Stakeholders Take Aim at Generic Competition Blocking Tactics

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Generic drug manufacturers have long accused their brand name counterparts of exploiting a federal program intended to promote medication safety as a means of blocking generic competition in the pharmaceutical marketplace.

Generic drug manufacturers have long accused their brand name counterparts of exploiting a federal program intended to promote medication safety as a means of blocking generic competition in the pharmaceutical marketplace.

Risk Evaluation and Mitigation Strategies (REMS) is a relatively new FDA program intended to provide additional safety information to patients and providers. The FDA may require REMS as part of the approval process for a new product, or an approved product with new safety information, to ensure the benefits outweigh the risks.1

Many of the products deemed REMS-worthy cannot be purchased or distributed in the normal way. Instead, they must often be distributed by specially certified prescribers and pharmacists. There may be limits on the amount of drug that can be dispensed at said certified locations, and obtaining the product may be contingent on mandatory enrollment and monitoring of patients within registries. Brand name manufacturers have argued that they cannot give generic drugmakers enough samples of these REMS-covered products necessary to conduct the FDA-required bioequivalency testing because doing so would be outside the restricted distribution pathway. Still others claim that brand name manufacturers use REMS in order to artificially extend the market exclusivity for their drugs.2

“Misuse of FDA REMS patient safety programs is one way that certain brand-drug companies delay generic competition,” said Chip Davis, president and CEO of the Generic Pharmaceutical Association (GPhA), in a press release earlier this year.3 “Failure to address the loophole that makes these abuses possible is a missed opportunity to encourage more competition in generic drugs and to generate billions of dollars in additional savings for patients and the health system.”

The Senate Judiciary Committee and the Subcommittee on Antitrust introduced a bill, the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act, that seeks to block pharmaceutical companies from circumventing or otherwise abusing the system to prevent generic competition.4

The Congressional Budget Office has estimated that legislation similar to the CREATES Act would save the government over $2 billion in 10 years due to the new generics that would gain entry to the market.5

The CREATES Act focuses on undermining 2 strategies sometimes employed by brand name drug manufacturers to block generic competition:

  • Sample-sharing, which is when brand name manufacturers prevent potential generic competitors from obtaining samples of the branded drug. This limits the generic company’s ability to perform the testing necessary to show that its generic product is therapeutically equivalent to the branded drug, which is a prerequisite for FDA approval.
  • Participation in a shared safety protocol, which occurs when brand manufacturers claim to require a REMS and then refuse to allow generic competitors to participate in that safety protocol, which further blunts generic drugmakers’ abilities to gain FDA approval. If the act were enacted, a generic drugmaker being subjected to either delay tactic would be able to seek injunctive relief in court under the CREATES Act. It would also authorize judges to award damages to claimants in an effort to deter future delay tactics.

“Unfortunately, we’re seeing some brand name drug companies engage in anti-competitive tactics that delay entry of lower cost generic drugs into the market,” co-sponsor Senator Charles Grassley said in a statement. “This bill takes important steps to ensure that our laws are not frustrated.”6

Perhaps the most egregious example of this type of behavior is Turing Pharmaceuticals’ infamous overnight 5000% price hike for the 62-year-old drug Daraprim last September—a move that Turing CEO, Martin Shkreli, told CBS News was “not excessive at all.” Daraprim is a standard- of-care drug for life-threatening toxoplasmosis that is also a co-treatment for HIV and malaria. Following the drug acquisition, the price per tablet of Daraprim promptly leaped from $13.50 one day to $750 the next. Then, Turing limited distribution even though the FDA had not required an REMS plan. This hindered manufacturers’ ability to create generic versions of the drug.7

Congress has taken previous action against pharmaceutical companies attempting to game the system. The FAST Generics Act, which was introduced in 2014 and then again in 2015, would have closed the aforementioned REMS “loophole”—which refers to a company’s ability to employ restricted distribution networks to block manufacturers’ market entry—a tactic that initially grew from the REMS Elements to Assure Safe Use (ETASU). If enacted, the legislation would have positioned the Department of Health and Human Services (HHS) to serve as the go-between for the generics industry and brand manufacturers. Generics companies would have sought HHS authorization before submitting a request and authorization to a brand manufacturer.8

The CREATES Act takes the effort a step further and was applauded by the GPhA, which, in 2014, produced a study that estimated drugmakers used REMS to thwart competition for $5.4 billion in sales on 40 small-molecule drugs. About 40% of FDA-approved drugs are now subject to REMS. The report cautioned that, if left unchallenged, the impact on the development of lower-cost biosimilars would be substantial.9

On the opposite side of the debate, strong REMS advocates allege that the oversight is necessary for drugs known to carry very high risks, and that changes to the system would dilute important safety mechanisms. A blog post on the Health Affairs website, written in support of strong REMS, notes that of the 70-plus drugs now authorized to have unique REMS programs in place, only around 30 are subject to the more restrictive Elements to Assure Safe Use (ETASU) requirements. The post also noted that more than a dozen drugs subject to REMS requirements have gone generic—including 9 with ETASU provisions. This, the blog’s authors allege, serves as evidence that REMS do not impede the development of generics.8,10

Similarly, Holly Campbell, a spokeswoman for the Pharmaceutical Research and Manufacturers of America (PhRMA), told Focus, “[REMS] are a critical regulatory tool for protecting patient safety. While we are currently reviewing [the CREATES Act], we would be concerned if patient safety could be jeopardized in any way.”5

For patients, quicker access to lower-cost generics could be the difference between adhering to a crucial treatment regimen and forgoing their medications. Steady medication adherence is the key to improving health outcomes, especially for patients with chronic conditions.

Nearly 10% of generic drugs more than doubled in price between July 2013 and July 2014 alone, according to data from the CMS. In the same time period, the price of more than 1200 generic drugs increased by an average of 448%.11

A study recently published in JAMA Internal Medicine investigated prescribing trends for brand name atorvastatin (Lipitor), generic atorvastatin, and authorized generic atorvastatin. The researchers found that a 6-month delay in the availability of generic versions of Lipitor prevented patients from benefiting from lower out-of-pocket costs.12

An accompanying commentary, however, alleged that the JAMA findings paint an incomplete picture of patient access to generics. The investigation fails to account for the fact that other generic drugs in the same therapeutic class were available during the study period.13

“Although the focus on out-of-pocket costs in the study is important, 1 piece—simvastatin—is missing,” wrote Walid F. Gellad, MD, MPH, and Chester B. Good, MD, MPH, in the commentary. “In 2006, simvastatin (Zocor, marketed by Merck) lost its patent, and a generic version became available. For many individuals—and most of the individuals in the cohort studied by Luo et al, of whom only 12.9% had documented coronary artery disease—simvastatin is appropriate for the treatment of hyperlipidemia.”13

The soaring prices for generic drugs are of particular concern for many patients, employers, insurers, and lawmakers, and the CREATES Act may be the most aggressive legislation yet in the pursuit to thwart anticompetitive behavior in the generics industry.2,4,10


  • A Brief Overview of Risk Evaluation & Mitigation Strategies (REMS). FDA website. Accessed July 6, 2016.
  • Sarpatwari A, Aaron Kesselheim A. Ensuring timely approval of generic drugs. HealthAffairs website. Accessed July 6, 2016.
  • Healthcare stakeholders urge senate to end REMS abuse increase generic drug competition [press release]. Pharmacy Times website. Accessed July 6, 2016.
  • Gray N. Lawmakers introduce bill to end REMS abuse, boost generic competition. BioPharmaDive website. Accessed July 6, 2016.
  • Brennan Z. New senate bill aims to close regulatory loopholes blocking generic drug competition. Regulatory Affairs Professionals Society website. Published June 15, 2016. Accessed July 6, 2016.
  • Grassley works to combat rising drug prices for Iowans. Chuck Grassley website. Accessed July 6, 2016.
  • Gilchrist A. Turing Daraprim price hike follows a precedent. Pharmacy Times website. Accessed July 6, 2016.
  • Gilchrist A. FAST Generics Act Reintroduced in Congress. Pharmacy Times website. Accessed July 6, 2016.
  • Brill A. Lost Prescription Drug Savings from Use of REMS Programs to Delay Generic Market Entry. Generic Pharmaceutical Association website. Accessed July 6, 2016.
  • Worthy S, Curtis S. In ‘ensuring timely approval of generic drugs,’ safety must come first. Health Affairs Blog. Accessed July 6, 2016.
  • Gilchrist A. Effort to curb rising generic drug costs reaches Congress. Pharmacy Times website. Accessed July 6, 2016.
  • Luo J, Seeger JD, Donneyong M, Gagne JJ, Avorn J, Kesselheim AS. Effect of generic competition on atorvastatin prescribing and patients’out-of-pocket spending. JAMA Internal Medicine website. Published June 27, 2016. Accessed July 6, 2016.
  • Gellad WF, Good CB. Prescription of brand-name medications when generic alternatives are available—patently unfair. JAMA Internal Medicine website. Published June 27, 2016. Accessed July 6, 2016.

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