Earlier this week, the Food and Drug Administration (FDA) held a public hearing entitled “The Hatch-Waxman Amendments: Ensuring a Balance Between Innovation and Access,” to address the agency’s plan to increase competition on the drug market while fostering innovation. A variety of stakeholders including academics/researchers, payers/providers, pharmaceutical developers, and patient/consumer advocates provided diverse input to a panel of FDA employees. The panel included Anna Abram and Elizabeth Dickinson of the Office of the Commissioner at the FDA; Keith Flanagan, Maryll Toufanian, and Kathleen Uhl of the Office of Generic Drugs at the Center for Drug Evaluation and Research (CDER), FDA; Grail Sipes of the Office of Regulatory Policy at CDER; Peter Stein of the Office of New Drugs at CDER; and Markus Meier at the Bureau of Competition at the Federal Trade Commission.
Opening Remarks
The meeting opened with remarks made by Dr. Scott Gottlieb, Commissioner of the FDA and Janet Woodcock, the Director of CDER. Dr. Gottlieb noted,
FDA doesn’t have a direct role in how drugs are priced. But at FDA, we do play a key, if indirect, role in the eventual cost of medicines. For one thing, our regulatory requirements impact the cost of drug development. On some level, drugs are ultimately priced to some measure of the cost of the capital needed to create them. These costs aren’t just a reflection of the direct cost of drug development, but also lots of indirect costs. They include the cost of scientific and regulatory risk. They also include the costs associated with the time it takes to develop a drug and gain its regulatory approval, and the costs associated with the research and development of experimental products that ultimately do not make it to market.
He acknowledged that the FDA does have some ability to help reduce the time and uncertainty of drug development by ensuring its regulatory requirements are efficient, predictable, and science-based.
He also pointed to another way the FDA can have an impact on drug costs:
by encouraging competition. Consumers derive greater value when they have access to more choice and competition. This is especially true when it comes to new drug categories. Novel drugs that are therapeutically similar, or can be used interchangeably, can provide price competition. In other instances, they offer important clinical differentiation for patients who might not respond to one particular drug, but benefit from a medicine that works through a slightly different mechanism.
Commissioner Gottlieb further noted that the FDA will address “gaming” of the system that keeps generics out of the market. He said that the FDA is taking steps to “improve our own regulatory framework” including a highly efficient review cycle to “increase the speed at which generic drugs can enter the market.”
Discussion
Academic Perspectives
Researchers and academics focused heavily on increasing competition through: reforming REMS regulations; addressing harms from citizen petitions; and brand pharmaceutical marketing practices.
Michael Carrier, an expert in the pharmaceutical industry and antitrust laws at Rutgers Law, stated that certain actions by brand companies distort the Hatch-Waxman Act to evade the system and impede entry of generics to the market, and that these actions “are not about innovation.” FDA panelists were interested in how to prospectively address the approximately 20 percent of reformulations, or changes in brand product, that are aimed at elongating exclusivity.
Harvard Medical School researcher Ameet Sarpatwari presented research showing that violations of REMS by brand companies restricted access to drug samples and therefore delayed generic entry. He used this data to advocate for the CREATES Act and FAST Generics Act, both of which he said would close REMS loopholes and potentially save up to $5.4 billion a year in reduced drug costs. Dr. Sarpatwari noted that in 2012, brand companies spent $24 billion marketing to physicians against generics, and $3.1 billion on marketing directly to consumers.
Payer and Provider Perspectives
Payers and providers expressed frustration with brand companies using FDA regulations to inhibit generic entry, including pay-for-delay, patent evergreening, and product-hopping.
Todd Ebert and Wayne Russell of the Healthcare Supply Chain Association proposed creating a more specific timeline for fast tracked applications for generic products, lowering the FDA review time to 8 months from the current 20 months, and prioritizing generics with no suppliers on the market. REMS reform continued to be a main topic for payers and providers.
Pharmaceutical Development Perspectives
Association for Accessible Medicines (AAM) President and CEO Chip Davis said that market realities allow for “gaming” of the system, noting that “innovation is flourishing but competition is not.” Davis stated that barriers for entry stall competition, and are exacerbated in low volume markets, as markets need at least three to four generics to reduce drug costs. He proposed waiving the requirement for a single, shared REMS system, reevaluating bioequivalence (BE) standards and improving the generic drug review process through PDUFA II. He noted that “failure to act will be significant and encourage anti-competitiveness.” The panel was receptive to Mr. Davis’s proposals, asking clarifying questions about the BE standard developments and low volume markets. All manufacturers believed that REMs should not be used to restrict access of generics to samples.
David Korn, Vice President of the Pharmaceutical Research and Manufacturers of America (PhRMA) stated that the innovator industry invests billions in research and development, and that IP protections supports long term sustainability for drugs on the market. He said that uncertainties in the patent system creates challenges for innovative companies, as patent challenges have been filed more frequently. The FDA panel asked Mr. Korn if there should be a requirement for companies to demonstrate reasoning for post approval changes and if these reasoning’s should be public.
John Murphy, Deputy General Counsel for Biotechnology Innovation Organization, noted that FDA efforts to publish a list of products where there is no competition “should go a long way to relieve concerns of competition for generics,” but also said that supplying unlimited samples for testing can be challenging for innovative companies.
Patient and Consumer Perspectives
Patient and consumer stakeholders echoed concerns about REMS and abuses of citizens petitions, though the bulk of the presentations centered around the patient experience. Speakers encouraged “regulatory humility” since abuse of government procedures presents a threat to competition.