Bill Takes Aim at Branded Rx Companies' Efforts to Stall Generics

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Jeannie Baumann

June 15— A Senate panel is tackling drug pricing through a bill designed to prevent a tactic by branded pharmaceutical companies to stall release of generics and biosimilars.

The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act (S. 3056) would make it easier for generic drug companies to bring federal court cases and receive damages if they believe branded drugmakers are using a Food and Drug Administration-mandated risk plan for certain drugs as a reason to thwart generic drugmakers' access to drug samples for testing. A Senate Judiciary panel has scheduled a hearing on the legislation for June 21.

“Pharmaceutical companies should be compensated for their important work developing life-saving treatments, but predatory practices at the expense of consumers are unacceptable,” Sen. Patrick J. Leahy (D-Vt.), the bill's lead sponsor and the top Democrat on the Senate Judiciary Committee, said in a June 14 statement introducing the bill.

At issue is the use of a plan called a Risk Evaluation and Mitigation Strategy (REMS), which the FDA can require if the agency determines that the drug needs safety measures beyond the professional labeling. Introduced as part of 2007 FDA Amendments Act (Pub. L. 110-85), a provision in REMS allows drug companies to restrict distribution of their products.

The claim—which has been backed by the Federal Trade Commission (13 PLIR 1354, 9/18/15)—is that branded drug companies are using this restriction as an excuse not to sell samples of their drug to generic manufacturers. Without these samples, generic manufacturers can't run the necessary tests to demonstrate their products are “bioequivalent,” or work in the same way as their branded counterparts, which Leahy called an anticompetitive practice that ultimately delays entry of lower-priced generic drugs.

Another REMS tactic, according to a bill summary, is when a branded drug company prevents generic companies from joining a a distribution protocol applicable to both brand and generic versions of the medicine, which also keeps generic drugs off the market.

New Cause of Action

S. 3056 would allow a generic drug manufacturer to bring an action in federal court for injunctive relief, such as obtaining the samples or entering into negotiations for a shared safety protocol, instead of going working through more general antitrust laws. The bill also would authorize a judge to award damages to deter future delaying conduct.

An attorney who asked not to be named told Bloomberg BNA June 15 while there have been lawsuits around the access issue arising from REMS, they have had to use more general causes of action and have proven unwieldy. The attorney added that the idea with this bill is to give the courts a very specific cause of action to adjudicate.

Industry Groups React

Chip Davis, president of the Generic Pharmaceutical Association, applauded the bill in a June 14 statement, calling Leahy's bill a “common sense solution that will prevent such abuses, and further patient access to safe, effective, and affordable medications.”

“Companies that exploit restricted access programs—whether under the pretext of an FDA-mandate or on their own accord—delay generic competition and undermine the intent of Hatch-Waxman at the expense of America’s patients,” Davis said. “It is time to put a stop to these anticompetitive maneuvers.” The Hatch-Waxman law governs generic drug approvals by the Food and Drug Administration.

The American Hospital Association also has endorsed the bill, according to a June 14 letter from AHA Executive Vice President Tom Nickels to Leahy. The hospital group said generic drugs “are one tool for reducing drug prices, as they increase competition to the monopoly enjoyed by drug manufacturers after a drug’s patent expires.”

Holly Campbell, a spokeswoman for the Pharmaceutical Research and Manufacturers of America, said in a June 15 e-mail said the REMS program is a critical regulatory tool for protecting patient safety. “While we are currently reviewing the legislation, we would be concerned if patient safety could be jeopardized in any way,” she said.

The bill has bipartisan support as Judiciary Committee Chairman Charles Grassley (R-Iowa) has cosponsored the bill along with Sens. Mike Lee (R-Utah) and Amy Klobuchar (D-Minn.), who lead the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights. The antitrust panel is the same subcommittee that plans to address Leahy's bill during the June 21 hearing.

State Law, Earlier Bill

Leahy introduced the bill less than two weeks after his own state, Vermont, became first to require greater transparency from drug manufacturers when they increase prices of prescription medications (14 PLIR 854, 6/10/16).

“Solving this issue will require nuanced, thoughtful work on all sides to ensure that consumers are protected and that pharmaceutical companies that act in good faith can continue to innovate for patients,” Leahy said. “With the CREATES Act, the bipartisan leaders of the Senate Judiciary Committee and its Subcommittee on Antitrust, Competition Policy and Consumer Rights are using our roles to address anticompetitive behavior that blocks competition and delays the creation of affordable generic drugs.”

Reps. Steve Stivers (R-Ohio) and Peter Welch (D-Vt.) introduced a similar bill (H.R. 2841) a year ago (14 PLIR 72, 1/15/16).

To contact the reporter on this story: Jeannie Baumann in Washington

To contact the editor responsible for this story: Randy Kubetin at

For More Information

A copy of the bill is available at

A summary of S. 3056 is available at

More information on the June 21 Senate Judiciary Committee's antitrust subcommittee hearing is available at

Request Health Care on Bloomberg Law