The CREATES Act & FAST Generics Act Violate IP Protections and Opens the Door to Unnecessary Litigation

Posted by Alexander Hendrie on Tuesday, June 6th, 2017, 4:00 PM PERMALINK

The House Energy and Commerce Committee is expected to soon consider H.R. 2430, the FDA Reauthorization Act, legislation to reauthorize the agency’s user fees for drugs and medical devices.

During consideration of this legislation, it is possible that members will consider amending the bill with several pieces of legislation that modify the FDA’s Risk Evaluation and Mitigation Strategies (REMS), a regulatory structure that applies to a small set of potentially dangerous drugs.

Specifically lawmakers may consider H.R. 2212, the “Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act,” and H.R. 2051, the “Fair Access for Safe and Timely" (FAST) Generics Act.

While these proposals are an honest attempt to increase access to medicines, they risk undermining intellectual property protection, open the door to unjustified litigation, endanger patient and researcher safety, and suppress innovation. 

The existing REMS regulatory structure is carefully balanced to promote safety, innovation, and access. These pieces of legislation would threaten that balance. As such, members of the Energy and Commerce Committee should reject both pieces of legislation.

Upends a Carefully Balanced, Working Regulatory System
REMS is a special regulatory process that affects a small set of about 40 highly advanced, yet potential dangerous drugs. This process is necessary because of the volatile nature of these medicines, and ensures they are efficiently developed and administered in a way that carefully balances property rights, safety, and access.

H.R. 2212 and H.R. 2051 modify this system by allowing generics to bypass FDA procedures that exist to ensure REMS medicines are safely developed. Under the proposal, a generic manufacturer is not required to include adequate safeguards for patients and researchers as a condition of authorization, and FDA is limited in its ability to deny or modify an authorization request. This lack of safety undermines the entire rationale for the REMS regulatory process.

Undermines Intellectual Property Rights
Patent exclusivity for medical development has been carefully and deliberately legislated to ensure that creativity, innovation, and medical growth are protected. However, exclusivity is limited to prevent against a monopoly and ensure that consumers have access to medicine at reasonable prices.

Although H.R. 2212 and H.R. 2051 aim to ensure bad actors do not abuse the regulatory system, the litigation system could create a system where innovators are forced to hand over their IP through the threat of litigation. This represents a potentially dangerous precedent that undermines property rights, resulting in more resources being devoted to fighting frivolous litigation and fewer resources to research and development costs.

Encourages Unnecessary Litigation
As noted above, the legislation creates a new litigation system that grants generic competitors seeking samples from an innovator the ability to launch litigation just 30 days after negotiation has begun --  essentially forcing innovators to hand over their IP or go to court.

If enacted into law, the CREATES Act and the FAST Generics Act would open the door to bad actors in the industry launching petty and unjustified litigation. This would be a handout to trial lawyers at the expense of innovators, consumers, and the healthcare system.

The legislation’s legal protections are so vague that  innovators may even be responsible for actions taken by a reckless generic competitor.

Proposed Changes Will Not Lower Costs

While both the CREATES Act and FAST Generics Act may be well meaning attempts to increase efficiency, they are flawed proposals. Lower health care costs will not be achieved through empowering flawed litigation or through changes to the regulatory process that fail to protect innovation or safety.

While supporters have claimed these proposals are a solution to reducing the cost of medicines, they may do the opposite by creating a more burdensome, litigious system that undermines innovation.

Costs associated with medical development are already significant. On average it costs $2.6 billion and more than a decade of research time for each new medicine that hits the market. Serious proposals to reduce costs should focus on increasing competition in a way that encourages innovation, limits meritless litigation, and protects safety.

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