Congress Takes Aim at Reducing the Cost of Medicine

Rothwell, Figg, Ernst & Manbeck, P.C.
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Two bills were signed into law on April 23, 2021, with the aim of increasing access to and education regarding generic and biosimilar medicines.

The Ensuring Innovation Act was passed with the aim to “lower the price patients pay for their prescriptions,” according to Senator Bill Cassidy, one of the co-sponsors for the bill. The bill also “ensures affordable life-saving medicine while preserving innovation for cutting-edge medicine,” per comments by Senator Roger Marshall, another of the bill’s co-sponsors. Representative Kurt Schrader, a co-sponsor of the House companion bill, stated that the bill would close “another loophole to prevent drug companies from gaming the system and holding back competition in the marketplace.”

For all these ambitious goals, the bill makes relatively narrow changes to the Federal Food, Drug and Cosmetic Act (the “FD&C Act”). Specifically, the bulk of the changes in the bill replace the term “active ingredient” with the term “active moiety” in certain portions of the FD&C Act, as well as inserting similar terms relating to biologics. The majority of these changes deal with New Chemical Entity exclusivity and Orphan Drug exclusivity. These exclusivities allow for a period where the first company to meet the requirements for exclusivity may market the medicine without generic competition, regardless of any related patent coverage.

This change to “active moiety” is intended to restrict these exclusivity periods to the FDA’s narrower definition of “the molecule or ion… responsible for the physiological or pharmacological action of the drug substance,” which explicitly excludes changes such as salts, complexes or chelates. This addresses a perceived issue where a company currently selling a drug protected by some form of exclusivity could attempt to receive a new exclusivity period by introducing a product with a new active ingredient but the same active moiety.

Whether these changes will achieve the goals described by the bill’s sponsors remains to be seen. The FDA has, for well over 20 years, interpreted the statute with the “active ingredient” language to require a new “active moiety” to receive exclusivity. 21 C.F.R. § 314.108 (1994). That said, drug companies have found at least some success in convincing courts that this interpretation was impermissible, see Amarin Pharms. Ireland Ltd. v. Food & Drug Admin., 106 F. Supp. 3d 196, 208–09 (D.D.C. 2015), so the Act cannot be said to have no effect.

The Advancing Education on Biosimilars Act of 2021 was similarly intended to “help lower the cost of health care” by providing education to health care providers and patients about biosimilars, according to Senator Maggie Hassan, one of the bill’s co-sponsors. This effort to educate the public about biologics and biosimilars traces back to at least 2019, when similar bills were introduced by Sen. Hassan and others. Now-retired Senator Mike Enzi, a co-sponsor of the 2019 version of the bill, stated the intention was to “drive down drug costs by increasing confidence in cheaper prescription drug alternatives like biosimilars.”

The Act authorizes the Secretary of Health and Human Services to operate a website providing educational materials regarding biologics and biosimilars, including definitions and the review and approval processes for those products. Should this and other efforts increase the adoption of biosimilars, reports have indicated reductions in health care costs of up to $7 billion annually could be achieved by an increased share of the market going to biosimilars.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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