Limited distribution networks, which are established when a drug maker contracts with either 1 or a limited number of distributors, can allow a manufacturer to efficiently manage the supply chain for a given product. However, as a recent paper argues, LDNs can have an anticompetitive impact on the marketplace.
Limited distribution networks (LDNs), which are established when a drug maker contracts with either 1 or a limited number of distributors, can allow a manufacturer to efficiently manage the supply chain for a given product. However, as a recent paper argues, LDNs can have an anticompetitive impact on the marketplace.
Writing in the April issue of The American Journal of Managed Care®, a sister publication of The Center for Biosimilars®, Laura Karas, MD, MPH, and colleagues explain how LDNs have been used to prevent generic and biosimilar companies from accessing samples of drugs that are necessary to perform testing that will support drug applications to the FDA.
Karas and her fellow authors point to a recent experience with Turing Pharmaceuticals, maker of pyrimethamine (Daraprim), an antiparisitic drug whose price was increased from $13.50 per pill to $750.00 per pill under the leadership of then-CEO Martin Shkreli. According to the paper, the director of patient access at Turing commented that he would not have approved a generic drug developer’s attempt to purchase the drug for testing, fearing that competition could undercut the high cost of the product.
The authors explain that the FDA’s Risk Evaluation and Mitigation Strategies (REMS) are often used as a pretext for creating LDNs. REMS programs, despite their stated purpose of ensuring that the benefits of high-risk drugs outweigh potential risks, have come under fire from a variety of stakeholders, including FDA Commissioner Scott Gottlieb, MD, who said that REMS programs “can block the timely entry of a generic competitor” despite the fact that the Food and Drug Administration Amendments Act of 2007 specifies that REMS programs must not be used to delay approval of generic drugs.
While a REMS program may require a product to be sold only to named patients with valid prescriptions, the FDA does not recommend or mandate the use of an LDN as a way to achieve drug safety. However, those manufacturers who elect to contract with a small number of distributors may include in contract terms that the drug only be sold to individual patients, not to generic or biosimilar developers.
According to the FDA’s Janet Woodcock, MD, director of the Center for Drug Evaluation and Research, the agency has fielded more than 150 inquiries from generic and biosimilar companies who say they have had testing samples withheld by brand name drug makers.
Not only can withholding of samples result in costly litigation for companies, it can also have a negative impact on the healthcare system when drug makers raise the price of treatments that have no alternatives available. In addition to pyrimethamine, corticotropin (H.P. Acthar Gel), a systemic corticosteroid approved by the FDA in 1952, has seen a 116,575% increase in price from 2001 to 2018 (from $40 per vial to $46,670 per vial). Similarly, hydroxyl-progesterone caproate (Makena), a synthetic progestin approved first in 1956, saw a 14,900% price increase when it rose to from $10 to $1500 in 2011.
Karas and colleagues suggest 3 potential solutions to the misuse of LDNs:
“Misuse of LDNs to deter generic competitors may result in billions of dollars in lost savings each year, so effective legislation addressing this practice could yield tremendous financial benefits,” the authors conclude.
Reference
Karas L, Shermock KM, Proctor C, Socal M, Anderson GF. Limited distribution networks stifle competition in the generic and biosiilar drug industrites. Am J Manag Care. 2018;24(4):e122-e127. ajmc.com/journals/issue/2018/2018-vol24-n4/limited-distribution-networks-stifle-competition-in-the-generic-and-biosimilar-drug-industries.
Eye on Pharma: Sandoz Files Antitrust Suit; Yuflyma Interchangeability; Costco’s Ustekinumab Pick
April 22nd 2025Sandoz's antitrust suit against Amgen, the FDA’s interchangeability designation for Celltrion’s adalimumab biosimilar, and the inclusion of an ustekinumab biosimilar in Costco’s prescription program highlight growing momentum to expand biosimilar access and affordability for patients with chronic inflammatory diseases.
How AI Can Help Address Cost-Related Nonadherence to Biologic, Biosimilar Treatment
March 9th 2025Despite saving billions, biosimilars still account for only a small share of the biologics market—what's standing in the way of broader adoption and how can artificial intelligence (AI) help change that?
President Trump Signs Executive Order to Bring Down Drug Prices
April 16th 2025To help bring down sky-high drug prices, President Donald Trump signed an executive order pushing for faster biosimilar development, more transparency, and tougher rules on pharmacy benefit managers—aiming to save billions and make meds more affordable for everyone.
Will the FTC Be More PBM-Friendly Under a Second Trump Administration?
February 23rd 2025On this episode of Not So Different, we explore the Federal Trade Commission’s (FTC) second interim report on pharmacy benefit managers (PBMs) with Joe Wisniewski from Turquoise Health, discussing key issues like preferential reimbursement, drug pricing transparency, biosimilars, shifting regulations, and how a second Trump administration could reshape PBM practices.
Latest Biosimilar Deals Signal Growth Across Immunology, Oncology Markets
April 14th 2025During Q1 2025, pharmaceutical companies accelerated biosimilar expansion through strategic acquisitions and partnerships in hopes of boosting patient access to lower-cost treatments in immunology and oncology.
Experts Pressure Congress to Remove Roadblocks for Biosimilars
April 12th 2025Lawmakers and expert witnesses emphasized the potential of biosimilars to lower health care costs by overcoming barriers like pharmacy benefit manager practices, limited awareness, and regulatory delays to improve access and competition in chronic disease management during a recent congressional hearing.