Drugmakers use safety rules to block generics

For decades, pharmaceutical companies have deployed an array of tactics aimed at preventing low-cost copies of their drugs from entering the marketplace. But federal regulators contend the latest strategy – which relies on a creative interpretation of drug safety laws – is illegal.

The Federal Trade Commission recently weighed in on a legal case over the tactic involving the drug maker Actelion, and earlier this month a federal suit was filed in another case in Florida. “We definitely see this as a significant threat to competition,” said Markus Meier, who oversees the commission’s health care competition team.

The new approach is almost elegant in its simplicity: Brand-name drugmakers are refusing to sell their products to generic companies, which need to analyse them so they can create the copycat versions.

Traditionally, the generic drugmakers purchased samples from wholesalers. But because of safety concerns, an increasing number of drugs are sold with restrictions on who can buy them, forcing the generic manufacturers to ask the brand-name companies for samples. When they do, the brand-name firms say no.

Brand-name companies say they are protecting themselves – and patients – in case the drugs are somehow used improperly. They say no law requires one company to do business with another.

Advocates for generic drugs say the practice could limit access to the low-cost drugs, which they say have saved more than $1 trillion over the last decade. They say the companies that have most aggressively pursued the tactic tend to be those with drugs that are nearing the end of their patent life.

Actelion, a Swiss company, is withholding samples of its flagship product, Tracleer, which treats a lung disorder. Its patent is set to expire in 2015. The company’s other product in question, Zavesca, has a patent that expires later this year. Tracleer costs about $79,000 a year, while Zavesca costs about $229,000.

The issue has its roots in a 2007 law that allowed the Food and Drug Administration to require detailed safety programmes for drugs with serious side effects or the potential for abuse. In many cases, those programmes simply direct the company to educate doctors or patients about risks. But in other cases, they require that distribution be limited to approved pharmacists and health care providers.

About 70 drugs carry mandatory drug safety plans, and of those, 34 have more restrictive requirements, according to the FDA. Although the 2007 law said the programs should not be used to block development of generic drugs, brand-name companies said the language was vague and began restricting access to drug samples soon after it was passed.

In 2009, generic companies began complaining that Celgene had refused to sell them samples of Thalomid, the drug better known as thalidomide that is now used to treat cancer and leprosy, and a related drug, Revlimid. Lannett, a generic company, sued Celgene, claiming its practices were anti-competitive, and the case was settled. The trade commission and the Connecticut attorney general started investigations, which Celgene has said are still under way.

At least one company, Gilead Sciences, explicitly restricts access to samples. Pharmacies and other institutions that buy its drug Letairis, which treats a serious lung condition, must agree not to “use product in clinical trials or other studies without the prior written consent of Gilead Sciences,” according to an order form sent to customers by Accredo, a specialty pharmacy that distributes Letairis for Gilead. A spokesman for Gilead declined to comment.

Brand-name manufacturers are also limiting access to drugs even when the government does not require it. In a federal lawsuit filed April 1 in Florida, Accord Healthcare, an Indian generics manufacturer, said the drug company Acorda refused to turn over samples of its multiple sclerosis drug Ampyra, even though there are no restrictions on its distribution.

No obligation

In a letter to Accord from Acorda that was submitted to the US District Court for the Southern District of Florida, in Fort Lauderdale, Acorda echoed other companies’ positions and said it was under no obligation to sell its products to another manufacturer.

Apotex, a Canadian company, said the drugmaker Novartis denied it access to Tasigna, a leukemia drug, until Apotex threatened to sue. Another company, Lundbeck, has so far declined to provide Apotex with samples of the drug Xenazine, which treats a movement disorder caused by Huntington’s disease.

Julie Masow, a spokeswoman for Novartis, said Apotex ultimately purchased samples of Tasigna through the drug’s sole distributor. She said the delay was the result of a misunderstanding, adding “generic companies are free to buy Novartis products through distribution channels.”

Representatives of brand-name manufacturers say there are good reasons to restrict drugs to approved pharmacies or health care providers. Lundbeck said it sells Xenazine, also known as tetrabenazine, to a limited network of specialty pharmacies because it treats fewer than 25,000 people nationwide.

“Not many retail pharmacies would stock the product for so small a patient population,” said Sally Benjamin Young, a spokeswoman for Lundbeck.

She said Lundbeck was seeking guidance on the issue from regulators because “it is not clear under the applicable laws and regulations that Lundbeck is permitted to sell tetrabenazine to any person or entity without a prescription.”

Some within the industry have been forthright about how these drug safety programmes can be turned to a company’s advantage. At a conference in 2010, one speaker delivered a presentation that listed “life cycle management options” as one benefit of such safety programs. “Life cycle management” is industry jargon for maximizing the length of a brand’s patent life.

Rep. Henry A Waxman, D-Calif., said Congress needed to remove the loophole that allows branded drugmakers to deny generic manufacturers access to their products.
“The purpose of these postmarket safety plans was to protect consumers from risky drugs, not to allow brand companies to thwart generic competition,” said Waxman, who in 1984 co-wrote the landmark law expanding access to generic drugs.

But legislative efforts to require drugmakers to sell samples to generic companies have failed twice, once during passage of the 2007 law, and last summer, when Congress reauthorized a user-fee program for drugs and medical devices. The language was removed from last year’s bill after brand-name pharmaceutical companies lobbied against it, according to an industry lobbyist and legislative aides.

A spokeswoman for the industry trade group, the Pharmaceutical Research and Manufacturers of America, declined to comment.

Without clarity from Congress or regulators, many are looking to the Actelion case, in which the company is asking the US District Court in New Jersey to rule that it should not be forced to sell samples to Apotex and Roxane Laboratories.

“This action concerns the fundamental right of a business to choose for itself with whom to deal and to whom to supply its products,” Actelion said in legal filings.

Steve Giuli, the head of government affairs for the US at Apotex, said the practice of denying access to samples was only the latest example of the brand-name industry’s evolving efforts to prevent generic competition. “They just keep pulling things out of their playbook,” he said. “You plug one up and they flip the page – and there’s another one ready to go.”