The US Federal Trade Commission (FTC) has filed an amicus (friend of the court) brief with a District Court, pointing out the potential for brand-name drugmakers to “improperly” use restricted drug distribution programmes to impede generic competition.
The FTC has filed the brief in the US District Court for the District of New Jersey, in the matter of Actelion Pharms Ltd vs Apotex Inc. This case involves allegations that Actelion has prevented Actavis, Apotex and Roxane from offering competing generic versions of Actelion’s branded drugs Tracleer (bosentan) for pulmonary arterial hypertension and Zavesca (miglustat), which is used to treat type 1 Gaucher disease, by precluding them from obtaining samples of those drugs to perform necessary testing.
In order to obtain Food and Drug Administration (FDA) approval, generics makers are required to conduct bioequivalence testing to demonstrate that a generic formulation is therapeutically equivalent to the branded drug. This testing requires access to a limited amount of the branded product.
Certain branded drugs have distribution restrictions on them, frequently as part of FDA-mandated Risk Evaluation and Mitigation Strategies (REMS), and these may be used to prevent generics firms from accessing samples of the branded product, the FTC points out. Branded firms have also implemented distribution restrictions for drugs that are not subject to a REMS, it adds.
Among other claims, the generics firms allege that Actelion’s conduct violates federal antitrust laws. Actelion seeks a broad declaration that it is under “no duty or obligation” to sell its products to potential competitors. Actelion points out that its distribution restrictions are required by the FDA, but also argues that its right to refuse to sell to the generics firms is “nearly absolute and would apply even without any FDA mandate.”
But, says the FTC, if Actelion’s legal position were to be adopted by the court, this could pose a significant threat to competition in the pharmaceutical industry. In the Hatch-Waxman Act, Congress designed a regulatory framework to encourage the introduction of low-cost generic drugs while preserving incentives for innovation. The Act created a mechanism for accelerated approval of generic drugs based on a showing that the generic formulation is bioequivalent to the branded drug, and this has been very successful in facilitating generic competition and generating large savings for consumers, the Commission tells the Court.
But, it warns, the Act cannot function as Congress intended if generics firms are unable to access samples of branded products. The generics makers’ antitrust claims are not barred as a matter of law, and their allegations in this case fit within established Supreme Court precedent holding that a monopolist’s refusal to sell to its potential competitors may, under certain circumstances, violate Section 2 of the Sherman Act, the US competition legislation passed in 1890.
The FTC brief also clarifies that a distribution agreement between a branded drugmaker and its distributors may violate Section 1 of the Sherman Act, even when the agreement involves a patented product.
The Commission’s intervention has been welcomed by the Generic Pharmaceutical Association (GPhA). “The issues raised here are critically important,” and the resolution of this case “will have profound effects on a multibillion-dollar industry and the prescription drug choices of hundreds of millions of Americans,” says GPhA chief executive Ralph Neas.
Nearly 40% of new drugs are currently subject to FDA-imposed safety restrictions, and branded drugmakers are abusing this channel, which is designed to protect patients, to block competition, he says.
“We applaud the FTC for taking this strong action in support of consumers and taxpayers. They are right on the policy, right on the law and taking the right action for the American people,” he concludes.
