Drug Cos. Using REMS to Delay Generic Competition

Five years ago in the wake of the Vioxx scandal, Congress passed tough new distribution rules for companies whose prescription drugs pose a serious risk to patients when misused. Now generic manufacturers are complaining those same rules are being used to thwart competition that could save consumers and taxpayers billions of dollars over the next decade.

Exhibit one in the generic industry’s brief involves thalidomide, whose use as an anti-nausea medication during pregnancy was banned in the early 1960s because it caused horrific birth defects in a handful of European countries where it had been approved. In the late 1990s, the drug, now marketed as Thalomid by Celgene, made a comeback, first as a medication for leprosy and then, in 2006, for some cancers.

But the FDA required its manufacturer adopt a “risk evaluation and mitigation strategy” (REMS) under the post-Vioxx law. It demanded Celgene maintain strict controls on distribution of the drug and obtain signed waivers from prescribing physicians saying they were aware of the risks, especially to pregnant women.

In 2009, with the first patents on the new uses for Thalomid nearing expiration, Dr. Reddy’s Laboratories, Inc., a New Jersey-based generic manufacturer, asked Celgene for samples so it could prepare a generic formulation. The company refused.

In a citizen’s petition to the FDA, Dr. Reddy’s officials complained that unless the FDA acted, “consumers will be prevented from having timely access to generic versions of an increasing number of important drugs.” The FDA, which has approved over 80 REMS in the past few years, many of them for expensive biologics that will face generic competition for the first time in the coming decade, did nothing.

Efforts to close the loophole have become the subject of a fierce behind-the-scenes lobbying campaign on rival bills that reauthorize industry user fees, which are now before a Congressional conference committee. The bill must pass since user fees now account for over half of the Food and Drug Administration’s drug division budget.

The Senate bill, which passed in a near unanimous vote last month, required that brand-name manufacturers cooperate with potential generic competitors by turning over samples of the more dangerous drugs. But the House version stripped the requirement after the Pharmaceutical Research and Manufacturers of America (PhRMA), the industry trade group, voiced opposition. The bill is now in conference.

“This stuff sounds arcane, but it has enormous potential to cost consumers tens of billions of dollars,” said Ralph Neas, president of the Generic Pharmaceutical Association. “Brand companies are using REMS to prevent generic companies from getting samples for testing.”

The group has lined up support from AARP, pharmacy benefit managers (PBMs), which manage prescription drug benefit plans for major employers, and a wide range of consumer groups. “The average price of generic drugs is $40 a month or 75 percent less than brand name drugs,” said David Certner, a lobbyist for AARP, which claims a membership of 20 million older Americans. “With biologics soon to be eligible for generic competition, it is absolutely critical that they be made affordable.”

According to generic proponents, PhRMA and the Biotechnology Industry Organization have inundated Capitol Hill with lobbyists in recent weeks to keep the Senate provision out of the final bill. The drug industry and other health-related firms rank number one among all industries in lobbying this year, according to the Center for Responsive Politics, having spent $67 million in the first quarter alone, which is 50 percent more than any other industry. The top five lobbying groups for all of health care were PhRMA ($5.3 million), Merck ($4.5 million), Pfizer ($3.5 million), Eli Lilly ($2.9 million) and Novartis ($2.8 million).

PhRMA senior vice president Matthew Bennett, in a prepared statement, did not comment directly on the issue, but did say that “REMS were not created to serve the interests of the generic drug or PBM sectors. When REMS are imposed on companies by the FDA,” he said, “it is within the context of patient safety, and that should continue to be the focus moving forward.”