Today the Federal Trade Commission (FTC) and the Food and Drug Administration (FDA) released joint guidance concerning competition for biologics, including biosimilars. The joint guidance seeks to enhance competition for biologics and reduce manufacturers’ use of false or misleading statements or promotional communications concerning the efficacy or safety of biosimilars and other biologics. This guidance appears to be part of the Trump administration’s effort to reduce the cost of medications for consumers, as it is aimed at increasing the level of competition biosimilars can offer and raising awareness of the safety and efficacy of biosimilars.
- Recent developments indicate that pharmaceutical deals are attracting greater scrutiny from the Federal Trade Commission (FTC).
- In September 2019, FTC Chairman Joseph Simons reportedly stated that the FTC will more closely scrutinize deals with overlaps involving products that are still in clinical study or development. Because of the high failure rate of products in early phases of study, the FTC typically has focused on overlaps between marketed products or products near Federal Drug Administration (FDA) approval, g., products in Phase III of the FDA pipeline. Chairman Simons’s statement makes clear that the FTC plans to examine earlier stage products while reviewing deals.
- In 2018, the director of the FTC’s Bureau of Competition announced in a speech that the FTC would favor divestitures of marketed drugs over pipeline drugs in pharmaceutical deals. Traditionally, when the FTC has had a concern about overlapping products, it has allowed the merging parties to decide which of the overlapping products to divest to remedy the concern. The director explained that, unlike marketed products, pipeline products may be costly to transfer or never be brought to market, eliminating a potential source of future competition.
- Legislators on Capitol Hill have placed pressure on the FTC to scrutinize pharmaceutical deals with more vigor. Nine US senators wrote the FTC in September to voice concerns about the effect of pharmaceutical deals on innovation and prices. In their letter, the senators specifically highlighted divestitures of pipeline products, stating that such divestitures may not sufficiently address threats to competition because pipeline products may never make it to market.
THE LATEST: FTC Submits Comment on FDA Guidance Aimed at Deterring Abuse of Citizen Petition Process
The Federal Trade Commission (FTC) submitted comments supporting the Food and Drug Administration’s (FDA) guidance for assessing whether a pharmaceutical company petitioner is misusing the citizen petition process to delay approval of a competing drug.WHAT HAPPENED:
- The FDA released revised draft guidance intended to discourage pharmaceutical companies from gaming the citizen petition process.
- The FTC expressed approval of the considerations the FDA will use to determine whether a petition was submitted to delay or inhibit competition.
- The considerations the FDA will use include:
- The petition was submitted unreasonably long after the petitioner learned or knew about the relevant information;
- The petitioner submitted multiple and/or serial petitions;
- The petition was submitted close to the expiration date of a known patent or exclusivity;
- The petition’s scientific positions were unsupported by data or information;
- The petition was the same or substantially similar to a prior petition to which the FDA had already substantively responded;
- The petitioner had not commented during other opportunities for input;
- The petition requested a standard more onerous or rigorous than the standard applicable to the petitioner’s drug product; and
- Other relevant considerations, including the petitioner’s history with the FDA.
- Each of the FTC commissioners testified during Senate confirmation hearings that scrutinizing health care and pharmaceutical companies would remain a top priority of the Commission.
- The FTC’s support of the FDA guidance appears to be part of a broader agenda to actively pursue sham petitions and discourage attempted abuses that seek to use Noerr-Pennington immunity as a shield in an administrative setting.
- In 2017, the FTC filed a lawsuit in federal court alleging that Shire ViroPharma Inc. (Shire) violated antitrust laws through repeated use of sham petitioning.
- Though the district court dismissed the FTC’s complaint, the FTC has lodged an appeal and appears committed to reining in alleged abuses of the citizen petition process.
- Going forward, citizen petitions are likely to face even more scrutiny. Under the revised draft guidance, once the FDA determines that a petition was submitted primarily to delay competition, it will refer that determination to the FTC. Potentially anticompetitive petitions will now face two rounds of review by federal regulators.
THE LATEST: FTC to Look Closely at Competition between Biologics and Biosimilars and Patent Protection Strategies of Branded Manufacturers
On July 18, 2018, US Food and Drug Administration (FDA) Commissioner Scott Gottlieb delivered a speech at The Brookings Institution in Washington, DC, discussing how to bolster competition from biosimilars while maintaining innovation.
The Commissioner noted the absence of true competition among biologics from biosimilar products in the United States, similarly to what the country experienced 30 years ago with respect to generics. The Commissioner said that this situation is caused, in part, by what he views as anticompetitive practices implemented by branded manufacturers, such as:
- Rebating schemes in which drug manufacturers bundle discounts to health insurers and employers across different pharmaceutical products;
- Multi-year contracts granting important rebates to payors, often entered into right before the entry of a biosimilar on the market;
- Volume-based rebates;
- Tying rebates, i.e., when rebates are offered if a product is bought together with a biologic;
- Patent thickets, i.e., when branded manufacturers’ own dense portfolios of overlapping intellectual property rights cover biologics; and
- Bundling biologics with other products, i.e., when a product is sold together with a biologic.
When Customer Supply Contracts Lead to Trouble: Exclusive Dealing Provisions Result in FTC Monopolization Action against Invibio
The Federal Trade Commission (FTC) continues to aggressively enforce the antitrust laws. On April 27, 2016, the FTC took action against Victrex, plc and its wholly owned subsidiaries, Invibio, Inc. and Invibio Limited (collectively, Invibio) because of exclusivity terms in its supply contracts. The consent order requires Invibio to cease and desist from enforcing most of the exclusivity terms in its current supply contracts and generally prohibits Invibio from requiring exclusivity in future contracts. Invibio is also prohibited from using other pricing strategies, such as market-share discounts, that would effectively result in exclusivity.
Exclusive dealing by a monopolist may be challenged and prohibited when the acts allow the monopolist to maintain its monopoly power. Total foreclosure is not a requirement for unlawful exclusive dealing—it simply must foreclose competition in a substantial share of the relevant market so as to adversely affect competition.
The FTC’s complaint alleged that Invibio’s exclusive dealing provisions in its customer contracts foreclosed a substantial share of the market from two entrants despite those entrants offering a similar product at lower prices. In addition to using exclusivity terms in its long term supply contracts to impede its competition and maintain its monopoly power in the worldwide market for implant-grade polyetheretherketone (PEEK), the FTC complaint also alleged that Invibio used strategies to “coerce or induce device makers to accede to exclusivity terms, including threatening to discontinue PEEK supply or to withhold access to regulatory support.” (more…)
On Thursday, August 14, 2014, several physicians wrote a letter to Commissioner Hamburg of the U.S. Food and Drug Administration (FDA) expressing their concerns regarding the naming of biosimilar products in light of the implementation of the Biologics Price Competition and Innovation Act (BPCIA).
Unlike traditional small-molecule prescription drugs, most biologics are complex and are typically made from human or animal materials. The BPCIA provides an abbreviated licensure pathway for biologics that are demonstrated to be “biosimilar” to or “interchangeable” with an FDA-licensed biologic. A biologic may be demonstrated to be “biosimilar” if data show that, among other things, the product is “highly similar” to an already-approved biologic. Unlike “generic” versions of small-molecule prescription drugs, biosimilars are not bioequivalent to their reference biologics. To date, the FDA has not approved any biosimilar products.
The licensure pathway contemplated by the BPCIA is meant to reduce the time and cost of bringing competing biosimilar products to consumers. As the FDA begins evaluating the first U.S. applications for the licensing of biosimilars, concerns have arisen as to how approved biosimilars will be named. In their letter to Commissioner Hamburg, the physicians argued that biosimilars “must have distinguishable nonproprietary names” from their reference biologics. The physicians wrote that distinct names are needed to avoid confusion: if a biologic and its biosimilars share a common name, physicians may incorrectly assume that the products are approved for all of the same indications, even if the FDA disagrees. The physicians also argued that unique names for biosimilars will help doctors track adverse events by allowing them to correctly identify what product caused the event.
However, not everyone agrees with the physicians’ position. On July 1, 2014, a group of pharmacies, insurers and unions wrote a letter to Commission Hamburg asking the FDA to require that biologics and biosimilars share the same name. This group argued, among other things, that requiring distinct names for biosimilars may slow the uptake of biosimilar products as substitutes for brand-name biologics, thereby limiting significant potential cost savings.