On March 9, 2020, the Chairman of the Federal Trade Commission provided opening remarks at the FDA/FTC Workshop on a Competitive Marketplace for Biosimilars in Silver Spring, Maryland, which workshop is a collaboration between the Federal Trade Commission and the Food & Drug Administration to promote competitive markets for pharmaceuticals. The focus of the workshop was on biologics markets and what can be done to spark competition for these innovative new treatments.
What Are Biologics?
Biologics are innovative new treatments for serious and life-threatening diseases like cancer, diabetes, and Crohn’s Disease. Often, biologics are the only effective treatments for these diseases. But biologics can be very expensive—some costing tens of thousands and others costing millions of dollars. Total U.S. spending on biologics is growing rapidly, reaching $125.5 billion in 2018.
In 1979, the FTC published a report on state laws preventing pharmacists from substituting branded drugs with generics, concluding that these laws imposed substantial unwarranted costs on consumers by unduly restricting price competition between generic and branded drugs. Those findings helped pave the way for state laws that allow automatic substitution of the brand for the generic.
A FTC study in 2002 on generic drug entry recommended that brand-name companies and generic applicants settling patent litigation under the provisions of the Hatch-Waxman Act submit those settlements to the FTC, which recommendation was incorporated into the Medicare Modernization Act of 2003.
The Medicare Modernization Act is the primary means by which the FTC learns about potentially anticompetitive patent settlements between brand and generic drug manufacturers. Following amendments to the Medicare Modernization Act in 2018, the FTC now also obtains and reviews biologic-biosimilar patent settlement agreements.
The FTC Chairman stated in his opening remarks:
“Competition between reference biologics and biosimilars is just as important as competition between brand and generic small-molecule drugs. Biosimilars, which are as safe and effective as their reference biologics, hold the promise of reducing price and therefore increasing access to these treatments. This is because when given a choice between two highly similar products, well-informed consumers typically choose the less expensive option. This competition, in turn, drives prices down.”
“But competition only works when consumers have reliable and truthful information. In some instances, statements from reference biologic manufacturers and the groups they fund may mislead patients and physicians into believing the biosimilar is not as safe or as effective as the reference biologic. Such deception might violate both consumer protection and antitrust laws.”
“Although the [Federal Trade] Commission generally supports comparative advertising, that advertising must be truthful and not misleading. Advertising creating an impression of clinically meaningful differences between a reference biologic and its biosimilar is likely false or misleading and therefore constitutes an unfair or deceptive practice.”
“Similarly, from an antitrust perspective, maintaining or growing share by deceiving patients and physicians about competitors’ offerings is not competition on the merits. It also erects artificial barriers to entry and creates costs for biosimilar manufacturers to counter the deception. Such deception therefore likely constitutes an unfair method of competition.”
“The FTC is committed to taking appropriate enforcement action against false or misleading communications involving biologics and biosimilars.”
“But the FTC’s enforcement priorities in this industry extend beyond deceptive conduct. The FTC will also deter behavior that impedes access to samples needed to develop biosimilars. In January of this year , for example, the FTC brought its first case alleging a restrictive distribution scheme that anticompetitively blocked competition for a small-molecule drug. The FTC will also continue to review patent settlement agreements involving biologics and biosimilars for, among other things, anticompetitive reverse-payment agreements.”
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