Teva on FDA name and shame list

Teva Photo: Reuters Ammar Awad
Teva Photo: Reuters Ammar Awad

The US Food and Drug Administration has published a list of pharma companies that "game the system" to block generic competition.

The US Food and Drug Administration (FDA) has decided to take sides in the fierce public debate in the US on drug prices. The FDA has published a list of companies that block generic competition to their products, legally, but in the view of FDA Commissioner Scott Gottlieb using means to "game the system". The list has no legal effect; its significance is in the arena of public opinion. The aim is to name and shame companies that engage in certain practices.

Publication of the list is on the face of it good news for generic companies such as Israel's Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), since if it does lead to an improvement for generic drug makers it should be positive for the company, whose main business in generics. The story, however, is more complicated than this, particularly for Teva, which itself appears on the list. Teva is mentioned on the list as having used obstructive tactics to block generic production of its drugs - and not of its blockbuster MS drug Copaxone, as might be thought, but of a product that is itself generic, an acne treatment called Claravis.

The list names all the companies about which the FDA has received complaints that they prevented generic drug companies from obtaining samples of their brand drugs, so that the generics companies could copy them legally. The FDA says that generic companies generally need between 1,500 and 5,000 units of the brand drug in order to carry out tests demonstrating that their generic version is bioequivalent to it. Teva's name appears among those of many large and reputable companies, some of which used this blocking delaying tactic in relation to more than one drug.

The FDA states that it received four enquiries in relation to difficulty in obtaining samples of Claravis. In relation to some other products the list records ten enquiries or more. The leaders for the number of drugs in this category are Novartis and Actelion, each of which has four drugs in the list. Actelion is also the leader for number of enquiries for a single drug - 14. Mylan, a close rival of Teva, also appears on the list with one drug.

"In passing the 1984 Hatch-Waxman Amendments to the Federal Food, Drug & Cosmetic Act (the law that gives special patent protection to drugs - G. W.), Congress created a system that balances encouraging and rewarding medical innovation with facilitating robust and timely market competition. One of the primary ways that FDA facilitates a competitive marketplace is through the efficient approval of generic drugs, which are often lower-cost than brand drugs," the FDA explains.

"Unfortunately, the process established by Congress may not always function as intended. At times, certain 'gaming' tactics have been used to delay generic competition. One example of such gaming is when potential generic applicants are prevented from obtaining samples of certain brand products necessary to support approval of a generic drug. The inability of generic companies to purchase the samples they need slows down, or entirely impedes, the generic drug development process - leading to delays in bringing affordable generic alternatives to patients in need."

Sometimes it is difficult to tell whether distribution of a product is limited because of safety concerns on the part of the FDA, or whether the difficulty in obtaining the product is part of a business tactic. The drug for which Teva is named is subject to an FDA-imposed Risk Evaluation and Mitigation Strategy limiting its distribution, so that it is likely to receive the benefit of the doubt over the reason that it took four enquiries with the FDA before Teva's competitors managed to obtain samples of the drug.

Teva's interests when it comes to encouragement of generics are mixed these days. On the one hand, most of its revenue derives from generic products. On the other hand, most of its profits in recent years, and in its plans for the future, derive from innovative products. Teva has lost exclusivity on its leading innovative product, Copaxone, which now has generic competitors, and it is experiencing delays in obtaining approval for the most promising innovative product in its pipeline, Fremanezumab for treating migraines. It could therefore be that, at this precise moment, shaming for companies that do not cooperate on generics is good for it.

Teva's share price has not changed materially in the four days since the FDA list was published. The company has a market cap of $21 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on May 21, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Teva Photo: Reuters Ammar Awad
Teva Photo: Reuters Ammar Awad
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