The “Lowering Drug Prices by Once Again Putting Americans First” Executive Order addresses various FDA matters, such as importation from Canada and accelerated approval of generics and biosimilars. In this episode of Connected With Latham, Washington, D.C. partners Chris Schott, Ben Haas, and Bill McConagha analyze these FDA implications, and explore how the EO overlaps with five drug pricing bills championed by Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa). Also check out Chris’s interview with Life Sciences IP Review about industry impacts of the Grassley bills. And yes, it’s back: Read our bi-weekly Drug Pricing Digest on the website or subscribe to receive future editions in your inbox.
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(00:02):
Hello and welcometo Connected with Latham, where we discuss
ideas, legal developments, and businesstrends shaping the global economy.
This is the 17th episode of the Latham& Watkins Drug Pricing series,
and I'm Chris Schott, a partnerin the Healthcare & Life Sciences practice
in our Washington, D.C. office.
I focus my practice on all thingsmarket access, and that includes
manufacture, compliance relatedto the Medicare drug rebate program,
(00:24):
Medicare Parts B and D,and the 340B framework pricing program,
as well as, of course, implementationof the Inflation Reduction Act
and other health care reform initiativessuch as state laws.
Let me put in a quick plug.
I'm pleased to announce the relaunch ofthe Latham & Watkins Drug Pricing Digest,
where we track reports or coveragefrom the trade press,
government publicationsand releases, and court opinions.
(00:46):
We intend to distribute the digestat the start of every other week,
and if you want to get it in your inboxrather than just finding it online,
we'll include a subscriptionlink in the podcast notes.
Today, I'm happyto welcome two guests on the podcast
listening partnersBen Haas and Bill McConagha.
If you've tuned in to the podcastbefore then you'll be familiar with them
as they've both been guests previously.
But Ben, why don't we start with you?
(01:08):
Do you want to quickly introduce yourself?
Thank you.
Chris, I'm an FDA partner and global vicechair of the Latham’s
Healthcare & Life Sciencespractice group here in DC.
It's a pleasure to be here today.
Bill, how are you today?
Thanks, Chris.
I am great.
I am an FDA partner in Latham’sHealthcare & Life Sciences practice group.
Like Ben, before joining private practice,I worked at FDA for over 17 years
(01:31):
in a variety of capacities,
including a little over a decadein the US, chief counsel,
a period as an assistant commissioner,and then spent almost four years
as a health policy advisor on the SenateHealth Committee, which the listeners
may know is the committee of jurisdictionover 50 in the Senate.
Thanks, and thank you for joiningthe podcast today.
In each episode,we focus on a specific topic
(01:51):
that is relevant to market access,drug pricing, or the pharmaceutical
and health care sectors. More broadly.
And after discussing the substance,we ask the question, which Olympic sport
does it like?And we have the list of Olympic sports
here to seewhich most resembles the topic.
It was a strategy, complexityor frankly, level of conflict.
Seems like the introgot kind of long this time,
but we've finally made itto discussing today's topic.
(02:15):
On April 15th, Trumpsigned an executive order
titled Lowering Drug Prices by Once againPutting Americans First.
The document is not particularly long.
It's about four printed pages.
There are 14 sections, 12of which are substantive.
And obviously a number of the sectionsfocus on drug pricing,
(02:36):
and we'll talk a little bit about thattoward the end of the podcast.
But more interesting, and really the focusof our discussion here today
are the FDA related sectionsin the executive order.
And so what are those sections?
Well, today we plan to focusprimarily on two things here.
Section nine talks about acceleratingthe approval of generics and biosimilars.
And sectionten talks about drug importation programs
(02:58):
that states can runimport drugs in Canada.
We'll also talk a bit with Bill and Benabout some of the congressional proposals
that also target farmers activities,and the drug approval and pricing space.
So let's get started.
Bill, maybe we beginwith the importation concept.
So we know the idea of putting drugs fromCanada has been around for quite a while,
(03:20):
and President Trump appearsto be showing renewed interest here.
Can you provide some backgroundon what the section 804
provision here basically is?
Sure. Glad to do it. And thanks, Chris.
So, again, this is sectionten of the executive order in which,
the president is essentially directing,
HHS and the commissioner of FDA
(03:42):
within 90 days to take steps to streamline
and improve the importation programunder section 804, as you mentioned.
And so happy to to spend a momentdiscussing what this is.
So section 804 of the Food, Drugand Cosmetic Act, the Federal Food, Drug,
Cosmetic Act, was last amended in 2003.
So over 20 years ago,under the Medicare Modernization Act,
(04:04):
and it created a provision in the FederalFood, Drug, and Cosmetic Act
that allows for the importationof certain prescription drugs
from Canada by pharmacists and wholesalersin the United States.
And it's worthnoting that an essential feature of this,
this legislation,this this, provision in the Food, Drug,
Cosmetic Act, now is the idea that for anyimportation program to become effective,
(04:29):
there had to be a threshold determinationby the Secretary of HHS
that the importation would, one,
pose no additional riskto the public health and safety, and two
would result in a significant reductionin cost of the covered drugs
to the American consumer.
And I'll pause there on this ideathat it's American consumers.
(04:50):
So there actually had to besome demonstrable savings
to the consumer who was, you know,procuring the drug, not simply
a lower cost that got consumedby so-called middlemen, in the process.
So for nearly 20 years,the law lay dormant,
so to speak, as no secretaryof HHS made this certification
(05:10):
and this included both Republicanand Democratic administrations.
So there was, for any number of reasons,
a decision not to make the certification.
And so for many who follow this closely,
like, like those of us in this practice,there was this sense
that the certification provisionwas sort of a poison pill.
(05:30):
It was a threshold that simply couldn'tbe met to effectuate the law.
And so the law had this symbolic value,but it was never going to actually,
become effective.
So the breakthrough that brings us tothe discussion we're having today
occurred in October 2020,in President Trump's first administration.
So first, the secretary of HHS under Trumpand that first administration
(05:53):
made the certificationunder section 804 in in 2020.
And actually went so faras to promulgate a rulemaking
to kind of effectuatethe program, to basically build
the architectureof what this program would be.
And that is found in 21 CFR part 251.
So the new rulemaking,consistent with section 804,
(06:16):
allows for states to sponsorwhat are called SIPs or SIPs
and this acronym stands for a section 804
import program,which is truly a horrible acronym.
But that's that's what the SIP is.
And, under the SIP program,
a state or Indian tribe, is ableto propose kind of an importation program
(06:37):
and then as part of it, expectedto kind of manage and oversee
the importation of the drugsin a way that shows their safety
in a waythat assures the savings of the consumers,
and they have to follow fairly complexFDA process
involving kind of categorization,authorization, some testing.
I'll elaborate on this in a moment.
But much of this is, in the law itself.
And then, you know, finds,additional extension in this rulemaking
(07:02):
and I guess I'd say at the riskof oversimplifying this,
I think the easiest way
to think of the program is,is having two kind of big steps.
The first is the state or local government
submits this SIP to FDA, which lays out
its specific program,its partners, its safety controls.
(07:22):
And if FDA authorizes that authorizes
the SIP,then a huge step forward has been taken.
But there was a second piece of this,which is that the sponsor
must then submit a pre importation request
for separate reviewand authorization by FDA,
and this step calls for more detail
about the specific productsthat will be imported.
And it deals with some of the most complexfeatures of the law,
(07:46):
which relate to kind of mandatory testing,requirements,
to ensure that, the drugs are authentic,
clarity about who's going
to do that, testing,
clarity on how the product
will be labeledand some other very technical issues.
There are other important factorsto keep in mind as part of this.
You know, oneis that by terms of the statute,
(08:08):
certain drugs are not even eligiblefor inclusion in the SIP.
And this includes biologics.
It includes I.V.
drugs, products that are covered by a rim.
So almost by definition, it's
a limited universe of productsthat can come in under this program.
Typically there would be solid oral dosageor subcutaneous drugs.
And the theory isthese would be the blockbuster type drugs,
(08:29):
that are, you know,under a period of exclusivity, brand name
products in the United States for whichthere would be a price differential,
between the price for sale in the U.S.
and the price for sale in Canada.
Chris,the second point is to say that by law,
the supply chain has to be kind ofvery carefully limited here.
There is supposed to be one manufacturer,one foreign
(08:50):
seller, one importer,each with different responsibilities.
And so for this to work at all,there has to be some discipline
around the waythis does supply chain works.
So the state that has madethe most progress to date
in moving forward tothis is the state of Florida,
which submitted a sip through something
called the Florida Agency for Health CareAdministration, and it was revised
(09:12):
several timesbetween November 2020 and late, 2023.
And it was actually authorized by FDA.
The SIP was in January of 2024.
So notably, it was authorizedduring the Biden administration.
And so while the certification occurredunder the Trump administration
and the rulemaking,the program was promulgated
under the Trump administration.
(09:33):
The Biden administration took this a stepforward, and they authorized the SIP.
So Florida then submitted this pre
importation request,and it has not yet been approved.
And so the program has never gone live.
And towards the very end
of the Biden administrationin December of last year or December 2024,
after he granted the Florida Agencyfor Health Care
(09:54):
Administration an additional six monthsuntil July of this year
to complete the required steps
to get approval of the importationrequest and launch the SIP.
And so the idea is thatit is still very much alive and pending.
And now Trump is back, and the executiveorder seeks to make this,
a priority again.
And I see, just to wrap up the backgroundhere, kind of this
(10:18):
EO is a way to communicate thatthis is a policy priority, to the public.
At the same time, it's
kind of admonishing FDAto figure out how to move this forward.
And and I guess I should also note,just for the listeners
who don't follow this closely,that I'm focused on Florida
because they've made the most progressto date under this law.
But there are a number of other states
that that are working on mature programsand have submitted SIPs.
(10:40):
So, Colorado, Vermont,Maine, New Mexico also,
submitted SIPsthat that are not yet approved.
Yeah. Thanks, Bill.
Very helpful to lay out this background.
I'll note that Connecticut hasa pending bill that would,
you know, talk about how that state
is supposedly to thentry to also engage in this program.
So you mentioned that this has been aroundin the statute for quite a long time.
(11:01):
So what are some recent changes tothe section that you know for the program?
I don't know that there are any kindof major recent changes, at least,
that go beyond the kind ofthe last milestone in this, which was the,
extension of the time frame for,
the pre importation request,at the end of the Biden administration.
(11:22):
You know, I think the new story hereis, is the executive order,
from the Trump administration.
And I think fundamentally, it'sseeking to kind of accelerate approval
not only for perhaps Flor,but also to find a way to simplify,
the administration to the program.
I think what's buried in the executiveorder is this idea that,
for whatever reason, the pre importationrequest has been a stumbling block.
(11:42):
Why is it taking itsuch a long time for this to move forward?
Why haven't they gotten to. Yes.
I think the executive orders admonishingFDA to try and figure this out.
You know, in terms of recent develops,I will note that for whatever it's worth,
the new administration did pull downfrom FDA website a link to the Biden
executive order that expressed supportfor the CEP program.
(12:04):
I don't find that surprising, right?
When the administration takes downthe executive orders of the other,
it is certainly not to be interpretedas an act of hostility
towards the importation program.
I think quite the opposite.
As noted, this really, came to fruitionin the first Trump administration.
And so this is, you know,this is an extension of that.
I'll also note that as at leastit relates to the timing for Florida,
(12:27):
that the December 2024 letterfrom the Biden administration
that gave the Florida program, until July,
to kind of come back and try and solvethe problems in the importation requests.
Also,
says that Florida
could ask for another extensionby May 6th of this year if they need one.
So there's clearly a mechanism in place
(12:49):
to kind of extend the, review hereand work this out.
And, you know,it seems to all of us that the,
at this point that the Florida experienceis the bellwether.
That's very interesting to hearhow things have progressed
and what are some other factors, maybe,that are slowing down the progress
that's been around for a long time.
Florida has been added for a long time.
(13:09):
What are some other factors therethat might explain what's taking so long?
Well, that's a that's a great question.
I don't know the details of the preimportation requests
and where the hang ups are,
but I think what they highlight isthat there are complexities,
when the kind of
rubber meets the road, so to speak, here,which have to do with these questions
about how you're going to test
(13:30):
to prove the authenticity of the drugyou're bringing
in, how you're going to dealwith the labeling issue.
There are provisions in the rulemakingin the law
that talk about kind of compulsorysharing of information
by the brand name drug company,to kind of help assist with this process.
And my guess is thatthere have been stumbling blocks there.
I will note that just more generally,I think there are also
(13:50):
a variety of other potential obstacleshere that could slow things down.
Generally. You know,the first is litigation.
So if if one of these steps goes live,I think it's
almost certain that the brand namedrug manufacturers are going to sue.
So in 2020, when the rulemakingwas promulgated by the Trump
administration, Pharma, on behalf of,you know, the drug industry,
(14:11):
United States filed litigation,to try and stop the ship.
This was in a in a lawsuitfiled in federal court in DC.
And they argued, among other things,that the kind of compulsory data sharing
that I just referenced, the provision
of labels, these thingsviolated intellectual property rights.
Of the companies,they abridged free speech.
And I think it really interesting, kind of
(14:35):
cause of
action hereis this idea that they were uncompensated
takings under the,you know, the Constitution.
And so my, my sense is that those issueswill continue to be pursued.
The suit itself was dismissedin February 2023, on the grounds
that there was no particular shipauthorized at the time.
And so it never reached the merits,but it was dismissed without prejudice.
(14:58):
So if a ship goes live,I fully expect pharma will file again.
Another potential issue to think of inall of this is as at least
an obstacle, down the lineis, is, you know, the Canadian reaction.
So I don't know, the very latest,but the government of Canada has signaled
on many occasions that it's not goingto permit the sale of these Canadian
(15:18):
drugs into the U.Sunder the kind of terms laid out here.
And, and so they could try to block itfrom the source.
And, you know,
certainly the kind of currentpolitical dynamics relating to the tariffs
and the kind of the relationshipbetween the U.S.
and Canada right nowis a another complexity in all of this.
I think a related
practical question,frankly, just has to do with volumes.
(15:40):
So, you know, it's one thing if a SIP ortwo gets authorized, the United States.
But it's hard to imagine,as a practical matter, how this works
on a truly kind of widespread,systematic basis.
I think there are roughly 230 million
people in the United Statesthat roughly 40 million in Canada.
So it's not clear how Canadian pharmaciesare going to serve the local population
(16:02):
and then be able to serve
kind of eight timesthat, to their neighbor, to the south.
And it's just something to think about.
And I think thatwhat critics of the law would say is
that virtual reality means thatthe only way that this could really work,
if it was ever to work onkind of a widespread scale, would be that
people would be trained shipping drugsfrom elsewhere in the world through Canada
(16:23):
into the United States,which is, a precisely,
a risk that the law seeks to avoidor safeguard against,
but might become kind ofa real practical tension,
as we dealwith these kind of volume questions.
And I
guess I'll just add that, you know,finally, as I mentioned a moment ago,
the terms of the pre
importation plan are by themselvesunder the law, kind of quite complicated.
(16:46):
And, as with all such things,the devil is in the details, right?
The need for the testing,the labeling, the truncated,
supply chain or practical challengesthat may make it difficult
for widespread importation from Canada,even if some discreet, ships move forward.
Well, so it definitely sounds like thereare a lot of moving parts to track here.
And one question I've receivedmultiple times from manufacturers is
(17:10):
how would they find outif one of their, shall we say, brand
drugs might be a targetfor one of these importation programs?
And Bill,it sounds like based on the pathway
you've described with the brands,drug information having to be shared,
it seems pretty clear that a manufacturerwith a targeted drug
here would definitely become awarethat this process is in motion,
but nevertheless, it makes senseto track all these developments
(17:31):
so that there's no surpriseif something were to pop up.
And as part, I'll just addthat as part of the importation request,
the sponsors are obligated to identifythe products that they want to bring in.
So there is a mechanism to, identify
exactly what they're targetingon a program by program basis.
Yeah.So there would definitely be, some notice.
(17:52):
So maybe we now turn to Ben and talkabout section nine of the executive order,
which is titled Accelerating Competitionfor High Cost Prescription Drugs.
So it looks like the CEOthere is trying to speed up
the introductionof cheaper drugs into the market,
by calling for reports and recommendationson ways to accelerate approval
of generics, biosimilars, second and classand OTC over-the-counter medicines.
(18:14):
So, Ben, do you have a senseof what kind of actually
approaches President Trump,maybe seeking to pursue here?
Thank you.
Chris.
You know, I think reallythere are two, sections
within the executive orderthat should be reviewed in tandem here.
The first is, as you mentioned, sectionnine, the second would be section 13.
I think it would be helpful to level setwhat the,
(18:38):
text of the executive orderactually says on those issues
because they do have very similartimelines.
First, under section
nine, the executive order directsthat the FDA, within 180 days
or six months to issue reports,providing recommendations
for how to accelerate,the approval of generics,
(18:58):
biosimilar drugs and combination products,
to the market while maintaining,you know, FDA, his gold
standards of safetyand effectiveness of all products.
Second,
section 13, directs
not only the FDA, but the DOJ,
and the Department of Commerceand the FTC to issue a joint report.
(19:26):
Providing recommendations on how to reduce
any competitive behavior from big pharma,from pharma manufacturers.
We'll talk about a few elements of whatthat putative,
anti-competitive conduct looks like.
But taken together, both the FDAand these other,
other federal agencies have six months,to engage in a listening session
(19:48):
and to issue reports,on how to address this.
Now, if you look at the executive order
consistent with this white House,the preamble to it provides
a we made really good progress,during the first Trump term,
that progress was kneecapped,
for stalled by the Biden administration.
(20:08):
So many of the conceptsthat are teed up in the executive order
or what we sort of predict will bethe outcome of these ongoing reviews,
really do trace their provenanceto steps taken by the first Trump
administration,to lower, prescription drug costs
and to likewise, combat
perceived,any competitive behavior by big pharma.
(20:31):
So what are wetalking about in particular?
First,there were a series of recommendations
and policy efforts in the first Trumpadministration outside of you here.
The first was in 2017,
the FDA's DrugCompetition Action Plan, or DCAP,
which focused on improvinggeneric approval pathways for sponsors
(20:51):
and for his own internal processesto, accelerated
efficiency, closed loopholesand otherwise,
get around the delays that were perceivedto be ongoing with respect
to generic competition,particularly for high cost drugs.
Since 2017,
at a fairly highlevel, FDA has made it easier for sponsors
(21:14):
under the DCAP to,
proceed through the developmentand approval process,
among other things, of bagthat FDA issued a final guidance
on generic drug labeling.
In situations where their reference drug'slabeling is not updated,
really to allow, generic manufacturers
to get their drugs through the FDA processmore quickly.
(21:36):
Second, in 2018,
what I'll refer to as the drug pricingblueprint
official name, American Patientsfirst, the Trump administration blueprint
to lower drug prices and reduceout of pocket costs was released.
That document included approaches,
to impose value based purchasing options,pricing negotiations,
(22:00):
reform on RB drug acquisition,
site neutral payment policies,
and more generally,the promotion of biologic innovation.
In a married to improvementsto the generic approval pathway.
So that is another element we think
as part of FDA's ongoing review,they'll pick up that blueprint,
(22:21):
and carry it forward into the reportthat needs to be issued,
in six months,specifically this fall, in October.
Finally, I'll flag, the FDA final rule,
additional conditionsfor nonprescription use.
This should guide, the approach
to facilitating OTC switches.
(22:41):
Taking, prescription drug productsthat are only available at the pharmacy
behind the counter, to OTC statusthat can be purchased at outside
the counter or over-the-counter,I should say, in the pharmacy,
that final rule at an effective dateor has an effective date in May, May
27th, 2025, the final rule
(23:03):
was delayedby the administration, transition.
And what it does is it implementsthe second part of section
nine by establishing a pathwayto allow more drug products
to switch to OTC for quote unquote,additional conditions,
allowing sponsors to provide informationbeyond what can be provided
under the OTC drug labeling system, i.e.,the drug facts label.
(23:25):
This process and that final rulein the implementation of the OTC
rule is seen as a, priorityfor the new, FDA commissioner.
Yeah.
Thanks, Ben.
Thanks for working through all of thatand making the connection here
between the EOand and other existing initiatives.
And I think in that same vein,let's take a look at Congress.
So it seems like Congress also,of course, is concerned still with
(23:49):
the price for drugs and in particularthe behavior of foreign manufacturers,
where there seems to be alwaysthis allegation that manufacturers
trying to limit competitionthrough various means.
But then can you tell us a little about
what's happening on the Hillin that regard?
Well, it's an age old issue.
I've been doing this for 25 years,and since the first day started,
there have been, effortsby, you know, brand drug manufacturers
(24:12):
to, forestall or delaya generic competition.
Likewise, there've been effortsby the generic industry to facilitate
the ease of entry to get around,pharma patents,
to bring products to the marketmore quickly.
It's been an issue,as I noted for many years,
Congress picking up the baton, from Trump,
(24:35):
seems particularly eager to,
push for bills that would addresswhat they perceive to be, misconduct.
Particularly Senator ChuckGrassley is focused on
some of these practices that have grownin the industry over the years.
He's a sponsor of at least five bills
introduced, in the SenateJudiciary Committee in recent weeks.
(24:57):
Many of these bills have bipartisansupport, of both Republicans
and Democrats.
I'll address a few of those here.
The first and perhaps most interesting or
compelling is the stop stalling act,
which is officially entitledthe Stop Significant and Time Wasting
Abuse Limiting Legitimate Innovationof New Generics
(25:20):
act or Stop Stalling Actnow, who's coming up with these names?
I don't know. That is quite a mouthful.
But what it does and what it's referred tocolloquially is a sham act.
It's intended to stop Big Pharmafrom using so-called sham, citizen
petitions to forestall or significantlydelay, generic competition.
(25:44):
Chris, I should say a few wordson citizen petitions,
because when you take a step back,they are,
generally consideredimportant for the public health.
But a citizen
petition allows, is for any stakeholder,whether it's a member of industry,
an individual,
a public health group, etc., to file
(26:04):
a public petition with the FDA,
then ask FDA to take or refrain
from taking, the actionspecified in the citizen petition.
So it's a way for non-regulatedstakeholders, i.e.
individuals,to try to secure, an action, from the FDA
and FDA is generally subject to reviewto, respond to those submissions.
(26:29):
But, you know, like many other toolsin the regulatory toolkit,
citizen petitions can be abused,
if they are filed at the last minute,
simply to delay, a final approval of,follow on generic etc..
And, you know,certainly big Pharma has been, accused
of that type of misconduct,of not filing meritorious petitions,
(26:53):
but rather petitionsreally just intended to extend the clock.
Praying companies are
filing sham petitions, oftenperceived, to be at the 11th hour.
They raise dubious claims.
They waste FDA time and resources.
And ultimately, many of them,
if not the vast majority, are rejected.
(27:14):
You know, critics, of the processand the citizen petition process,
as I noted, you know, at 30,000ft, it'svery valuable to the public.
Have have argued that it's actually donemore, to,
farm the public health and to help it,
because it's become a tool in the toolkitas a way to delay generic competition.
(27:35):
And I should be clear herethat when we talk about delays,
they can be very financially significant.
So each day that a brand companymaintains, a market,
presence or monopoly, I should say,could mean millions of dollars.
So, we're not talking about a week,not being that big of a deal.
(27:57):
It can be quite a big dealwhen we talk about high value medication.
So the bill wouldthe Grassley bill would seek to curb,
those punitive abusesof the citizen petition process
by doing many things, among other things,it would grant FTC authority
to bring civil actionsagainst parties filing what are,
(28:19):
determined to be sham petitionswith the FDA.
Provides for penalties, up to and greater
than $50,000 per calendar day
of review or revenue earned by the sellerof the branded product
in the context of a sham citizen petition,and finally defines
a sham citizen petitionin a very specific way.
(28:41):
Objectiveand reasonableness of the petition.
Parties intention and, objective intent,
to delay approvalof a generic or biosimilar product.
And then the petition is part of a series,
petitions or,a pattern of conduct intended
to, forestall if not impede,generic competition altogether.
(29:05):
So, Chris, there's that Grassley bill,another proposed bill, the Drug
Competition Enhancement Act, also seeksto halt so-called product shopping,
which is generally viewed as a meansfor branded pharma,
to avoid generic competitionby doing what?
Well, what it would outlaware very minor small modifications,
(29:27):
to a drug or biologic,that are intended to extend a patent term
or to limit or delay,lower cost generic, market entry.
This is commonly referred to as producthopping.
You know, when you make a product,
change it in a new patentfor a very minor modification,
really just to first preventa generic, applicant
(29:49):
from obtaining,follow on approval, that prior formulation
to evergreen
the product preserve the competitive,
insulate and in perpetuity forever.
There are two types of producttopping that are addressed by this doll.
The first is a hard switch,which is when a brand of manufactured
(30:10):
discontinues or withdraws an application.
It introduces a foreign productwith pat protection
within a certain period relative to thatstatic or biosimilar approval.
The second is a soft switch,which is when a brand
manufacturer takes actionsthat would unfairly disadvantage
the listed retro reference productrelative to a follow on product.
(30:34):
So specific exemptionswould exist under this bill.
I urge everyone to read it.
But again,this is another, legislative effort
to avoid what is perceivedto be a pretty common tactic
by Big Pharma to preserve marketmonopolies over high value drugs.
Lastly, the
(30:54):
Judiciary Committee in the Senatehas also introduced three bills
that focus on using patent exclusivity
rules to enhance, competition.
One of these focuses on the ratherwell known or so called pay for delay
tactic of pharma industry, under which,
they would make small changes to theexisting practices intended to assist,
(31:18):
generic and biosimilar companies,through license agreements
and other means, to essentially engagein corporate or commercial agreements
to, bring generic into cooperation
to preserve the market for that product.
Thanks, Ben for walking through thesefirst two of the five bills.
(31:40):
I'm just happy that the word shamwill finally be defined legally.
I think in other word, that could use helphere is shambolic.
So we should look out for the next billthat maybe talks about that.
So those are the first two of thosefive bills.
There are three othersthat were introduced which also align with
a portion of the executive order.
And these other three billsseem to all have one theme in common,
(32:01):
namelythat they take a negative view of patents.
So I find that somewhat ironic.
Because the 30 year old frameworkestablished by Hatch-Waxman
and the Biologics Price CompetitionInnovation Act,
really has been the foundationfor the unparalleled life enhancing
and I would say,
life saving pharmaceutical innovationthat we've seen in this country.
So unfortunately, now, 30 years later,those very patents
(32:24):
that allow innovators
to benefit from their inventionsand recoup the significant outlay,
which, of course, then
is used for developing further treatmentsand further therapeutics,
and that those that that very regimeis somehow coming under a shadow.
Many of the provisions in these billsappear to be motivated by
the sentiment that is, takes a dimor negative view of patents
(32:45):
and the executive order, which was issuedafter these bills became public strikes.
But at the same court in section two,
Bill, do you have some thoughts on
how the Hatch-Waxman regimeis being regarded nowadays?
I think it's a fantastic question.
And, you know,going back to the importation issue
(33:05):
I was talking about earlier,
there are a lot of folks who have beenfollowing this for a long time
that have wondered, if there's a concernabout prices in the United States,
why don't we revisit the termsof Hatch-Waxman as opposed to, say,
open up our borders and find these otherways to kind of nibble around the edges?
Let's go to the heart of the issue,which are the,
you know, the terms of the Hatch-Waxman.
(33:28):
Provisions
that basically created the modern genericdrug industry in the United States.
I think others and I don't I would never
deign to speak for Senator Grassley,but I think others would say
that the, architecture of the,
you know, kind of the deals or equitiesin, Hatch-Waxman makes sense,
but there have been abusesof the patent system
(33:50):
that have led to perversionsof what's been intended there.
And so what we need to do to reallyeffectuate the true intent of Hatch-Waxman
is get our arms around some of theseanti-competitive activities. And,
and so I see both sides of that argument.
But I'm delighted to talk about,you know, very briefly,
the other three, billsjust around this out.
If, if you can Santa Cruz. Absolutely.
(34:13):
Please go ahead. Oh, it sounds good.
So, for the sake of our listeners,
in just the interest of time,I'll try and do this briefly, but,
there are indeed, three other bills.
And, I'll begin with one that plays offthe point that Ben was making
just a moment ago about pay for delay.
So, the first I'll talk aboutis to preserve access
to affordablegenerics and biosimilars act.
(34:33):
And this is indeed a bipartisan bill
that has been introducedin several previous Congresses.
And it would statutorily prohibitso-called pay for delay.
The concept that Ben was talking about atthe end of his remarks just a moment ago
and just, you know, again,as a reminder, pay for delay is
when a brand name drug companyand kind of an initial generic entrant
(34:54):
enter into a dealin which the generic company
is compensatedfor delaying entry into the market.
So the generic company
makes money because it's getting paidfor doing nothing.
The brand name company benefitsbecause it has a continued monopoly.
Same concept applies in the case of,you know, brand
name, biologicand a biosimilar interchangeable.
(35:16):
This idea is that the party thatsuffers in this is the American consumer
and the taxpayer, to the extent that,these are products that are reimbursed
because there's no lowering of of the costof these drugs in the marketplace.
So this bill attemptsto deal with pay for delay statutorily.
It also addressesso-called reverse payments,
(35:37):
which are settlementswhere transfers of value
were made to potential generic competitorsto settle claims of patent infringement.
Which gets to this point.
You just mentioned, Chris,about abuses in the patent system.
So, as the listeners may know, in 2013there was kind of a landmark Supreme Court
case called FTC v Watson Pharmaceuticals
(35:57):
that held that certain of these so-calledpay for delay agreements,
are prohibited, is anti-competitive.
And so what this bill would dois legislatively prohibit
such arrangements as in a competitivebased on certain recited findings.
You know, that these arrangements
are monopolistic, that they delaythe market of generics and biosimilars.
(36:17):
They're, you know, antitheticalto free competition and consumer interests
and most fundamentally,antitrust principles,
because these are really FTC bills,not FDA bills.
At their heart, though, they clearlyimpact FDA regulated products.
As with all these things,the devil is in the detail.
You know,
it's not clear to me that this legislationreally kind of clarifies current
(36:40):
uncertainties around the applicationof what it means to be anti-competitive.
It says that any agreement
providing to generic or biosimilarapplicant with, quote, anything of value,
including exclusive license, unquote,would be presumptively anticompetitive.
So it's essentially saying that the burdenis on those making the deal to basically
show that it's consistent with,you know, antitrust principles.
(37:05):
And there are certain exceptions herelaid out in the statute.
It does saythat some agreements are permissible.
If it can be shown,you know, that they are,
pro competitionor at least that the pro competition
aspects of them would outweighthe entire competition.
But basically it would doall of this legislatively.
It would grant FTC specific authorityto institute civil actions,
(37:27):
and it would grant the FTC authorityto get up to treble damages.
So there would be a clearfinancial penalty disincentive into
entering into these,these, these agreements.
Chris, the second bill
I want to touch on is the AffordablePrescriptions for Patients Act.
This is also a bipartisan bill.
This is also a bill that has beenintroduced in previous Congresses.
(37:48):
And it includes many of the same sponsorswho back to pay for delayed legislation.
We just discussed
the bill targetsmanipulation of the patent system
via what are called patent thickets,and the patent evergreen concept
that Ben just spoke about,
where pharma tries to extend patentsand thus essentially limit
the ability of lower cost alternativesto enter into the market.
(38:09):
It is incredibly technical,and I'm not an IP lawyer,
so I'm not going to attemptto get into the weeds.
I would simply confuse all of you,and I think with each sentence
will advertise that I was a history majorand not a scientist in college.
So I'll pause there, but just simply saythat we wanted to call it out today.
In the interest of being fulsome inkind of talking about these bills
and how they may relateto the executive order,
(38:32):
and urge listeners who may be interested
in looking at the bill more closelyto do so, because it is certainly a piece
of this current effort to promotecompetition and choice in the marketplace.
And to your
point, a moment ago,Chris, suspicious of patent abuses,
finally,the last bill to cover, is the Interagency
(38:53):
Patent Coordination and ImprovementAct of 2025.
Again, a bipartisan bill, again, onethat has been introduced in past Congress.
Its aim is to ensure more consistencybetween FDA
and the Patent and Trademark Office PTO.
So PTO, as as our listenersmay know, is supposed to get information
from FDA and other agencieswhen examining patents
(39:15):
to ensure that, in a sense,all the agencies are all on the same page,
have access to the same patent listings,and this bill
would enhance communications by,requiring kind of a report
on interagency exchanges and establishingan interagency task force on patents.
And it's intended,I think, to address the perception
(39:37):
that the applications, the productapproval
applications would get submittedto FDA for review and approval.
May include information relevant
to patent ability that has not been sharedwith the patent examiners.
And so the idea is to kind ofget the agencies together
to make surethey are seeing the same things,
but also to imposeaffirmative duties on the sponsors,
(40:01):
to be sharing the same typeof patent information
with both agencies to basically
reduce and competitive surprises.
And so to this fundamental questionyou ask when we open this up, Chris,
how does all of this relateto the executive order?
And in this case, particularly sectiontwo of the executive order?
I think this all all these billsjust remind us
(40:23):
that patents and antitrust
concepts are toolsthat, you know, provide,
you know, lawmakers and the executiveagencies, with opportunities
to try and promote, you know, genericentry into the marketplace.
Well, both.
Thanks very much for unpackingthese pretty dense technical provisions
that, like you said, really strayinto the intellectual property, field.
(40:45):
Maybe we can turn it back to Ben
here to wrap upthis FDA portion of the discussion here.
So, you know, Ben,how would you describe this executive
orders, possible impact on the FDAactivities in the coming months?
It's really impossible to predict.
Chris.
At this point,I think this is a perfect example
(41:06):
of, on the one hand, trying to empower
or, the executive order and via Congress,
the FDA to be an aggressiveand robust regulator
to combat a public health issuethat has been identified,
by the white House, high cost, products,facilitating generic entry, etc..
(41:27):
So, well, putativelyFDA would be given additional tools.
They'll have additional workif you marry that to the fact
that we are experiencing,in an ongoing way, a reduction in force.
Many of the folks the key, intellectual,
firepower at the agency,the institutional knowledge,
(41:47):
the folks that would actually implementthese new policies and rules are gone.
So it's difficult to predict, given
the relatively short timeline, six months,
whether or notwe'll actually see, any movement
to achieve, these policy objectives,given the ongoing reduction in force.
Well, thanks to
both of you for this fulsome discussionof how the, you know, relates to FDA
(42:11):
type issues and certainly this overlapwith the five Grassley bills.
So maybe to close out,
let me talk a little bitabout the drug pricing perspective here.
And I'll just highlight one aspectwhich is section three which addresses
the Inflation Reduction Act.
So for a while commentators had wonderedhow President Trump would deal
with the IRA because obviously it camefrom the prior administration.
(42:33):
What do you bandanna?What do you enhance it?
And so sectionthree in the executive order makes clear,
that Trump certainly intendsto use the IRA provisions.
So section three has, three pieces to it.
The first piece talks about askingthe Secretary of Health, Human Services
to issue guidance within 60 daysfor initial price applicability year 2028.
(42:56):
So there's been finalguidance issued for 2046 27.
So the next cycle would beto have proposed guidance for 2028.
The guidance for the prior ones2026 came out in March.
I mean, the initial guidanceand for version 87 that was issued in May.
So now 60 days from April 15thwhen this executive order was signed,
it doesn't seem to departtoo much from the cycle that we've seen
(43:19):
for the prior to two rounds herewith the proposed guidance.
The second subsection here,
talks about the part D redesign
and essentially premium stabilization.
So as we probably all recall,toward the end of last year,
there was an issue with part D premiumsincreasing unexpectedly
as a result of the changes,IRA was making to the part D benefit.
(43:43):
And the administration had toish had to set up
this demonstration projectto stabilize premiums.
So here within 100 days,there's supposed to be,
a recommendation on
how to best stabilizeand reduce Medicare Part D premiums.
The third piece here is interestingbecause again,
it touches on congressional prerogatives.
(44:05):
So here the Secretary is instructedto work with Congress to modify
the IRA's negotiation programby aligning the time periods
for eligibility between small moleculedrugs and biologics.
So, as it currently stands, aand the approved small molecule drug
can first become eligibleseven years after approval, while
a biologic first becomes eligibleafter 11 years.
(44:28):
So this so-called pill penalty
has been discussed widely,including in the last Congress.
And here, the executive order instructsthe Secretary to, quote, work
with Congress to modifythe law to align those two time periods.
If that were tocome to pass, it would be very interesting
to see how that would impactthe drugs already on the list.
(44:49):
Would some that might no longerbe eligible if the seven year period
for in these drugs becomes 11 years,but they fall out, how would that happen?
So definitely something to be focused onand to watch.
There's always a concern with budgetneutrality eliminating the so-called pill
penalty would exclude more drugsfrom the negotiation process for longer,
(45:09):
so it remains to be seenhow that might all be addressed.
Let me mention one more timethe relaunch of the bi weekly drug
pricing digest,
and we'll put a link for subscribingto that here in the show notes.
So with that,
we can maybe return to the questionwe had asked at the very beginning.
Which Olympic sport is it like, maybewe start with you, Ben, what do you think?
(45:29):
Which Olympic sport have you picked?
Well, I've thought long and hardabout this, Chris.
I would say we have an issueor a perceived issue of,
lack of, generic repetition,high drug prices, etc..
And we have talked about a lot ofdifferent tools to address that issue.
So I'm going to go with fencing.
(45:50):
We're going to throw a bunch of stuffagainst the wall and see what sticks.
Very good.
I really like thatanalogy. Bill, what have you come up with?
I fear it's going to pale in comparison.
My Olympic sport is trampolining,
and, many of you aren't even awarethat's an Olympic sport.
And here's why.
(46:11):
It's exciting.
It's kind of funto watch their highs and lows.
There are judges involved,so there's an element of intrigue,
like ice skating, right?What are the rules?
Do they really count?
But here's the most essential piece.
When I watch trampoline and I ask myself,what am I watching?
What is this?
And, I think there's kindof an element of, trying to see
(46:35):
what comes of all of these initiatives.
Are they politically symbolic?
Will they translateinto actually changes in the law?
Would they just translateinto kind of enforcing current law
more efficiently?
And and so I'm
very interested, to see what comes of it.
And I don't knowif that's an incredible time,
but I'm going todouble down on trampolining.
(46:57):
Very exciting.
I had to really discipline myself.
Yeah,to stay on the list of Olympic sports
because there's so many other thingsthat you could think of.
But I had to pick canoe slalomand I hadn't really heard of this before.
But essentially here you navigatea whitewater course, by passing
through 25 upstream and downstream gates,and it is quickly, at times as possible.
And it seems to me here, that'skind of what we're doing.
(47:19):
We're being thrown these gateswe have to pass through by the president.
We're being thrown more gatesto pass through by Congress.
And we have to react really quicklywhile we're on this water course,
you know, hurdling downstream,to figure out what's the best pathway to
to make it successfullythrough all these hurdles,
(47:39):
get our therapists to marketand and get reimbursement.
So I think thatwraps up the substance of our podcast.
And as always, we now have to figure outwhere do we go for the after party.
Bill, I think you had a good idea.
Where are we going?
Well,I live in the burbs and drive a minivan,
so I'm not equippedto suggest a place for a cool party.
(48:00):
So what I did wasI turned to, a much cooler colleague.
So I'll call out the great Meryl Bartlett,who, for listeners that don't know, is
a, a lawyer in RFD groupwho practices with me and Ben,
she is a fantastic attorney,an even better person.
And she has suggested Happy Gemini,which is a wine bar
with great handmade pizza.
(48:21):
Excellent. That sounds great.
Can't wait to go.
Thanks to Ben
Haas and Bill McConaghafor joining the podcast today and sharing
insights on the FDA-related provisionsand Trump's drug pricing executive order.
And thank you to our listenersfor checking out the Latham & Watkins
Drug Pricing series, which is partof our Connected with Latham podcast.
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(48:44):
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(49:07):
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(49:28):
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(49:48):
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Hello and welcometo Connected with Latham, where we discuss
ideas, legal developments, and businesstrends shaping the global economy.
This is the 17th episode of the Latham& Watkins Drug Pricing series,
and I'm Chris Schott, a partnerin the Healthcare & Life Sciences practice
in our Washington, D.C. office.
I focus my practice on all thingsmarket access, and that includes
manufacture, compliance relatedto the Medicare drug rebate program,
(00:24):
Medicare Parts B and D,and the 340B framework pricing program,
as well as, of course, implementationof the Inflation Reduction Act
and other health care reform initiativessuch as state laws.
Let me put in a quick plug.
I'm pleased to announce the relaunch ofthe Latham & Watkins Drug Pricing Digest,
where we track reports or coveragefrom the trade press,
government publicationsand releases, and court opinions.
(00:46):
We intend to distribute the digestat the start of every other week,
and if you want to get it in your inboxrather than just finding it online,
we'll include a subscriptionlink in the podcast notes.
Today, I'm happyto welcome two guests on the podcast
listening partnersBen Haas and Bill McConagha.
If you've tuned in to the podcastbefore then you'll be familiar with them
as they've both been guests previously.
But Ben, why don't we start with you?
(01:08):
Do you want to quickly introduce yourself?
Thank you.
Chris, I'm an FDA partner and global vicechair of the Latham’s
Healthcare & Life Sciencespractice group here in DC.
It's a pleasure to be here today.
Bill, how are you today?
Thanks, Chris.
I am great.
I am an FDA partner in Latham’sHealthcare & Life Sciences practice group.
Like Ben, before joining private practice,I worked at FDA for over 17 years
(01:31):
in a variety of capacities,
including a little over a decadein the US, chief counsel,
a period as an assistant commissioner,and then spent almost four years
as a health policy advisor on the SenateHealth Committee, which the listeners
may know is the committee of jurisdictionover 50 in the Senate.
Thanks, and thank you for joiningthe podcast today.
In each episode,we focus on a specific topic
(01:51):
that is relevant to market access,drug pricing, or the pharmaceutical
and health care sectors. More broadly.
And after discussing the substance,we ask the question, which Olympic sport
does it like?And we have the list of Olympic sports
here to seewhich most resembles the topic.
It was a strategy, complexityor frankly, level of conflict.
Seems like the introgot kind of long this time,
but we've finally made itto discussing today's topic.
(02:15):
On April 15th, Trumpsigned an executive order
titled Lowering Drug Prices by Once againPutting Americans First.
The document is not particularly long.
It's about four printed pages.
There are 14 sections, 12of which are substantive.
And obviously a number of the sectionsfocus on drug pricing,
(02:36):
and we'll talk a little bit about thattoward the end of the podcast.
But more interesting, and really the focusof our discussion here today
are the FDA related sectionsin the executive order.
And so what are those sections?
Well, today we plan to focusprimarily on two things here.
Section nine talks about acceleratingthe approval of generics and biosimilars.
And sectionten talks about drug importation programs
(02:58):
that states can runimport drugs in Canada.
We'll also talk a bit with Bill and Benabout some of the congressional proposals
that also target farmers activities,and the drug approval and pricing space.
So let's get started.
Bill, maybe we beginwith the importation concept.
So we know the idea of putting drugs fromCanada has been around for quite a while,
(03:20):
and President Trump appearsto be showing renewed interest here.
Can you provide some backgroundon what the section 804
provision here basically is?
Sure. Glad to do it. And thanks, Chris.
So, again, this is sectionten of the executive order in which,
the president is essentially directing,
HHS and the commissioner of FDA
(03:42):
within 90 days to take steps to streamline
and improve the importation programunder section 804, as you mentioned.
And so happy to to spend a momentdiscussing what this is.
So section 804 of the Food, Drugand Cosmetic Act, the Federal Food, Drug,
Cosmetic Act, was last amended in 2003.
So over 20 years ago,under the Medicare Modernization Act,
(04:04):
and it created a provision in the FederalFood, Drug, and Cosmetic Act
that allows for the importationof certain prescription drugs
from Canada by pharmacists and wholesalersin the United States.
And it's worthnoting that an essential feature of this,
this legislation,this this, provision in the Food, Drug,
Cosmetic Act, now is the idea that for anyimportation program to become effective,
(04:29):
there had to be a threshold determinationby the Secretary of HHS
that the importation would, one,
pose no additional riskto the public health and safety, and two
would result in a significant reductionin cost of the covered drugs
to the American consumer.
And I'll pause there on this ideathat it's American consumers.
(04:50):
So there actually had to besome demonstrable savings
to the consumer who was, you know,procuring the drug, not simply
a lower cost that got consumedby so-called middlemen, in the process.
So for nearly 20 years,the law lay dormant,
so to speak, as no secretaryof HHS made this certification
(05:10):
and this included both Republicanand Democratic administrations.
So there was, for any number of reasons,
a decision not to make the certification.
And so for many who follow this closely,
like, like those of us in this practice,there was this sense
that the certification provisionwas sort of a poison pill.
(05:30):
It was a threshold that simply couldn'tbe met to effectuate the law.
And so the law had this symbolic value,but it was never going to actually,
become effective.
So the breakthrough that brings us tothe discussion we're having today
occurred in October 2020,in President Trump's first administration.
So first, the secretary of HHS under Trumpand that first administration
(05:53):
made the certificationunder section 804 in in 2020.
And actually went so faras to promulgate a rulemaking
to kind of effectuatethe program, to basically build
the architectureof what this program would be.
And that is found in 21 CFR part 251.
So the new rulemaking,consistent with section 804,
(06:16):
allows for states to sponsorwhat are called SIPs or SIPs
and this acronym stands for a section 804
import program,which is truly a horrible acronym.
But that's that's what the SIP is.
And, under the SIP program,
a state or Indian tribe, is ableto propose kind of an importation program
(06:37):
and then as part of it, expectedto kind of manage and oversee
the importation of the drugsin a way that shows their safety
in a waythat assures the savings of the consumers,
and they have to follow fairly complexFDA process
involving kind of categorization,authorization, some testing.
I'll elaborate on this in a moment.
But much of this is, in the law itself.
And then, you know, finds,additional extension in this rulemaking
(07:02):
and I guess I'd say at the riskof oversimplifying this,
I think the easiest way
to think of the program is,is having two kind of big steps.
The first is the state or local government
submits this SIP to FDA, which lays out
its specific program,its partners, its safety controls.
(07:22):
And if FDA authorizes that authorizes
the SIP,then a huge step forward has been taken.
But there was a second piece of this,which is that the sponsor
must then submit a pre importation request
for separate reviewand authorization by FDA,
and this step calls for more detail
about the specific productsthat will be imported.
And it deals with some of the most complexfeatures of the law,
(07:46):
which relate to kind of mandatory testing,requirements,
to ensure that, the drugs are authentic,
clarity about who's going
to do that, testing,
clarity on how the product
will be labeledand some other very technical issues.
There are other important factorsto keep in mind as part of this.
You know, oneis that by terms of the statute,
(08:08):
certain drugs are not even eligiblefor inclusion in the SIP.
And this includes biologics.
It includes I.V.
drugs, products that are covered by a rim.
So almost by definition, it's
a limited universe of productsthat can come in under this program.
Typically there would be solid oral dosageor subcutaneous drugs.
And the theory isthese would be the blockbuster type drugs,
(08:29):
that are, you know,under a period of exclusivity, brand name
products in the United States for whichthere would be a price differential,
between the price for sale in the U.S.
and the price for sale in Canada.
Chris,the second point is to say that by law,
the supply chain has to be kind ofvery carefully limited here.
There is supposed to be one manufacturer,one foreign
(08:50):
seller, one importer,each with different responsibilities.
And so for this to work at all,there has to be some discipline
around the waythis does supply chain works.
So the state that has madethe most progress to date
in moving forward tothis is the state of Florida,
which submitted a sip through something
called the Florida Agency for Health CareAdministration, and it was revised
(09:12):
several timesbetween November 2020 and late, 2023.
And it was actually authorized by FDA.
The SIP was in January of 2024.
So notably, it was authorizedduring the Biden administration.
And so while the certification occurredunder the Trump administration
and the rulemaking,the program was promulgated
under the Trump administration.
(09:33):
The Biden administration took this a stepforward, and they authorized the SIP.
So Florida then submitted this pre
importation request,and it has not yet been approved.
And so the program has never gone live.
And towards the very end
of the Biden administrationin December of last year or December 2024,
after he granted the Florida Agencyfor Health Care
(09:54):
Administration an additional six monthsuntil July of this year
to complete the required steps
to get approval of the importationrequest and launch the SIP.
And so the idea is thatit is still very much alive and pending.
And now Trump is back, and the executiveorder seeks to make this,
a priority again.
And I see, just to wrap up the backgroundhere, kind of this
(10:18):
EO is a way to communicate thatthis is a policy priority, to the public.
At the same time, it's
kind of admonishing FDAto figure out how to move this forward.
And and I guess I should also note,just for the listeners
who don't follow this closely,that I'm focused on Florida
because they've made the most progressto date under this law.
But there are a number of other states
that that are working on mature programsand have submitted SIPs.
(10:40):
So, Colorado, Vermont,Maine, New Mexico also,
submitted SIPsthat that are not yet approved.
Yeah. Thanks, Bill.
Very helpful to lay out this background.
I'll note that Connecticut hasa pending bill that would,
you know, talk about how that state
is supposedly to thentry to also engage in this program.
So you mentioned that this has been aroundin the statute for quite a long time.
(11:01):
So what are some recent changes tothe section that you know for the program?
I don't know that there are any kindof major recent changes, at least,
that go beyond the kind ofthe last milestone in this, which was the,
extension of the time frame for,
the pre importation request,at the end of the Biden administration.
(11:22):
You know, I think the new story hereis, is the executive order,
from the Trump administration.
And I think fundamentally, it'sseeking to kind of accelerate approval
not only for perhaps Flor,but also to find a way to simplify,
the administration to the program.
I think what's buried in the executiveorder is this idea that,
for whatever reason, the pre importationrequest has been a stumbling block.
(11:42):
Why is it taking itsuch a long time for this to move forward?
Why haven't they gotten to. Yes.
I think the executive orders admonishingFDA to try and figure this out.
You know, in terms of recent develops,I will note that for whatever it's worth,
the new administration did pull downfrom FDA website a link to the Biden
executive order that expressed supportfor the CEP program.
(12:04):
I don't find that surprising, right?
When the administration takes downthe executive orders of the other,
it is certainly not to be interpretedas an act of hostility
towards the importation program.
I think quite the opposite.
As noted, this really, came to fruitionin the first Trump administration.
And so this is, you know,this is an extension of that.
I'll also note that as at leastit relates to the timing for Florida,
(12:27):
that the December 2024 letterfrom the Biden administration
that gave the Florida program, until July,
to kind of come back and try and solvethe problems in the importation requests.
Also,
says that Florida
could ask for another extensionby May 6th of this year if they need one.
So there's clearly a mechanism in place
(12:49):
to kind of extend the, review hereand work this out.
And, you know,it seems to all of us that the,
at this point that the Florida experienceis the bellwether.
That's very interesting to hearhow things have progressed
and what are some other factors, maybe,that are slowing down the progress
that's been around for a long time.
Florida has been added for a long time.
(13:09):
What are some other factors therethat might explain what's taking so long?
Well, that's a that's a great question.
I don't know the details of the preimportation requests
and where the hang ups are,
but I think what they highlight isthat there are complexities,
when the kind of
rubber meets the road, so to speak, here,which have to do with these questions
about how you're going to test
(13:30):
to prove the authenticity of the drugyou're bringing
in, how you're going to dealwith the labeling issue.
There are provisions in the rulemakingin the law
that talk about kind of compulsorysharing of information
by the brand name drug company,to kind of help assist with this process.
And my guess is thatthere have been stumbling blocks there.
I will note that just more generally,I think there are also
(13:50):
a variety of other potential obstacleshere that could slow things down.
Generally. You know,the first is litigation.
So if if one of these steps goes live,I think it's
almost certain that the brand namedrug manufacturers are going to sue.
So in 2020, when the rulemakingwas promulgated by the Trump
administration, Pharma, on behalf of,you know, the drug industry,
(14:11):
United States filed litigation,to try and stop the ship.
This was in a in a lawsuitfiled in federal court in DC.
And they argued, among other things,that the kind of compulsory data sharing
that I just referenced, the provision
of labels, these thingsviolated intellectual property rights.
Of the companies,they abridged free speech.
And I think it really interesting, kind of
(14:35):
cause of
action hereis this idea that they were uncompensated
takings under the,you know, the Constitution.
And so my, my sense is that those issueswill continue to be pursued.
The suit itself was dismissedin February 2023, on the grounds
that there was no particular shipauthorized at the time.
And so it never reached the merits,but it was dismissed without prejudice.
(14:58):
So if a ship goes live,I fully expect pharma will file again.
Another potential issue to think of inall of this is as at least
an obstacle, down the lineis, is, you know, the Canadian reaction.
So I don't know, the very latest,but the government of Canada has signaled
on many occasions that it's not goingto permit the sale of these Canadian
(15:18):
drugs into the U.Sunder the kind of terms laid out here.
And, and so they could try to block itfrom the source.
And, you know,
certainly the kind of currentpolitical dynamics relating to the tariffs
and the kind of the relationshipbetween the U.S.
and Canada right nowis a another complexity in all of this.
I think a related
practical question,frankly, just has to do with volumes.
(15:40):
So, you know, it's one thing if a SIP ortwo gets authorized, the United States.
But it's hard to imagine,as a practical matter, how this works
on a truly kind of widespread,systematic basis.
I think there are roughly 230 million
people in the United Statesthat roughly 40 million in Canada.
So it's not clear how Canadian pharmaciesare going to serve the local population
(16:02):
and then be able to serve
kind of eight timesthat, to their neighbor, to the south.
And it's just something to think about.
And I think thatwhat critics of the law would say is
that virtual reality means thatthe only way that this could really work,
if it was ever to work onkind of a widespread scale, would be that
people would be trained shipping drugsfrom elsewhere in the world through Canada
(16:23):
into the United States,which is, a precisely,
a risk that the law seeks to avoidor safeguard against,
but might become kind ofa real practical tension,
as we dealwith these kind of volume questions.
And I
guess I'll just add that, you know,finally, as I mentioned a moment ago,
the terms of the pre
importation plan are by themselvesunder the law, kind of quite complicated.
(16:46):
And, as with all such things,the devil is in the details, right?
The need for the testing,the labeling, the truncated,
supply chain or practical challengesthat may make it difficult
for widespread importation from Canada,even if some discreet, ships move forward.
Well, so it definitely sounds like thereare a lot of moving parts to track here.
And one question I've receivedmultiple times from manufacturers is
(17:10):
how would they find outif one of their, shall we say, brand
drugs might be a targetfor one of these importation programs?
And Bill,it sounds like based on the pathway
you've described with the brands,drug information having to be shared,
it seems pretty clear that a manufacturerwith a targeted drug
here would definitely become awarethat this process is in motion,
but nevertheless, it makes senseto track all these developments
(17:31):
so that there's no surpriseif something were to pop up.
And as part, I'll just addthat as part of the importation request,
the sponsors are obligated to identifythe products that they want to bring in.
So there is a mechanism to, identify
exactly what they're targetingon a program by program basis.
Yeah.So there would definitely be, some notice.
(17:52):
So maybe we now turn to Ben and talkabout section nine of the executive order,
which is titled Accelerating Competitionfor High Cost Prescription Drugs.
So it looks like the CEOthere is trying to speed up
the introductionof cheaper drugs into the market,
by calling for reports and recommendationson ways to accelerate approval
of generics, biosimilars, second and classand OTC over-the-counter medicines.
(18:14):
So, Ben, do you have a senseof what kind of actually
approaches President Trump,maybe seeking to pursue here?
Thank you.
Chris.
You know, I think reallythere are two, sections
within the executive orderthat should be reviewed in tandem here.
The first is, as you mentioned, sectionnine, the second would be section 13.
I think it would be helpful to level setwhat the,
(18:38):
text of the executive orderactually says on those issues
because they do have very similartimelines.
First, under section
nine, the executive order directsthat the FDA, within 180 days
or six months to issue reports,providing recommendations
for how to accelerate,the approval of generics,
(18:58):
biosimilar drugs and combination products,
to the market while maintaining,you know, FDA, his gold
standards of safetyand effectiveness of all products.
Second,
section 13, directs
not only the FDA, but the DOJ,
and the Department of Commerceand the FTC to issue a joint report.
(19:26):
Providing recommendations on how to reduce
any competitive behavior from big pharma,from pharma manufacturers.
We'll talk about a few elements of whatthat putative,
anti-competitive conduct looks like.
But taken together, both the FDAand these other,
other federal agencies have six months,to engage in a listening session
(19:48):
and to issue reports,on how to address this.
Now, if you look at the executive order
consistent with this white House,the preamble to it provides
a we made really good progress,during the first Trump term,
that progress was kneecapped,
for stalled by the Biden administration.
(20:08):
So many of the conceptsthat are teed up in the executive order
or what we sort of predict will bethe outcome of these ongoing reviews,
really do trace their provenanceto steps taken by the first Trump
administration,to lower, prescription drug costs
and to likewise, combat
perceived,any competitive behavior by big pharma.
(20:31):
So what are wetalking about in particular?
First,there were a series of recommendations
and policy efforts in the first Trumpadministration outside of you here.
The first was in 2017,
the FDA's DrugCompetition Action Plan, or DCAP,
which focused on improvinggeneric approval pathways for sponsors
(20:51):
and for his own internal processesto, accelerated
efficiency, closed loopholesand otherwise,
get around the delays that were perceivedto be ongoing with respect
to generic competition,particularly for high cost drugs.
Since 2017,
at a fairly highlevel, FDA has made it easier for sponsors
(21:14):
under the DCAP to,
proceed through the developmentand approval process,
among other things, of bagthat FDA issued a final guidance
on generic drug labeling.
In situations where their reference drug'slabeling is not updated,
really to allow, generic manufacturers
to get their drugs through the FDA processmore quickly.
(21:36):
Second, in 2018,
what I'll refer to as the drug pricingblueprint
official name, American Patientsfirst, the Trump administration blueprint
to lower drug prices and reduceout of pocket costs was released.
That document included approaches,
to impose value based purchasing options,pricing negotiations,
(22:00):
reform on RB drug acquisition,
site neutral payment policies,
and more generally,the promotion of biologic innovation.
In a married to improvementsto the generic approval pathway.
So that is another element we think
as part of FDA's ongoing review,they'll pick up that blueprint,
(22:21):
and carry it forward into the reportthat needs to be issued,
in six months,specifically this fall, in October.
Finally, I'll flag, the FDA final rule,
additional conditionsfor nonprescription use.
This should guide, the approach
to facilitating OTC switches.
(22:41):
Taking, prescription drug productsthat are only available at the pharmacy
behind the counter, to OTC statusthat can be purchased at outside
the counter or over-the-counter,I should say, in the pharmacy,
that final rule at an effective dateor has an effective date in May, May
27th, 2025, the final rule
(23:03):
was delayedby the administration, transition.
And what it does is it implementsthe second part of section
nine by establishing a pathwayto allow more drug products
to switch to OTC for quote unquote,additional conditions,
allowing sponsors to provide informationbeyond what can be provided
under the OTC drug labeling system, i.e.,the drug facts label.
(23:25):
This process and that final rulein the implementation of the OTC
rule is seen as a, priorityfor the new, FDA commissioner.
Yeah.
Thanks, Ben.
Thanks for working through all of thatand making the connection here
between the EOand and other existing initiatives.
And I think in that same vein,let's take a look at Congress.
So it seems like Congress also,of course, is concerned still with
(23:49):
the price for drugs and in particularthe behavior of foreign manufacturers,
where there seems to be alwaysthis allegation that manufacturers
trying to limit competitionthrough various means.
But then can you tell us a little about
what's happening on the Hillin that regard?
Well, it's an age old issue.
I've been doing this for 25 years,and since the first day started,
there have been, effortsby, you know, brand drug manufacturers
(24:12):
to, forestall or delaya generic competition.
Likewise, there've been effortsby the generic industry to facilitate
the ease of entry to get around,pharma patents,
to bring products to the marketmore quickly.
It's been an issue,as I noted for many years,
Congress picking up the baton, from Trump,
(24:35):
seems particularly eager to,
push for bills that would addresswhat they perceive to be, misconduct.
Particularly Senator ChuckGrassley is focused on
some of these practices that have grownin the industry over the years.
He's a sponsor of at least five bills
introduced, in the SenateJudiciary Committee in recent weeks.
(24:57):
Many of these bills have bipartisansupport, of both Republicans
and Democrats.
I'll address a few of those here.
The first and perhaps most interesting or
compelling is the stop stalling act,
which is officially entitledthe Stop Significant and Time Wasting
Abuse Limiting Legitimate Innovationof New Generics
(25:20):
act or Stop Stalling Actnow, who's coming up with these names?
I don't know. That is quite a mouthful.
But what it does and what it's referred tocolloquially is a sham act.
It's intended to stop Big Pharmafrom using so-called sham, citizen
petitions to forestall or significantlydelay, generic competition.
(25:44):
Chris, I should say a few wordson citizen petitions,
because when you take a step back,they are,
generally consideredimportant for the public health.
But a citizen
petition allows, is for any stakeholder,whether it's a member of industry,
an individual,
a public health group, etc., to file
(26:04):
a public petition with the FDA,
then ask FDA to take or refrain
from taking, the actionspecified in the citizen petition.
So it's a way for non-regulatedstakeholders, i.e.
individuals,to try to secure, an action, from the FDA
and FDA is generally subject to reviewto, respond to those submissions.
(26:29):
But, you know, like many other toolsin the regulatory toolkit,
citizen petitions can be abused,
if they are filed at the last minute,
simply to delay, a final approval of,follow on generic etc..
And, you know,certainly big Pharma has been, accused
of that type of misconduct,of not filing meritorious petitions,
(26:53):
but rather petitionsreally just intended to extend the clock.
Praying companies are
filing sham petitions, oftenperceived, to be at the 11th hour.
They raise dubious claims.
They waste FDA time and resources.
And ultimately, many of them,
if not the vast majority, are rejected.
(27:14):
You know, critics, of the processand the citizen petition process,
as I noted, you know, at 30,000ft, it'svery valuable to the public.
Have have argued that it's actually donemore, to,
farm the public health and to help it,
because it's become a tool in the toolkitas a way to delay generic competition.
(27:35):
And I should be clear herethat when we talk about delays,
they can be very financially significant.
So each day that a brand companymaintains, a market,
presence or monopoly, I should say,could mean millions of dollars.
So, we're not talking about a week,not being that big of a deal.
(27:57):
It can be quite a big dealwhen we talk about high value medication.
So the bill wouldthe Grassley bill would seek to curb,
those punitive abusesof the citizen petition process
by doing many things, among other things,it would grant FTC authority
to bring civil actionsagainst parties filing what are,
(28:19):
determined to be sham petitionswith the FDA.
Provides for penalties, up to and greater
than $50,000 per calendar day
of review or revenue earned by the sellerof the branded product
in the context of a sham citizen petition,and finally defines
a sham citizen petitionin a very specific way.
(28:41):
Objectiveand reasonableness of the petition.
Parties intention and, objective intent,
to delay approvalof a generic or biosimilar product.
And then the petition is part of a series,
petitions or,a pattern of conduct intended
to, forestall if not impede,generic competition altogether.
(29:05):
So, Chris, there's that Grassley bill,another proposed bill, the Drug
Competition Enhancement Act, also seeksto halt so-called product shopping,
which is generally viewed as a meansfor branded pharma,
to avoid generic competitionby doing what?
Well, what it would outlaware very minor small modifications,
(29:27):
to a drug or biologic,that are intended to extend a patent term
or to limit or delay,lower cost generic, market entry.
This is commonly referred to as producthopping.
You know, when you make a product,
change it in a new patentfor a very minor modification,
really just to first preventa generic, applicant
(29:49):
from obtaining,follow on approval, that prior formulation
to evergreen
the product preserve the competitive,
insulate and in perpetuity forever.
There are two types of producttopping that are addressed by this doll.
The first is a hard switch,which is when a brand of manufactured
(30:10):
discontinues or withdraws an application.
It introduces a foreign productwith pat protection
within a certain period relative to thatstatic or biosimilar approval.
The second is a soft switch,which is when a brand
manufacturer takes actionsthat would unfairly disadvantage
the listed retro reference productrelative to a follow on product.
(30:34):
So specific exemptionswould exist under this bill.
I urge everyone to read it.
But again,this is another, legislative effort
to avoid what is perceivedto be a pretty common tactic
by Big Pharma to preserve marketmonopolies over high value drugs.
Lastly, the
(30:54):
Judiciary Committee in the Senatehas also introduced three bills
that focus on using patent exclusivity
rules to enhance, competition.
One of these focuses on the ratherwell known or so called pay for delay
tactic of pharma industry, under which,
they would make small changes to theexisting practices intended to assist,
(31:18):
generic and biosimilar companies,through license agreements
and other means, to essentially engagein corporate or commercial agreements
to, bring generic into cooperation
to preserve the market for that product.
Thanks, Ben for walking through thesefirst two of the five bills.
(31:40):
I'm just happy that the word shamwill finally be defined legally.
I think in other word, that could use helphere is shambolic.
So we should look out for the next billthat maybe talks about that.
So those are the first two of thosefive bills.
There are three othersthat were introduced which also align with
a portion of the executive order.
And these other three billsseem to all have one theme in common,
(32:01):
namelythat they take a negative view of patents.
So I find that somewhat ironic.
Because the 30 year old frameworkestablished by Hatch-Waxman
and the Biologics Price CompetitionInnovation Act,
really has been the foundationfor the unparalleled life enhancing
and I would say,
life saving pharmaceutical innovationthat we've seen in this country.
So unfortunately, now, 30 years later,those very patents
(32:24):
that allow innovators
to benefit from their inventionsand recoup the significant outlay,
which, of course, then
is used for developing further treatmentsand further therapeutics,
and that those that that very regimeis somehow coming under a shadow.
Many of the provisions in these billsappear to be motivated by
the sentiment that is, takes a dimor negative view of patents
(32:45):
and the executive order, which was issuedafter these bills became public strikes.
But at the same court in section two,
Bill, do you have some thoughts on
how the Hatch-Waxman regimeis being regarded nowadays?
I think it's a fantastic question.
And, you know,going back to the importation issue
(33:05):
I was talking about earlier,
there are a lot of folks who have beenfollowing this for a long time
that have wondered, if there's a concernabout prices in the United States,
why don't we revisit the termsof Hatch-Waxman as opposed to, say,
open up our borders and find these otherways to kind of nibble around the edges?
Let's go to the heart of the issue,which are the,
you know, the terms of the Hatch-Waxman.
(33:28):
Provisions
that basically created the modern genericdrug industry in the United States.
I think others and I don't I would never
deign to speak for Senator Grassley,but I think others would say
that the, architecture of the,
you know, kind of the deals or equitiesin, Hatch-Waxman makes sense,
but there have been abusesof the patent system
(33:50):
that have led to perversionsof what's been intended there.
And so what we need to do to reallyeffectuate the true intent of Hatch-Waxman
is get our arms around some of theseanti-competitive activities. And,
and so I see both sides of that argument.
But I'm delighted to talk about,you know, very briefly,
the other three, billsjust around this out.
If, if you can Santa Cruz. Absolutely.
(34:13):
Please go ahead. Oh, it sounds good.
So, for the sake of our listeners,
in just the interest of time,I'll try and do this briefly, but,
there are indeed, three other bills.
And, I'll begin with one that plays offthe point that Ben was making
just a moment ago about pay for delay.
So, the first I'll talk aboutis to preserve access
to affordablegenerics and biosimilars act.
(34:33):
And this is indeed a bipartisan bill
that has been introducedin several previous Congresses.
And it would statutorily prohibitso-called pay for delay.
The concept that Ben was talking about atthe end of his remarks just a moment ago
and just, you know, again,as a reminder, pay for delay is
when a brand name drug companyand kind of an initial generic entrant
(34:54):
enter into a dealin which the generic company
is compensatedfor delaying entry into the market.
So the generic company
makes money because it's getting paidfor doing nothing.
The brand name company benefitsbecause it has a continued monopoly.
Same concept applies in the case of,you know, brand
name, biologicand a biosimilar interchangeable.
(35:16):
This idea is that the party thatsuffers in this is the American consumer
and the taxpayer, to the extent that,these are products that are reimbursed
because there's no lowering of of the costof these drugs in the marketplace.
So this bill attemptsto deal with pay for delay statutorily.
It also addressesso-called reverse payments,
(35:37):
which are settlementswhere transfers of value
were made to potential generic competitorsto settle claims of patent infringement.
Which gets to this point.
You just mentioned, Chris,about abuses in the patent system.
So, as the listeners may know, in 2013there was kind of a landmark Supreme Court
case called FTC v Watson Pharmaceuticals
(35:57):
that held that certain of these so-calledpay for delay agreements,
are prohibited, is anti-competitive.
And so what this bill would dois legislatively prohibit
such arrangements as in a competitivebased on certain recited findings.
You know, that these arrangements
are monopolistic, that they delaythe market of generics and biosimilars.
(36:17):
They're, you know, antitheticalto free competition and consumer interests
and most fundamentally,antitrust principles,
because these are really FTC bills,not FDA bills.
At their heart, though, they clearlyimpact FDA regulated products.
As with all these things,the devil is in the detail.
You know,
it's not clear to me that this legislationreally kind of clarifies current
(36:40):
uncertainties around the applicationof what it means to be anti-competitive.
It says that any agreement
providing to generic or biosimilarapplicant with, quote, anything of value,
including exclusive license, unquote,would be presumptively anticompetitive.
So it's essentially saying that the burdenis on those making the deal to basically
show that it's consistent with,you know, antitrust principles.
(37:05):
And there are certain exceptions herelaid out in the statute.
It does saythat some agreements are permissible.
If it can be shown,you know, that they are,
pro competitionor at least that the pro competition
aspects of them would outweighthe entire competition.
But basically it would doall of this legislatively.
It would grant FTC specific authorityto institute civil actions,
(37:27):
and it would grant the FTC authorityto get up to treble damages.
So there would be a clearfinancial penalty disincentive into
entering into these,these, these agreements.
Chris, the second bill
I want to touch on is the AffordablePrescriptions for Patients Act.
This is also a bipartisan bill.
This is also a bill that has beenintroduced in previous Congresses.
(37:48):
And it includes many of the same sponsorswho back to pay for delayed legislation.
We just discussed
the bill targetsmanipulation of the patent system
via what are called patent thickets,and the patent evergreen concept
that Ben just spoke about,
where pharma tries to extend patentsand thus essentially limit
the ability of lower cost alternativesto enter into the market.
(38:09):
It is incredibly technical,and I'm not an IP lawyer,
so I'm not going to attemptto get into the weeds.
I would simply confuse all of you,and I think with each sentence
will advertise that I was a history majorand not a scientist in college.
So I'll pause there, but just simply saythat we wanted to call it out today.
In the interest of being fulsome inkind of talking about these bills
and how they may relateto the executive order,
(38:32):
and urge listeners who may be interested
in looking at the bill more closelyto do so, because it is certainly a piece
of this current effort to promotecompetition and choice in the marketplace.
And to your
point, a moment ago,Chris, suspicious of patent abuses,
finally,the last bill to cover, is the Interagency
(38:53):
Patent Coordination and ImprovementAct of 2025.
Again, a bipartisan bill, again, onethat has been introduced in past Congress.
Its aim is to ensure more consistencybetween FDA
and the Patent and Trademark Office PTO.
So PTO, as as our listenersmay know, is supposed to get information
from FDA and other agencieswhen examining patents
(39:15):
to ensure that, in a sense,all the agencies are all on the same page,
have access to the same patent listings,and this bill
would enhance communications by,requiring kind of a report
on interagency exchanges and establishingan interagency task force on patents.
And it's intended,I think, to address the perception
(39:37):
that the applications, the productapproval
applications would get submittedto FDA for review and approval.
May include information relevant
to patent ability that has not been sharedwith the patent examiners.
And so the idea is to kind ofget the agencies together
to make surethey are seeing the same things,
but also to imposeaffirmative duties on the sponsors,
(40:01):
to be sharing the same typeof patent information
with both agencies to basically
reduce and competitive surprises.
And so to this fundamental questionyou ask when we open this up, Chris,
how does all of this relateto the executive order?
And in this case, particularly sectiontwo of the executive order?
I think this all all these billsjust remind us
(40:23):
that patents and antitrust
concepts are toolsthat, you know, provide,
you know, lawmakers and the executiveagencies, with opportunities
to try and promote, you know, genericentry into the marketplace.
Well, both.
Thanks very much for unpackingthese pretty dense technical provisions
that, like you said, really strayinto the intellectual property, field.
(40:45):
Maybe we can turn it back to Ben
here to wrap upthis FDA portion of the discussion here.
So, you know, Ben,how would you describe this executive
orders, possible impact on the FDAactivities in the coming months?
It's really impossible to predict.
Chris.
At this point,I think this is a perfect example
(41:06):
of, on the one hand, trying to empower
or, the executive order and via Congress,
the FDA to be an aggressiveand robust regulator
to combat a public health issuethat has been identified,
by the white House, high cost, products,facilitating generic entry, etc..
(41:27):
So, well, putativelyFDA would be given additional tools.
They'll have additional workif you marry that to the fact
that we are experiencing,in an ongoing way, a reduction in force.
Many of the folks the key, intellectual,
firepower at the agency,the institutional knowledge,
(41:47):
the folks that would actually implementthese new policies and rules are gone.
So it's difficult to predict, given
the relatively short timeline, six months,
whether or notwe'll actually see, any movement
to achieve, these policy objectives,given the ongoing reduction in force.
Well, thanks to
both of you for this fulsome discussionof how the, you know, relates to FDA
(42:11):
type issues and certainly this overlapwith the five Grassley bills.
So maybe to close out,
let me talk a little bitabout the drug pricing perspective here.
And I'll just highlight one aspectwhich is section three which addresses
the Inflation Reduction Act.
So for a while commentators had wonderedhow President Trump would deal
with the IRA because obviously it camefrom the prior administration.
(42:33):
What do you bandanna?What do you enhance it?
And so sectionthree in the executive order makes clear,
that Trump certainly intendsto use the IRA provisions.
So section three has, three pieces to it.
The first piece talks about askingthe Secretary of Health, Human Services
to issue guidance within 60 daysfor initial price applicability year 2028.
(42:56):
So there's been finalguidance issued for 2046 27.
So the next cycle would beto have proposed guidance for 2028.
The guidance for the prior ones2026 came out in March.
I mean, the initial guidanceand for version 87 that was issued in May.
So now 60 days from April 15thwhen this executive order was signed,
it doesn't seem to departtoo much from the cycle that we've seen
(43:19):
for the prior to two rounds herewith the proposed guidance.
The second subsection here,
talks about the part D redesign
and essentially premium stabilization.
So as we probably all recall,toward the end of last year,
there was an issue with part D premiumsincreasing unexpectedly
as a result of the changes,IRA was making to the part D benefit.
(43:43):
And the administration had toish had to set up
this demonstration projectto stabilize premiums.
So here within 100 days,there's supposed to be,
a recommendation on
how to best stabilizeand reduce Medicare Part D premiums.
The third piece here is interestingbecause again,
it touches on congressional prerogatives.
(44:05):
So here the Secretary is instructedto work with Congress to modify
the IRA's negotiation programby aligning the time periods
for eligibility between small moleculedrugs and biologics.
So, as it currently stands, aand the approved small molecule drug
can first become eligibleseven years after approval, while
a biologic first becomes eligibleafter 11 years.
(44:28):
So this so-called pill penalty
has been discussed widely,including in the last Congress.
And here, the executive order instructsthe Secretary to, quote, work
with Congress to modifythe law to align those two time periods.
If that were tocome to pass, it would be very interesting
to see how that would impactthe drugs already on the list.
(44:49):
Would some that might no longerbe eligible if the seven year period
for in these drugs becomes 11 years,but they fall out, how would that happen?
So definitely something to be focused onand to watch.
There's always a concern with budgetneutrality eliminating the so-called pill
penalty would exclude more drugsfrom the negotiation process for longer,
(45:09):
so it remains to be seenhow that might all be addressed.
Let me mention one more timethe relaunch of the bi weekly drug
pricing digest,
and we'll put a link for subscribingto that here in the show notes.
So with that,
we can maybe return to the questionwe had asked at the very beginning.
Which Olympic sport is it like, maybewe start with you, Ben, what do you think?
(45:29):
Which Olympic sport have you picked?
Well, I've thought long and hardabout this, Chris.
I would say we have an issueor a perceived issue of,
lack of, generic repetition,high drug prices, etc..
And we have talked about a lot ofdifferent tools to address that issue.
So I'm going to go with fencing.
(45:50):
We're going to throw a bunch of stuffagainst the wall and see what sticks.
Very good.
I really like thatanalogy. Bill, what have you come up with?
I fear it's going to pale in comparison.
My Olympic sport is trampolining,
and, many of you aren't even awarethat's an Olympic sport.
And here's why.
(46:11):
It's exciting.
It's kind of funto watch their highs and lows.
There are judges involved,so there's an element of intrigue,
like ice skating, right?What are the rules?
Do they really count?
But here's the most essential piece.
When I watch trampoline and I ask myself,what am I watching?
What is this?
And, I think there's kindof an element of, trying to see
(46:35):
what comes of all of these initiatives.
Are they politically symbolic?
Will they translateinto actually changes in the law?
Would they just translateinto kind of enforcing current law
more efficiently?
And and so I'm
very interested, to see what comes of it.
And I don't knowif that's an incredible time,
but I'm going todouble down on trampolining.
(46:57):
Very exciting.
I had to really discipline myself.
Yeah,to stay on the list of Olympic sports
because there's so many other thingsthat you could think of.
But I had to pick canoe slalomand I hadn't really heard of this before.
But essentially here you navigatea whitewater course, by passing
through 25 upstream and downstream gates,and it is quickly, at times as possible.
And it seems to me here, that'skind of what we're doing.
(47:19):
We're being thrown these gateswe have to pass through by the president.
We're being thrown more gatesto pass through by Congress.
And we have to react really quicklywhile we're on this water course,
you know, hurdling downstream,to figure out what's the best pathway to
to make it successfullythrough all these hurdles,
(47:39):
get our therapists to marketand and get reimbursement.
So I think thatwraps up the substance of our podcast.
And as always, we now have to figure outwhere do we go for the after party.
Bill, I think you had a good idea.
Where are we going?
Well,I live in the burbs and drive a minivan,
so I'm not equippedto suggest a place for a cool party.
(48:00):
So what I did wasI turned to, a much cooler colleague.
So I'll call out the great Meryl Bartlett,who, for listeners that don't know, is
a, a lawyer in RFD groupwho practices with me and Ben,
she is a fantastic attorney,an even better person.
And she has suggested Happy Gemini,which is a wine bar
with great handmade pizza.
(48:21):
Excellent. That sounds great.
Can't wait to go.
Thanks to Ben
Haas and Bill McConaghafor joining the podcast today and sharing
insights on the FDA-related provisionsand Trump's drug pricing executive order.
And thank you to our listenersfor checking out the Latham & Watkins
Drug Pricing series, which is partof our Connected with Latham podcast.
You can subscribe and listen to newand archived episodes of licensed podcasts
(48:44):
on LW.com, Apple Podcasts, Spotify,or anywhere else you listen to podcasts.
If you have questionsor would like additional information,
please email us using the linkslocated in the show description.
We hope you'll join us again next time.
This podcast is providedas a service of Latham and Watkins LLP.
Listening to this podcast does not create
an attorney client relationshipbetween you and Latham and Watkins LLP,
(49:07):
and you should not send confidentialinformation to Latham and Watkins LLP.
While we make every effortto assure that the content of this
podcast is accurate, comprehensiveand current, we do not warrant
or guarantee any of those things,and you may not rely on this podcast
as a substitute for legal researchand or consulting a qualified attorney.
Listening to this podcast
(49:28):
is not a substitute for engaging a lawyerto advise you on your individual needs,
should you require legal adviceon the issues
covered in this podcast,please consult a qualified attorney.
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Portions of this communicationcontain attorney advertising.
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