REMS “Abuses” Concern FDA, But Can Scolding Help Speed Generic Entry?

Brand name companies’ use of restricted distribution programs to block the development of generic drugs has been an unintended consequence of the FDA Amendments Act of 2007. The generics industry has long complained that the use of FDA-required risk management plans prevents access to affordable medicines. While that battle has ranged in the courts, FDA has remained quiet on the subject. Until now.

Innovator drug companies have become increasingly crafty at using Risk Evaluation & Mitigation Strategies to block the development of generic competitors – to the point where they are abusing the system, FDA Office of New Drugs Director John Jenkins, MD, declared during the FDA/CMS Summit for Biopharmaceutical Executives in Washington, D.C. in December.

Without naming names, Jenkins said that “some innovators have very cleverly taken it as an opportunity to evergreen their products” and “have become really aggressive in using that strategy and hiring the best lawyers to try to back it up.” It has reached the point where some companies are “abusing” the system, he declared, and it’s “a growing, major problem” for FDA.

Created under the FDA Amendments Act of 2007, REMS allow FDA to approve drugs and biologics with risk profiles that may otherwise not have passed muster with the agency by putting restrictions on how the products are distributed – and who can use them.

Jenkins and his counterpart on drug safety, Office of Safety & Epidemiology Director Gerald Dal Pan, MD, both used their annual appearance at the FDA/CMS Summit to express concern that those safety tools have become (in their view at least) a lifecycle management strategy for innovator companies. Their frustration was evident – and is significant in that neither is directly involved in generic drug reviews, and therefore would not normally be expected to speak out on an issue of concern to generic companies.

But both sound weary of being drawn into debates (with the explicit or implicit threat of legal action) over how a REMS imposed by the new drugs side of FDA affects the ability of the generic drug side to approve an ANDA.

There are at least three ways a REMS can potentially delay a generic entry:

• Innovator companies have tried to use a closed distribution system involved in a REMS to deny access of samples of a reference-listed drug and block a generic competitor’s ability to conduct bioequivalence studies. Normally, a generic firm simply buys the brand from distributers for use in bioequivalence studies, but many REMS are set up to cut out any access other than direct to a registered prescriber and patient.
• The REMS statute envisions a “shared” risk management program upon generic entry, but provides no mechanism to force an innovator company to work with a generic competitor.
• There are (in some cases at least) intellectual property protections on the REMS itself – above and beyond the “typical” patents protecting a pharmaceutical product and its uses.

In each case, FDA’s ability to address the issue appears quite limited. For the first issue – allowing access to REMS – FDA has taken one significant step: setting up a process to formally declare that sales to a generic applicant are permitted by a given REMS. That, of course, is far short of actually compelling a sale, but does in theory make an antitrust intervention more viable.

For the second issue, the agency has (and likely will continue) to waive the requirement to “share” a REMS in the face of real or perceived recalcitrance by the innovator. But that means more work for the agency, potentially more cost for the generics, and more burden on providers.

In the third case, it is hard to see what if anything FDA can do about intellectual property issues. That will clearly be the domain of the courts.

So it is tempting to view the frustration voiced by Jenkins and Dal Pan as a sign of powerlessness: at this point, the agency is left with public jawboning as its only real option. But that may not be the case for long.

What’s really needed, according to the Generic Pharmaceutical Association, is a legislative fix, namely, the "Fair Access for Safe and Timely Generics" Act (or FAST Generics Act), which was introduced last fall.

GPhA says it has been working with the House Energy & Commerce Committee to include the FAST Generic Act in whatever legislative package comes out of the “21^st Century Cures” process. But whether the association will be successful is unclear: “Cures” has focused on ways to speed new innovations to market, not on ways to encourage generic drug development (and there was no discussion of FAST in the first draft “discussion document” released by the E&C committee in January).

There is another option. FDA’s somewhat unusual advocacy on the topic may raise the profile enough that the issues could be brought to the negotiating table at the next round of user fee programs. Between renewal of the prescription, generic and biosimilar user fee programs, it is bound to be an issue that the generic drug industry – and FDA – will want resolved.

An Administrative Fix from FDA

It is clear from FDA’s recent regulatory actions – and Jenkins’ and Dal Pan’s comments on the issue at the FDA/CMS Summit – that the agency is becoming increasingly frustrated by the tactics used by a relatively short list of companies to use REMS to block the entry of generic drugs.

At the moment, only a handful of companies (most notably Celgene Corp.andJazz Pharmaceuticals PLC) are using REMS to block generic entry. But other branded manufacturers, such asAcorda Therapeutics Inc. and Actelion Pharmaceuticals Ltd., have taken the tactic a step further by implementing self-imposed restricted distribution programs – outside of an FDA-required program – to prevent generic companies’ from acquiring samples of a reference-listed drug.

REMS were intended to be “a system to ensure the safe use of the drug, but now it’s become an evergreening system for avoiding generic competition,” Jenkins said.

That wasn’t the intent of Congress when it passed the FDA Amendments Act; the law specifically says that REMS should not “block or delay” the development and approval of generics. “Congress gave us some tools to try to address generic entry,” Jenkins noted, “but they are not as strong as they might have been to avoid what was probably an unexpected or unintended problem.”

Typically, a prospective ANDA holder would purchase samples of a branded drug from a wholesaler. But the distribution of drugs subject to a REMS with “Elements to Assure Safe Use” are restricted exclusively to specialty pharmacies and registered patients. Innovator companies argue that providing samples to prospective ANDA sponsors would violate those distribution agreements. Moreover, they have a right to decide with whom they do business.

In one attempt to address the issue, FDA issued a draft guidance document on December 5 that provides assurances to branded manufacturers that the agency has reviewed a generic company’s bioequivalence study protocols and determined that they contain safety protections comparable to those in the REMS. Under the draft guidance, generic companies could request a letter from FDA stating that providing samples to a prospective ANDA holder would not violate the REMS.

“We issued a guidance to try to get around one of the ploys, which was to argue that it was unsafe for the generic company to have access to the REMS-covered medication to do their bioequivalence study,” Jenkins said. “We issued a guidance to basically try and give coverage from FDA saying it is okay for a REMS-covered product to be utilized in a bioequivalence study to support a generic.”

While helpful, it’s not a perfect solution. In the draft guidance, FDA acknowledges that requesting or obtaining a letter is not a legal requirement, and the agency still cannot force branded companies to provide would-be generic competitors with samples of their reference-listed drug. That decision still rests with innovator. (Also see "Generics REMS Hurdles Lowered Somewhat By FDA Protocol Letters" - Pink Sheet, 4 Dec, 2014.)

In issuing the draft guidance, FDA fulfilled a promise made to Dr. Reddy's Laboratories Ltd.that it would establish procedures for a generic company to gain confirmation from the agency that obtaining sample material for bioequivalence testing complies with distribution restrictions imposed through a REMS, and would ensure safe use of the product. (Also see "Generic Companies Gain Little From FDA Decision On Access To REMS Drugs" - Pink Sheet, 12 Aug, 2013.)

That promise was made in FDA’s response to a 2009 citizen’s petition in which Dr. Reddy’s asked the agency to force brand name manufacturers to make available samples of their products for bioequivalence testing. (Also see "Will REMS Delay Generics? Revlimid Petition May Help Determine The Answer" - Pink Sheet, 18 Jun, 2009.) FDA declined that request in 2013, saying it did not have the authority to do so, and referred Dr. Reddy’s to the Federal Trade Commission. (FTC is investigating whether innovator companies are using REMS to unfairly block generic competition, but has yet to bring charges.)

Dr. Reddy's filed the petition after being thwarted by Celgene in its attempts to develop a generic equivalent to Revlimid(lenalidomide), which, as a teratogen, is available only under a restricted distribution program. Celgene used similar tactics to protect Revlimid’s predecessor product, Thalomid (thalidomide), and was sued by Lannett Co. Inc.in2011 and Mylan Inc. in 2014. The Mylan suit is ongoing, but Lannett and Celgene reached a settlement, and Lannett says it has submitted an ANDA for thalidomide to FDA.

Until more requirements can be placed on innovators, either through court decisions or legislation, GPhA offers another solution: FDA could post standards on its website that generic companies could use as the required criteria for determining bioequivalence while conforming with the protections afforded by the REMS.

“This would alleviate the safety concerns expressed by innovator companies while also addressing the generic industry’s concerns with innovator companies impeding generic competition,” the association says in comments to FDA’s draft guidance.

SEC. 505–2. COMPETITIVE ACCESS TO COVERED PRODUCTS FOR DEVELOPMENT PURPOSES.

(a)DEFINITIONS.—In this section:

(1) COVERED PRODUCT.—The term ‘covered product’ means any drug approved under section 505 or any biological product that is licensed under section 351 of the Public Health Service Act, including—

(A) any combination thereof; and

(B) when reasonably necessary to demonstrate sameness, biosimilarity, or interchangeability for purposes of this section, section 505, or section 351 of the Public Health Service Act (as applicable), any product, including any device, that is marketed or intended for use with such drug or biological product.

(2) ELIGIBLE PRODUCT DEVELOPER.—The term ‘eligible product developer’ means a person that seeks to develop an application for the approval of a drug under section 505(b) or 505(j) or the licensing of a biological product under section 351 of the Public Health Service Act.

(3) LICENSE HOLDER.—The term ‘license holder’ means the holder of an application approved under section 505(b) or section 505(j) or a license under section 351 of the Public Health Service Act for a covered product (including the holder’s agents, wholesalers, distributors, assigns, and corporate affiliates).

(4) REMS PRODUCT.—The term ‘REMS product’ means a covered product that—

(A) is subject to a risk evaluation and mitigation strategy under section 505–1; or

(B) is deemed under section 909(b) of the Food and Drug Administration Amendments Act of 2007 to have in effect an approved risk evaluation and mitigation strategy under section 505–1.

(b) COMPETITIVE ACCESS TO COVERED PRODUCTS AS A CONDITION ON APPROVAL OR LICENSING.— As a condition of approval or licensure, or continuation or renewal of approval or licensure, of a covered product under section 505 of this Act or section 351 of the Public Health Service Act, respectively, the Secretary shall require that the covered product’s license holder not adopt, impose, or enforce any condition relating to the sale, resale, or distribution of the covered product, including any condition adopted, imposed, or enforced as an aspect of a risk evaluation and mitigation strategy approved by the Secretary, that restricts or has the effect of restricting the supply of such covered product to an eligible product developer for development or testing purposes.

(c) COMPETITIVE ACCESS TO COVERED PRODUCTS OTHER THAN REMS PRODUCTS FOR DEVELOPMENT PURPOSES.—No license holder shall adopt, impose, or enforce any condition relating to the sale, resale, or distribution of a covered product that interferes with or restricts access to reasonable quantities of a covered product by an eligible product developer for development and testing purposes, at commercially reasonable, market-based prices, from the license holder or from any wholesaler or specialty distributor authorized by the license holder to commercially distribute or sell the covered product unless the license holder generally adopts, imposes, or enforces lawful conditions relating to the sale, resale, or distribution of a covered product, with respect to other buyers of the covered product.

(d) COMPETITIVE ACCESS TO REMS PRODUCTS FOR DEVELOPMENT PURPOSES.—

(1) PROHIBITED USE OF REMS TO RESTRICT ACCESS.—With respect to a REMS product, no aspect of a risk evaluation and mitigation strategy under section 505–1 shall prohibit or restrict, or be construed or applied to prohibit or restrict, the supply of such REMS product to an eligible product developer for development and testing purposes, at commercially reasonable, market-based prices, from the REMS product’s license holder or from any wholesaler or specialty distributor authorized by the license holder to commercially distribute or sell the REMS product.

(2) SINGLE, SHARED SYSTEM OF ELEMENTS TO ASSURE SAFE USE.—With respect to a REMS product, no license holder shall take any step that impedes—

(A) the prompt development of a single, shared system of elements to assure safe use under section 505–1; or

(B) the entry on commercially reasonable terms of an eligible product developer into a previously approved system of elements to assure safe use.

Source: The FAST Generics Act

Parallel REMS “Not Feasible”

The much tougher issue involves a requirement in the REMS law that brand and generic manufacturers of the same drug that are subject to ETASU use a single, shared system. FDA can waive that requirement if the burden of creating a single system outweighs the benefit – or if any aspect of the ETASU for the branded drug is covered by an unexpired patent that an ANDA filer was unable to license.

That latter provision reflects the reality that some companies, like Celgene, have patented their risk management programs (S.T.E.P.S, in the case of thalidomide). In the post-marketing setting, those patents have made it difficult for to establish shared brand-generic REMS programs. (Celgene decline a request for comment on the issue, citing ongoing legislation.)

FDA’s ability to allow a separate REMS, however, doesn’t preclude attempts by the innovator to enforce those patent rights, and sponsors like Jazz Pharmaceuticals have asserted they will have significant, long-term protection from any generic launch as a result.

Even without patents in the way, there are obvious issues with the “shared” REMS model. Even in cases where sponsors have a shared interest in building a viable REMS platform (as with the long-acting opioid class, for example) the actual negotiations are challenging. And when the “negotiation” involves a generic manufacturer who is attempting to take away market share (and likely involves litigation in the background), the dynamics are close to unworkable.

FDA has taken some administrative steps to address the issue, but officials also acknowledge that under current law, the agency has limited enforcement in the matter. One example came in 2013, when FDA granted approval to generic versions of Indivior PLC’s Suboxone (buprenorphine) and waived the requirement that they share the same REMS as the brand. In that case, FDA also referred the issue to the Federal Trade Commission. (Also see "Buprenorphine Waiver Sheds Little Light On FDA Decision-Making Process" - Pink Sheet, 22 Jul, 2013.)

That solves one immediate problem, but at the cost of creating another one. “We’ve heard very clearly from physicians and pharmacists that it’s just too cumbersome to have” different REMS for the same ingredient, Jenkins said. “Often a physician doesn’t know who’s product a patient will get when the wrote a prescription – whether it will be the brand or one generic or another. So these parallel systems just aren’t going to be feasible in actual practice.”

Still, that may be the only viable solution under current law – and, despite Jenkins’ reservations, the agency may be gearing up to take a similar step with Jazz’ Xyrem.

A Solution on the Horizon?

There are a couple of reasons for FDA to speak out now on this issue – and why GPhA is fighting particularly hard against the use of REMS to block generics.

First, while the practice is currently restricted to a handful of innovator companies, the generic drug association says it is growing in popularity.

According to a July 2014 survey conducted by Matrix Global Advisors and funded by GPhA, innovator companies are using REMS and self-imposed distribution restrictions to block the generic development of 40 small molecule drugs. Based on that number, the report estimates that the delay in market entry of those generic competitors costs the health care system a “conservative” $5.4 billion annually

Furthermore, some brand companies have gone a step further by using self-imposed restricted distribution programs – one not required by FDA – to prevent generic companies from acquiring samples of a reference-listed drug. Actelion used that strategy with its Gaucher disease drug Zavesca (miglusta), as has Acorda with Ampyra (dalfampridine), a drug to improve walking in multiple sclerosis patients.

And now with the biosimilars market about to take off, using REMS to block generic entry is not just a small molecule issue. FDA seeing the same strategies used to prevent the development of biosimilars, where branded companies are “making it very difficult for the biosimilar applicants to gain access to their product to do the testing and the research that’s needed to support an application,” Jenkins said at the FDA/CMS Summit.

GPhA has a legislative fix on the table. The FAST Generics Act, introduced by Reps. Steven Stivers (R-Ohio) and Peter Welch (D-Vt.) on September 18, 2014, would prohibit brand name manufacturing from adopting restricted access practices solely as a strategy to avoid generic competition. The bill would also prohibit the use of patented REMS to prevent a single shared system. (See box.)

Similar attempts have been made before: The House version of the FDA Amendments Act of 2007 would have required brand name companies to sell a reference-listed product to a generic company at fair market value. And the Senate-passed version of the FDA Safety & Innovation Act of 2012 would have required innovator companies to make samples of their products available to generic companies for testing.

The legislation is unlikely to be passed on its own, so the question is whether it could be attached to a bigger vehicle. The House Energy & Commerce’s “21^st Century Cures” discussion is one possibility, but the “Cures” process has largely focused on speeding new innovations to market, not on generic drug issues.

Indeed, the 400-page discussion document only mentions generics in the context of potential market exclusivity extensions for “American manufactured” generic drugs and biosimilars. GPhA had hoped the initial “Cures” discussion document would include a provision addressing the REMS issue, and blasted the committee for not including it in the draft. (The association later apologized.)

The “Cures” discussion is widely thought to be a precursor to the next round of user fee negotiations. Given FDA’s increasing frustration with the use of REMS to block generic drugs development – and the spillover of the tactic into the biosimilar space – the issue could be on the table for discussion during the next round of user fee discussions. It’s clearly a topic on the minds of FDA officials.