Bills
| 3.23.22

Should the FTC Have Greater Authority to Punish Pharmaceutical Companies for Interfering With Generic Drug Approvals? (S. 1224)

Do you support or oppose this bill?

What is S. 1224?

(Updated October 24, 2019)

This bill — the Stop STALLING Act — would reduce the incentives for branded pharmaceutical companies to interfere with the regulatory approval of competitive generics and biosimilars by abusing the Food and Drug Administration (FDA) citizen petition process. It would also give the Federal Trade Commission (FTC) enhanced authority to take action against those who file sham citizen petitions. 

Specifically, this bill would: 

  • Create an FTC cause of action against sham petitions as unfair methods of competition,
  • Create a rebuttable legal presumption of illegality for certain petitions referred from the FDA with a finding that they were submitted for the primary purpose of delaying the approval of a drug application, and
  • Grant the FTC the authority to seek civil penalties for violations. 

This bill’s full title is the Stop Significant and Time-wasting Abuse Limiting Legitimate Innovation of New Generics Act.

Argument in favor

Sham citizen petitions to the FDA help branded pharmaceutical companies unfairly block or otherwise delay competitive generic drugs’ approvals and waste the FDA’s valuable time and resources. By reducing the incentives for such sham petitions and increasing the FTC’s ability to punish sham petitioners, this bill would make it easier to get generic drugs approved and on the market, thereby lowering drug costs for consumers and health care providers.

Argument opposed

Citizen petitions are an important tool that allows pharmaceutical companies — who have the expertise needed to understand generic drugs’ complex science — and citizens with legitimate concerns to bring their concerns to the FDA. Raising the consequences for using this important tool will have a chilling effect on citizen petitions’ use, potentially putting pharmaceutical consumers at risk due to decreased reporting of adverse events or other concerns to the FDA.

Impact

Pharmaceutical drug consumers; pharmaceutical companies; generic drug approvals; citizen petitions to the FDA; sham citizen petitions to the FDA; the FDA; and the FTC.

Cost of S. 1224

The CBO estimates that enacting this bill would decrease the deficit by $117 million over the 2019-2029 period through lower premiums reducing federal subsidies for insurance purchased through the marketplaces and shifting compensation from tax-favored health insurance to taxable wages.

Additional Info

In-Depth: Sen. Amy Klobuchar (D-MN) introduced this bill to curb abuse of the FDA petition process and increase access to affordable prescription drugs: 

“The FDA petitioning process offers the public an opportunity to raise legitimate health and safety issues regarding potential new drugs, but for too long some businesses have been using it to advance their commercial interests at the expense of patients and consumers. Increased competition in prescription drug markets can only happen if we eliminate incentives for bad behavior, like submitting sham petitions that delay safe and effective generics and biosimilars from reaching the patients who need them. The bipartisan Stop STALLING Act will give enforcers increased authority to crack down on these abusive practices, helping to ensure that drug makers will think twice before submitting sham petitions that have more to do with increasing profits than improving patient safety.” 

After this bill’s House companion — along with the House companion to another pharmaceuticals-related bill Sen. Klobuchar sponsored, the Preserve Access to Affordable Generics and Biosimilars Act — passed the House Judiciary Committee on April 30, 2019, Sen. Klobuchar said: 

“The skyrocketing cost of prescription drugs in our country is an urgent problem, but there are solutions on the table to help Americans access the critical medications they need at prices they can afford. With the passage of my bills out of the House Judiciary Committee today, we are one step closer to ending the unfair practices that drive up prescription drug costs.” 

Original House cosponsor Rep. Doug Collins (R-GA) adds: 

“The Stop STALLING Act prevents brand-name pharmaceutical manufacturers from filing bogus citizen petitions simply to prevent generic options from coming to market. This legislation would help promote competition in the pharmaceutical market and give American families access to more prescription choices at lower costs.”

In floor remarks at this bill’s House Judiciary Committee markup, Rep. Collins added: 

“When used appropriately, citizen petitions filed with the Food and Drug Administration allow all Americans to raise legitimate health and safety concerns about prescription drugs proposed for FDA approval. But for too long, drug manufacturers have been allowed to game the system by submitting numerous or baseless, bogus petitions simply so the FDA will delay competing manufacturers’ approvals. As long as the FDA is tied up reviewing petitions, the original manufacturer is shielded from competition – and consumer drug prices remain high. Recently, the Third Circuit’s decision in FTC v. Shire ViroPharma made it harder for the Federal Trade Commission to use antitrust enforcement to stop this anticompetitive behavior. The Stop STALLING Act is sound, bipartisan legislation to make sure that the FTC has effective authority to act against sham petitions. While preserving the rights of citizens to bring legitimate health and safety concerns to the FDA, the Stop STALLING Act should stop in their tracks drug manufacturers that seek only to file baseless petitions to keep competitors off the market and prevent consumers from accessing lower cost alternative medications.”

Consumer Reports, which has long supported efforts to bring down prescription drug prices, supports this bill. In an April 29, 2019 letter to House Judiciary Committee leadership, it wrote:

“[The Stop STALLING Act] would prohibit the abusive use of so-called “citizen petitions” by brand-name drug makers to raise concerns that stall progress on developing generic alternatives. This petition process was established to provide citizens to have an opportunity to bring concerns to the FDA’s attention in a timely fashion. But the procedure has been commandeered by brand-name drug makers to raise dubious concerns, often numerous times, that require the FDA to suspend while it investigates and responds. One brand-name drug company reportedly filed 43 such petitions against a single generic applicant. [This bill] would prohibit submitting a citizen petition for the purpose of preventing or delaying the approval of a generic or biosimilar drug, as an unfair method of competition.” 

In response to Sen. Klobuchar’s questions for the record in a Senate Judiciary Committee Hearing, “IP and the Price of Prescription Drugs: Balancing Innovation and Competition,” on May 28, 2019, Rutgers Law School Professor Michael A. Carrier argued that this bill could be strengthened in two ways: 1) by listing sham facts that would indicate a citizen petition and 2) addressing subjective inquiry. With these recommendations in mind, Carrier suggested that this bill be modified to provide that 1) evidence of intent can be shown by both direct and indirect evidence and 2) that experienced actors engaged in objectively baseless conduct could demonstrate a subjective element. However, despite offering these suggestions, Carrier also expressed hearty support for this bill, testifying, “Nearly every one of these citizen petitions is brought by a brand company. None are filed by individuals. I love the legislation. I would go even stronger.”

This bill passed the Senate Judiciary Committee on a voice vote and has one Senate cosponsor, Sen. Chuck Grassley (R-IA), in the 116th Congress. Its House companion bill, sponsored by Rep. Hakeem Jefferies, passed the House Judiciary Committee by a voice vote with six bipartisan cosponsors’ support (including four Democrats and two Republicans).


Of Note: In theory, citizen petitions about drug safety are supposed to serve as a way for anyone to bring their concerns straight to the FDA. However, in March 2017, The Atlantic reported that “[i]n practice, many citizen petitions are filed by none other than pharmaceutical companies themselves—as a way of fighting off a competitor’s cheaper generic drug.” In a 12-year study of such petitions published in the New England Journal of Medicine, researchers found that such petitions were often “frivolous or questionable,” serving as a “last-ditch effort to hold off competition.” As The Atlantic article notes, citizen petitions are “a stealthier and innocuous-sounding way for companies to keep out competitors” as part of their efforts to keep out generic competition after their drugs’ patents expire. 

Sen. Klobuchar’s office notes that currently, “Although interested parties may file petitions with the FDA in connection with its review of certain drugs, concerns have been raised that pharmaceutical companies file serial petitions or last-minute petitions in attempts to delay generic approval, while imposing significant and unnecessary review costs on the FDA.” 

In his opening statement before the House Judiciary Committee voted to approve this bill, Chairman Jerrold Nadler (D-NY) cited the cases of Shire VirePharma and Indivior to illustrate the need for this bill. In Shire’s case, the company “abused the citizen petition process in order to maintain a monopoly over Vancocin Capsules, a drug used to treat potentially life-threatening gastrointestinal infections,” inundating the FDA with sham petitions to delay generic competitors’ approval for six years. According to the FTC’s antitrust complaint, Shire’s serial sham petitions “lacked any supporting clinical data,” yet they “succeeded in delaying generic entry at a cost of hundreds of millions of dollars to patients and other purchasers.”

In the case of Indivior, the manufacturer engaged in citizen petition abuse and other anticompetitive practices to maintain its monopoly over Suboxone, a treatment for patients addicted to prescription painkillers, heroin and other drugs. Rep. Nadler noted, “Indivior filed a series of sham petitions to prevent a generic competitor from entering the market with the same Suboxone tablets that it sold and marketed for nearly 10 years at a profit of over $2 billion dollars.” By the time the FDA rejected these sham petitions, Indivior had pulled its Suboxone tablet version from the market and converted the market to its newly-patented Suboxone film. Thus, Rep. Nadler concluded, “[b]y abusing the citizen petition process, Indivior reaped monopoly profits from its sale of Suboxone film, and it deprived victims of opioid addiction and medical practitioners the benefits of generic competition.”

Erika Lietzan, a law professor at the University of Missouri who previously specialized in FDA regulation in private practice, says that companies filing petitions regarding their competitors isn’t troubling in itself. In fact, she argues that companies themselves are, indeed, the right people to file petitions for legitimate scientific and legal concerns: 

“If it’s an innovative product, it may be the company that developed and has been making it for years is in a position to have insights into the science or manufacturing issues that others wouldn’t. So if anything, I almost think, those are the right people to be filing them.”

In its eighth annual report on delays in approvals of applications related to citizen petitions and petitions for stay of agency action, the FDA reported that petitions delayed two generic drug approvals in FY 2015 (but didn’t specify which drugs’ approvals were delayed). The agency wrote that it was concerned that resources spent responding to petitions by mandated deadlines detracted from its other work.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / Bill Oxford)