The Impact of Competition and Exclusivity on Access to Medicines

Published on: 

Innovator companies are exploring new avenues to keep generic drugs at bay, says CPhI expert, but competition authorities and drug regulators will play a key role in preventing such abusive anti-competitive practices.

In the 2017 CPhI Annual Report, Dilip G. Shah, CEO of Vision Consulting Group and secretary general, Indian Pharmaceutical Alliance, discusses the ongoing tension between competition and exclusivity and the impact on access to medicines. He notes that competition supports multi-source supply while exclusivity requires protection for a single source. “The competition ensures access, the exclusivity denies access,” he says.

Generic drug invasions have sparked many patent litigations worldwide during the past 20 years. In the past, innovator companies used to try and block market entry of generic drugs after the generic drug developer applies for regulatory approval. Today, however, innovator companies are exploring new avenues to keep generic drugs at bay so that they can extend market monopoly. Strategies have evolved, Shah observes, as innovators now attempt to block generic drugs at the development stage itself, which has resulted in issues such as innovators blocking access to pharmaceutical reference products for bioequivalence testing, thereby delaying or denying generic drug entry; and innovators using distribution safety protocol, known as risk evaluation and mitigation strategy (REMS), to impede generic drug development.

In light of these practices, regulators have stepped in, says Shah. The US Federal Trade Commission (FTC), for example, has intervened in legal disputes between generic and innovator companies for not providing their products for testing. “The US recently reintroduced a bill Creating and Restoring Equal Access to Equivalent Samples Act of 2017 (CREATES Act),” Shah wrote in the CPhI Annual Report. “It speaks for the innovators’ abusive practices. Though CREATES Act allows generics to sue innovators for not providing sufficient quantities of REMS products, experts doubt if it would provide optimum solution to the issue. It is possible that under the current regime in the US, the innovator companies may behave differently to avoid glare of the President. They may also not flout laws to pursue longer period of exclusivity, having regard to the new Administration’s focus on raising competition to reduce drug prices in the US.”

In the report, Shah highlights that generic drug developers rely on competition authorities to curb abusive anti-competitive practices of innovator companies. He explains that litigations involving competition authorities at the development stage have been few, not because abuses do not happen, but because generic drug companies are hesitant to take them up for two reasons.  “Firstly, they do not want their competitors to find out their product development focus and strategy. Secondly, many of them have some form of commercial alliance with the innovator companies. And they do not wish to adversely impact their commercial alliance,” says Shah. “However, once their pipeline of new products is chocked, generic companies will have no option but to invoke both, the competition authority and the drug regulator to have timely access to samples.”


Shah cites the comment made by FDA Commissioner, Scott Gottlieb, who told CNBC, “We don’t play a role in drug pricing, but we do affect drug competition in terms of getting new drugs on to the market, and create competition to older drugs, particularly with generic drugs.” Shah believes that in the near future, innovators will face increasing pressures from regulators and competition authorities to ensure that they do not deter generic drug development. After all, there is a demand for medicines to be affordable, especially with the burden of unsustainable healthcare expenditures.

Source: CPhI Annual Report 2017