FDA and the FTC Won’t Get Fooled AgainOctober 24, 2018
Last week, the President signed into law a bill that gives the FTC greater authority to police agreements between biologic license holders and biosimilar applicants – so-called “pay-for-delay” settlements. The FTC has been focused on these settlements in the pharmaceutical space for years, but until now lacked the same tools for review of biosimilar settlements.
Earlier this year, U.S. Senators Chuck Grassley and Amy Klobachar urged the FTC to examine “pay-for-delay” settlements in the realm of biosimilars, specifically arguing that the same problem that has “plagued generic pharmaceutical markets for years . . . may be being utilized for settlements regarding biologic medicines.” The Senators’ letter cited AbbVie Inc.’s settlement agreements with Amgen Inc. and Samsung Bioepsis over the blockbuster biologic Humira, which have been the subject of concern for patients groups as well. The persistent dearth of competition in the biologics space following passage of the Biologics Price Competition and Innovation Act in 2009 has been a topic of discussion among policy wonks and regulators, and the FTC has been paying close attention to the biosimilars market.
Now, the Patient Right to Know Drug Prices Act, which we previously blogged about here, has amended the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) such that biologic reference product license holders and biosimilar applicants are subject to the same FTC notification requirements applicable to branded pharmaceutical manufacturers and ANDA applicants under that law. Specifically, the FTC must be notified of any agreement between a branded drug/biologic company and a generic/biosimilar company, or between two generic companies or two biosimilar companies, that relates to (1) “the manufacture, marketing, or sale” of either the branded or generic/biosimilar product, or (2) the period of statutory exclusivity for a first generic or first biosimilar applicant. See MMA §§ 1111-1112. The FTC’s instructions for notification in the pharmaceutical context can be found here. They will likely apply in the biologic context as well.
Although the market for biosimilars is not yet competitive enough to inspire numerous “pay-for-delay” settlements, alleged anti-competitive tactics are already a concern – as explained in Pfizer’s recent FDA Citizen Petition. Moreover, the powers-that-be appear confident that robust competition in the biosimilars market is forthcoming. As seen from the adoption of the Biosimilars Action Plan, FDA is actively preparing for a highly competitive biosimilars market.
With 30 years of experiences with alleged anti-competitive efforts in the generic drug market under their belts, regulators are implementing proactive measures like FTC review of potentially anticompetitive settlements to attempt to curb potential abuses in the biosimilar market before they can start. Preventing such abuses has clearly been on Commissioner Gottlieb’s mind, as he remarked when rolling-out the Biosimilars Action Plan that
We’re falling into some of the same doubts and policy constraints that were used to deter competition from generics in the years after the Hatch Waxman Act.
But we’re not going to play regulatory whack-a-mole with companies trying to unfairly delay or derail the entry of biosimilar competitors. We’re not going to wait a decade or more for robust biosimilar competition to emerge.
This type of anticipatory policy-making underscores FDA’s, the FTC’s, and Congress’s commitment to creating a functioning, competitive, and ultimately accessible market for lower cost biologics.
Yet another collaboration between FDA and the FTC also provides some insight into FDA’s priorities. While the two agencies have worked together on promotion and substantiation issues since the 1950s, it is only more recently that FDA has been active in addressing potential anticompetitive issues in the drug industry. Just two weeks ago, FDA published a revised guidance indicating that it would refer citizen petitions with the primary purpose of delaying applications to the FTC. Timely authoritative referrals could mean increased success by the FTC in bringing antitrust actions against abusers of the citizen petition process. Maybe it’s the backlash from the Daraprim and EpiPen extreme price hikes, but regulators seem to be looping in the FTC more than ever. Regardless of the impetus, this reliance on FTC so early in the development of the biosimilar market could succeed in accelerating competition in the biologic space.