U.S. FDA Sends Letter to Push USPTO Concerning Drug Patents and Access

The U.S. Federal Food and Drug Administration (FDA) recently sent a letter to the U.S. Patent and Trademark Office concerning the FDA’s concerns regarding pharmaceutical patents and their impact on innovation and access. Some of the concerns include the use of continuations to build patent thickets to raise litigation costs as well as resulting in possible delays of generic entry; evergreening practices; and product-hopping.  Notably, the FDA is generally interested in increasing communication and collaboration to address those issues, including offering expertise, collecting additional information regarding IPRs and other post-grant procedures as well as inquiring whether examiners need more time to review patent applications. While the Trump Administration also had concerns regarding drug pricing, President Biden’s recent Executive Order concerning competition is the impetus for this letter’s push for increased collaboration. 

Bloomberg Tracking Pharmaceutical Prices

One way the Trump Administration appears to attempt to control drug prices is through use of the “bully pulpit.”  Wikipedia states that the “bully pulpit”: “is a conspicuous position that provides an opportunity to speak out and be listened to. This term was coined by United States President Theodore Roosevelt, who referred to his office as a "bully pulpit", by which he meant a terrific platform from which to advocate an agenda.”  

President Trump has used strong language to apparently shame pharmaceutical companies from raising drug prices.  Indeed, two pharmaceutical companies announced they would not raise prices for their drugs.  Those two examples make great headlines for President Trump, but are drug prices as a whole getting lower in the United States.  Bloomberg seeks to answer that question and is tracking the pricing of "widely used" and "well known" drugs across several different disease categories and updating that information as time passes.  Notably, prices (excluding Pfizer's drugs, who announced it would not raise prices) appear to be moving up.  Interestingly, the price increases are mostly hovering around 9% to 10%.  Also, the prices tracked by Bloomberg do not include the rebates that are provided by pharmaceutical companies, but are the list prices.  

The Trump Administration is moving on other fronts to try to control drug prices, but many experts state that some of those attempts will not impact the cost of drugs in the United States by much.  It will be interesting to see if actions taken by the Food and Drug Administration discussed here will make a significant difference.  

New Trump Administration U.S. FDA Working Group on Importation of Pharmaceuticals

The U.S. Secretary of the Department of Health and Human Services, Alex Azar, has recently directed the Food and Drug Administration (FDA) Commissioner Scott Gottlieb to establish a working group to explore importing “safe” pharmaceuticals from other countries in the case of a dramatic price hike by a pharmaceutical company.  The Press Release is careful to note that this would not include pharmaceuticals covered by “patents or other exclusivities.”  However, there is the recent U.S. Supreme Court case in Impression Products v. Lexmark International concerning an international exhaustion rule for U.S. patents.  The Press Release states:

As part of the Trump administration’s efforts to lower drug prices and put American patients first, Health and Human Services Secretary Alex Azar requested today that FDA Commissioner Scott Gottlieb establish a working group to examine how to safely import prescription drugs from other countries in the event of a dramatic price increase for a drug produced by one manufacturer and not protected by patents or exclusivities.

“We look forward to working with Commissioner Gottlieb and the FDA to explore how importation could help address price hikes and supply disruptions that are harming American patients,” said Secretary Azar. “We have seen a number of both branded and generic examples in recent years where a single manufacturer dramatically hikes the price for a drug unprotected by patent or exclusivities. In the 2015 case of the drug Daraprim, we saw the list price of a drug approved by the FDA in 1953 increase by more than 5,000 percent.

“Safe, select avenues for importation could be one of the answers to these challenges. When HHS released the President’s Blueprint for putting American patients first, I said we are open to all potential solutions—assuming they are effective, safe for patients, and respect choice, innovation, and access.

“Importation may well fit that bill in some instances. We look forward to working with Commissioner Gottlieb on this issue, and appreciate the voluminous work FDA has done to increase competition in America’s drug markets.”

Trump Administration FDA Moves to Speed Up Biosimilar Process in United States

The high cost of health care in the United States is a significant issue.  Some research points to two causes of the high cost in the United States: 1) high pharmaceutical cost; and 2) high wages for health care workers.

Notably, two pharmaceutical companies, Novartis and Pfizer, recently announced that they would not implement pharmaceutical price increases on certain drugs.  This is apparently from pressure from the Trump Administration.  

The Commissioner of Trump's Food and Drug Administration, Scott Gottlieb, MD, recently released comments concerning pricing reform for a Brookings Institution discussion on pharmaceuticals.  His comments define the problem with rising drug costs by placing a focus on biologics and the very slow movement in the United States for biosimilars to reach the marketplace.  His comments further explain how improving competition can lead to decreased prices and savings for the United States.  He details some solutions to the problems, including increased cooperation with regulators outside the United States to speed up biosimilar approval.  He further points to how intellectual property tactics taken by biologic owners are slowing down the process for biosimilars to reach consumers and how the FDA plans to work with the Federal Trade Commission to address these tactics.  Here is an excerpt of his comments:

While less than 2 percent of Americans use biologics, they represent 40 percent of total spending on prescription drugs.

So, enabling a path to competition for biologics from biosimilars is a key to reducing costs and to facilitating more innovation.

By enabling a path for competition from biosimilars, we also give innovators an added incentive to invest in further research that’ll lead to the discovery of even better drugs that deliver additional benefits for patients.

At the FDA, we’re focused on advancing policies that make the process for developing biosimilars more efficient.

To achieve these goals, I’m pleased to announce today that we’re releasing our Biosimilars Action Plan. This plan is an important piece of the Administration’s bold Blueprint to Lower Drug Prices and demonstrates the progress being made against the deliverables the President laid out.

Our plan is aimed at promoting competition and affordability across the market for biologics and biosimilar products. Before I focus on some of the details, I’d like to talk about some of the broader goals we’re focused on.

. . .

Biologics represent 70 percent of the growth in drug spending from 2010 to 2015. And they’re forecasted to be the fastest growing segment of drug spending in the coming years.

To make sure that the next generation of breakthroughs remains affordable, it requires vibrant competition from biosimilars. But it also means that we must consider new payment approaches. Models that allow us to take advantage of the competition that biosimilars offer.

Our current payment system, which reimburses drugs based on their average sales price, was designed in a single-source world. It was a market of biologics where there was typically only one drug in a category. And there wasn’t a lot of therapeutic variety or competition.

At the time, there was only one EGFR inhibitor on the market, and just one VEG-F inhibitor. I was there when this system was designed and implemented. And I can tell you many of us didn’t envision a world where there’d be so much competition in these therapeutic categories.

So a system was designed that accepted the fact that government programs, like Medicare, would be price takers.

We didn’t have the advantage of drug competition to enable the development of formularies, bidding and market-based negotiations like we have under Part D prescription drug plans.

So the system we designed—using the average sales price as a benchmark for reimbursement—was designed to help make sure that drug makers wouldn’t be able to take big price increases once the drugs reached the market. But it wasn’t a system designed to take advantage of price competition. Because we didn’t foresee that there would be multiple drugs in these different categories.

                . . .

While the FDA has approved 11 biosimilars through 2018, only three are now marketed in the U.S.

Competition is, for the most part, anemic.

It’s anemic because consolidation across the supply chain has made it more attractive for manufacturers, Pharmacy Benefit Managers, Group Purchasing Organizations and distributors to split monopoly profits through lucrative volume-based rebates on reference biologics—or on bundles of biologics and other products—rather than embrace biosimilar competition and lower prices.

It’s anemic because litigation has delayed market access for biosimilar products that are, or shortly will be, available in markets outside the U.S. several years before they’ll be available to patients here. These delays can come with enormous costs for patients and payors.

Let me give you one measure of those costs.

At the FDA, we did an analysis of biosimilar competition across all Organisation for Economic Co-operation and Development (OECD) markets. We looked at what would have happened if all the biosimilars that the FDA approved in the U.S. were successfully marketed here in a timely fashion.

We’ll release the full details on this analysis soon. But I want to give you a sense today of what we found.

To measure the potential impact of this biosimilar competition, we assumed that the savings achieved in the U.S., in terms of price discounts, would have been on par with the experience enjoyed in the other OECD nations.

Based on these assumptions, our analysis showed that if Americans had the opportunity to purchase successfully marketed, FDA-approved biosimilar prescription drugs, they could have saved more than $4.5 billion in 2017.

These are large savings. They’re about half of the nearly $9 billion in total savings in 2017 from all of the 2017 generic drug approvals, according to earlier FDA work.

This analysis assumes that all of the biosimilars that the FDA approved were successfully marketed.

But we know that’s not the case. We know that litigation blocked a lot of these launches. Yet our study found that entry of a single biosimilar product in non-U.S. OECD markets lowers prices relative to the reference product by 30 percent; markets with three to four biosimilar entrants have prices 35 to 43 percent lower than their reference biologics.

Our savings estimate doesn’t include additional potential savings from biosimilars approved in 2018. Estimated savings would therefore be significantly greater than $4.5 billion if these additional FDA-approved biosimilars were also marketed at or near the time of their approval.

Biologic manufacturers have a right to defend their legitimate intellectual property interests. And we want them to continue to offer the benefits of improved versions of originator biologics. These benefits might include biologics that target disease in new ways, such as delivering a toxic payload directly to cancer cells, or biologics that target multiple targets of disease at the same time.

. . .

But rebating schemes or patent thickets that are purely designed to deter the entry of approved biosimilars are spoiling this sort of competition. Long-dated contracts are another toxin. The branded drug makers thwart competition by dangling big rebates to lock up payors in multi-year contracts right on the eve of biosimilar entry.

We’re also concerned that volume-based rebates may encourage dysfunctional clinical treatment pathways. We’ve heard from multiple sources that some payors are requiring step-therapy or prior authorization on the reference biologic before patients can access a biosimilar. We see no clinical rationale for these practices, since a biosimilar must demonstrate, among other things, that it has no clinically meaningful differences from the reference product as a part of demonstrating biosimilarity.

The branded drug industry didn’t build its success by being business naïve. They are smart competitors.

But that doesn’t mean we need to embrace all of these business tactics, or agree that they’re appropriate.

Some of these tactics should be unacceptable to every member of the drug supply chain.

Biosimilars may be relatively new, but manufacturers’ tactics to delay and frustrate Congress’ legislative intent to promote competition in drug pricing date back decades.

These tactics were first honed in battles between branded companies and manufacturers of small molecule generics after the passage of the Hatch Waxman Act in 1984.

And these battles played out for a time. But ultimately competition prevailed, and so did the benefits of generics.

In 1983, generic drugs accounted for only 13 percent of U.S. prescriptions. Today, in 2018, it’s 90 percent. And generics can cost 75 to 90 percent less than their branded competitors.

Robust competition has led to generic drug prices that are often less expensive here in the U.S. than in other developed markets in Europe and Asia. The Association for Accessible Medicines, a trade group that represents generic drug makers, estimates that generic medicines have saved the U.S. well over $1 trillion over the last decade.

The generics market that we see today, while not perfect, is robust in most respects. But it took about two decades to develop. It took a long time for providers to grow comfortable prescribing generics and patients to be confident in taking them. It took a long time to work through legal tactics that were put in the way of competition. It took a long time for the coverage systems to be changed to take brisk advantage of generic entry.

Sometimes it feels as if we’re seeing the biosimilars version of “Groundhog Day,” with brand drug makers replaying many of the same tactics, and all of us being too susceptible to many of the same misconceptions about biosimilars’ safety and efficacy relative to originator biologics.

We’re falling into some of the same doubts and policy constraints that were used to deter competition from generics in the years after the Hatch Waxman Act.

But we’re not going to play regulatory whack-a-mole with companies trying to unfairly delay or derail the entry of biosimilar competitors. We’re not going to wait a decade or more for robust biosimilar competition to emerge.

Expanding access to affordable biosimilars, and slowing the rise of health care inflation, is an even more critical issue today than it was in 1984. The higher costs, and longer timelines, required to develop biosimilars relative to generics means that these delaying tactics can make it uneconomical for biosimilar sponsors to postpone entry for extended periods of time. I’m worried that the biosimilar manufacturers may pull out of these endeavors altogether if the brand drug makers are able to lock up markets even in cases where there’s a fully interchangeable competitor.

Ultimately, this behavior is also putting innovative drug development at risk by eroding public confidence in market-based pricing mechanisms. Too many people now are shooting at the branded drug makers. And the shrapnel isn’t just going to tear apart the gaming tactics that we might agree are gratuitous and ill conceived.

I’m worried that the shrapnel could also fray the fragile market-based rewards that support new innovation.

Our Biosimilars Action Plan applies many of the lessons learned from our experience with generic drugs to accelerate biosimilar competition with four key strategies.

First, improving the efficiency of the biosimilar and interchangeable product development and approval process.

Second, maximizing scientific and regulatory clarity for the biosimilar product development community.

Third, developing effective communications to improve understanding of biosimilars among patients, providers and payors.

And fourth, supporting market competition by reducing gaming of FDA requirements or other attempts to unfairly delay market competition to follow-on products.

I don’t want to get into the details of the entire plan in my remarks today. We’ve issued a plan that lays out all of the discrete elements of our approach.

But I want to highlight a few key actions that we’re taking.

I believe some of these actions can be transformative for sponsors’ ability to bring high quality biosimilars to market.

As part of this effort, the FDA is seeking to strengthen its partnerships with regulatory authorities in Europe, Japan and Canada. Such partnerships can enable greater efficiency in developing safe and effective biosimilars.

For example, we’re actively exploring whether data sharing agreements could give us better insights into biosimilars’ real-world safety and efficacy and, in some circumstances, facilitate the increased use of non-U.S.-licensed comparator products in certain studies to support an application under Section 351(k).

We know that when those developing biosimilars use biologics sourced ex-U.S. as their comparator product, it can lower the cost of clinical studies since many of these products can be procured more easily, and cheaply, in European and Asian markets.

We’ll also be updating the Purple Book and evaluate how we can incorporate additional information into that resource to give product developers more transparency.

And we’re also taking new steps to make the biosimilar development process more efficient.

. . .

Today, the FDA issued its final guidance on biosimilar labeling. The FDA wants to make sure that biosimilar products have labeling that allows health care practitioners to make informed prescribing decisions for their patients. Our guidance gives recommendations to applicants on how to prepare this labeling for review by the FDA.

We’re also going to be updating guidance to provide additional clarity on how biosimilar manufacturers can carve out indications from their labels where a branded drug maker might still maintain some IP. And we’re going to describe how these indications can be efficiently added into a biosimilar label once that IP on the branded alternative has lapsed.

We are also currently developing and implementing new FDA review tools, such as standardized review templates, that are tailored to applications for biosimilar and interchangeable products. We’ve already adopted similar approaches when it comes to generic drugs. These templates will improve the efficiency of the FDA’s review.

We’re also developing an index of biosimilars’ critical quality attributes relative to their reference products.

Such an index can allow sponsors to better understand how the FDA evaluates data from comparative analytical studies performed to support a demonstration of biosimilarity, and how to use suitable analytical methods.

And we’re going to be taking new steps to challenge some of the gaming tactics I talked about earlier. This includes new efforts to coordinate with the Federal Trade Commission (FTC) to address anti-competitive behavior.

A video of the Brookings Institution talk along with panelist responses can be found, here. 

FDA Attempts to Shame Pharmacuetical and Biotechnology Companies

The U.S. Federal Drug Administration (FDA) recently decided to try to “shame” some pharmaceutical and biotechnology companies for failing to provide samples to companies who wish to produce generic versions of their pharmaceuticals.  The FDA states:

In passing the 1984 Hatch-Waxman Amendments to the Federal Food, Drug & Cosmetic Act, Congress created a system that balances encouraging and rewarding medical innovation with facilitating robust and timely market competition. One of the primary ways that FDA facilitates a competitive marketplace is through the efficient approval of generic drugs, which are often lower-cost than brand drugs.

Unfortunately, the process established by Congress may not always function as intended. At times, certain “gaming” tactics have been used to delay generic competition. One example of such gaming is when potential generic applicants are prevented from obtaining samples of certain brand products necessary to support approval of a generic drug. The inability of generic companies to purchase the samples they need slows down, or entirely impedes, the generic drug development process – leading to delays in bringing affordable generic alternatives to patients in need.

As described in further detail below, these kinds of problems with generic access to necessary samples may occur when brand products are subject to limited distribution – whether the company has voluntarily adopted limitations on distribution, or the limitations have been imposed in connection with a Risk Evaluation and Mitigation Strategy (or REMS), a program that FDA implements for certain drugs to help ensure that their benefits outweigh their risks. In some cases, brand drug sponsors may use these limited distribution arrangements, whether or not they are REMS-related, as a basis for blocking potential generic applicants from accessing the samples they need.

As part of the FDA’s Drug Competition Action Plan (DCAP), FDA is committed – among other things – to addressing and improving transparency about this and other gaming tactics that delay the generic competition Congress intended.

There are around 50 drugs listed, including about 40 different pharmaceutical and biotechnology companies.  Do you think this tactic will work?  Interestingly, a New York Times article describes Celgene’s response, here.