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Obligations to fund and support costly studies can extend beyond the period of market exclusivity, giving generics competitors an advantage.
Last December, some two years after passage of the Food and Drug Administration Amendments Act (FDAAA), FDA issued its first draft guidance to help companies better understand what it expects to see in a REMS (risk evaluation and mitigation) submission. The guidance is welcome. Its now clear that the fate of a new drug depends on how well a REMS submission is crafted and later implemented.
Companies could also benefit from more practical guidance, draft or otherwise, on the REMS negotiation process with FDA. The critical element is anticipating and evaluating the strategic and bottom-line impact of making long term commitments For example, by agreeing to fund long term studies and/or clinical trials, an innovator could find itself in the position of providing to FDA results that would primarily benefit and support the continued marketing of generic and follow-on competitors. Data generated at considerable expense by the innovator would no longer be protected.
In REMS-related negotiations with FDA, company regulatory staffs are often under pressure to make commitments defined by the agency as necessary for obtaining marketing approval—and FDA approval of a product can result in a substantial increase in the value of a company's stock. Smaller companies are often under even greater pressure to make concessions, as marketing approval of the product may be essential to their survival.
In an environment where the regulator holds the upper hand, it's easy for a company not to factor into the REMS equation this long term perspective, given that its primary goal is the immediate reward of marketing approval. And failure to think long term can be costly, especially if REMS commitments legally oblige a company to conduct multi-year studies and/or clinical trials. The first companies to win marketing approval based on their commitment to such REMS conditions are only now beginning to focus on that long term price tag.
To illustrate the point, if a company makes a REMS-related commitment to conduct one or more studies and/or clinical trials over a 10-year period, that company is legally bound to comply with its commitment or face civil and potentially even criminal penalties. Assuming that FDA has not agreed in the interim to release the company from its obligation, that commitment would survive the expiration of any marketing exclusivity for the REMS covered product, including patent-related protection and data exclusivity.
At the expiration of marketing exclusivity, generic or follow-on versions of the REMS covered product would enter the market as competitors—but these competitors would not be bound by the same REMS obligations as the innovator. As a result, the innovator not only loses market share (and thus income) it would also still be legally required to fund the not-inconsequential cost of conducting ongoing REMS-required studies and/or trials. In effect, the innovator is paying for, and supplying to FDA, the trial and/or study results that will be used to support the continued marketing of its competition.
Moreover, because REMS obligations are the legally established conditions that support the marketing of a product, they could potentially complicate corporate strategic goals (such as partnership arrangements for licensing or even the sale of the REMS-covered product) at a later point in time.
The best course for pharma companies is to take the internal steps necessary to "cover all bases." Too often, REMS is seen as a compliance exercise that is best delegated to traditional regulatory staff. The proper course is to put REMS in the hands of a dedicated multi-disciplinary team, which in consultation with senior management should set the parameters of the company's negotiating position before discussions are launched with FDA. If FDA exceeds these negotiating parameters during negotiations, corporate senior management should make the final decision as to the commitment.
Ansis Helmanis is a former FDA official and founder of RegLink Associates. He can be reached at email@example.com