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FDA aims to deter, not shame, system-gamers by unmasking them, chief says

The U.S. Food and Drug Administration plans to start publicly identifying brand-name drugmakers that have attempted to game the system by using certain tactics to block generic competitors from entering the American market, the head of the agency said.

As early as May 17, the FDA plans to publicly post at least 150 letters on a new website that identify innovator biopharmaceutical companies that have withheld their products from generic manufacturers who need the samples to conduct the necessary bioequivalent testing to gain U.S. approval, Commissioner Scott Gottlieb told reporters.

"We are going to make them public for the first time," Gottlieb said at a May 14 briefing at Health and Human Services, or HHS, headquarters in Washington.

The unmasking of the system-gamers — part of the Trump administration's strategy to lower drug prices, unveiled on May 11 — is not an attempt to shame them, but rather, to discourage those companies from engaging in abusive practices, the FDA chief said.

"I don't think this is publicly shaming," Gottlieb said. "I think this is providing transparency in situations where we see certain obstacles to timely generic entry. And people don't fully understand all the reasons why there might be obstacles to generic competition that's going to help facilitate access for patients. And to the extent that this is one reason why there might be obstacles in place, we just want to provide transparency around that."

He said posting the letters could potentially serve as a deterrent to "engaging in practices that are antithetical to the spirit, if not the letter" of the 1984 Drug Price Competition and Patent Term Restoration Act, commonly called the Hatch-Waxman Act — the law that created the generic drug industry.

"And if it does, I think that's a useful public health outcome," Gottlieb said.

Specifically, certain brand-name manufacturers have been using the FDA's required risk programs — risk evaluation and mitigation strategies, or REMS — to try to stifle the generic companies by claiming they have a public health rationale for doing so, Gottlieb said.

"We know that certain brand name manufacturers are abusing the system by blocking access to samples and hiding behind FDA's rules when they do it," HHS Secretary Alex Azar said during a public address before the briefing.

"In some cases, the generic manufacturer will come to the FDA asking us whether or not there is an impediment to them getting access to the doses with respect to an REMS program being in place," Gottlieb said.

"Sometimes they will ask us to send an affirmative letter to the branded company saying that it's OK to sell the drug to the generic company," he said.

In those letters to the branded companies, the FDA explains that it is satisfied that the generic manufacturer will adopt measures to respect the REMS program, Gottlieb said.

"There are two parties that know that letter was sent — the generic manufacturer who requested it and the branded company that receives it. So it is disclosable information," he said.

Gottlieb said the FDA's website containing the letters will be not only retrospective, but also prospective — updated "on a continuous basis."

Nearly a year in the works

The commissioner — who is celebrating a year on the job this month — had been promising the release of the letters since last summer, noting then the agency had 150 of the correspondences from regulators telling branded companies "there's no reason why you can't sell" drugs to the generic manufacturers.

During a July 20, 2017, forum hosted by The Hill, Gottlieb said releasing the letters would provide the "kind of transparency that could be useful in the market to help affect" some of the gaming behavior.

At that time, he noted the FDA was examining whether there was any commercial confidential information in any of the letters and if so, how the agency would redact it.

"I don't see an obstacle to making them public," Gottlieb said during the July 2017 forum. "I think there's more that we can make public."

He said the issue of releasing the letters came down to questions of how much resources the FDA was willing to spend redacting any commercial confidential information and how much of a legal risk the agency was willing to take for a policy objective.

"We certainly don't do things as a public shaming vehicle," Gottlieb said last summer. "We can't be doing it just to interject ourselves into commercial disagreements. We do them when we have a public health rationale."

However, the FDA leader struck a different note during a May 25, 2017, House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies hearing, held shortly after he took the reins of the agency.

Rep. David Young, R-Iowa, said during the hearing: "There is a power in shaming. Sunlight is the best disinfectant to put people in place and to try to get to a better behavior."

To that, Gottlieb responded: "I would be happy to work with you on a shaming initiative."

New guidelines

At the May 14 briefing, Gottlieb said the FDA also plans to promulgate new guidelines aimed at addressing some of the REMS abuses, like when branded drugmakers drag out negotiations for a single shared risk program with generic manufacturers.

Under the guidelines, the FDA will be making it easier for generic companies to obtain waivers to "go their own way" on a REMS program rather than sharing one with the innovators if those branded companies appear to be stretching out the negotiation process, he said.

"We think that just by signaling that we are going to be willing to give waivers more easily to generic manufacturers, that's going to cut down this sort of gaming," Gottlieb said.

Also at the May 14 briefing, Centers for Medicare and Medicaid Services Administrator Seema Verma said that her agency would be unveiling some new enhancements on May 15 to its drug pricing dashboard.