Generic Industry Market Forces May Impact GDUFA III Talks

AAM's Chip Davis said a user fee cut is not in order, but industry consolidation and product launch problems may mean it cannot accept another large increase.

Economics may complicate the next round of generic drug user fee negotiations, should conditions within the industry not improve.

Generic price deflation has been ongoing for several years, in part because of wholesaler consolidation and other factors, and when combined with ongoing issues with patent system abuse, there is increasing the pressure on manufacturers trying to maintain and grow their product portfolios.

Chip Davis, president and CEO of the Association for Accessible Medicines, suggested those dynamics may have downstream effects on FDA's generic drug user fee program. He said absent changes the industry may not be able to accept another user fee increase like the one granted in GDUFA II.

Davis was not ready to say AAM will be asking for a fee cut in GDUFA III, but warned that by fiscal year 2022, the generics industry may not be as strong as today.

"The reality is if this is an industry that continues to look at consolidation and reducing the size of its portfolio, then it's not going to be the same size industry that absorbed 60% increases in fees last time," Davis said March 11 during a briefing with reporters.

AAM and other generic industry stakeholders have long complained about brand tactics, including patent evergreening and other strategies to prevent generic entry like using the Risk Evaluation and Mitigation System to prevent generic manufacturers from obtaining samples.

Outgoing FDA Commissioner Scott Gottlieb also has decried what he has called regulatory arbitrage. (Also see "Gottlieb: Real Risk Of Congressional Action If Anti-Competitive Actions Continue" - Pink Sheet, 3 May, 2018.)

In addition, AAM is concerned that consolidation of the wholesale market to three major purchasers will force more manufacturers out of the business. (Also see "FDA Contradicts AAM's Generic Market Consolidation Argument" - Pink Sheet, 21 Nov, 2017.)

Several bills have been introduced in Congress that would deal with patent and REMS abuse. Davis and others testified during a March 13 House Energy and Commerce Committee Health Subcommittee hearing on many of them.

The hearing addressed barriers to competition and many subcommittee members were interested in helping more generics reach the market and by extension increasing pricing pressure. Davis during the hearing warned that bills that would change the 180-day exclusivity rules for first generic filers to prevent so-called "parking," could reduce rather than expand generic competition. President Trump included a similar proposal in his FY 2020 budget request. (Also see "Trump FY 2020 Budget Renews Push To Reform 180-Day Exclusivity " - Pink Sheet, 11 Mar, 2019.)

AAM prefers legislation that would allow generic companies to sue brand firms that use FDA safety programs to avoid selling samples for testing. (Also see "CREATES Act: Republican Lawmakers Worry About Frivolous Lawsuits By Generic Firms" - Pink Sheet, 13 Mar, 2019.)

BsUFA May See Same Reauthorization Concerns

Davis seems to be offering a new incentive for FDA and Congress to end what they believe are anti-competitive tactics. He now is suggesting FDA operations also could be affected should reforms not be enacted.

"This industry is facing some real market challenges that if they're not stabilized is inevitably going to probably impact the discussions around and early-stage negotiations of the next round of GDUFA," Davis said.

GDUFA requires generic drug sponsors to pay user fees for application assessments and other services and allow FDA to improve its industry oversight. The GDUFA II agreement included major changes to the user fee structure, as well as an increase in fees paid to FDA.

Application fees increased 144% in FY 2018, the first year of GDUFA II. At the same time, supplement fees were eliminated and a new program fee was created. (Also see "Generic User Fee Hikes Could Disrupt US FDA Drug Pricing Campaign" - Pink Sheet, 28 Aug, 2017.)

GDUFA II is expected to generate more than $2.5bn for FDA over the five-year cycle, according to program financial plans. The Office of Generic Drugs grew substantially with fee revenue, in part so it could speed ANDA assessments and facility inspections. Decreases in revenue could threaten service levels.

Davis also suggested the biosimilar user fee program may see similar problems during its next renewal process if slow product uptake continues.

"If you look at biosimilars, 17 approved, seven on the market. If you're going to invest $300m, $400m in a biosimilar development program, you're not going to like that batting average very much," he said.

Davis added biosimilar uptake and the generic product launch concerns "are going to be two very big issues that we need to be mindful of heading into the next round."

Pfizer Inc. sued Johnson & Johnson over its contracting practices for Remicade (infliximab), which Pfizer argued are anti-competitive. Since approval, Remicade biosimilars have gained little market share. (Also see "Missed Opportunities: 10 Questions We Wish Senators Had Asked At The Drug Pricing Hearing" - Pink Sheet, 7 Mar, 2019.)

Among Gottlieb's primary initiatives has been to boost biosimilar development and uptake. The agency has issued many guidances as part of its Biosimilar Action Plan, although its most recent update of its proposed naming convention surprised many product proponents. (Also see "Policy Reversal: FDA Will No Longer Require Suffixes For Older Biologics" - Pink Sheet, 7 Mar, 2019.)

BsUFA is a much smaller user fee program revenue-wise compared to GDUFA and the older prescription drug user fee. However, it is poised to grow as more biosimilar products are developed and enter the market. (Also see "Biosimilars At US FDA: Personnel Spending Losing Influence Over Program" - Pink Sheet, 19 Aug, 2018.)

GDUFA And BsUFA III Planning Already Started

GDUFA II is less than two years into its five-year program cycle, but planning already is under way for another round of reauthorization negotiations, which may begin in 2020 or 2021. GDUFA II ends Sept. 30, 2022.

Many issues already are emerging as companies and FDA understand and encounter the changes imposed as part of the last renewal.

One idea floated would limit the applications eligible for a priority assessment after finding that the pathway seems more valuable for amendments. It is an acknowledgement that at least for the near-term, first-cycle approvals may remain rare. (Also see "Will GDUFA III Curtail Priority Assessments?" - Pink Sheet, 14 Sep, 2018.)

There also have been complaints about the requirements for complex generic sponsors to receive a product development or pre-submission meeting. Then-OGD Director Kathleen Uhl said changes would not be made until GDUFA III. (Also see "Unhappy With GDUFA II? Note It For GDUFA III, FDA Says" - Pink Sheet, 28 Nov, 2017.)

Biosimilar sponsors suggested expediting reviews for additional indications for the upcoming BsUFA III talks. Stakeholders also want finalized guidance on interchangeability and more efforts to combat misinformation about the products. (Also see "BsUFA III: Industry Eyes Streamlined Review Of New Indications, Phased Review Process" - Pink Sheet, 22 Oct, 2018.)