March 1, 2017

FDA encouraging vigorous competition from generic drugs

Opportunity for pharmaceutical manufacturers

The U.S. Food and Drug Administration (FDA) are desperately seeking to increase competition for prescription drugs. The reasons for this are of no surprise. Although we are, of course, in great support of deservedly obtaining robust patents for newly discovered pharmaceutical inventions, we are regularly reminded by some pharmacist friends of ours how the cost of patented pharmaceuticals deeply hurt the bottom line of many pharmacies, as well as often being unaffordable for those patients that need these drugs the most.

It appears that the FDA has announced its view is that there are significant benefits to having increased competition by generics, after the advantages of a obtaining patent protection for a pharmaceutical invention have expired.

Very recently, the FDA Commissioner, Scott Gottlieb, published a blog post announcing two immediate plans to initiate bringing an increase in competition into action:

  • Release a list of branded drugs that are not currently protected by a  patent application, but have no approved generic equivalents available;
  • Implement a policy to expedite the review of Abbreviated New Drug Applications (ANDAs) for any drugs until there are three approved generics available.
Why is the FDA concerned about the monopoly of pharmaceutical inventions?

As explained by Gottlieb, the FDA have embarked on a Drug Competition Action Plan in an effort to remove “some of the scientific and regulatory obstacles to generic competition across the full range of FDA-approved drugs”.

It appears to be a deep and real concern that significant numbers of patients are being priced out of obtaining the medicine they essentially need. This problem has increased over the last decade to the extent that now the FDA feel obliged to step in to facilitate faster approval for lower cost generic medicines.

Advertising Branded Pharmaceuticals That Are Off-Patent

The first document released by the FDA provides a lengthy list of patent-free drugs. The document is split into two parts: art I (pages 2-6) identifies drug products for which the FDA could immediately accept an ANDA without prior discussion. Part II (pages 7-9) identifies some drugs that involve potential legal, regulatory, or scientific issues which should be addressed with the agency prior to submission of an ANDA.

Prioritization of Review of Approval for Generics

The second document published by the FDA was an updated v “Prioritization of the Review of Original ANDAs, Amendments, and Supplements” (as found in the Manual of Policies and Procedures of the Office of Generic Drugs). This document outlined the newly agreed policy that priority status will be granted for generic products for which there are fewer than three ANDAs approved for the reference listed drug.

The priority status is contingent on the being no blocking patents in force at the time of application.

How Are Pharmaceutical Companies Gaming the System?

The FDA has become increasingly aware that pharmaceutical companies are “gaming” the regulatory legislation to prevent new approvals of generic drugs within the time-frames intended by such regulations. One example outlined by Gottlieb is the unavailability of certain branded products for comparative testing. Developing a generic alternative to a branded drug typically requires around 1,500 to 3,000 doses of the originator drug for side-by-side comparison studies. Despite the willingness of generic sponsors to purchase these products at fair market value, branded companies have adopted strategies to deliberately block a generic company from obtaining testing samples.

Branded companies often use restrictions in commercial contracts and distributor agreements to prohibit intermediaries in the drug supply chain selling the drugs to generic drug developers. Alternatively, access to testing samples can theoretically be restricted by placing distribution limitations on the branded products.

Entering a New Era for the FDA

Historically, the FDA has been reluctant to get involved in matters relating to drug pricing and active competition. We can assume, therefore, that there is strong enough concern that the time to act is now. Over the last decade, competition from safe and effective generic drugs has saved the U.S. health care system about US$1.76 trillion. Although Gottlieb’s blog post concedes that “innovation in pharmaceutical development is essential because it creates new and sometimes life-saving therapies,” these changes are preempted by the idea that access to lower-cost alternatives, once exclusivity periods lapse, are also critical to preserving the nation’s health.

Therefore, the push to obtain approval for an increasing number of generic drugs is clearly of utmost importance for the FDA. Gottlieb ‘s blog post has sent a clear message that the FDA have cottoned on the the issues, and indicates that further policies, procedures and legislative changes are coming to ensure vigorous competition, stating: “our goal is to broaden access to safe and effective generic drugs that can improve access to medicines and help consumers lover their health care costs.” It will be interesting to watch the effect of these forthcoming actions and whether they succeed in increasing competition between drugs (at least those with recently expired patent protection).

A public meeting will occur on 18 July 2017, to solicit input on places where the FDA’s rules are being used in ways that may create obstacles to generic access. Stay tuned for our take on the outcome of this meeting.

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