Friday, June 8, 2018

To Promote Lower Cost Drugs Including High Cost Specialty Meds, FDA Publishes Two New Draft Guidances

On June 1st, the FDA published two new "draft guidance" documents, which are recommendations for review and comments to address one of the many complex obstacles to timely generic and biologic drug launches.   Some of these obstacles are related to the current Risk Evaluation and Mitigation Strategies (REMS) program developed by the Brand manufacturer.   After 60 days, the "draft guidance" comments will be evaluated and new policies will be voted on and become effective with the goal to bring lower cost generics and biologics to the market sooner.

Currently the FDA requires certain Brand medications to have a REMS program provided prior to the approval of the drug.   The REMS document outlines serious safety concerns and employs tools beyond prescribing information to ensure that the benefits of a medication outweigh its risks. 

The FDA may also require certain "Elements To Assure Safe Use" (ETASU) such as requiring the provider to have specific training or experience, that patients using the drug be monitored, or that the drug is dispensed to patients with evidence of other documentation of safe-use conditions.  The ETASU may also include a system for the applicant to monitor, evaluate and improve a subscribed drug implementation.   Lastly, a REMS document must have a timetable for submission of assessments of the strategy. 

Once the period of Brand patent protection or exclusivity has lapsed, it seems that generic and biosimilar drug competition is not materializing judiciously.   Sometimes this is due to Brand drug manufacturers' tactics before and after the generic or biologic drug manufacturer seeks approval for market entry.  One example is restricting the sale of the Brand drug to the generic or biologic manufacturer, which typically requires an estimated 5,000 doses in order to run bioequivalence and bioavailability studies to prove that the generic is the same as the Brand.  

Mylan, one of the largest generic manufacturers, recently sued Celgene over their refusal to share samples of Revlimed, which costs approximately $180,000 per year.   In 2016, its third year on the market, Revlimed had $6.97B in sales, and given the initial $800M on research and development, Celgene continues to reap a significant ROI. The expiration date for the patent will be 2019, but Celgene’s delay strategies could allow the company to put off unrestricted competition from generics until 2026, which could cost an extra $45B to patients who need this cancer drug.    

After bioequivalency has been determined, Brand manufacturers make the negotiation time between the Brand and generic or biologic drug applicant a lengthy process often resulting in litigation.  This causes delays in the approval of the generic or biologic.   Brand manufacturers have used this litigation to their advantage delaying market entry.

The FDA's new "draft guidances" are an effort to address these issues currently delaying generic and biologic drug competition.   The two new FDA "draft guidances" are:   1) "Development of a Shared System REMS Guidance for Industry" and 2) "Waivers of the Single, Shared System REMS Requirement Guidance for Industry".  The objective is to shorten the time that a generic or biologic can launch.  In the first "draft guidance" Brand and generic/biologic applicants are encouraged to use an industry working group (IWG) or third party to expedite negotiations and develop a shared REMS Guidance and ETASU.    The second "draft guidance" allows the generic manufacturer an option to seek a waiver to obtain a separate and comparable REMS policy with ETASU in certain situations where the Brand manufacturer is not cooperating. 

These guidance reports are expected to translate to new policies and will be a major opportunity for client and member savings as they will allow lower cost generics and biosimilars to come to market earlier.  High cost biologics continue to represent not only 40%-50% of total pharmacy benefit dollars, but also a large percentage of medical costs i.e. infused drugs and drugs bought and billed by physicians.  However, physicians will have to agree that biologics are safe and that patients equally feel comfortable being prescribed a biologic versus the Brand reference or originator drug.

 At the same time Pharmacy Benefit Managers have a tremendous amount of control given that they develop formularies with preferred drugs from manufacturers who provide the highest rebate including some of the currently few biosimilars approved in the United States.  As biosimilars come to market sooner, losers will be the clients who are not using an independent pharmacy benefit consulting firm, thus leaving thousands of dollars as PBM profits for shareholders because they signed a three year PBM agreement, which has language excluding biosimilars from rebates.

PBIRx has been exclusively providing intelligent solutions to clients in the management of pharmacy benefit costs since 1993. With a staff that includes IT personnel, actuaries, financial analysts, clinical pharmacists, attorneys, HIPAA Compliance Officers and many more experts, PBIRx’s mission is to create optimal health care outcomes while minimizing overall health care costs. For more information, please visit or call (888) 797-2479.