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Executive Summary

The drug reimbursement battles in the post-1962 ANDA law period may focus initially on an effort to create differing levels of reimbursement for generic equivalents with different approved indications and/or dosing schedules. Pfizer Associate General Counsel Paul Miller told a Food & Drug Law Institute briefing Nov. 13 on the new ANDA/Patent Restoration Act that the brandname industry "must assure that generic drugs are not substituted for indications that they are not approved for." Miller suggested that "the mechanism to accomplish this may lie in formulary and/or agency listing of approved indications." He also suggested "substitution exclusion provisions, Rxs containing indications, and reimbursement and cost containment provisions which take heed" of dosage, formulation and indication differences. Differing levels of reimbursement for innovator products and generic copies could be used, Miller maintained, to continue support for post-approval research and drug education efforts by brand companies. "As long as the generic drug is available at the pharmacy, does it matter that it is for less than all the pioneer drug's indications?," Miller asked rhetorically. "The physician's Rx does not contain the diagnosis, the substitution lists and formularies do not make a distinction between substitutable and non-substitutable indications, and reimbursement programs do not establish varying cost levels for drugs based on indications." Miller Argues That Brand Education Efforts Justify Premium In MAC Payment Levels Similarly, the Pfizer attorney questioned whether reimbursement policies would distinguish between improved dosage forms."Will reimbursement systems in the future provide differentials, for example, for a state-of-the-art, once-a-day, sustained release dosage form in the face of inexpensive, multiple times a day generic substitutes? Will hospitals under the pressures of DRGs make such provisions?," Miller asked. In the case of the federal MAC reimbursement ceilings, Miller expressed confidence that brand products with added indications or dosing advantages could maintain single source status. "It would seem to me, for example," Miller said, "that if Pioneer drug X has two indications and all the available generic drugs have only one, then drug X is not a multi-source under the MAC program. In my opinion, the same result should apply in a sustained dosage form situation . . . This multi-source issue, I trust, will be handled readily . . ." Outlining an argument for more flexible MACs where multi-source situations evolve, Miller contended that new MAC levels for "the complex drugs of the late 1960's, 1970's and 1980's" should reflect the "extensive and expensive research and education programs" which accompany marketing of those brands. "Unless the MAC system factors in the cost involved in programs such as dosage form and new use research, research into mechanisms of action, post-marketing surveillance mechanisms and programs, papers, symposia and the entire sponsor-supported system which enables MDs to know about a drug and its proper use" will be weakened, Miller maintained. Squibb VP-Drug Regulatory Affairs Norman Lavy, MD, agreed that the issue of generic equivalency to a brand with added indications will be an outgrowth of the new law. Lavy suggested that under the new law "incentives are less clear for additional uses (for brand products)." He noted that, "while the act provides for periods of exclusivity" for uses or formulations that required concerted clinical work, his impression is "that these periods are of minor value to an innovator unless the new approval occurs late in the period of patent protection." Lavy further maintained that the possibility of drugs with the same chemical names, but different labelings, raise promotional enforcement issues and liability confusion."What are the implications when a generic drug labeled for less than all the indications is clearly being marketed for uses only contained in the innovator's label," Lavy asked. "Are there questions of reimbursement for Rxs for inappropriate dispensing by pharmacists, of liability for unlabeled adverse effects . . ." Lavy noted that brand interpretations of liability may make numerous firms liable for reactions from one mislabeled product.

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