Need Some Holiday Reading? Recent FDA Scholarship Worth a Spin

By Kurt R. Karst

Week 52 is often more laid back than any of the other 51 weeks in the calendar year. It offers us a chance to sift through and clean out the office in preparation for yet another busy year. But it’s also a chance for this blogger to catch up on some pleasure reading – you know, Citizen Petitions, FDA letter decisions, NDA Approval Packages, and law review and other similar academic articles on food and drug law – with my album of the year (“Subway Gawdz” by Too Many Zooz) in the iTunes playlist rotation. If you too have a few minutes to spare this week, then below is a list of food and drug law-related articles (including an abstract of each article) that we think are worth a read. Although we may not agree with some of the positions staked out in some of the articles, good research and writing is always appreciated and a pleasure to read. Happy reading!

Empirical Evidence of Drug Pricing Games - A Citizen’s Pathway Gone Astray

Robin Feldman, Evan Frondorf, and Andrew K. Cordova

University of California Hastings College of the Law

The FDA’s citizen petition process was created in the 1970s as part of an effort to fashion more participatory regimes, in which ordinary citizens could access the administrative process. The theoretical underpinnings hypothesize that a participatory structure will prevent regulatory agencies from being captured by the very industries they were intended to police. Anecdotal evidence suggests, however, that the FDA’s citizen petition process may have taken a different turn. This empirical study explores whether pharmaceutical companies are systematically using citizen petitions to try to delay the approval of generic competitors. Delaying generic entry of a drug — even by a few months — can be worth hundreds of millions of dollars of additional revenue, a cost ultimately born by consumers and government agencies in the form of high drug prices.

The study results provide empirical evidence that the citizen petition process at the FDA has now become a key avenue for strategic behavior by pharmaceutical companies to delay entry of generic competition It is a far cry from the “participatory citizen” notion that fueled the creation of such avenues at regulatory agencies. The article concludes by examining the nature of the problem and exploring the feasibility of three types of approaches to curb the behavior. These include: 1) a simple prohibition, if one were to conclude that most behavior in the category is likely to be inappropriate; 2) procedural blocks to ensure that the behavior cannot create sub-optimal results; or 3) punitive measures as a deterrent.

The Law of 180-Day Exclusivity

Erika Fisher Lietzan, University of Missouri School of Law

Julia Post, Covington & Burling LLP

In 1984, Congress created a statutory pathway for approval of generic drug applications and included an incentive for generic applicants to challenge the patents claiming the reference drugs on which they based their applications. The first generic applicant to file an ANDA with a patent challenge is eligible for 180 days of generic market exclusivity. This article is the fourth in a series of articles describing the resulting body of law, as interpreted and applied by FDA (in regulations, guidances, citizen petition responses, and individual decisions awarding and denying exclusivity) and the courts. The heart of the article is section II, which discusses a series of twenty-eight discrete interpretive issues, arranged in five categories: which rules apply, earning exclusivity, forfeiture of exclusivity, commencing the exclusivity term, and enjoyment (use) of the exclusivity term. It devotes considerable attention to developments since 2009 (our last article): new issues that have arisen relating to 180–day exclusivity generally, such as premature notice of paragraph IV certification, as well as the body of law emerging around the forfeiture provisions enacted in 2003. Section III briefly discusses three policy issue arising out of the 180–day exclusivity scheme: the impact of the scheme on subsequent generic applicants, the relationship between the scheme and patent settlements, and authorized generics — noting key judicial, legislative, and academic commentary on each. The Article concludes with a discussion of recent and pending legislative proposals that indirectly or directly address 180–day exclusivity and notes the exclusivity for interchangeable biologics that was modeled, in part, on the generic drug precedent.

Regulatory Property: The New IP

Robin Feldman

University of California Hastings College of the Law

For thirty years, a new form of intellectual property has grown up quietly beneath the surface of societal observation. It is a set of government-granted rights that have the quintessential characteristic of intellectual property and other forms of property — that is, the right to exclude others from the territory.

The impact of this form of IP on the US health care system, in particular, is enormous. In 2014, more than 40% of all new drugs approved by the FDA came through just one of these portals, with the companies collecting regulatory property rights along the way.

Some forms of this regulatory property are quasi-patent. Other forms are quasi-trade secret. Finally, some forms of this regulatory property are more like pure personal property, in that these benefits can be sold or traded on the open market. Sprawling and incremental, the system has grown by accretion as various groups have succeeded in making good arguments that they, too, should have a benefit. When accidental property combines with a system that is largely hidden from view, the danger is great.

Treating regulatory property in its rightful place among the pantheon of intellectual property rights allows appropriate analysis of the interactions among these powerful forces. It isn’t just a matter of labelling these phenomena as forms of property. It is a matter of understanding and making sense out of them as a coherent whole, as well as making sense of how they interact with other types of rights to exclude, such as patent and trade secret.

The Myths of Data Exclusivity

Erika Fisher Lietzan

University of Missouri School of Law

This article contributes to an ongoing academic and public policy dialogue over whether and on what terms U.S. law should provide “data exclusivity” for new medicines. Five years after a new drug has been approved on the basis of an extensive application that may have cost more than one billion dollars to generate, federal law permits submission of a much smaller application to market a duplicate version of the drug. This second application is a different type of application, and it may cost no more than a few million dollars to prepare. A similar sequence is true for biological medicines: twelve years after approval of an application that may have cost over one billion dollars to generate, the law permits approval of a smaller and less expensive application for a duplicate. Scholars, courts, and policymakers use the phrase “data exclusivity” to describe the period before the new pathway opens – a nod to the fact that applications of the second type rely on the research submitted by the first entrant. The primary “myth” of data exclusivity is that it is a benefit provided by the government for the benefit of first entrants. This article reframes data exclusivity instead as a period of time during which all firms are subject to the same rules governing market entry. It uses this insight as the foundation for an exploration of the complex web of legal, regulatory, and practical factors that may influence whether and on what terms firms enter the market with duplicates during and after that period, and for a systematic comparison of the new drug exclusivity and biological product exclusivity schemes in order to propose an approach that could prompt strategic decisions – both during and after that period – that will contribute to dynamic social welfare.

The Uncharted Waters of Competition and Innovation in Biological Medicines

Erika Fisher Lietzan

University of Missouri School of Law

Six years ago, Congress fundamentally changed how federal law encourages the discovery and development of certain new medicines and for the first time authorized less expensive “duplicates” of these medicines to be approved and compete in the marketplace. The medicines at issue are biological medicines, generally made from, or grown in, living systems. Many of the world’s most important and most expensive medicines for serious and life–threatening diseases are biological medicines.

We have a profound interest in understanding and evaluating the impact of this legislation on innovation and competition. Scholars and courts considering this question may be tempted to reason from, or analogize to, experience with generic drugs. And the 2010 biosimilar law was similar to the 1984 generic drug statute in basic purpose and structure. But the biologic framework as a whole — the complete landscape within which innovation and competition in biological medicines take place — is profoundly different from anything that scholars and courts have seen before.

This Article is the first to offer a high level description of the framework organized around the characteristics that define it and distinguish it from the conventional drug framework. It argues that unlike the drug framework, the framework for competition and innovation in biologics is variable and dynamic. And it argues that biologic framework separates and distinguishes patents, both conceptually and functionally, from the regulatory paradigm. As a result, although scholars and policymakers focusing on innovation incentives and competitive behavior with respect to medicines have decades of experience with the generic drug paradigm, there is a meaningful risk that this experience is mostly irrelevant when it comes to biologics. This article provides the basis for understanding both the specific differences and broader thematic divergence at play in the biologic paradigm.

Citizen Petitions: Long, Late-Filed, and At-Last Denied

Michael A. Carrier & Carl J. Minniti III, Rutgers Law School

The pharmaceutical industry is ground zero for many of the most challenging issues at the intersection of antitrust and intellectual property (IP) law. It also presents a complex regulatory regime that is ripe for anticompetitive behavior. It thus should not be a surprise that the industry has been subject to rigorous antitrust scrutiny in recent years.

While settlements between brand and generic firms and “product hopping” from one version of a drug to another have received attention, one behavior has avoided serious scrutiny. Brand firms’ filing of citizen petitions with the U.S. Food and Drug Administration (FDA) has almost entirely slipped beneath the radar. While citizen petitions in theory could raise concerns that a drug is unsafe, in practice they bear a dangerous potential to extend brand monopolies by delaying approval of generics, at a potential cost of millions of dollars per day.

This Article offers an empirical study of “505(q)” citizen petitions, which ask the FDA to take specific action against a pending generic application. It analyzes every 505(q) petition filed with the FDA between 2011 and 2015, documenting (1) the number of petitions each year, (2) who files the petitions, (3) the success rate of the petitions, (4) the petitions’ length, (5) whether petitions were filed in close proximity to the expiration of a patent or data exclusivity date, and (6) occasions in which the FDA approved generics on the same day it decided petitions.

The study finds that brand firms file 92% of 505(q) petitions. And it concludes that the FDA grants an astonishingly low 8% of petitions, rejecting a full 92%. Why is the grant rate so low? We consider several reasons. First, in the past 5 years, the average length of petitions has more than doubled, and the FDA almost never grants petitions with a length above the mean. Second, 39% of petitions are filed within 6 months of the expiration of a patent or FDA exclusivity date, with almost all of these petitions denied. Third, the FDA resolved a number of petitions on the same day it approved the generic, likely delaying generic entry. These three settings result in grants of only 3%, 2%, and 0%, respectively.

The Article concludes by offering examples of serial petitions, late-filed petitions, and a combination of petitions with other behavior such as product-hopping and settlements. In short, citizen petitions represent a hidden tool in brands’ toolkit of entry-delaying activity, and when used inappropriately force consumers to pay high drug prices while providing no offsetting safety benefit.

Memo To The President: The Pharmaceutical Monopoly Adjustment Act Of 2017

Alfred Engelberg

Since 1980, Congress has enacted many laws granting pharmaceutical manufacturers monopolies that no other industry enjoys. These extra monopolies were created with the expectation that monopoly profits would spur greater investment in research to find important new drugs. In fact, they have caused US consumers to pay higher prices for medicines for longer periods of time while making the pharmaceutical industry far more profitable than any other industry. I believe the next president and Congress should take several key steps, which I outline below, to roll back these costly, unnecessary monopolies.

The Need for FDA Reform: Four Models

Adam D. Thierer & Michael Patrick Wilt

George Mason University - Mercatus Center

The Food and Drug Administration, one of the oldest regulatory agencies, is showing unfortunate signs of age, particularly in its drug and device approval process. The approval process was established with the best of intentions — namely, to keep unsafe products off the market — but it has always come at a cost in terms of delaying life-enriching, and even lifesaving, drugs and devices.

The current cumbersome approval process generates both expense and uncertainty for inventors. The slow pace of approvals from the agency imposes avoidable suffering on patients, even as the FDA falls further behind technological progress. The agency’s review process needs to undergo comprehensive reform to streamline the process so that it may keep pace with modern developments and the need for speedier drug and device approval. The most important reform is for policymakers to determine where the FDA has a comparative advantage and where the private sector can take on some of the duties that the FDA has been performing.

The consequences of failing to implement comprehensive reform will be profound for innovators and, ultimately, patients. This policy brief summarizes four models for reform proposed by scholars affiliated with the Mercatus Center at George Mason University and others which would change how medical products are brought to markets and removed from markets by creating a process to adapt to technological growth and consumer demand in the 21st century.

A Second Look at the CREATES Act: What's Not Being Said

Erika Fisher Lietzan

University of Missouri School of Law

The recently introduced CREATES Act would require innovative drug companies to sell their products to their competitors, and it would also require these companies to share with these same competitors the use and distribution arrangements they developed to manage the risks of the products. Supporters describe the bill as the latest remedy for the “regulatory abuse” and “predatory delay tactics” of the innovating pharmaceutical companies and thus part of a broader program to address high drug prices. Earlier proposals relating generally to the same topic, but differing in approach, were introduced in 2014 and 2015 but failed to move forward. Several recent drug pricing controversies have placed the pharmaceutical industry in the spotlight, however, and momentum for the proposal has picked up.

This brief article offers important additional context for understanding the proposal by laying out some of the things that are not being said — about use and distribution restrictions associated with new medicines, about the underlying complaints from the generics industry, and about the design and likely effect of the bill. The first part explains pharmaceutical risk management and FDA’s decades–old practice of requiring use and distribution restrictions for certain drugs to manage risk. The second part critically assesses the complaints levied against the research–based companies and the proposals offered to address those complaints. The final part explores the possible practical effects of the proposed legislation and broader implications for innovation policy.

Drug Shortages, Pricing, and Regulatory Activity

Christopher Stomberg

University of California, San Diego - Department of Economics

This study examines the patterns and causes of shortages in generic non-injectable drugs (e.g., tablets and topicals) in the United States. While shortages for injectable drugs have garnered more attention, shortages of other forms of prescription drugs have also been on the increase. In fact, they follow a strikingly similar trend with a number of important tablet drugs having recently been affected by shortage. This poses important questions about the root causes of these trends since most explanations found in the literature are specific to generic injectable drugs. Using a simple heuristic framework, three contributing factors are explored: regulatory oversight, potential market failures in pricing/reimbursement, and competition. This paper features an empirical examination of the contribution of changes in regulatory oversight to drug shortages. A pooled dynamic regression model using FDA data on inspections and citations reveals a statistically significant relationship between FDA regulatory activity (inspections and citations) and drug shortage rates. This result cuts across both injectable and non-injectable drugs, and could reveal a transition in equilibrium quality that should be transitory in nature, but it should also be interpreted with care given the other factors likely affecting shortage rates.

Pharmaceutical Antitrust: What the Trump Administration Can Do

Michael A. Carrier Rutgers Law School

Drug prices are in the news. “Pharma Bro” Martin Shkreli increased the price of Daraprim, a treatment for fatal parasitic infections, by 5000%. Mylan found itself on the hot seat for raising the price of the anaphylaxis-treating EpiPen 15 times in 7 years, resulting in a 400% increase to more than $600. Politicians rail about the harms of high drug prices.

What can the next Administration do? A lot. This article shows how — even without directly regulating price — it can use antitrust law to reduce prices by challenging an array of anticompetitive behavior. It can target settlements by which brand drug firms pay generics to delay entering the market. It can go after “product hopping,” by which a brand firm switches from one version of a drug to another to forestall generic competition. It can target distribution restrictions that brands have instituted to block generics. And it can challenge other conduct in the industry.

In short, antitrust law has a vital role to play. Antitrust is about competition, which lowers prices and increases choice. Consumers in the pharmaceutical industry suffer harms as directly in this setting as anywhere. High drug prices have resulted in patients not being able to take vital medicines or splitting pills in half. To add insult to injury, this anticompetitive behavior typically is not justified based on innovation or patents. The agencies in the next Administration have important tasks ahead of them in targeting conduct in the pharmaceutical industry.

The Scope of Preemption under the 2009 Family Smoking Prevention and Tobacco Control Act

Sam Halabi, University of Missouri School of Law

The 2009 Family Smoking Prevention and Tobacco Control Act endeavored to alter the regulatory regime for tobacco products in the United States by allocating authority to regulate tobacco products to the U.S. Food and Drug Administration (FDA). While the law aims at greater transparency in the constituent components of cigarettes and non-combustible tobacco products, it also includes a provision which will bring FDA’s consumer protection and tobacco control mandates into tension: Section 911’s process for the approval of modified risk tobacco products. That provision allows tobacco manufacturers to submit applications to label products as “reduc[ing] the harm or the risk of tobacco-related disease associated with commercially marketed tobacco products.” As public health researchers have noted, Section 911 threatens to codify and authorize long-standing industry practices of asserting or implying health-promotion or harm-limiting claims that are in fact intended and shown to have precisely the opposite outcome including most recently the use of descriptors like “mild”, “light”, “ultra-light” and “low.” In 2014, FDA opened a comment period for the first modified risk tobacco product produced by Swedish Match as part of a joint venture with Philip Morris. One of the most effective ways of policing industry use of modified-risk tobacco labeling is product liability claims based on state common law torts. Section 916 of the Tobacco Control Act provides an ambiguously phrased preemption provision which will implicate the reach of Article VI preemption for FDA-approved products. This article is the first to analyze the heretofore unanswered question: what is the scope of constitutional preemption when Section 911 (modified risk tobacco products) and Section 916 (preemption of state law) are read together against the broader background of U.S. Supreme Court precedent that will shape that inquiry? Tobacco consumers will inevitably use state law causes of action to allege that the content of tobacco manufacturers’ modified risk claims are misleading, that modified risk claims extend use of non-modified risk claim products, and that modified risk tobacco products are used to shape risk perception across other product lines. At stake in answering the preemption question correctly is how the tobacco industry may use Section 911 to continue historical practices with FDA’s approval and the public health implications of doing so as well as the broader relationship between the 2009 Act and state law as FDA and federal courts shape the law’s implementation.