Abbvie’s agreements with biosimilar manufactures to keep their biosimilar versions of Humira® off the market may soon be the subject of a review by the US Federal Trade Commission (FTC).
As we previously wrote, Abbvie entered into at least two settlement agreements with manufacturers to keep biosimilar versions of Humira off the market. In April 2018, it was announced that Abbvie entered into a settlement agreement with Samsung Bioepis that would delay the U.S. launch of Samsung Bioepis’ biosimilar version of Humira® (adalimumab) until June 30, 2023. This is the second such settlement agreement that Abbvie entered into related to the its blockbuster rheumatoid arthritis drug. In September 2017, Abbvie also entered into an agreement with Amgen that would delay the U.S. launch of Amgen’s biosimilar product until January 31, 2023, several months earlier than the Samsung Bioepis’ biosimilar.
It now appears that the Federal Trade Commission, or FTC, may be getting involved in reviewing the settlement agreements for violation of anticompetitive rules. Such settlement agreements, also known as "reverse payment" or "pay-for-delay" settlement agreements, have been common between brand and generic small molecule drug makers and have long been the center of dispute between drug companies and the FTC, ultimately resulting in the US Supreme Court's decision in FTC v. Actavis in 2013. Such settlement agreements are ones in which a drug company, usually the brand company, pays another company, usually the generic drug manufacturer, to stay out of the market, thus avoiding generic competition and a patent validity challenge. In Actavis, the US Supreme Court held that the FTC could make an antitrust challenge under the “rule of reason” against a settlement agreement rather than allowing the FTC to establish a rule that such agreements were presumptively illegal.
In contrast to the small molecule space, FTC review of settlement agreements in the biosimilar space is new territory. However, two Senators, Charles Grassley (R-IA) and Claire Klobucher (D-MN), think the FTC should review the Humira® settlement agreements and have sent a letter to the FTC to that effect. From their letter, which is reproduced below, it appears that the Senators are concerned both about the disparity of biosimilar entry dates between the U.S. (2023) and Europe (October 2018) as well as the cost reduction provided by generic competition.
Senators Klobuchar and Grassley have long supported efforts to combat anti-competitive tactics and promote generic competition in the drug industry. The senators are lead sponsors of the Preserve Access to Affordable Generics Act, that would limit “pay for delay” deals where settlement agreements are used to delay generic drugs from reaching consumers. Senators Grassley and Klobuchar also introduced the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act, which addresses abuse and delay tactics that prevent generic companies from performing the required testing and distribution necessary for FDA approval.
It should be noted that despite the high cost of Humira®, which has been the top-selling biologic drug for several years, the size of a price reduction when a biosimilar enters the market is unlikely to be as great as we have seen for generic small molecule drugs. Nevertheless, both brand and biosimilar manufactures should be aware that any settlement agreements they enter into may be scrutinized by the FTC.
Dear Chairman Simons:
We write to urge the Federal Trade Commission (FTC) to look into whether strategies to hinder or delay generics from entering the market – such as anticompetitive "pay for delay" settlement agreements that have plagued generic pharmaceutical markets for years – may be being utilized for settlements regarding biologic medicines.
As you are aware, the FTC estimates that these pay for delay settlements can cost consumers and taxpayers $3.5 billion in higher drug costs every year. Since 2001, the FTC has filed a number of lawsuits to stop these deals, and has worked with Congress on legislation to end pay for delay settlements. We would like to continue those efforts to combat these agreements and explore their impact on the biologic market.
Biologics play an important role in treating many serious illnesses and are among the fastest growing classes of therapeutic products. As they are more expensive than simple molecule pharmaceuticals, biologics constitute a substantial and increasing proportion of our nation's healthcare costs. Without biosimilar competition, U.S. patients and payers will likely see additional price increases on biologics in the years to come.
For example, AbbVie Inc.'s (AbbVie) Humira is a biologic medicine that treats multiple inflammatory diseases and is the world's top-selling prescription drug with annual sales of $16 billion, including more than $10 billion in the United States alone.
Over the past year, AbbVie entered into global settlement agreements of all intellectual property litigation with both Amgen Inc. (Amgen) and Samsung Bioepsis (Samsung) over their biosimilars of Humira. Under the agreements, Amgen and Samsung will not launch their products in the United States until 2023, but both companies will be able to launch their biosimilars into the European market in October 2018. This means that while European patients will benefit from biosimilar competition later this year, Americans may be without access to Humira biosimilars for almost five more years. While such terms in patent settlement agreements may not always be inappropriate, the incentives for parties to delay biosimilar entry are present, and biologic markets could be susceptible to patent settlement abuse.
In light of the importance of biosimilar competition to drive down prices and improve the quality of life for American patients, we urge the FTC to examine global patent settlements relating to biosimilars to ensure they are not in violation of antitrust laws.
Thank you for your prompt attention to this important matter. We appreciate the FTC's efforts to ensure that potentially anticompetitive practices do not impede competition in the pharmaceutical market.
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