Today, as part of the Trump Administration's stated goal to lower drug prices, the Food and Drug Administration (FDA) published a list of pharmaceutical companies that have allegedly refused to sell samples of their drugs to generic manufacturers. Secretary of Health and Human Services Alex Azar and FDA Commissioner Scott Gottlieb contend that refusals to provide generic manufacturers with samples needed to perform the bioequivalence testing required for generic approval hinder competition and lead to higher prices. Commissioner Gottlieb said that the agency has received 150 complaints from generic manufacturers relating to 20 to 30 drugs and is encouraging the Federal Trade Commission (FTC) to take enforcement action. The FDA's publication could also expose those on the list to enforcement actions by state attorneys general and to private class action lawsuits, and it implicates the unsettled question of whether innovator drug companies have a duty under the antitrust laws to deal with prospective generic rivals. We provide below an overview of the state of the law.
Background
Most “duty to deal” antitrust cases relating to sample sharing have involved drugs that are subject to FDA-mandated Risk Evaluation and Mitigation Strategies (REMS) Programs. The REMS process—which Congress created as part of the Food and Drug Administration Amendments Act of 2007—is designed to address issues involving the safety, abuse and diversion of selected pharmaceutical drugs. REMS programs often restrict drug distribution, for example by requiring pharmacies or wholesalers to distribute drugs only to certain qualified physicians or healthcare facilities. These restrictions become operative when the FDA concludes they are “necessary to ensure that the benefits of the drug outweigh the risks of the drug.”1
In many cases, REMS distribution restrictions can complicate a generic drug manufacturer's path to approval. The Hatch-Waxman Act sought to streamline that path by providing an abbreviated application process for generic drugs. Under those provisions, the generic manufacturer filing an Abbreviated New Drug Application (ANDA) need not prove that the drug is safe and effective for its intended use. Instead, the generic applicant need only show that its product is bioequivalent to a reference listed drug that has already satisfied the rigorous FDA clinical trial requirements. To demonstrate bioequivalence, the generic manufacturers must obtain samples of the branded drug and provide comparative data on bioavailability. With no REMS restrictions in place, generic manufacturers normally purchase drug samples from wholesalers.
If the drug at issue is subject to a REMS distribution restriction, however, the generic manufacturer may be unable to do so. In these circumstances, the generic manufacturer will request that the branded drug company itself provide it with samples, squarely raising the question of whether the branded company has an antitrust duty to do so. Not surprisingly, many innovator companies object to giving a potential rival samples because doing so would aid that rival's efforts to challenge the innovator's patents and to free ride off the innovator's massive research and development investment. While some innovators have also expressed concerns about violating mandatory REMS requirements, the ability to refuse based on those safety or legal concerns is limited if the generic obtains a...
