Barrier to Generic Competition Threatens Safe, Low Cost Drug Options

Carlos Angulo and Alexandra W. “Sasha” Miller argue that an increasingly common brand company tactic is threatening to undermine the entire FDA generic drug approval process.  

Congress established the current FDA generic approval process in the Hatch-Waxman amendments to the Federal Food, Drug and Cosmetic Act. Hatch-Waxman has given millions of Americans expedited access to life-saving generic medicines that are as safe and effective as, and less expensive than, their brand-name counterparts. Thanks to this groundbreaking legislation, the U.S. healthcare system has saved more than $1 trillion in the past decade alone. 

The current issue facing generic companies is that while they need access to brand company product samples in order to submit an application to FDA, brand companies are denying that access. Under Hatch-Waxman, a generic drug applicant can rely on FDA’s previous approval of a brand drug product (the “Reference Listed Drug” or “RLD”) to establish the generic product’s safety and effectiveness. But for a generic applicant to rely on FDA approval of the RLD, it must show that the generic product is, among other things, “bioequivalent” to the RLD – which can only be demonstrated if the applicant has sufficient quantities of the RLD to conduct and submit comparative studies to FDA. 

In what the FDA calls a “growing major problem,” brand companies are increasingly denying generic competitors access to RLD samples needed for required bioequivalence testing. In some cases, these companies refuse access by invoking FDA-required safety restrictions on specific drug products – known as Risk Evaluation and Mitigation Strategies or “REMS” – even though the law prohibits using a REMS to restrict generic competition.

For products not governed by a REMS, brand companies have sometimes unilaterally imposed their own, non-FDA-required restricted distribution systems – for example, by making a product available only to patients through a prescription that must be filled by a specialty pharmacy under contract with the manufacturer.   

These brand company restrictions mean the generic company cannot even prepare a generic drug application, much less receive FDA approval. One report estimates that this denial of access costs the U.S. healthcare system $5.4 billion annually. 

With so much at stake, generic drug companies must remain tenacious in their efforts to acquire samples. And despite the obstacles brand companies have imposed, at the end of the day many of them are willing to provide RLD samples. Getting to that point, however, often requires extended exchanges between the generic and brand company that can begin with a simple request for RLD samples but may not end until months later, with the negotiation of a formal supply agreement. It’s a time-consuming and frustrating process, but generic companies must remain persistent.

Efforts are also underway at FDA, in Congress and in the courts that could provide valuable help as generic companies push for access to needed samples.

In December 2014, the FDA issued draft guidance that would enable generic companies to receive a letter from the agency attesting that the generic company’s use of requested RLD samples would not violate a particular REMS. Taking FDA’s action further, a bipartisan coalition in Congress introduced the Fair Access for Safe and Timely Generics Act of 2015 (“FAST Generics Act”), to require a brand company, as a condition of FDA approval of one of its products, to agree not to use a REMS to restrict the supply of the product for testing or development purposes. While important, these efforts are incomplete because they only address REMS products, not non-REMS restricted distribution systems unilaterally adopted by brand companies.

In the courts, several cases have addressed whether refusal to provide access to product samples for generic bioequivalence testing might violate U.S. antitrust laws. While these cases remain in the early stages, or have settled, a number of federal district courts have held that such refusals could amount to antitrust violations. As generic companies negotiate access to RLD samples, these cases provide helpful precedents – and this legal leverage may grow as other cases progress or are filed.

Given the time it takes for Congress, FDA, or the courts to act, and the likely incompleteness of their responses, generic drug companies must actively apply their own business leverage. While government help may come, private efforts are critical for ensuring that Hatch-Waxman provides Americans with safe, effective, and affordable medicines for decades to come. 

Carlos Angulo and Alexandra W. "Sasha" Miller are partners at Zuckerman Spaeder LLP.