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Drug maker's legal battle with the FDA delays generic competition

Endo Pharmaceuticals games the system by asking the FDA to rule that an old version of its drug is unsafe

It is a highly popular prescription medicine. Unfortunately, Opana is also highly popular in the wrong circles.

The drug is an opioid pain reliever similar to OxyContin. And like OxyContin, Opana is often abused. Millions of people throughout the nation crush prescription opioids like these (to defeat the pills’ extended release design), then inject or snort the medications in order to get a quick, powerful high.

The results have been devastating. Since 2003, more people have died each year from opioid abuse than from heroin and cocaine combined. Close to 15,000 opioid abusers died from overdoses in 2008, and more than 475,000 abusers were sent to emergency rooms in 2009. And every year, the number of opioid abusers—and fatalities—continues to climb. According to the Centers for Disease Control and Prevention, prescription opioid abuse in the U.S. is “a growing, deadly epidemic.”

In response, the Food and Drug Administration (FDA) has pressured the makers of prescription opioids to develop abuse-resistant versions, says Prof. Marsha Cohen of University of California Hastings Law School. Endo Pharmaceuticals, the manufacturer of Opana, complied. Endo began selling a crush-resistant version of its drug in February 2012 and ceased sales of its original version a few months later, in May.

Endo didn’t stop there, however. In August, the company petitioned the FDA to rule that Endo withdrew the original version of Opana for safety reasons. When the agency didn’t respond quickly enough, Endo filed suit Nov. 30, asking the federal district court in Washington, D.C., to force the agency to make a ruling. 

Why was Endo so impatient? Because Endo’s patent on the original formulation of Opana was about to expire, and two rival drug makers were poised to sell generic versions of the drug starting Jan. 1. These generics could not be sold, however, if the FDA were to rule that the original version of Opana was withdrawn for safety reasons. Such a ruling would postpone the competition to Endo’s second-biggest-selling drug, which earns the company hundreds of millions of dollars per year.

If Endo wins its legal battle with the FDA, the company will have pioneered a novel way to forestall generic competition, according to many drug law experts. But it is unclear if Endo will succeed. “I’m sure other drug companies will be looking at this really closely because they are looking for avenues to protect their revenue,” says Anthony Fitzpatrick, a partner at Duane Morris.

Gaming the System

Innovative drug companies (and their innovative lawyers) have come up with a variety of ways to game the legal system in order to delay generic competition. One common technique is “evergreening” or “product hopping”: Before the patent on a popular drug expires, the manufacturer obtains a patent on a slightly modified version of the drug. For instance, the new version may be a capsule instead of a tablet; the amount of the active ingredient may be increased, so fewer pills need be consumed at one time; or the new version may have an extended time release formula. There are all sorts of possible modifications. 

The manufacturer then replaces the old version of the drug with the new version, forcing doctors to prescribe the new version. Physicians become accustomed to prescribing the new version, and because there’s no generic of the new version, patients and health care companies must pay top dollar for this medicine.

Once they become available, generics of the old version offer little competition. The old version isn’t identical to the new version, so a pharmacy can’t substitute one for the other. In order to buy the old, cheaper, generic version of a drug, patients or health care companies must have their doctors specifically prescribe the old version. This rarely happens, so generics of the old version gain little traction in the market.

Safe Measure

Endo’s new twist on product hopping would prevent doctors from prescribing the old version of a drug. In this case, if the FDA determines that Endo withdrew the old version of Opana for safety reasons, no one could market that old, unsafe version. Endo could sell its new, safer—and patent-protected—version without the possibility of any generic competition.

Endo’s clever stratagem, however, could fail. The FDA could rule that Endo’s withdrawal of the original version of Opana was not justified by safety concerns. 

Endo stated that the original version of Opana was safe when it asked the FDA to approve the drug. The FDA subsequently found the drug was safe. So why should the drug now be considered unsafe? Endo might argue that a new, crush-resistant version discourages abuse and is therefore safer. But the FDA has never before held that a drug was unsafe simply because a new, safer version was available. “Safer is not the [legal] standard. For instance, you can buy both aspirin and enteric-coated aspirin, which is safer for users’ stomachs,” Cohen says. “Just because there’s a safer drug, that doesn’t mean the old drug is unsafe.”

Perhaps the original version of Opana always was unsafe because it could easily be abused. That, however, could be a tricky argument for Endo to make. The FDA has never previously found a drug to be unsafe simply because it could be abused, according to papers the agency filed in its litigation with Endo. “The FDA characterizes this as a novel case,” says James Czaban, chair of the FDA practice group at Wiley Rein.

Up in the Air

If Endo prevails in this case, the makers of other patented drugs could follow in its footsteps. “This is not a unique situation. There are quite a lot of pain medications, and abuse of them is common,” Fitzpatrick says. 

Moreover, the strategy Endo pioneered needn’t be limited to pain medications. “Safety issues apply to all drugs. The broader issue of safety and withdrawal because of safety is something I could see used in other cases,” Fitzpatrick adds.

This strategy could offer huge opportunities to brand-name drug companies. “If Endo wins, I would suggest to all my [brand-name pharmaceutical] clients that this is a great way to extend the monopoly on all their products,” says Michael Samardzija, a partner at Bracewell & Giuliani.

Endo has lost the first round of its fight. In December 2012, the district court ruled against Endo; it held that the FDA was not unduly delaying its decision on whether the original version of Opana was withdrawn for safety reasons. As a result, on Jan. 1, two generic versions of Opana came onto the market.

But Endo is not defeated yet because the FDA must still decide why Endo pulled the original version of Opana off the market. The president and CEO of Endo, Dave Holveck, said in a statement, “We are hopeful that FDA will ultimately make the right decision before May ... that the original formulation of Opana ER was discontinued for reasons of safety.”

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