the FTC's support for the CREATES Act. A congressional solution to the problems would likely be more effective than litigation efforts, which can be slow and uncertain. The FTC believes that the measure would reduce the incentive for brands to use REMS to impede competition from lower cost generics, according to Meier.

Following the testimony of the agency representatives, the House lawmakers heard testimony from a panel of experts. The second panel included representatives from academia and a former FTC Bureau of Competition assistant director.

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