Published on Oct 09, 2024
HELP Committee ranking member lambasts FDA Commissioner for inaction on clarifying patent listing requirements on the FDA Orange Book. Echoing concerns raised by industry stakeholders, Bill Cassidy (R-LA) wrote a letter to the FDA saying the agency’s reticence has resulted in the FTC “polic[ing]” the Orange Book, a list of approved drug products and their patent protections, “beyond its purview and jurisdiction.”
Drug manufacturers would prefer guidance from the FDA over the FTC investigating Orange Book patent filings. For 19 years, the FDA has taken the role of a lenient regulator, instead claiming the agency has no expertise in patent law; the agency says it only plays a ministerial role in Orange Book oversight. For example, in 2020, the FDA skirted industry requests for guidance, publishing a request for comment instead.
In the FDA’s absence, the FTC announced last year that patent abuses which delay generic drugmakers from competing could be investigated as potential violations of the FTC Act. The FTC has already issued warning letters disputing more than 300 patent listings, exposing the targeted drugmakers to high legal risks from an aggressive regulator.
Additionally, the FTC signaled in an amicus brief that patents on medical devices that don’t claim the underlying drug ingredient should be delisted, creating additional legal risks for drugmakers.
Since the FTC issued those warning letters, five companies targeted by the FTC—Boehringer Ingelheim USA, Novartis (NVS), Novo Nordisk (NVO), AbbVie (ABBV) and Mylan Specialty (through its parent company Viatris Pharmaceuticals)—have contributed $22,000 to Sen. Cassidy’s political funds: Bill Cassidy for U.S. Senate and the Continuing America’s Strength and Security PAC.
The Cassidy letter mirrors concerns previously expressed by the largest pharmaceutical trade organizations and drugmakers, some of whom responded to the FTC’s challenges by pointing to the FDA’s unclear direction on Orange Book listings.
Ty Bofferding, a HELP Committee spokesman for Cassidy, told The Capitol Forum that the letter reflects the committee’s responsibility “to ensure clarity and effective use of the Orange Book system and was not instigated by any member of the industry.”
Earlier this summer, Cassidy co-introduced the REMEDY Act alongside Sen. Dick Durbin (D-IL). The bill would require brand name drug manufacturers to identify the single patent which would receive a 30-month stay if challenged. The lawmakers at the time said the bill would allow “generic drug manufacturers would be allowed to enter the market more easily, by having more certainty and visibility into the patent landscape.”
Cassidy is not up for re-election until 2026. Four of the companies who donated did not respond to requests for comment. A Novo Nordisk spokesperson said: “Novo Nordisk employees can choose to fund an independent political action committee (PAC) that supports candidates of both parties who work on issues important to patients and communities.”
A campaign spokesman told The Capitol Forum that Cassidy accepts support from stakeholders on both sides of many issues. However, he said, “if they choose to donate to his campaign they are signing up for his agenda. Contributions have no impact on Senator Cassidy’s policy making.”
Sen. Cassidy’s office didn’t answer questions from The Capitol Forum about whether the lawmaker or staff had met with company representatives affected by the FTC warning letters or members of the industry’s leading trade organizations to discuss Orange Book listing practices.
Instead, Bofferding said, “Senator Cassidy has been a leader in the Senate on getting lower-cost generics to market faster and reducing the cost patients pay for their medications. When there is ambiguity in regulations or the enforcement of them, the entire system suffers.”
While campaign contributions in themselves do not guarantee lawmakers pass—or kill—certain legislation, they ensure that donor concerns are heard by lawmakers. For what it’s worth, the HELP Committee Chairman, Sen. Bernie Sanders (I-VT), did not co-sign Cassidy’s letter to the FDA. Neither campaign fund of Sanders, Progressive Voters of America and Friends of Bernie Sanders, have accepted contributions from any of the companies issued warning letters by the FTC.
Sen. Sanders’ office didn’t respond to a request for comment by deadline.
Campaign contributions alone don’t tell the full story. Lobbying records from Q2 2024 show that BIO, a trade group representing the biotechnology industry, spent almost $1.8 million in total, including on the so-called “FTC Orange Book Delisting Initiative.” Among the several offices noted as part of the outreach, BIO included the Department of Health and Human Services (of which the FDA is a part) and the Senate, but not the Federal Trade Commission.
BIO didn’t respond to a request for comment or confirm if any of its lobbyists had met with Sen. Cassidy during Q2 2024.
Pharma Supply Chain Developments
Following insulin lawsuit, Wyden, Brown ask FTC to scrutinize PBMs’ vertical integration of drug making facilities. Sens. Ron Wyden (D-OR) and Sherrod Brown (D-OH) wrote to FTC Chair Lina Khan, praising the FTC’s recent lawsuit against the largest pharmacy benefit managers (PBMs) over insulin pricing while urging the agency to “examine new PBM tactics that appear to create further barriers to competition and harm the ability of consumers to access lower cost prescription drugs.”
In the letter, Sens. Wyden and Brown said they’re concerned about how some of the largest PBMs, who are already vertically integrated with insurers and pharmacies, have entered another part of the prescription drug supply chain: manufacturing.
CVS (CVS) Caremark and Cigna’s (CI) Express Scripts, both “Big Three” PBMs,” launched subsidiaries that “co-manufacture” biosimilars of AbbVie’s blockbuster arthritis drug Humira. The CVS subsidiary, Cordavis, partners with drugmaker Sandoz, while Express Scripts’ Quallent Pharmaceuticals partners with Boehringer Ingelheim.
The PBMs appear to simply provide consulting services to their drugmaker partners rather than manufacturing capabilities, the Senators said. But this arrangement raises concerns, according to Wyden and Brown, that PBMs may be lining their pockets by controlling another part of the supply chain. They accused the PBMs of looking to “markup the cost of biosimilars and steer patients to their higher cost ‘co-manufactured’ products while limiting access to products from non-affiliated manufacturers.”
The Senators said the FTC should open a 6(b) study into this practice.
An Express Scripts spokesperson told The Capitol Forum that drugmakers alone set the list prices of medications, and that next year Express Scripts will offer multiple Humira biosimilars on its largest formularies. The spokesperson said the biosimilar developed through the co-manufacturing agreement “costs most patients $0 out of pocket and costs our clients less than $1,000 per 30-day fill” and the manufacturing agreement helps “ensure stable, quality supply.”
A CVS Health spokesperson touted Cordavis’ “ability to identify biosimilar drugmakers that produce high-quality alternatives at a sustainable supply on which our members can rely” and said that by transitioning patients to preferred biosimilars, “we have already saved more than half a billion dollars for our clients in this therapy class, and nearly all of their members’ out-of-pocket costs have been reduced to $0.”
M&A and Partnerships
To pharmacists’ alarm, trade groups, PBMs plan on selling shares of Surescripts to private equity group in deal valued over $1.5 billion. A private equity group called TPG Capital announced plans to become the majority shareholder of Surescripts, the dominant e-prescribing platform for health care providers and pharmacies. Some independent pharmacists are concerned that the ownership change will mean they soon have to pay higher fees to process prescriptions.
Previously, Surescripts was jointly owned by the two pharmacy trade groups that founded it—the National Community Pharmacists Association (NCPA) and National Association of Chain Drug Stores (NACDS)—as well as two of the “Big Three” PBMs, CVS Caremark and Express Scripts. These shareholders will still retain minority ownership.
Last year, Surescripts settled allegations from the Federal Trade Commission that it illegally dominated two electronic markets—prescription drug routing and eligibility. The company agreed to refrain from the contracting practices, including exclusivity and loyalty agreements, that the FTC targeted in its 2019 antitrust lawsuit, and from enforcing non-compete contracts.
Surescripts is, however, still the dominant player in the e-prescribing market, claiming to touch 99 percent of U.S. patients. Pharmacists described the company as impossible to avoid working with.
Surescripts charges fees to both health care providers and pharmacists who use it. Independent pharmacists told The Capitol Forum they’re worried those fees will increase once TPG takes over its majority share. The independent pharmacy industry has long accused prescription drug middlemen of subjecting them to extractive fees and exploitative contracts.
“How soon will we be paying even more for a service forced upon us? And if they are not going to increase our fees, who will they target?” Jeremy Counts, a Virginia-based independent pharmacist and PBM reform advocate, told The Capitol Forum.
In a press release on the matter, NCPA said it “negotiated [with TPG] for important protections for independent pharmacies,” including “fee stability and ownership neutrality.” An NCPA spokesperson said the group couldn’t comment further on the provisions it negotiated and what the ownership structure of Surescripts will look like going forward.
Similarly, CVS Caremark declined to comment; Express Scripts and NACDS didn’t respond to requests for comment. TPG and Surescripts also didn’t respond to requests for comment.
It’s possible the sale to a private equity group could be a strategic one to avoid regulatory scrutiny, although antitrust enforcers have recently been taking a closer look at private equity in health care. An FTC spokesperson declined to comment on whether the agency plans on scrutinizing TPG’s proposed acquisition.
