Drug Approval Law Will Likely Deter Pharma Delay Tactics

Pharmaceutical manufacturers have used many strategies to delay competition from lower-cost equivalent products over the years. While so-called pay-for-delay has garnered more media attention, manufacturers have also blocked competition by denying access to product samples needed for development of lower-cost equivalents.

But in late December, Congress enacted a law that seeks to prevent this practice. Tucked away in the 700-plus page omnibus Further Consolidated Appropriations Act is a bipartisan bill known as the Creating and Restoring Equal Access to Equivalent Samples, or CREATES, Act, H.R. 965/S. 340. Both sides of the political aisle will laud their party’s efforts in passing this promising law during the coming election.

A History of Delaying Access

Developers seeking U.S. Food and Drug Administration approval to sell a generic or biosimilar product must perform bioequivalence tests comparing their proposed product against an already approved version of that product. But owners of the approved product often refuse to provide access to samples of the product to developers.

And for products that require risk evaluation and mitigation strategy, or REMS, plans — programs for prescribing and distributing drugs that have high potential for serious adverse effects — companies would claim their FDA-approved plan prohibited them from providing samples. Further, those companies would use the FDA’s requirement that competing products have a shared REMS program as an excuse to engage in protracted negotiations over the language of a shared program that would delay approval of the competitor.

These roadblocks have meant lower-cost versions of these products were not being brought to market in a timely manner. And patients have been paying the price.

What Congress Created With CREATES

The CREATES Act (Section 610 of Public Law No. 116-94) has two main provisions. First, developers can utilize a comparable REMS plan instead of the previous requirement of a single, shared REMS. Second, developers can bring a lawsuit to obtain a sufficient amount of a reference product for testing if the developer has been unable to obtain the product from the license holder. In order to successfully bring such an action, a developer must prove the following by a preponderance of the evidence:

As of the date of the lawsuit, the developer had not obtained sufficient quantities of the product on commercially reasonable, market-based terms;

The developer sent a written request to a named corporate officer of the license holder that was made by certified or registered mail, and specified a point of contact and address for the product to be shipped upon reaching an agreement; and

The license holder did not deliver sufficient quantities of the product on commercially reasonable, market-based terms by 31 days after the license holder received the request (or, for products covered by REMS with ETASU, the date the license holder received from the developer the copy of the FDA’s authorization to receive product, if later).[1]

CREATES Act: A Potentially Effective Deterrent

The CREATES Act should be an effective deterrent from abuses of certain tactics used to delay lower-cost generic and biosimilar products. Because the CREATES Act no longer requires one REMS program for all versions of a drug and instead allows developers to utilize a comparable REMS, there is less incentive for license holders to manipulate the REMS negotiations to cause delay.

License holders also have less incentive to refuse or delay providing sufficient quantities of product samples because the act provides for monetary awards to a developer that successfully brings suit after following the statutory notice procedure. The act states that attorney fees and costs shall be awarded to a developer that is successful in obtaining a court order requiring production of samples.[2]

In addition, if the developer can show the license holder delayed in providing sufficient quantities without a legitimate business reason, or defied a court order to provide samples, the act also allows for an award of a monetary amount sufficient to deter the license holder from such future actions.[3]

Previously, a developer that was unable to obtain sufficient quantities of a reference product needed to develop a lower-cost alternative would have had limited options; primarily an antitrust lawsuit, which can be expensive and difficult to maintain. The CREATES Act, however, has the potential to be both a shield and a sword for those developing generic and biosimilar drugs — discouraging abuses and providing a tool if such abuses do occur.

The federal government is obviously focused on this particular abusive practice. On the heels of the passage of the CREATES Act, the FDA and Federal Trade Commission recently stated that they will be working jointly to deter behavior that impedes access to samples of biological reference drugs in order to bring down the cost of biosimilars and improve access.

In order to best position itself to either timely receive product for testing or be in the best position for litigation, a prudent developer should understand the CREATES Act and be prepared to use this potentially effective tool.