REMS As A New Competitive Sword?

paradiseLGjpg_1The pharmaceutical industry has long-been criticized for use of anticompetitive tactics.  Brand pharmaceutical companies have been publicly accused of several high-profile activities to increase profits and stifle competition.  These include: shifting demand to a modified form of an existing brand drug (often called “product hopping”), using authorized generics to retain market share, frivolously filing citizens petitions to delay generic market entry, and using reverse payment settlements to keep generics of the market during their 180 day exclusivity period (otherwise known as pay-for-delay settlements).  A persistent opponent in these tactics, the Federal Trade Commission (FTC), routinely invokes antitrust and unfair competition law to frame legal challenges.  In fact, the 2012 Supreme Court case FTC v. Actavis examined pay-for-delay settlements entered into between new drug application (NDA) patent holders and generic applicants, holding that they were not per se illegal but subject to a rule of reason test.

Many are now pointing to brand pharmaceutical manufacturers use of Risk Evaluation and Mitigation Strategies (REMS) as the latest anticompetitive tactic.  The Food and Drug Administration Amendments Act of 2007 (FDAAA) introduced REMS to enhance the FDA’s post-approval authority over drugs.  FDAAA contains new statutory provisions that allow the FDA to require further studies for safety and efficacy, along with increased authority for FDA to review these commitments on a continuing basis.  The FDA can require a REMS as either a condition of approval or, in the case of already approved products, as a subsequent additional condition for continued marketing.  A REMS may require a medication guide for patients, prescription physician information, communications to health care providers and pharmacies, limitations on labeling, promotion, and prescribing in order to assure safe use by patients, and a plan for implementation.  Violations trigger civil money penalties and subject manufacturers to litigation under misbranding provisions within the Food, Drug and Cosmetic Act.  To date, the FDA has implemented 70 REMS, half of which include elements to assure safe use (ETASU) that often take the form of distribution restrictions, training and recordkeeping requirements for prescribers and pharmacists, and prescribing limitations.

As noted here, a recent study announced last month estimates that $5.4 billion per year has been lost in prescription drug savings due to distribution restrictions imposed by brand drug manufacturers.  Brand manufacturers subject to a REMS for an NDA drug product claim that they cannot make samples of that drug available to the generic applicant because they would be in violation of distribution restrictions placed on the products by the FDA in the REMS.  However, in order to obtain approval through the generic drug approval process, a generic applicant must show bioequivalence to the NDA product through pharmacokinetic and pharmacodynamic measures.  The medical community is already targeting this practice as problematic, noting that it is a direct threat to the effective use of a drug-safety tool in order to increase profits and keep generic products off the market. In an April 2014 New England Journal of Medicine article, excerpted here, the authors urge that “the use of REMS requirements to block the market entry of generic drugs could well lead to higher health care costs and adverse patient outcomes.”

The REMS tactic is playing out in court in New Jersey.  Mylan Pharmaceuticals filed a complaint earlier this year against Celgene Corporation, claiming violations of federal antitrust law.  Mylan alleges that Celgene refuses to distribute the products Thalomid and Revlimid for bioequivalence testing for products in development by Mylan.  Because of their teratogenic nature, the FDA has invoked ETASU REMS for both Thalomid and Revlimid consisting of various extensive requirements to prevent embryo-fetal exposure, among other things: see here and here.  One aspect of the ETASU is strong oversight and requirements for distribution only through authorized dispensing pharmacies.  Celgene’s position is that the distribution restrictions prohibit the transfer of drug samples to Mylan for any purpose, including bioequivalence studies.

The FTC has taken a strong interest in the case, and filed an amicus brief on June 17, 2014.  In the brief, the FTC argues that Celgene is potentially engaging in exclusionary conduct in violation of the Sherman Act by “refusing to sell to rivals.”  The FTC notes that Celgene may be in violation of both Section 1 and  2 of the Sherman Act by not only refusing to directly provide samples to Mylan, but also implementing restrictions that prevent Mylan from purchasing samples though customary distribution channels.  Celgene has moved to dismiss.

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Monday Morning Recap: The Week (7.28.14-8.3.14) in Drug & Device Law & Policy

Picture3Here’s this week’s Monday Morning Recap, the post where we call out the drug and device law and policy developments that caught our eye and made us think over the previous week.  You can see all of our previous Monday Morning Recap posts here.

1. This past week, Julie Steenhuysen at Reuters filed a report on “[t]he worst Ebola outbreak in history[.]” The outbreak “is heaping new pressure on U.S. regulators to speed the development of treatments for the deadly virus, which has killed more than 700 people since February. The U.S. Food and Drug Administration on Friday said in an emailed statement the agency ‘stands ready’ to work with companies and investigators working with patients ‘in dire need of treatment.’ . . . FDA’s statement follow calls by doctors fed up by the lack of progress on Ebola treatments, a market deemed too small to gain much attention by large pharmaceutical companies. Earlier this month, the agency put a hold on a Tekmira Pharmaceuticals Corp clinical trial of TKM-Ebola, one of the few Ebola treatments advanced enough to be tested in people. The hold prompted a North Carolina physician with family members in West Africa to say enough. ‘This should be the last Ebola epidemic without a cure,’ said Dr. Ahmed Tejan-Sie, an internist from Burlington.”

2. The FDA announced that it was “notifying Congress of its intention to publish a proposed risk-based oversight framework for laboratory developed tests (LDTs), which are designed, manufactured and used within a single laboratory.” Andrew Pollack at the New York Times explains: “Test systems or kits that are sold to hospitals, laboratories, doctor’s offices and the public have long been regulated as medical devices, giving the agency the opportunity to review them before they are marketed. But tests developed and performed by a single laboratory, with all samples being sent there, have typically not been. The F.D.A. had claimed the legal authority to regulate these so-called laboratory-developed tests, but said it was exercising ‘enforcement discretion’ not to do so. The agency said on Thursday that such discretion must end because circumstances had changed. Lab-developed tests once were fairly simple, often developed by a hospital for tests on its own patients. Now the tests can be complex and are being developed by companies and marketed widely.”

3. Also this past week, BioMarin Pharmaceutical announced that it had sold its rare pediatric disease priority review voucher to Regeneron Pharmaceuticals for $67.5 million. BioMarin was awarded the voucher in February “when it received approval of VIMIZIM®, a new biological product for patients with Mucopolysaccharidosis type IVA, also known as Morquio A syndrome.” Per Ron Winslow and Joseph Walker at the Wall Street Journal: “The voucher was the first to be issued under the pediatric incentive program, and also the first to change hands.” For additional background, see my post here.

4. At Pharmalot, Peter Loftus reported that a group of medical societies and pharmaceutical industry trade groups has written a letter to the Centers for Medicare & Medicaid Services (CMS) expressing concern that when the first Physician Payments Sunshine Act report is released later this month it will not provide the context needed to allow the public to understand the reasons for payments made by drug and device companies to physicians. CMS, Loftus writes, responded that it “does plan to make available the nature of payment for each payment or transfer of value made to a physician or teaching hospital and will also include context on the website.”

5. Finally, at CommonHealth blog Deborah Becker discusses a newly-released report from The New England Comparative Effectiveness Public Advisory Council that “contains some surprising findings about medication maintenance addiction treatment. It says that methadone, long used to treat heroin addiction, may be the most effective and cheapest treatment. The report . . . found that when comparing methadone with suboxone (Buprenorphine) or naltrexone (Vivitrol), more patients stayed in treatment longer if they were taking methadone. In follow-ups with patients three to 12 months after they first started taking medication, 63 percent of methadone patients were still in treatment, compared with 52 percent of those taking suboxone and 28 percent on naltrexone. Methadone also appears to be the cheapest maintenance medication, despite the requirement of having a health care facility daily distribute the drug to patients.”

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Monday Morning Recap: The Previous Week (7.21.14-7.27.14) in Drug & Device Law & Policy

July 28, 2014 by · 1 Comment
Filed under: Drugs & Devices, Monday Morning Recap 

Picture3Here’s this week’s Monday Morning Recap, the post where we call out the drug and device law and policy developments that caught our eye and made us think over the previous week.  You can see all of our previous Monday Morning Recap posts here.

1. Last Wednesday, two advocacy groups, the Medicare Rights Center and Social Security Works, released a report calling on Congress to take four concrete steps to reduce the price Medicare pays for prescription drugs: (1) restore the rebates that were lost with the passage of the Medicare Modernization Act; (2) allow Medicare to negotiate drug prices on behalf of Part D enrollees by establishing “Medicare-administered drug plans, with a uniform premium and a vetted benefit design to ensure safety, appropriate use and high value care”; (3) speed up the closure of the Medicare “doughnut hole” by securing additional discounts from drug manufacturers, and (4) “[p]romote cost-effective prescribing for Part B prescription drugs”, which are typically administered in a doctor’s office by injection or infusion, and which tend to be very expensive.

2. As we noted here, concerns have been raised about manufacturers’ use of Risk Evaluation and Mitigation Strategies (REMS) to delay entry of generic drugs. This week the Generic Pharmaceutical Association released a commissioned study that attempts to quantify the impact. The author writes: “This paper estimates lost savings on forty generic small-molecule products whose market entry, according to a survey of generic drug manufacturers, is currently delayed by misuse of REMS or other restricted access programs. Specifically, this paper identifies $5.4 billion in annual pharmaceutical spending that could be saved if generic versions of the forty identified drugs were allowed to come to market.

3. The Second Circuit decided an important case this week involving the Food and Drug Administration’s (lack of) response to the use of antibiotics to help farm animals grow. At Bill of Health, Diana Winters writes: “This issue has enormous public health consequences, but the consequences of this case extend beyond antibiotic use, to agency practice in general.  The opinion sanctions egregious agency delay and a tremendous lacuna in decision making.

4. Reuters reported on a new partnership between Britain’s Medical Research Council and seven leading drug manufacturers, under which academic researchers “will gain access to ‘deprioritized’ pharmaceutical compounds. Often these compounds have been dropped from development because they are not sufficiently effective against a particular condition, but they may still be useful against other diseases with shared biological pathways. . . . While drugmakers have traditionally been reluctant to share their compounds, there is a growing recognition that outside experts may be able to unlock value by taking a different approach, resulting in shared profits between companies and academic institutions.”

5. Finally, I recommend the series of posts Richard Cassin published at The FCPA Blog last week (here, here, and here) on the ways in which in-house lawyers, including in-house lawyers at drug and device companies, are “caught between their duty as advocates on the one hand, and the modern concept of ethics and compliance on the other hand.”

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John Jacobi in The Record on the Impact of Halbig and King on New Jersey

jacobi-176x220_1Last Friday, Seton Hall Law Professor published an opinion piece in The Record on the implications for New Jersey of the D.C. Circuit’s decision in Halbig v. Burwell and of the Fourth Circuit’s decision in King v. Burwell. Professor Jacobi writes:

The good news is that New Jersey has available to it a relatively simple means to protect its consumers from a decision that could threaten their access to insurance. New Jersey could create a state health insurance exchange, thereby guaranteeing, under everyone’s interpretation of the contested language of the ACA, that the subsidies would remain available.

This option is not as far-fetched as it might seem. Sure, Governor Christie vetoed the Legislature’s state exchange bill in December 2012. But he made that decision when everyone agreed that subsidies would be available through a federal exchange. He might well feel differently if blocking a state exchange would throw 160,000 consumers off the insurance rolls. He bucked national pressure, after all, when he expanded Medicaid, allowing more than 200,000 New Jersey consumers to gain Medicaid coverage.

Read the entire article here.

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A Myriad of Problems for Myriad: No Patents for Genes, Major Insurer Cuts Back on Genetic Testing

Picture1By Layne Feldman

Over the past year, two developments—one legal, and one economic—have hit Myriad Genetics, Inc. hard. These developments could have significant ramifications on the detection and treatment of cancer.

First, last summer, the Supreme Court ruled that Myriad could not patent the isolated BRCA 1 and BRCA 2 genes that the company used to develop tests to uncover mutations in the two genes. The presence of such mutations dramatically increases a woman’s risk of developing breast or ovarian cancer. In the Myriad case, the Court reversed the Federal Circuit, and held that the genetic sequences in question could not be patented because they were naturally occurring segments. To the Court, Myriad’s principal scientific contribution was identifying the precise location of a naturally occurring genetic sequence. Though the Court conceded this was a significant breakthrough, a gene is not patent eligible solely because of its isolation. The underlying principle is that products of nature are precluded from patent eligibility.

In the time since this holding, Myriad’s monopoly over this type of gene-based testing has diminished, as rivals, like Quest Diagnostics and its BRCAdvantage test, have entered the marketplace.

This Spring, the U.S. District Court for the District of Utah denied an injunction Myriad sought against competitor Ambry Genetics Corporation. Ambry had developed similar products to Myriad’s gene based cancer test. In the case before the Utah court, University of Utah Research Foundation et al. v. Ambry Genetics Corporation, Myriad claimed patent infringement and requested a preliminary injunction to prevent Ambry from selling its tests until the court reached its final determination. On March 10, the court held that Myriad was not entitled to the injunction.

Myriad’s shares fell twelve percent in the wake of the court’s holding.

Cigna’s decision in August 2013 to require genetic counseling before it covers genetic testing, including Myriad’s tests for breast cancer indicators, has only exacerbated these legal setbacks.  Cigna is the first U.S. health insurer to require genetic counseling before it pays for hereditary breast and ovarian cancer tests. Cigna officials expressed hope that the policy would decrease the prevalence of unnecessary tests, as many doctors, fearing suit, accede to patient’s requests for testing. Cigna’s policy, which went into effect on September 15, 2013, requires evaluation by a certified counselor from the American Board of Medical Genetics or the American Board of Genetic Counseling before commencing genetic testing. Medical professionals, however, have criticized the policy, asserting that it could result in patients opting out of beneficial testing due to the need for additional referrals. This could ultimately result in less cancer detections, and less treatment.

Only time will tell if these developments will help or hurt cancer patients.  On one hand, permitting Myriad to patent the ability to isolate and work with BRCA DNA sequences would certainly prevent other bioengineers from manipulating these sequences to reach new breakthroughs in the fight against cancer.  Ambry Chief Executive Officer Charles Dunlop has assumed this stance, stating, in response the Utah court’s decision, that “[c]ompetition stemming from a free market drives all of us to improve and ultimately increases patient access to life-changing information.”

But on the other hand, blocking patents could preclude companies from entering into this sphere altogether as the venture might not be economically viable if competitors can flood the marketplace with similar tests. And if the critics of Cigna’s policy are correct, policies like Cigna’s would only aggravate this problem. As patients opt out of genetic testing because of the need for additional referrals, fewer tests would be conducted, and the financial incentives gained from this market could diminish.

Layne Feldman is a third-year law student at Seton Hall University School of Law who is concentrating in Health Law. We are very pleased to welcome Layne to the blog today.

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