Are drug companies using safety rules to block generic competition?

BY Megan Thompson  July 24, 2014 at 3:13 PM EDT
Photo by Flickr user e-Magine Art

Photo by Flickr user e-Magine Art

A new study claims pharmaceutical companies may be misusing FDA safety guidelines to block generic drugs from market, costing the health care system more than $5 billion dollars a year.

The FDA requires that pharmaceutical companies develop Risk Evaluation and Mitigation Strategies, or REMS, to ensure the safety of higher-risk products. In some cases, the guidelines restrict access to the brand drugs.

In order to develop and test less costly generics, manufacturers must obtain samples of the brand drug, typically by buying them through wholesalers. Both the Generic Pharmaceutical Association and the Federal Trade Commission allege that in recent years, brand companies have been increasingly misusing REMS to block generic makers from accessing the samples they need, in some cases, applying restricted-access programs to drugs where it isn’t required.

The GPhA study, conducted by Matrix Global Advisors, looked at 40 drugs that generic manufacturers claim are currently delayed because of a REMS issue. The survey estimates the lost savings total $5.4 billion year, with the federal government overpaying $1.8 billion, and consumers paying almost $1 billion more out-of-pocket.

Several generic makers have filed lawsuits against brand drug companies over the access issue. Last month, the FTC issued an amicus brief in a lawsuit in which a generic drug maker has sued Celgene over two drugs used to treat cancer, Thalomid and Revlimid. The FTC contends the behavior could violate antitrust law.

The GPhA study also said once the FDA gives the go-ahead for generic versions of biologic drugs, called biosimilars, the REMS issue could mean lost savings of $140 million for every $1 billion in sales. A recent PBS NewsHour report explored why less-expensive biosimilars aren’t yet available in the United States.

In an email to NewsHour, a spokeswoman for the Pharmaceutical Research and Manufacturers of America said the group is reviewing the study and has no comment at this time.