- Issue: Some brand-name drug manufacturers engage in anticompetitive behaviors to block or delay competition from generic drugs. One tactic is to use the Risk Evaluation and Mitigation Strategy (REMS) to prevent generic manufacturers from obtaining samples necessary for required bioequivalence testing as part of the generic drug approval process at the Food and Drug Administration (FDA). The FDA recently posted a list of 39 manufacturers who may have misused REMS to block generic drug entry.
- Goal: To describe the impact of such anticompetitive behavior on patients.
- Methods: We use a true story to describe how anticompetitive practices that delay generic drugs from entering the market affect patients.
- Key Findings: Some manufacturers’ anticompetitive behaviors, such as misuse of REMS, have serious implications for patients because they prevent more affordable generic drug products from entering the market and enable brand-name manufacturers to continue monopoly pricing.
- Conclusion: Addressing anticompetitive behaviors like misuse of the REMS program would help patients by lowering prices and increasing access to medication.
At age 48, Robin Ridley of Goodlettsville, Tenn., was diagnosed with multiple myeloma, a blood cancer that affects the plasma cells found in bone marrow. Multiple myeloma changes healthy plasma cells, which produce antibodies that maintain the immune system, to cancerous cells.1 This can lead to bone damage, infections, and organ dysfunction.2
In 2016, Robin was prescribed Revlimid (lenalidomide), an oral chemotherapy treatment manufactured by Celgene that received Food and Drug Administration (FDA) approval in 2006. It is the standard, and highly effective, treatment for multiple myeloma, and no generic versions of the drug have been approved.3
When her battle with cancer began, Robin had been working as an executive assistant and was covered under her employer’s health insurance plan. But when she began to lose her memory, a common side effect of her treatment, she could no longer work. Although Robin’s cancer is near remission, she will continue to need Revlimid for the rest of her life.
After leaving her job in 2017, Robin exercised her eligibility under COBRA to buy into her former employer’s health insurance plan. Celgene paid Robin’s copayments for Revlimid and her $5,000 deductible. But starting next year, Robin’s COBRA coverage and Celgene’s financial support will end — meaning she will have to pay for the drug out of pocket potentially for the rest of her life. While Revlimid is saving her life, paying $15,000 a month for 21 pills could financially ruin her along the way.
Applying FDA research on the impact of generic price competition, if three generic drugs were on the market for Revlimid, their price could be as low as $3,000 per month.4 Without any generic competition, Celgene raised the price of Revlimid three times in 2017, increasing the list price by 19.8 percent.5
This brief explores why generic alternatives to Revlimid are not available so long after its market entry and what policies might help patients like Robin who struggle to pay for lifesaving drugs.
Anticompetitive Behaviors Using the REMS Program
Brand-name manufacturers are guaranteed certain market protections through patents and market exclusivity as incentives to develop new drugs. These protections create monopolies and therefore generate large financial incentives for manufacturers to maintain them. Revlimid’s first patent for treatment of multiple myeloma expires this year, but FDA granted the drug additional exclusivity periods until 2024 for its use as a maintenance therapy for multiple myeloma and mantle cell lymphoma.9 Generic manufacturers have been trying to get samples from Celgene to prepare to enter the market, but with little success so far.
When these protections expire, generic drugs are likely to enter the market, introduce competition, and lead to lower prices for generics and brand-name drugs. Per FDA research, the first generic drug to enter the market will be slightly cheaper than the brand-name drug. The second generic will on average be 50 percent cheaper, and the third entrant can cost 20 percent of the brand-name drug’s price on average.10
However, some manufacturers take excessive steps to prevent or delay generic drugs from entering the market, including misusing the Risk Evaulation and Mitigation Strategy (REMS) program. Brand-name manufacturers may do this in two ways.
First, a brand-name manufacturer may prevent a generic competitor from accessing samples for bioequivalence testing by using the elements to assure safe use part of the required REMS program. In order to receive FDA approval, a generic manufacturer must conduct testing to ensure the generic product is not clinically significantly different from the brand-name drug—and this requires samples of the brand-name drug.11 Brand-name manufacturers manipulate the REMS programs to prevent generic manufacturers from gaining access to samples. As of May 2, 2018, 45 of the 74 REMS programs had elements to assure safe use.12 Revlimid currently has an FDA-mandated REMS with elements to assure safe use,13 and Celgene, the manufacturer, has cited its REMS program as the reason it cannot provide samples to potential generic manufacturers, despite FDA stating its REMS program should not prohibit Celgene from providing samples.
Second, if a brand-name drug is subject to an FDA-mandated REMS program, then the generic manufacturer must share the same REMS program. The brand-name manufacturer and generic manufacturer typically must negotiate having a shared REMS program. Those negotiations include reaching agreement on confidentiality, product liability concerns, antitrust concerns, and access to a license for REMS program elements that are patented. Brand-name manufacturers can delay the establishment of a shared REMS program by prolonging negotiations, which can delay the generic drug from entering the market. FDA will not approve a generic product to come to market until the shared REMS is agreed upon by both parties. As of May 2, 2018, the FDA had approved 10 shared REMS programs and sent letters to manufacturers stating its concerns over their efforts to delay creation of shared REMS programs for four products.14
Potential Policy Solutions to Address REMS Misuse
Addressing REMS abuses has raised concerns in this administration and Congress, and the policy options to address this anticompetitive behavior seem like the most promising opportunity.
This spring, President Donald Trump released his blueprint for lowering prescription drug prices, which calls out REMS abuses and solicits public comment to address them.19 Since then, FDA published two draft guidances to address REMS abuses: One suggests ways to establish a shared REMS program to avoid stalemates between brand-name and generic drug manufacturers, and the other describes circumstances in which the agency could waive the requirement for shared REMS programs.20 FDA also published a list of manufacturers that have potentially abused REMS to delay generic competition.21 Celgene appears on the list three times, including for its actions related to Revlimid. None of the actions or announcements from the administration addresses the problem of when a brand-name manufacturer blocks access to samples to potential generic manufacturers for bioequivalency testing.
Several additional policy approaches have been suggested to curb this particular kind of anticompetitive behavior, either through new legislation or by leveraging existing FDA authority (see table below). The bipartisan Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act of 2017 would enable a generic manufacturer to sue in federal court to force a brand-name manufacturer to provide samples.22 The CREATES Act would expedite legal review and change the burden from proving a violation of antitrust law to one in which the generic manufacturer would only need to prove that a sufficient quantity of samples were being withheld. The CREATES Act also would permit a generic manufacturer to work with FDA to establish its own REMS program, comparable to the brand-name manufacturer’s REMS program.23 The Congressional Budget Office estimates the CREATES Act could save the federal government more than $3 billion over 10 years.24
FDA could rely on its existing authority related to REMS oversight and approval to address the sample withholding issue.25 The agency could, for example, establish stricter criteria to ensure that brand-name manufacturers provide samples to generic manufacturers within an appropriate time. However, this approach would not address brand-name manufacturers’ use of voluntary limited distribution systems that have the same effect as the REMS program abuses.
Another potential solution would be for Congress to expand FDA’s authority to impose civil monetary penalties on manufacturers that abuse the REMS programs. Such penalties are unlikely to be sufficient to deter the anticompetitive behavior, however.
Blocking access to samples and delaying implementation of a shared REMS program are just some of the ways in which certain brand-name drug manufacturers may keep competitors from developing lower-priced generics. The anticompetitive behaviors associated with REMS programs are estimated to cost patients more than $5 billion each year.26
Policies like the CREATES Act are needed to help restore the balance between encouraging drug innovation and promoting price competition, giving patients like Robin hope for affordable, lifesaving drugs.
The authors and the Commonwealth Fund would like to thank Patients for Affordable Drugs for sharing Robin Ridley’s story. We are incredibly grateful to Robin for allowing us to tell it.
1 “Key Statistics for Multiple Myeloma,” American Cancer Society, February 2018, https://www.cancer.org/cancer/multiple-myeloma/about/key-statistics.html.
2 “What Is Multiple Myeloma?” Multiple Myeloma Research Foundation, https://www.themmrf.org/multiple-myeloma/what-is-multiple-myeloma/.
3 Institute for Clinical and Economic Review (ICER), A Look at Treatments for Multiple Myeloma (ICER, May 2016), https://icer-review.org/wp-content/uploads/2016/06/icer_multiple_myeloma_v4.pdf.
4 “Generic Competition and Drug Prices,” Food and Drug Administration (FDA), https://www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/ucm129385.htm.
5 Eric Sagonowsky, “Celgene takes its most aggressive price hikes yet on Revlimid, Pomalyst: analyst,” FiercePharma, October 2017, https://www.fiercepharma.com/pharma/celgene-takes-its-most-aggressive-price-hikes-revlimid-pomalyst-yet-analyst.
6 Waxman Strategies research on “Approved Risk Evaluation and Mitigation Strategies (REMS),” FDA, https://www.accessdata.fda.gov/scripts/cder/rems/index.cfm.
7 “What’s in a REMS?” FDA, May 2018, https://www.fda.gov/Drugs/DrugSafety/REMS/ucm592636.htm.
8 “A Brief Overview of Risk Evaluation and Mitigation Strategies (REMS),” FDA, https://www.fda.gov/downloads/AboutFDA/Transparency/Basics/UCM328784.pdf.
9 Waxman Strategies research on “Orange Book: Approved Drug Products with Therapeutic Equivalence Evaluations,” FDA, June 2018, https://www.accessdata.fda.gov/scripts/cder/ob/results_product.cfm?Appl_Type=N&Appl_No=021880; A. Palumbo et al., “Lenalidomide: a new therapy for multiple myeloma,” Cancer Treatment Reviews 34 no. 3 (May 2008):283–91, doi: 10.1016/j.ctrv.2007.12.005; NCI Staff, “FDA Approves New Use for Lenalidomide in Multiple Myeloma,” Cancer Currents Blog, March 16, 2017, https://www.cancer.gov/news-events/cancer-currents-blog/2017/fda-lenalidomide-myeloma-maintenance.
10 FDA, “Generic Competition and Drug Prices.”
11 Drug Price Competition and Patent Term Restoration Act, Pub. L. No. 98-417, 98 Stat 1585 (1984).
12 Waxman Strategies research on FDA, “Approved Risk and Evaluation Mitigation Strategies (REMS).”
13 Waxman Strategies research on FDA, “Approved Risk and Evaluation Mitigation Strategies (REMS).”
14 Waxman Strategies research on FDA, “Approved Risk and Evaluation Mitigation Strategies (REMS)”; Waxman Strategies research on “Reference Listed Drug (RLD) Access Inquiries,” FDA, June 2018, https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/AbbreviatedNewDrugApplicationANDAGenerics/ucm607738.htm.
15 International Union of Operating Engineers Stationary Engineers Local 39 Health and Welfare Trust Fund, the Detectives’ Endowment Association, Inc., and David Mitchell v. Celgene, No. 17-CV-04319 (D.N.J. Jun. 14, 2017).
16 International Union of Operating Engineers Stationary Engineers Local 39 Health and Welfare Trust Fund, the Detectives’ Endowment Association, Inc., and David Mitchell v. Celgene.
17 “Cancer Patient Sues Big Pharma for Illegal Price Gouging” (Press release, Patients for Affordable Drugs, June 2017), http://www.patientsforaffordabledrugs.org/2017/06/15/patient-sues-pharma-for-illegal-price-gouging/.
18 Mylan Pharmaceuticals v. Celgene, No. 14-CV-2094 (D.N.J. Jun. 17, 2014).
19 American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs (Department of Health and Human Services, May 2018), https://www.hhs.gov/sites/default/files/AmericanPatientsFirst.pdf.
20 “Statement from FDA Commissioner Scott Gottlieb, M.D., on new policies to reduce the ability of brand drug makers to use REMS programs as a way to block timely generic drug entry, helping promote competition and access” (Press release, FDA, May 2018), https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm609365.htm.
21 FDA, “Reference Listed Drug (RLD) Access Inquiries.”
22 CREATES Act of 2017, S. 974, 115th Cong (2017).
23 Henry Waxman, Bill Corr, and Kristi Martin, “Bipartisan Bill Would Increase Competition Among Drug Manufacturers and Lower Drug Prices,” To the Point, Jan. 29, 2018, http://www.commonwealthfund.org/publications/blog/2018/jan/bipartisan-bill-drug-manufacturers-competition-prices.
24 “Leaders of Senate and House Judiciary Committees Reintroduce Bipartisan Legislation to Counter Rising Prescription Drug Prices” (Press release, U.S. Sen. Patrick Leahy, April 27, 2017), https://www.leahy.senate.gov/press/leaders-of-senate-and-house-judiciary-committees-reintroduce-bipartisan-legislation-to-counter-rising-prescription-drug-prices.
25 Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. ch. 9 § 505–1(f)(8).