How Will REMS Change The Branded/Generic Pharmaceutical Dynamic?

By Gregory Fiore, MD, Chief Executive Officer, Fiore Healthcare Advisors LLC and Chief Medical Officer, SSI Strategy

As discussed in the New England Journal of Medicine on April 17, 2014 (Sarpatwari, Avorn, and Kesselheim), Risk Evaluation and Mitigation Systems (REMS) are being used as a source of competitive advantage by some pharmaceutical companies.

Researchers from the Brigham and Women's Hospital and Harvard Medical School published a Perspective in the New England Journal of Medicine (NEJM) describing possible outcomes resulting from intellectual property protection afforded to REMS. The Perspective cited an example whereby a manufacturer chose not to violate their REMS obligations by providing drug to a generic drug manufacturer. A second example described a manufacturer’s assertion that its REMS-enabled patent protection may be infringed in certain ways by a generic offering.

Stepping away from the legal details of these cases, three points about REMS may be helpful to consider when thinking through the future of the obligations and protections in this area.

First – REMS program development and execution is extremely resource intensive, both from a financial and human capital perspective. Much time and energy is spent developing and executing these programs. This is a labor of love (the program allows patients to benefit from needed products that might otherwise not be approved) and a necessity for a pharmaceutical manufacturer but the resource requirements are enormous. 

Second – as rigorous and standardized as REMS programs are in terms of training, documentation, and decision making, there are many subjective elements left to interpretation. Many key decision points rely on clinical judgment. Such judgment often arises from collaborative team discussions within product teams in clinically and scientifically motivated pharmaceutical companies.

Third – a point that was made in the NEJM Perspective and commonly accepted is that a REMS is a required condition for products that have risks which would outweigh potential benefits in the absence of the REMS.

In our view, generics manufacturing is a business involving more legal skill; sophisticated manufacturing capabilities; and hospital account contracting than medical judgment; clinical decision-making skills; and patient-centricity. Generic pharmaceuticals typically generate lower profit margin per sale than do branded pharmaceuticals, which requires generic companies to temper investment in areas not directly linked to return.

Putting this all together, I am not yet convinced it makes sense for the United States healthcare system to place its highest risk products into the hands of the generics industry, even with a shared REMS in place. Our view is that REMS is more than just a program to be implemented as a commodity layered onto generics manufacturing and distribution. We believe that REMS serves as a marker for a high quality, multi-stakeholder pharmacovigilance system in place to ensure safety of patients exposed to high-risk products.

Until we are able to tease out the intangible elements required to ensure safety of patients, we are best to leave the distribution of REMS-requiring products to companies that have demonstrated they are motivated, willing to invest, and capable of designing and implementing a REMS.