The CREATES Act Would Create a Cause of Action to Obtain Restricted Product Sample and to Facilitate Shared REMS

By Kurt R. Karst –    

Earlier this week, Senators Patrick Leahy (D-VT), Chuck Grassley (R-IA), Amy Klobuchar (D-MN), and Mike Lee (R-UT) announced the introduction of bipartisan legislation that they say is intended to “end inappropriate delay tactics that are used by some brand-name drug manufacturers to block competition from more affordable generic drugs.” The bill, S. 3056, is known as the “Creating and Restoring Equal Access to Equivalent Samples Act” (or “CREATES Act”), and addresses both the availability of reference product sample when a product is either subject to a Risk Evaluation and Mitigation Strategies with Elements to Assure Safe Use (“ETASU REMS”) or is under a self-imposed restricted distribution system, and shared REMS negotiations.  The bill was immediately praised by several groups (see here, here, and here).  As we’ve previously noted (see our posts here, here, and here), the availability of product sample for reference products under a restricted distribution system and the issue of shared REMS have been the subject of increasing litigation. Reference product restricted distribution systems and generic drug availability have also piqued the interest of the Federal Trade Commission (see here). 

As noted above, the CREATES Act addresses both ends of the generic drug (and biological product) spectrum: the availability of reference product sample needed to conduct bioequivalence studies (or other testing) in order for a company to submit an ANDA, a 505(b)(2) NDA, or a PHS Act § 351(k) biosimilar application, and the negotiations that surround finalization of a REMS program needed to approve a generic drug application.

With respect to application submission, the CREATES Act would allow the sponsor of an ANDA, a 505(b)(2) NDA, or a biosimilar application (i.e., an “eligible product developer”) to bring an action in federal court to obtain from the brand-name sponsor of a drug or biological product subject to restricted distribution (and that is not in shortage) – either under an ETASU REMS or under a self-imposed restricted distribution system – the sample it needs to conduct testing to seek approval of a generic drug or biosimilar biological product.  Provided certain elements are met, a court may “order the license holder to provide to the eligible product developer without delay sufficient quantities of the covered product on commercially reasonable, market-based terms.”  The bill would also authorize a judge to award monetary damages to an eligible product developer in an amount “sufficient to deter the license holder from failing to provide other eligible product developers with sufficient quantities of a covered product on commercially reasonable, market-based terms. . . .”  The maximum monetary award would not be greater than the revenue that the brand-name license holder earned on the covered product during a period specified in the bill. 

With respect to application approval and shared REMS, we note that under the FDC Act brand-name and generic drug sponsors are generally expected to share a single REMS system. However, the statute allows for a deviation from that single, shared system under certain circumstances.  Specifically, FDC Act § 505-1(i)(1)(B) states:

A drug that is the subject of an [ANDA] and the listed drug shall use a single, shared system under [FDC Act § 505-1(f)]. [FDA] may waive the requirement under the preceding sentence for a drug that is the subject of an [ANDA], and permit the applicant to use a different, comparable aspect of the elements to assure safe use, if [FDA] determines that—

(i) the burden of creating a single, shared system outweighs the benefit of a single, system, taking into consideration the impact on health care providers, patients, the applicant for the [ANDA], and the holder of the [RLD]; or

(ii) an aspect of the [ETASU] for the applicable listed drug is claimed by a patent that has not expired or is a method or process that, as a trade secret, is entitled to protection, and the applicant for the [ANDA] certifies that it has sought a license for use of an aspect of the [ETASU] for the applicable listed drug and that it was unable to obtain a license.

FDA has allowed very few deviations from a single, shared REMS system (see here and here).

The CREATES Act would allow an eligible product developer to bring an action in federal court seeking an order that a brand-name company whose product is covered by an ETASU REMS: (1) “enter into a single, shared system of elements to assure safe use with the eligible product developer on commercially reasonable terms;” (2) “allow the eligible product developer to join a previously approved system of elements to assure safe use with respect to the covered product on commercially reasonable terms;” or (3) “demonstrate that [FDA] has waived the requirement for the covered product to be part of a single, shared system of elements to assure safe use.” The bill would also authorize a judge to award an eligible product developer reasonable attorney fees, costs of the civil action, and “a monetary amount sufficient to deter the license holder from failing to reach agreements that would allow other eligible product developers to participate in a single, shared system of elements to assure safe use on commercially reasonable terms.”  The maximum monetary award would not be greater than the revenue that the brand-name license holder earned on the covered product during a period specified in the bill (and that is different than the period identified for product sample purposes). 

Finally, the CREATES Act would create a limitation of liability on brand-name sponsors who provide product sample to eligible product developers. “A license holder shall not be liable for any claim arising out of the failure of an eligible product developer to follow adequate safe-guards to assure safe use of the covered product during development or testing activities described in this section, including transportation, handling, use, or disposal of the covered product by the eligible product developer,” states a provision in the bill. 

The CREATES Act is the latest effort by Congress to address restricted distribution product availability and shared REMS. Some aspects of the CREATES Act are clearly inspired by legislation introduced in 2014 and 2015 – specifically, the Fair Access for Safe and Timely Generics Act (“FAST Generics Act”) (H.R. 5657 and H.R. 2841) – but the CREATES Act goes further than previous legislation, allowing  eligible product developers to obtain a court order (see our previous post here).  The FAST Generics Act did not get much traction on Capitol Hill, but the CREATES Act might with heightened concerns over drug pricing.