FDA Commissioner Scott Gottlieb Testifies to Judiciary on Encouraging Pharma Competition

FDA Commissioner, Scott Gottlieb, MD, testified before the House Judiciary Committee this afternoon in a hearing titled “Antitrust Concerns and the FDA Approval Process.”

Gottlieb opened his remarks by reiterating the FDA’s commitment to addressing the problem of high drug cost by encouraging competition, then itemized the steps the agency is taking to address barriers to competition in the pharmaceuticals marketplace:

• Restricted distribution systems and access to drugs for bioequivalence testing. Gottlieb discussed the fact that risk evaluation and mitigation strategies (REMS) can be used by innovators to improperly withhold samples from generics developers, even in cases in which the FDA has informed a brand company in writing that it will not consider provision of a product to be a violation of REMS. He said that the agency has fielded—and forwarded to the Federal Trade Commission (FTC)—more than 150 inquiries from generics companies citing withholding of testing samples.
• Single, shared-system REMS. For branded drug products approved with REMS with elements to assure safe use (ETASU), the FDA requires the generic applicant and originator to use a single, shared system to implement the ETASU before the generic’s application may be approved, though the agency may waive the requirement. Prolonged negotiation over the single, shared REMS requirement can be used to delay approval, Gottlieb noted, and can place a time and resource burden on the agency. While the agency hopes to pursue single, shared systems in most circumstances, it is “actively considering our authority and practices in this space,” he noted.
• Citizen petitions. A vehicle for stakeholders external to the FDA to ask the agency to either take or refrain from taking an action, a citizen petition is commonly used to ask the agency not to approve a generic application. Gottlieb said that the resources the agency must devote to such petitions, many of which are ultimately dismissed as being without merit, are significant, and that the agency is considering ways to reduce the burden of these petitions.
• Unapproved drugs. A 1962 amendment to the Food, Drug, and Cosmetics Act required that all drugs must be shown to be effective—not just safe—prior to marketing. As a result, thousands of drugs required new efficacy evaluations to meet the legal requirement. Gottlieb estimated that more than 1000 prescription drug products have yet to be evaluated. The fact that these drugs have not yet been addressed under the agency’s 2006 Unapproved Drugs Initiative means that there is no clear pathway for generic versions to be approved.
• “Pay-for-Delay.” Dr Gottlieb described so-called “pay-for-delay” agreements as settlements in which drug companies resolve patent litigation over potentially infringing follow-on products by agreeing with generic makers to delay product entry in exchange for monetary benefit. He stopped short of saying that the controversial tactic inhibited competition, saying “we do not know when generic products would have entered the market if the patent litigation had continued and the companies had not settled with an agreement to delay marketing.”

Also testifying was Markus H. Meier, acting director of the FTC, who echoed Gottlieb’s concerns about REMS abuse, citizen petitions, and pay-for-delay arrangements. Yet, in comparison with Gottlieb’s measured approach to describing the difficulties facing the FDA, Meier took a bolder stance, saying “drug manufacturers have exploited certain features of the existing regulatory framework created by the Hatch-Waxman Act to extend exclusive rights well beyond the periods Congress provided to spur investments in innovation,” and calling REMS programs “an appropriate area for Congressional focus and concern.”

Meier echoed Gottlieb’s concerns about the use of REMS to delay generic entry, as well as refusal of testing samples to biosimilar and generics developers. Meier cited antitrust cases—including Celgene’s alleged use of REMS to prevent testing of its Thalomid and Revlimid, as well as Actelion’s alleged imposition of distribution restrictions to prevent competitors from accessing samples. Meier further indicated that the FTC has concerns about biosimilars manufacturers being denied information that would assist them in compliance with the Biologics Price Competition and Innovations Act (BPCIA).

Finally, Meier suggested that bipartisan House Bill 2212, the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act, could reduce incentives to abuse regulation. The act would, he said, allow generics firms to initiate legal action against innovator companies and obtain samples for testing after establishing that they had complied with existing statutes. It would also provide a clearer path for generics firms to establish separate REMS programs if necessary.

Additional testimony in support of the CREATES Act was provided by David Olson, Esq, associate professor of law at Boston College Law School, who said that the legislation is a “narrowly tailored solution to the failure to share samples.” Alden Abbott, Esq, deputy director of The Heritage Foundation, testified that the act addresses current statutory limitations, as current “antitrust laws are ill-suited to combat anticompetitive regulatory manipulation.” Erika Lietzan, Esq, associate professor of law at University of Missouri School of Law, testified that she had concerns about the CREATES Act, citing “weak empirical support for any legislative action” and saying that the act is “flatly inconsistent with fundamental patent law principles,” while Aaron Kesselheim, MD, MPH, associate professor of medicine at Harvard Medical School, praised the act, but called for additional, more extensive reform.