Pharma Law and Business Roundup: June 2013
|Written by: Ed Silverman
Founder and Editor of Pharmalot
Posted: June 24, 2013 @ 7:45 am
Once again, it is time to catch up on the onslaught of news emanating from the pharmaceutical industry. By now, most are probably are aware of a pair of Supreme Court rulings, but we will very briefly recap those and then move on to some other highlights. Here you go…
After years of debate and controversy, the US Supreme Court ruled that drugmakers can face lawsuits over so-called pay-to-delay patent settlements, but that such deals should not necessarily be assumed to be illegal. The decision largely vindicates the position held by the Federal Trade Commission, which argued the deals are anti-competitive because generic drugmakers are given incentive to file lawsuits against brand-name rivals and then settle for a quick profit, rather than challenge a patent in court. The FTC calculated the reverse settlments, as some call them, cost consumers $3.5 billion annually.
“This court declines to hold that reverse payment settlement agreements are presumptively unlawful. Courts reviewing such agreements should proceed by applying the ‘rule of reason,’ rather than under a ‘quick look’ approach,” Justice Stephen Breyer wrote in a 5-to-3 decision. “…The likelihood of a reverse payment bringing about anticompetitive effects depends upon its size, its scale in relation to the payor’s anticipated future litigation costs, its independence from other services for which it might represent payment and the lack of any other convincing justification” (here is the ruling).
As a result of the ruling, which essentially looked to decide the balance between intellectual property rights and anti-trust behavior, generic drugmakers may become more aggressive about proceeding with their copycat versions, suggesting consumers may see lower prices on some medicines. Others suggest the deals will roll on, albeit in a more calculated manner that will raise legal costs for drugmakers.
“This probably plays out as follows: a branded and a generic company ink a settlement agreement and then FTC will evaluate the circumstances after the fact and will choose to sue in select cases,” writes Sanford Bernstein analyst Tim Anderson in a note to investors. “This raise the bar on how settlement deals need to be constructed such that they don’t run afoul of the ‘rule of reason.’”
In a unanimous decision with important implications for biomedical research, the Supreme Court invalidated key parts of two patents held by Myriad Genetics that form the basis of a widely used genetic test for breast and ovarian cancers. But the court also drew a distinction between the right to patent genes based on naturally occurring DNA and genetic material created synthetically in labs.
The ruling came after a protracted battle in which critics charged Myriad was allowed to limit access to potentially life-saving genetic tests for women at risk of developing the disease. Myriad patented two isolated human genes – BRCA1 and BRCA2 – that account for most inherited forms of the cancer. Each tests costs up to $4,000 and the patents prevent other labs from offering tests without paying fees.
DNA is a “product of nature and not patent eligible merely because it has been isolated,” Justice Clarence Thomas wrote for the court. “… Myriad did not create anything. To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention.”
The finding was hailed by medical researchers and advocates who challenged the Myriad patents on behalf of several women on the grounds that the situation set a bad precedent for public policy. Not surprisingly, other labs quickly announced plans to offer the genetic tests, sending Myriad stock on a rollercoaster ride that day.
Diabetes drugs made headlines twice in recent weeks. In mid-June, the NIH ran a workshop to examine the safety of several widely used medicines called GLP-1 inhibitors and whether a definitive link can be established to acute pancreatitis and pancreatic cancer, which were the subject of recent studies that generated considerable controversy. The outcome was inconclusive, but the FDA may want further studies.
Meanwhile, the American Diabetes Association called for drugmakers that sell these meds to release patient-level data that can be used for an independent review. Whether the drugmakers – Merck, Bristol-Myers Squibb, AstraZeneca, Eli Lilly, Novo Nordisk and Boehringer Ingelheim – will comply remains to be seen. With the exception of GlaxoSmithKline, the pharmaceutical industry has resisted releasing such data over concerns that proprietary information will be compromised.
So far, none have agreed to provide patient-level data, which is a contentious issue. Drugmakers are concerned releasing data will compromise proprietary information. The PhRMA trade group recently criticized the idea and AbbVie is trying to prevent the European Medicines Agency from releasing data for its Humira rheumatoid arthritis treatment. Only GlaxoSmithKline has taken such a step and this was done in response to the Avandia scandal.
But ADA chief scientific officer and chief medical officer Robert Ratner is optimistic the drugmakers will comply and the process, which involves choosing an academic research organization to sift through the data, can be completed in about a year. As he sees it, the ADA can be an honest broker using a bully pulpit to cajole the companies to comply. “I think we’re going to get it,” he says. “…it would look awfully bad for that company to refuse when others have agreed.”
There was a different two-day meeting earlier in June in which a divided FDA advisory committee voted to ease restrictions on the use of Avandia. Of 26 panelists, 20 voted to either remove or modify a REMS, or risk evaluation and mitigation strategy, which was created in 2010 after a long-running controversy over the extent to which the GlaxoSmithkline drug causes heart attacks and strokes. That debate emerged after a 2007 meta-analysis found a 43 percent greater chance of cardiovascular risks.
The meeting was held to review the re-adjudication of a Glaxo clinical trial that was widely criticized for its design by several FDA staffers three years ago. The review found the pill was not associated with a significantly increased cardiovascular risk. Nonetheless, it remains unclear how the REMS may be adjusted. The Avandia program contains a medication guide and another component known as ETASU, or elements to assure safe use, which spells out terms for physician participation, patient enrollment and distribution requirements for pharmacies.
Some panelists suggested another outcomes study, but there are obstacles to this approach, including the ethics of conducting such a trial when only 3,200 people are still regularly prescribed the drug. And there is little incentive for Glaxo to sponsor a trial, since the Avandia patent expired in 2011 and sales have shrunk to less than $10 million annually.
“The train may have already left the station on this,” said David Oakes, a professor of biostatistics and computational biology at the University of Rochester Medical Center, who voted to remove the REMS altogether. “I’m not sure what the practical results will be.”
In an unexpected reversal, the Obama administration ended plans to block over-the-counter access to the one-pill version of the Plan B One-Step contraceptive, to girls and women. The move came after a federal appeals court ruled the contraceptive can be sold to girls and women of all ages on an over-the-counter basis. However, restrictions will remain in place for the older, one-pill version over concerns that young girls may not able to adequately understand directions for using two separate dosages.
The compromise was endorsed by US District Court Judge Edward Korman, who excoriated the White House for placing politics over science and earlier had ordered both versions of the pill should be made available without restrictions. The White House fought his order by declaring that he overstepped his bounds and that such decisions should be the result of agency rulemaking.
Now, though, the FDA plans to take to comply with his order. Notably, Teva Pharmaceutical, which makes Plan B One-Step, was asked to “promptly” file an application asking to end age and sales restrictions on the pill, and the FDA agreed to “approve it without delay.” In addition, the FDA expects that generic drugmakers will seek similar arrangements and the agency will review those applications, although labeling could be affected by exclusivity held by Teva.
The moves largely end a decade-long controversy, which grew especially heated in late 2011 after US Secretary of Health & Human Services Kathleen Sebelius superceded an FDA decision to loosen restrictions. The maneuver prompted charges the White House was trying to appease conservatives prior to a presidential election year. Some believe that Plan B prevents a fertilized egg from implanting in the womb, which some equate to abortion.
But some unknowns remain. A key issue is affordable access if there are significant price differences between treatments. Plan B One-Step contains just one pill and will soon be readily available without restrictions, while the older two-pill version is available as a lower-cost generic, but will still require girls under 17 to provide a prescription and proof-of-age at retail location where there is an on-duty pharmacist. And the difference in price may $30 or more, which some teenagers may not have.
Meanwhile, GlaxoSmithKline was embroiled in two scandals in China. The drugmaker determined that a scientific paper that was published in Nature Medicine in 2010 contained fabricated data and dismissed Jingwu Zang, one of the listed authors, who was a senior vp and head of R&D in Shanghai, China. Glaxo is also seeking a retraction. And three other employees were placed on administrative leave pending a final review and a fifth has resigned.
At the same time, Glaxo is investigating allegation that its sales staff there was involved in bribing doctors to prescribe such, such as its Lamictal epilepsy medication, sometimes an on off-label basis, between 2004 and 2009. Sales reps allegedly provided doctors with speaking fees, cash, dinners and paid trips in return for prescribing.
The scandals, which generated considerable publicity, greatly embarrassed the drugmaker, which only last year agreed to plead guilty and pay $3 billion to the US government to resolve criminal and civil charges in connection with off-label promotion of several drugs, failing to report safety data and reporting false prices. Glaxo was already one of several drugmakers being investigated by US authorities for violating the Foreign Corrupt Practices Act.
In the latest fallout from the Ranbaxy manufacturing scandal, a lawsuit will be heard later this month by the Supreme Court in India in which criminal prosecution of all former and present directors of the embattled generic drugmaker is being sought. The suit also seeks restricted product marketing and cancellation of production licenses for two plants that attracted the attention of the FDA for making substandard medicines.
The suit was filed by attorney Manohar Lal Sharma as a public interest litigation, which can be submitted by anyone for the benefit of the public. The filing comes amid growing concern in India over the quality of Ranbaxy medicines after the drugmaker recently agreed to pay a $500 million fine to the US government to settle criminal and civil charges for manufacturing violations. The US Department of Justice called the fine the “largest” financial penalty ever paid by a generic drugmaker for violating the Food, Drug & Cosmetic Act.
For nearly a decade, Ranbaxy perpetuated a scheme to boost profits and maintain its edge as a leading purveyor of low-cost generics. The generic drugmaker was charged with using raw chemicals from unapproved sources, fabricating in-house test data to meet FDA standards and concealing these activities from FDA inspectors by falsifying records.
In recent weeks, a hospital in Mumbai notified its staff not to purchase any of its medicines. Daiichi Sankyo, which spent $4.6 billion to buy Ranbaxy from the founding Singh family, is considering legal action because “certain former shareholders concealed and misrepresented critical information.” However, rormer Ranbaxy ceo Malvinder Singh called the charges baseless.
Meanwhile, India’s Ministry of Health & Family Welfare asked the Drug Controller General of India to examine US court documents for signs that Ranbaxy similarly attempted to dupe domestic consumers. In fact, the lawsuit charges Ranbaxy sold substandard medicines around the world, including in India, and wants the court to take action against the DCGI for failing to protect consumers.
The new crop of hepatitis C treatments may form the next battleground between the pharmaceutical industry, poor nations and patient advocates. A report from the Global Commission on Drug Policy, which includes former Federal Reserve Chairman Paul Volcker and billionaire businessman Richard Branson, suggests compulsory licenses should be pursued when pricing talks with drugmakers fail.
“Governments should enhance their efforts to reduce the costs of new and existing hepatitis C medicines – including through negotiations with pharmaceutical companies to ensure greater treatment access for all those in need. Governments, international bodies and civil society organizations should seek to replicate the successful reduction in HIV treatment costs around the world, including the use of patent law flexibilities to make them more accessible,” the report says.
‘Patent law flexibilities’ refers to a World Trade Organization pact called TRIPS, or Agreement on Trade-Related Aspects of Intellectual Property Rights, which allows countries to pursue compulsory licensing as an option to make patented medicines more affordable to their citizens. But this has been a contentious provision for the pharmaceutical industry.
Brand-name drugmakers argue that overriding patents with compulsory licenses robs them of incentives and rewards for investing in innovative research, while patient advocates say licensing is the only means to make high-priced medicines affordable. The issue has caused several high-profile disputes in recent years in such countries as Thailand, Brazil and South Africa involving various HIV and cancer treatments.
About 170 million people are infected with hepatitis C globally, including 10 million who inject drugs, but the commission found that drug enforcement laws in many countries are forcing drug users away from public health services into riskier settings where the virus abounds. And this is increasing pressure for medicinal solutions.
The commission report notes that “if treatment access remains low, there will be a rising number of people who use drugs who develop advanced or fatal liver disease” and the use of hepatitis C drugs “will be severely limited if they are not affordable for low and middle income countries… Reducing the costs of existing and future hepatitis treatments should be an urgent priority for all national and international authorities.”
Meanwhile, a Novartis probe into clinical trials run in Japan for its Diovan blood pressure drug yielded signs of wrongdoing. The drugmaker admitted that two employees had varying levels of involvement in clinical trials that were initiated by investigators but were supposed to have been independent.
The admission came after several papers were retracted and a prominent researcher, who was the principal investigator in most cases, resigned a position from a major university. The cascading chain of events has prompted increasingly unflattering coverage in the media in recent months, which ultimately prompted Novartis to investigate.
The controversy erupted after several papers co-authored by Hiroaki Matsurbara, formerly of Kyoto Prefectural University, were retracted. These included the main publication of the Kyoto Heart study, which was published in the European Medical Journal in 2009 and claimed Diovan reduced the risk of heart attacks and strokes, which Novartis used in its promotions. The study helped Diovan become a huge seller in Japan.
Another paper found Diovan helped diabetics avoid heart disease and a third paper claimed the drug could benefit high-risk patients with high blood pressure. More recently, Novartis employee Noburo Shirahashi was listed as a statistician on yet another paper concerning Diovan – the Jikei heart trial that was published in The Lancet - but he was only listed as being affiliated to Osaka City University, which has received more than $1 million in donations from the drugmaker.
About the Author
Ed Silverman is a prize-winning journalist who has covered the pharmaceutical industry for the past 17 years. In addition to editing Pharmalot, he is currently an editor-at-large for Med Ad News. Previously, he was a bureau chief for The Pink Sheet, the venerable industry newsletter, and a contributor to its sister publication, In Vivo magazine. Before that, Silverman worked as a business writer for The Star-Ledger of New Jersey, one of the nation’s largest daily newspapers, where he conceived and launched Pharmalot.