"End the shenanigans," FDA Commissioner Scott Gottlieb told brand drug manufacturers Wednesday as the Federal Trade Commission (FTC) opened a workshop looking at the obstacles to robust competition in the U.S. prescription drug market.

"Our economic model, which rewards highly innovative drugs with the opportunity to hold monopolies for a limited period of time through patents and exclusivities, and to freely price their products to a measure of the value that a transformative drug offers, also depends on the generic approval process working as intended," Gottlieb said.

The system "must work at both ends of the marketplace – the end where the highly innovative drugs are developed and rewarded, and also at the other end, where those medicines face brisk competition once their patents and exclusivities have lapsed," he said. If brand companies want to continue to operate under the current model that allows them to set their prices, they have to end the games that prevent competition, he warned.

An often-played move is denying access to the reference drug for generic and biosimilar development. Brand companies may use FDA-approved risk evaluation and mitigation strategies (REMS) as an excuse to refuse to sell the reference drug to would-be competitors. When a REMS for a specific drug includes elements to assure safe use, brand companies also may delay negotiating a mandatory shared REMS to keep a competitor off the market and maintain high prices.

Gottlieb promised that he's going to make sure the FDA's regulatory processes are harder to abuse. That includes how the agency implements its REMS programs. As part of that effort, he announced a draft guidance the FDA rolled out Wednesday to make it easier for brand and generic sponsors to develop one common master file for the implementation of a shared REMS.

The draft guidance, which is set for publication in Thursday's Federal Register, is the first step toward making it easier to implement a single shared REMS for the brand and generic versions of a drug. The changes will give the FDA a stronger basis to waive the requirement that a generic drug be part of a shared REMS when the brand sponsor doesn't want to share, Gottlieb said.

In the coming weeks, the agency also plans to take more steps to address other anticompetitive behaviors, including the use of restrictive agreements with supply chain members, such as specialty pharmacies, to block the sale of a reference drug to a generic or biosimilar developer. "When intermediaries sign on to these restrictive games, I want them to know that they're challenging a broader public health goal," Gottlieb said.

However, those actions will address only a few of the games brand companies play to protect their drugs from competition long after the main patents have expired. Michael Carrier, a professor at Rutger's Law School, outlined several other anticompetitive tactics being employed by brand sponsors, including product hopping when the new drug offers no true benefit, abuse of citizen petitions to delay generic entry and bundling/rebates in negotiations with pharmacy benefit managers to get preferable formulary placement.

More competition needed

Although much of the discussion focused on brand vs. generic competition, FTC Acting Chairwoman Maureen Ohlhausen said attention also needs to be paid to what it takes to build sustainable competition among generic drugs. Policymakers have tended to ignore that post-patent space, but it's where deep savings are delivered, she noted, pointing out that discounts of 85 percent or more are seen when a large number of generics compete.

Thus, "there are few things more effective in lowering the cost of prescription drugs than fostering substantial generic entry upon patent expiration and letting competitive markets drive prices ever lower," Ohlhausen said.

The assumption has been that once patent protections expired for a drug, "policymakers wouldn't have to do much more than get out of the way to see those 85 percent reductions in price," Ohlhausen said. While that may be true for drugs with large demand, the assumption doesn't hold for all drugs because the markets for individual therapies are much more diverse and complex than some policymakers realize, she added. As a result, some drugs don't face much competition.

With an eye on the escalating price of brand drugs, the FTC wants to identify impediments to vigorous competition once drug patents have expired and determine the appropriate policy response. Carrier and a few other speakers at the workshop saw the solution as greater enforcement of antitrust law.

But Ohlhausen said, "The complex, multifaceted nature of these problems strongly suggests that antitrust enforcement is not a cure-all. . . . Just as there is no single drug to cure every ailment, the antitrust laws are not a panacea for every economic concern."

As the workshop progressed with panels focused on generic drug competition and some of the supply chain intermediaries, Robert Andrews, CEO of Health Transformation Alliance (HTA), said the fundamental question shouldn't be "how can we get a better price for a drug," but rather "how can we make the patient healthier."

The HTA, a group of more than 40 major corporations looking to transform the U.S. health care system, has its own idea of what success would look like, based on a personalized formulary for every patient. The goal of the HTA isn't to get a discount on a drug that shouldn't have been prescribed in the first place, Andrews said. Instead, it's to get the best outcome for each patient.

To do that, patients and doctors need to be incentivized to use a personalized formulary in the most efficacious way. Filling a prescription should be more convenient to increase adherence. And the price set by the drug manufacturer needs to be tied in large part to the health outcome of the patient, Andrews said.

Too much context is missing when the question merely focuses on whether a drug is too expensive, he said, as the answer depends on what the drug does and how it performs in a given patient.

In summing up the workshop, Rena Conti, an assistant professor at the University of Chicago, pointed to three sets of actors who share the blame for high drug prices – big pharma, supply chain intermediaries and generic companies that are consolidating and creating new monopolies. She also noted a complex series of regulatory actors whose policies may be contradictory and inadvertently making the situation worse.

"Good-intention solutions can have very unintended consequences," she warned the FTC, adding that there are no silver bullets to the problem.

The FTC will be accepting comments through Dec. 8 as it searches for ways to make the prescription drug market more competitive.

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