AAM opposes changes to exclusivity in proposed bill

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AAM opposes changes to exclusivity in proposed bill

By Sandra Levy - 06/06/2019
The Association for Accessible Medicines president and CEO Chip Davis expressed disapproval to the Senate HELP Committee that Section 205 of The Lower Health Care Costs Act of 2019 discussion draft would weaken incentives for generic manufacturers to take on expensive and uncertain challenges to questionable brand-name patents.

In a letter to committee Chairman Lamar Alexander and Ranking Member Patty Murray, AAM president and CEO Chip Davis said, “We appreciate the opportunity to offer our views on The Lower Health Care Costs Act of 2019 (“discussion draft”) released on May 23. We share the committee’s goal of lowering the cost of health care and to enhancing patient access to more affordable medicines. Over the last several months, we valued the opportunity to work toward that shared goal and provided a robust set of recommendations to lower out-of-pocket costs for patients."

Davis said that the current version of the proposal would lead to less competition and higher drug prices for America’s patients, and that without changes to the discussion draft, AAM would be forced to oppose The Lower Health Care Costs Act.

Davis said that for more than 30 years, the Hatch-Waxman Act has provided the only incentive for generic manufacturers to develop more affordable medicines by awarding a 180-day period of exclusivity for first filers that challenge a patent protecting an expensive brand-name drug.

"By promoting patent challenges, 180-day exclusivity encourages competition and the earlier entry of safe and more affordable generic alternatives. Thus, the 180-day exclusivity provision has been critical to the Hatch-Waxman Act’s long track record of success in promoting generic competition," he wrote.

Davis added, "The proposed changes to the 180-day exclusivity—as set forth in Section 205 of the discussion draft—turn the Hatch-Waxman incentive on its head. Section 205 is overly broad and would
fundamentally undermine the ability of generic manufacturers to deliver more affordable medicine to America’s patients. The proposed language could, for example, trigger a loss of exclusivity based on a failure by the FDA to grant final approval by a first applicant within 30 months for any reason even when the generic drug applicant is diligently seeking final approval."

Davis explained that first filers could be penalized through no fault of their own due to delays by the FDA. "The FDA’s statistics confirm that this will occur—its projected median time to final approval is 30 months. Thus, there could be potential triggers and losses of exclusivity for the median of all ANDAs," he wrote.

"As such, the proposed Section 205 injects substantial uncertainty into business decisions. If 180-day exclusivity can be lost due to factors outside of the manufacturer’s control, a manufacturer may be less willing to undertake an expensive and time-consuming patent challenge. The net result would be fewer generic drugs introduced into the market and less competition for expensive brand drugs—undermining the potential for patient savings and directly contravening the intent of Hatch-Waxman," added Davis.

"Generic manufacturers should diligently pursue FDA approval under all circumstances and the current market incentives—notably the 180-day exclusivity—provide ample motivation for this to occur. While it is our view that Congress adequately addressed the potential for “parking” as part of the Medicare Modernization Act of 2003, we have provided the Committee with two alternatives that were narrowly and carefully tailored to the FDA’s stated concerns,"wrote Davis.

"Either of these alternatives would provide the FDA with additional authority to resolve the handful of occurrences it has identified as problematic, while preserving the only incentive available to generic manufacturers to challenge brand-name patents. We are also offering a third alternative that incorporates former FDA commissioner Scott Gottlieb’s suggested revisions to Section 205. Those revisions ensure that generic companies who are actively and diligently pursuing final approval will not be unfairly penalized."

Finally, Davis said, "Current market realities and anti-competitive tactics, combined with misguided policies, threaten the long-term stability of the generics and biosimilars markets even as the costs of brand pharmaceuticals continue to rise. In fact, over the last two years, generic manufacturers experienced a net loss of $7.7 billion as a result of price reductions and lower volume. In contrast, spending on protected brand-name drugs increased by $20.8 billion on a net basis due to higher prices and additional volume. The Lower Health Care Costs Act, as currently proposed, would only exacerbate this trend by undermining the only incentive for early generic entry and reversing Hatch-Waxman’s more than 30-year track record of success."

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