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FDA Regulatory Abuses and How to Solve Them: REMS, Citizen Petitions, and Product Hopping

The Food and Drug Administration's recent public meeting demonstrated that brand companies are engaging in wide-spread abuse of regulations in order to block access to generic drugs. As Mr. Balto said in his presentation, predation by abuse of government procedure is one of the most insidious anticompetitive practices. He covered three of the most egregious abuses in his presentation and offered possible solutions for them; below are short summaries of the main problems.

The three biggest areas of concern are: abuse of distribution safety protocols for drugs (often known as REMS), the filing of fraudulent citizen petitions just to cause delays, and product hopping to extend patents and exclusive periods regarding drugs.

The first issue is REMS (Risk Evaluation Mitigation Strategy) is a distribution safety protocol that is required for many products of brand name manufacturers. If brand drugs are subjected to REMS, abbreviated new drug applications are as well. In recent years brand-name companies prevented potential generic competitors from getting samples of branded drugs to they cannot perform testing needed to show their drugs are equivalent and get FDA approval. Companies justify this behavior by citing REMS and saying that it prohibits them from sharing samples. This claim is false; the FDA has already sent letters to companies about this, but it should send more of those letters and publicize these abuses so consumers are aware of them. The solution to this problem is a piece of legislation in Congress called the CREATES Act, which would prohibit these abuses and allow generic drug companies to file suit in federal court to get samples. Judges could also levy fines to discourage these delays and the FDA could approve alternate safety protocols. Mr. Balto called on the FDA to support the CREATES Act and Congress to pass it as soon as possible.

The second problem is citizen petitions. Brand drug companies file frivolous petitions to delay generic drug approval, often after the FDA has determined the generics are safe. The FDA has to review them, but the First Amendment does not allow petitioners to use the process as a sham to interfere with competitors, which is what is currently happening. A recent study found that brand companies file 92% of citizen petitions and only 8% of them are granted; the average number of petitions filed per year is treading upward while the success rate is trending downward. Mr. Balto urged the FDA to conduct a study on the continued usefulness of citizen petitions, consider scaling back the program, and require public disclosure of the entities behind the petitions. Transparency, he remarked, is the enemy of abuse.

The final issue is reformulations or product hopping. In this case, brand drug companies make trivial changes to drugs in order to secure longer patents and periods of exclusivity. This usually occurs close to the end of the patent's life and has nothing to do with genuine innovation. In some cases these companies have bought back their inventory of the original product and destroyed it just to keep prices high. Product hopping harms consumers and decreases competition for generic drugs, and pharmacists can't substitute a generic version so consumers have to pay more. Antitrust cases are not a good answer to this problem; enforcement agencies have limited resources, the cases are time consuming and expensive, and it is unclear how much they help consumers in this call. The solution is increased transparency and accountability. Mr. Balto suggested that reformulations could be tested or that the FDA might determine that such changes would not harm competition.

The FDA announced it will continue to accept public comments for the next two months in the middle of September, and that it is determined to end these abuses. We applaud Commissioner Gottlieb's determination to ensure access to affordable generic medicines and will be watching closely to make certain these reforms are carried out.

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