INNsight article by Alan Klein, September 2015

With many legal and regulatory issues currently at play in the American generic drug industry, this article will address a few of the more important developments in recent months.

With more than 86 percent of prescriptions written for generic medicines, representing about 30 percent of the dollar value of drug sales in the U.S., America remains the largest of the top five generic markets by value, accounting for 46.9 percent of the $117 billion global total. About half of generic drugs are available to patients at a cost of five dollars or less, and almost 80 percent of all drugs marketed in the U.S. have a generic counterpart. Generics have met with extraordinary success in America, fulfilling the promise of the 30-year-old Hatch Waxman Act to provide patients with quality, brand-equivalent medicines at dramatically reduced cost.

Notwithstanding these successes, however, several significant challenges remain for generic drug companies in the U.S. marketplace. This article will focus on three of them – generic drug labeling and products liability, the biosimilar pathway to regulatory approval and product launch, and the broadening permissible scope of off-label marketing for branded generic drugs.

New Generic Drug Labeling on the Horizon

A year ago, the U.S. Food and Drug Administration announced its consideration of new drug labeling rules for generics, whose labeling, for good reason, invariably tracked the brand drug’s or reference listed drug’s (RLD) labeling almost word-for-word. Hatch-Waxman required this, as did the FDA’s regulations, mandating that generic drug labeling be “the same as” brand drug, or RLD, counterparts. Bioequivalency also precluded any material variations in the “design” of generic medicines. In 2011, and again in 2013, the U.S. Supreme Court reinforced these statutory and regulatory rules by barring products liability lawsuits against generics under the United States Constitution by patients claiming injuries caused by drugs with inadequate warnings or deficient design.

The FDA’s response to these rulings, and under pressure from consumer lobbying groups and brand-name drug manufacturers, was to propose new regulations released for public comment. Under these rules, brand and generic drug manufacturers would be equally obligated to strengthen product warnings on the basis of new information received about health risks. Because of the interest they generated, and the importance of the rule changes, the public comment period was extended into March of this year, and the agency’s final regulations are anticipated to be finalized and published prior to year end.

Under the FDA’s proposed regulations, generic drug companies would be required to immediately strengthen or otherwise modify label warnings when they receive new safety- related information relating to the drug, and in advance of FDA approval. To ensure the label change is communicated properly and promptly, the FDA would permit the ANDA holder to distribute a “Dear Doctor/Health Care Provider” letter to physicians and would require the proposed label change to be submitted to the agency in a format permitting its public posting through the Internet. The FDA would then post the proposed label change on its own website for access by physicians, the public and other generics. The brand drug company, or RLD holder, will then have an opportunity to change its labeling, or not; and the FDA will ultimately decide whether the label change initiated by the generic is warranted by the supporting data. If so, the label changes must be made by the brand/RLD company and all other generics marketing the drug.

Great concern has been expressed by the Generic Pharmaceutical Association (GPhA) and a variety of consumer groups, physicians and others about whether these changes, if made, will promote uniformity or undercut labeling uniformity; will engender confusion among prescribers and patients; will increase the cost of generic medicines (GPhA has estimated these additional costs at $4 billion a year); and may force generics to abstain from producing certain drugs because of perceived liability risks.

All eyes are on Washington this fall as the industry and others await the FDA’s final regulations.

Biosimilars Pathway Issues

The introduction into the U.S. marketplace of biosimilar versions of complex biologics used to treat illnesses, such as cancer, hemophilia, growth disorders and rheumatoid arthritis, could save consumers, health insurance carriers and government payors upwards of $44 billion over a 10-year period. The Biologics Price Competition and Innovation Act of 2009 (BPCIA) established a regulatory pathway for biosimilars to enter the market by furnishing an application to the FDA as early as four years into the reference biologic’s 12-year exclusivity period.

In March of this year, the FDA approved its first biosimilar application – Sandoz’s biosimilar of the biologic Neupogen® used in cancer therapy. Other biosimilar applications are pending and currently under FDA review. Sandoz’s drug, named Zarxio®, was recently launched in the U.S. with a 15-percent discount off the wholesale price of Neupogen®, which has been on the market for 24 years.

Two current issues, discussed briefly below, are essential to generics considering the development and sale of biosimilars in the American marketplace.

First, the past several years have witnessed a controversy roiling between brand and generics over biosimilar naming. In the European Union, Canada, Australia and Japan, shared naming under the international non-proprietary name (INN) system has been utilized for several years. While brand companies have urged the use of unique non-proprietary names for biosimilars to promote product safety and accurate adverse event reporting, generics have sought the use of the same non-proprietary name to enhance the marketplace acceptance and substitutability of lower-cost biosimilars.

In late August, the FDA in a draft Guidance statement required that biosimilars carry the same non-proprietary name as the reference biologic with the addition of a four-letter suffix “devoid of meaning,” and that the reference biologic carry a different four-letter suffix. For example, Sandoz’s Zarxio® will now be known as “filgrastim-bflm,” and Amgen’s Neupogen® “filgrastim-jcwp.” The FDA also announced in this Guidance that it is considering adopting the same convention in the naming of interchangeable biologics, or, alternatively, having all interchangeable biologics use the same non-proprietary name and the same suffix as the reference product. This Guidance on the naming of interchangeable biologics is anticipated by year’s end, and another Guidance on demonstrating interchangeability likely will follow thereafter.

Second, currently before the Federal Circuit Court of Appeals, which hears all U.S. patent litigation appeals, are two important issues ironically involving the same product as discussed above, Sandoz’s biosimilar of Amgen’s Neupogen®. In a patent suit initiated by Amgen against Sandoz in a California federal court, the trial judge ruled that the BPCIA’s pre- lawsuit information exchange process, known colloquially as “the patent dance” between a biologic’s patent owner and generic biosimilar drug challenger, was voluntary and optional on the part of the generic. The trial court also found that a generic under the BPCIA was not required to wait for receipt of FDA licensure before furnishing the reference product holder with a required 180-day notice of its intent to commercially market its product. A panel of the Federal Circuit agreed with Sandoz that “the patent dance” was optional but disagreed that notice of product launch could occur before the generic’s receipt of marketing approval from the FDA. The full Federal Circuit has now agreed to rehear the appeal. As noted above, Sandoz has already launched its product. The court’s decision will be significant for all companies operating in the biologics/biosimilars arena in determining the rights and obligation of the parties under the BPCIA on these issues.

Looser Off-Label Marketing Limits

Off-label marketing issues have almost always involved brand drug manufacturers. However, it should also be a topic of interest to generics marketing branded products. Branded generic drugs currently average about 6 percent of prescriptions written in the U.S. This will likely increase as generic-produced biosimilars obtain FDA approval and are accepted by U.S. prescribing physicians and their patients. In August, a New York federal judge ruled that Amarin Pharma, Inc. has a right under the free speech clause of the First Amendment to the U.S. Constitution to make certain truthful, non-misleading statements about the off-label uses of Vascepa®, a drug indicated to reduce severe triglyceride levels in adult patients. When Amarin sought FDA approval to promote the drug for use in patients with lesser triglyceride levels and of therapeutic benefit in reducing the risk of coronary heart disease, the FDA opposed the request, and Amarin brought suit.

In a thoughtful, extensive decision the court found in Amarin’s favor, holding that the proposed communications, scientifically based and with appropriate disclaimers, were truthful and non-misleading. While the decision does not bind courts in other jurisdictions, it provides a helpful roadmap for generics utilizing either their own sales force or contract detail persons in marketing their branded medicines. The FDA needs to decide if it will appeal this decision to the U.S. Court of Appeals for the Second Circuit, but, for now, it is another case espousing the use by both brand-name drug companies and generics of truthful communications, carefully prepared, in conveying to physician prescribers scientifically supported off-label uses of their products.


Alan Klein is a partner in the Trial Practice Group of the international law firm, Duane Morris LLP. Mr. Klein and his firm serve the generic drug industry in Hatch-Waxman matters, related litigation and patent opinion letters, as well as commercial and products liability cases. He can be contacted at aklein@duanemorris.com.

Disclaimer: This article is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this article are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.