INNsight article by Alan Klein, June 2012

An interesting tug-of-war is ensuing in Washington in the halls of Congress, and beyond, pitting generics against the powerful big pharma lobby and its constituent companies. What’s at stake is the ability of generic drug manufacturers to obtain from brand-name drug companies samples of their products for use in bioequivalency clinical trials necessary for small molecule, biologics and biosimilars approvals from the Food and Drug Administration (“FDA”).

In the past, generics have often encountered delays in the provision of such samples from brand manufacturers unhappy with the prospect of generic competition and potential Paragraph IV patent challenges. Now, big pharma has found a new tool to use in refusing requests from generics anxious to procure samples for use in bioequivalency testing. Beginning in 2009, when Dr. Reddy’s Laboratories sought samples of Revlimid®, an oncologic drug, from its manufacturer, Celgene, brand-name drug companies (as Celgene did) have invoked provisions of a 2007 federal law placing strict safety controls on many pharmaceuticals in the U.S. marketplace. Revlimid® contains lenalidomide, a derivative of thalidomide, a known teratogen.

The legislation, the Food and Drug Administration Act Amendments (“FDAAA”) of 2007, mandated the adoption and use of a risk evaluation and mitigation strategy (“REMS”) after certain drugs were approved for marketing under a New Drug Application, Abbreviated New Drug Application or Biologics License Application if the FDA decided that it was “necessary to ensure that the benefits of the drug outweigh its risks.” FDAAA’s requirements apply both to drugs on the market at the time of its passage as well as those approved for marketing afterwards.

Big Pharma’s Position

Brand companies argue through such high-powered trade associations as PhRMA (Pharmaceutical Research and Manufacturers Association) and the Biotechnology Industry Organization (BIO), that they are currently under no legal obligation to sell their products to a competitor, and that brand manufacturers are reluctant to expose themselves to liability risks by providing quantities of drugs with known dangers – such as Revlimid’s® teratogenicity risk – to a third party for human testing under circumstances beyond their control.

The Generics’ Response

When Celgene denied Dr. Reddy’s request for Revlimid® samples, Dr. Reddy’s petitioned the FDA, accusing Celgene of an anti-competition motive. The US Federal Trade Commission (“FTC”) launched an investigation. As Celgene explained in a subsequent earnings report, the FTC’s investigation was initiated “to evaluate whether there is reason to believe that we [Celgene] have engaged in unfair methods of competition.” Both the FTC and the Connecticut Attorney General have expressed concern that by using such restrictive sample distribution policies, brand-name drug companies may be seeking to hinder the development and marketing of generic drugs and deferring the benefits of generic medicines to consumers, taxpayers who fund government healthcare programs, and third-party payors, such as health insurance carriers.

A Legislative Solution Proposed Fails to Carry

Pending before both Houses of Congress, in the U.S. Senate and House of Representatives, are proposals extending and broadening legislation under which the FDA collects user fees from drug companies in order to fund its review of NDAs, ANDAs and BLAs, and to inspect finished product and API manufacturing plants. The 2012 FDA Safety and Innovation Act – in the Senate version of the bill, but not the House’s – had tacked onto it language to prevent the use of FDAAA’s REMS provisions to restrict generics’ access to brand drug samples. These provisions were supported by leading U.S. Senators and were passed in a near-unanimous vote in the Senate last month. Under their terms, civil penalties would have been established for improperly withholding such product samples once the FDA had approved a generic applicant’s risk mitigation and safety protocols as comparable to those of the brand manufacturer. These provisions, if enacted into law, would have applied to all drugs, including biosimilars, the development of which the FDA has encouraged and promoted with the publication of three Guidance Documents earlier this year. The Senate amendment was supported by the Generic Pharmaceutical Association, pharmacy benefit managers, which manage prescription drug benefit plans for major employers, pharmacy trade associations, and consumer groups.

Interestingly, the FDAAA itself contains a provision prohibiting brand companies from withholding product samples from generics, but it has no “teeth,” or enforcement penalties if they don’t comply.

As noted above, the House bill amending the proposed user fee legislation did not contain similar language as the Senate bill requiring the furnishing of product samples to generics. Such language, in an earlier version of the House bill, was stripped from the bill after vigorous opposition by PhRMA.

Over the past ten days, the Senate and House proposals were the subject of intense negotiations to resolve differences, and, earlier this week it was announced that agreement had been reached on a compromise user fee bill without the provisions prohibiting brand-name drug manufacturers from using the FDAAA’s REMS policies to block generics from getting samples of a reference listed drug. The final version of the user fee legislation will now be voted on and likely approved by both Houses of Congress, and it is expected to reach President Obama’s desk sometime in July for his signature. Thus, the issue has not gone away. Whether and when another legislative attempt at a solution is made, or regulatory remedy sought, remains an open question at this time. Observers believe, however, that there will be additional opportunities during the next legislative session, and following the U.S. Presidential election in November, to again seek a legislative fix for this problem.