My colleague and tireless crusader for free market healthcare Grace Marie Turner has a concise post at NRO's Critical Condition health blog that raises an important point I did not address:
"This provision also faces a potential constitutional challenge. Such FDA intrusion into the marketplace would be unprecedented because the government would be compelling a commercial transaction between companies that does not involve a willing seller and willing buyer."
Grace-Marie's point is grounded in both the FDA statutory authority and previous Supreme Court rulings that anti-trust claims are not grounds for forcing a company to share it's intellectual property with it's competitors. In the past, when Congress enacted statutes requiring innovator companies to share IP or data absent an exclusivity period or protections they did so in stand-alone bills (Hatch-Waxman and biosimilars) and not as amendments that, as Grace Marie notes, are "tucked" into another bill. (Though the biosimilars measure was folded into PPACA)
Further, the exclusivity granted to innovator companies extends, in particular cases, to REMS programs. Specifically 10 percent of all REMS require elements to assure safe use (ETASU) that include training, websites, track and trace technology to link companies, wholesalers, pharmacists, physicians and patients, software systems that integrate prescribing information with data collected to monitor safe use. These are proprietary systems without which a drug is considered unsafe. It's a criminal activity to sell knowingly sell unsafe drugs. Companies can incur criminal and civil liability even for selling such drugs with the understanding that they will be used in a 'safe' manner if the drug winds up being mis-used or harming someone. Will generic companies assume the cost of litigation and damages? What safeguards are in place to assure that both the administration of a REMS and product testing are done overseas where Congress has raised concerns about FDA's oversight?
Grace Marie also notes that the "REMS provision is expected to save the government at least $100 million over ten years (for reasons that are unclear even to careful observers). The risks to innovation and patient safety are incalculably larger."
That's an understatement. Just as the original estimates of the savings from biosimilars were vastly overstated and unreliable, so too are the estimates of hundreds of millions of dollars in savings from generic versions of drug with REMS. REMS, especially those with hard-wired systems to assure safe use, are expensive to develop, maintain and update. The cost of REMS will be passed on to consumers in the form of higher prices. My guess is CBO and the sources it relied on to develop the cost-saving estimates did not take into account the requirement that generic companies will need to create a REMS for the drugs they want to get outside of REMS.
And I also bet they did not look at the impact this amendment might have on drug shortages. Maintaining an ETASU program is an expensive proposition. Most of them are required of cancer drugs or drugs used in treating cancer patients. What's the point of accelerating generic development of products only to create shortages of the drugs down the road? The PDUFA bill has a whole section on addressing drug shortages. Not a word on how the cost of REMS might affect that problem.
Finally, In a previous post I wrote: "And now, because the Supreme Court ruled that innovator companies are liable for harms done to patients by the administration of a generic version of their drug (Wyeth v. Levine) any screw up because of a sloppy REMS or the purchase of a product outside the REMS or even an adverse event could be grounds for suing an innovator. "
I failed to also note that a more recent Supreme Court ruling could also put innovator companies in more legal danger. In PLIVA Inc. v. Mensing, 131 S.Ct. 2567 (2011) "the Court ruled that FDA’s regulations preventing generic drug manufacturers from changing their labeling except to mirror the label of the brand-name, Reference Listed Drug (“RLD”) manufacturer (whose drug product is approved under an NDA) preempt state-law failure-to-warn claims against generic drug manufacturers, because generic drug manufacturers are unable to comply with both federal and state duties to warn. Since the Court issued its decision, scores of court decisions have been issued dismissing litigation against generic drug manufacturers on Mensing grounds. "
So that might mean innovator companies will still be on the hook for updating REMS well after it stops manufacturing a drug. It's one reason Roche has pulled out of making Accutane and the iPLEDGE program.
There's another wrinkle to the liability issue. As the FDA Law Blog notes: Two months ago, Senator Leahy noted that the Mensing decision “creates a troubling inconsistency in the law with respect to prescription drugs.” This is a reference to the U.S. Supreme Court’s March 2009 decision in Wyeth v. Levine, 555 U.S. 555 (2009), in which the Court held that state-law tort actions against a brand-name drug manufacturers for failure to provide an adequate warning label are not preempted.
Leahy has introduced The “Patient Safety and Generic Labeling Improvement Act.” The bill would amend the FDC Act to add new section 505(w): "Notwithstanding any other provision of this chapter, the holder of an application approved under subsection (j) may change the ‘Warnings’ section of the labeling of a drug so approved in the same manner as the holder of an approved new drug application under subsection (b), unless the Secretary prescribes by rule another manner.
Section 1131 could open up another double standard of tort liability. At the very least, it complicates Leahy's effort to develop a stand-alone bill.
It is an ill-considered amendment that was rejected once before because it was considered extreme to force a company to sell a product to a competitor who wants to make money by copying it. Because it also threatens patient safety, exposes innovator companies to unknown liability and may contribute to drug shortages, another approach to reconciling REMS with generic drug approvals is needed.