Using REMS to block generic sample access may violate antitrust laws, says US FTC
This article was originally published in SRA
The Generic Pharmaceutical Association (GPhA), which lately has been on the opposing side of the US Federal Trade Commission, gave the agency a big pat on the back on 13 March after the government watchdog declared that refusal by a brand-name firm to sell drug samples to potential generic competitors may violate antitrust laws1,2.
The FTC did not take a position on the factual merits in a lawsuit involving Actelion's refusal to sell samples of its pulmonary arterial hypertension medicine Tracleer (bosentan) and its Gaucher disease drug Zavesca (miglustat) to generic firms seeking the medicines for bioequivalence testing for FDA approval of lower-cost copycats.
However, it said such actions may violate certain provisions of the Sherman Antitrust Act of 1890.
Actavis, Apotex and Roxane are alleging that Actelion has implemented distribution restrictions that prevent the companies from purchasing samples of Tracleer and Zavesca through customary distribution channels or directly from the Swiss innovator, thereby precluding the generics firms from meeting FDA requirements for developing the lower-cost versions of the branded medicines.
In the case currently before the US District Court for the District of New Jersey, Actelion is arguing that antitrust laws place virtually no limit on the company's ability to block generic access to its brand product, and is seeking a broad declaration from the court that the firm is under no duty or obligation to sell its products to potential competitors.
Actelion is contending that it can refuse to sell Tracleer to generics firms because the drug's risk evaluation and mitigation strategy (REMS) plan imposed on it by the FDA, which dictates, among other things, that the medicine may only be dispensed through pharmacies, practitioners and healthcare settings that are specially certified and bound by contract to follow a strict protocol to monitor and protect patient health.
To fulfill its REMS obligations, Actelion said it only works with wholesalers that agree to comply with the FDA's requirements for Tracleer and that those distributors can only sell the drug to entities specially certified and bound by contract to follow the required protocol.
Because Tracleer comes with certain adverse effects, Actelion is contending that it has a legitimate interest in how the drug is used and administered to patients.
"Any harm caused as a result of the potential misuse of Tracleer during testing by a generic could have a significant impact on Actelion and Tracleer's reputation and standing in marketplace," the Swiss company argued in its brief before the court, adding that interest exists even independently of the REMS.
However, in a friend-of-the-court brief, the FTC noted that, recognizing that certain restricted distribution programs could be used to impede generic competition, Congress included language in the legislation that created REMS – the FDA Amendments Act of 2007 – clarifying that REMS provisions may not be used for such purposes.
Indeed, FDAAA states that no holder of a REMS-covered drug shall use an aspect of the REMS to block or delay approval of an abbreviated new drug application (ANDA) – with the FDA even declaring publicly that such is the case.
The FDA has issued letters clarifying that, in appropriate circumstances, a particular brand firm may sell REMS drugs subject to restricted distribution programs to particular generic firms for bioequivalence testing without violating the REMS, the FTC pointed out in its amicus brief.
The FTC pointed out that in the case of Zavesca, which does not have a REMS, Roxane is alleging Actelion has nonetheless implemented restricted distribution agreements for the product.
Roxane also is asserting that Actelion has provided Tracleer and Zavesca to non-competitor research organizations and brand drug companies to conduct clinical studies using the drugs, outside the restricted distribution networks used to distribute the drugs to patients.
The allegations that Actelion is willing to provide access to non-competitors, despite its distribution restrictions, but refuses to provide access to its potential competitors, even if compensated at full retail price, "support a viable theory of exclusionary conduct under existing precedent", the FTC said.
Actelion is claiming it is protected under the general principles of antitrust law that as a private firm, it is ordinarily free to choose with whom it does business and that vertical agreements with distributors rarely pose any competitive concern.
However, the FTC said those principles "are not absolute."
Under certain circumstances, potentially including those alleged in the counterclaims here, a monopolist’s refusal to sell to its rivals may violate Section 2 of the Sherman Act, and vertical agreements may violate Section 1," the FTC said.
"The unique regulatory framework governing the pharmaceutical industry may create conditions that increase the potential for anticompetitive conduct that prevents or delays generic competition," the agency said. "While the evidence may not ultimately support any of the Sherman Act claims in this case, the FTC respectfully submits that they are not barred as a matter of law."
If a biopharma innovator can effectively block generics firms from accessing the brand product, "it may be able to prevent generic competition even after its patents on these products expire," the FTC surmised.
"If successful, this conduct could upset the balance of the Hatch-Waxman Act and, more broadly, undermine the core principle of the patent system that patents have a limited duration," the agency said.
Competition from lower-priced generic drugs saves American consumers "billions of dollars" a year, the FTC said. If Actelion's legal position is adopted, such an outcome could prove costly for consumers, the agency said.
"Actelion's position that it has a virtually absolute right to block generic access to its products therefore poses a significant threat to competition in the pharmaceutical industry," the FTC declared.
"GPhA strongly supports the FTC's opposition of this anti-consumer practice," said Ralph G Neas, president and CEO of the Washington-based industry association.
"The FTC's forceful arguments make a compelling case," he said, noting that his group also has filed a brief in the case.
While the GPhA supported the FTC's brief, the group in recent years has locked horns with the agency over the legality of so-called pay-for-delay deals, in which innovator firms pay generic drug makers to keep their lower-cost products off the market for a period under patent settlement agreements.
An appeal filed by the FTC against Watson, now part of Actavis, involving pay-for-delay is due to be heard by the Supreme Court on 25 March3.
When it comes to the patent settlement agreements, the FTC is "wrong on the facts, wrong on the public policy and wrong on the law," Mr Neas said in a 17 January statement4.
References
1. Actelion Pharms Ltd v Apotex Inc (Case No. 1:12-cv-05743), FTC Amicus Brief: Improper Use of Restricted Drug Distribution Programs May Impede Generic Competition, 12 March 2013, www.ftc.gov/opa/2013/03/actelion.shtm
2. GPhA press release, 13 March 2013, www.gphaonline.org/gpha-media/press/
3. Turning Hatch-Waxman on its head for generic drug makers? US court cases imminent, Scrip Regulatory Affairs, 11 March 2013
4. GPhA statement, 17 January 2013, www.gphaonline.org/gpha-media/press/gpha-ftc