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US Senate panel advances bill to speed lawsuits combating big pharma gaming

A bill aimed at combating anti-competitive practices used by brand-name drug manufacturers to impede generic rivals was advanced to the Senate floor by the chamber's Judiciary Committee.

The committee on June 14 voted 16-5, with all of the nays coming from RepublicansSens. Jeff Flake of Arizona, Mike Crapo of Idaho, Ben Sasse of Nebraska and Thom Tillis of North Carolina and Orrin Hatch of Utah though six members of that party backed the bill.

The legislation, known as the Creating and Restoring Equal Access To Equivalent Samples, or CREATES, Act, would make it easier and faster for generic-drug companies to sue brand-name biopharmaceutical makers when those manufacturers withhold samples of their medicines needed by their competitors to conduct required studies for U.S. approval.

A generic company generally needs 1,500 to 5,000 doses of the brand-name drug to perform those studies.

Innovators have used stalling tactics such as telling generic manufacturers that the brand-name companies are not permitted to provide the samples under their risk evaluation and mitigation strategy, or REMS, programs, which the U.S. Food and Drug Administration requires to ensure that a medicine's benefits outweigh its risks.

The FDA imposes a REMS when a drug is associated with serious risks.

Another practice brand-name companies have engaged in is placing restrictions in their commercial contracts or agreements with prescription drug distributors, wholesalers or specialty pharmacies to try to limit their ability to sell the innovator's samples to generic developers for testing.

"This behavior is abusive, it is anti-competitive and it is all too common," said Sen. Patrick Leahy, D-Vt., who wrote the CREATES Act.

He said the practices brand-name drugmakers use have been "devastating" and "dreadfully effective" at blocking lower-priced rivals from coming to the U.S. market.

FDA actions

FDA Commissioner Scott Gottlieb already has tried to thwart those abuses, including publicly naming drugmakers that have attempted to block generic manufacturers from obtaining the samples.

Gottlieb also has made it easier for generic-drug manufacturers to create their own REMS programs, telling them in new guidelines issued last month how and when the companies can seek waivers that would allow them to do so.

"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 told reporters in May ahead of the guidelines' release.

Gottlieb said the FDA's actions were part of the administration's effort to lower prescription drug prices. Earlier this month, the FDA estimated that the generics it approved in 2017 could save Americans as much as $16 billion over one year.

However, promises of reduced drug costs made by President Donald Trump, including his vow that "voluntary massive drops in prices" would be announced on June 13, have yet to materialize.

A narrowly tailored legal pathway

The CREATES Act targets abuses that undermine free-market competition and the integrity of the Drug Price Competition and Patent Term Restoration Act — commonly known as the Hatch-Waxman Act — said Sen. Chuck Grassley, R-Iowa, chairman of the Judiciary Committee and one of the co-sponsors of the legislation.

"It allows for disputes over drug samples to be litigated under a clear and narrowly tailored legal pathway in federal court," Grassley said at the beginning of the June 14 hearing.

By improving and streamlining existing litigation options, the CREATES Act could end up sending more parties to the bargaining table instead of the courtroom, Grassley said.

"Our hope and expectation is that no lawsuits would be necessary; that companies would simply stop these abusive gimmicks and sell the samples at market price," Leahy added.

Leahy and Grassley, who both called the legislation a "market-based solution," noted that the nonpartisan Congressional Budget Office, which provides financial analyses to lawmakers, estimated that the CREATES Act would save federal programs about $3.8 billion by increasing generic-drug competition and associated cost savings.

Utah's Hatch, however, said that while the CREATES Act has a laudable goal, the damages cap in the bill far exceeded what was "necessary to ensure adequate deterrence and could incentivize non-meritorious litigation."

But Grassley said he would not have supported the legislation if it encouraged "frivolous lawsuits."

Hatch had offered an amendment to the CREATES Act that would have required generic manufacturers or other parties seeking to challenge an innovator biopharmaceutical company's patent to choose between filing a lawsuit under the Hatch-Waxman Act or an inter partes review, which are trial proceedings held by the U.S. Patent and Trademark Office's Patent Trial and Appeal Board intended to be a faster and more affordable alternative to the American court system.

But the Hatch later withdrew the measure, as did the sponsors of two other amendments.

Support from CVS Health, insurance plans

While the legislation is opposed by brand-name lobbying groups, the bill is supported by several other organizations, including CVS Health Corp., America's Health Insurance Plans, the Pharmaceutical Care Management Association, the Academy of Managed Care Pharmacy, consumer advocacy group Public Citizen, the Blue Cross Blue Shield Association and the generic-trade group the Association for Accessible Medicines.

Senate Majority Leader Mitch McConnell, R-Ky., has not disclosed when he plans to bring the CREATES Act to the Senate floor for a vote. The House is working on its own version of the bill, but it is unclear when that measure will be brought to the chamber for consideration and how much it may differ from the Senate's legislation.