F.D.A. Rule Could Open Generic Drug Makers to Suits

The Food and Drug Administration on Wednesday signaled its intention to permit generic drug makers to make changes to their safety labels, a move that could open the door to lawsuits against generic drug companies for the first time since a Supreme Court decision barred such suits two years ago.

Consumer advocates applauded the development, calling it a necessary fix for a system that they say is unfair to patients who take generic medicines.

“It’s common sense,” said Dr. Sidney M. Wolfe, a senior adviser to the Health Research Group at Public Citizen, which in 2011 petitioned the F.D.A. to pass just such a rule. “It will obviously end this situation where people are being harmed physically and yet, although they are harmed, they have no right to go into court and get redress for serious damages.”

Dozens of lawsuits against generic drug manufacturers have been dismissed since 2011, when the Supreme Court ruled that because the generic companies must, by law, use the same label warnings as their brand name counterparts they cannot be sued for failing to alert patients about the risks of taking their drugs. Last month, the Supreme Court ruled — on similar grounds — that patients also may not sue generic drug makers by claiming that the drug was defectively designed.

The F.D.A.’s intentions came in the form of a bureaucratic step in which the agency must notify the Office of Management and Budget of its plans to publish a proposed new rule. In a summary posted Wednesday on the budget office’s Web site, the F.D.A. said the proposed rule would “create parity” between generic and brand-name drug makers with respect to how they update their labels — the lengthy list of a drug’s uses, dosages and risks.

Under the current system, brand-name manufacturers can change the label if they receive important new information about their drug. If the F.D.A. agrees that the label change is necessary, the generic manufacturers of the drug must also change their labels. The rule change could also allow generic manufacturers to change their labels if they became aware of safety concerns, which could make them liable if a court were to find they failed to warn patients about potential harms.

“It is a first step toward acknowledging that there is a problem with the current system,” said Michael Johnson, a lawyer who represented Gladys Mensing, one of the patients who sued generic drug companies in the 2011 Supreme Court case, Pliva v. Mensing. “It doesn’t make sense to have one set of rules for the name brand and another set of rules for the generics.”

Sandy Walsh, an F.D.A. spokeswoman, noted that the agency had said before that it was considering such a rule change. “It is premature to cite what changes in the regulations might be,” she said in an e-mail. “Discussions are under way.”

The Generic Pharmaceutical Association, an industry group, declined to comment on Wednesday. In the past, generic drug companies have argued against such a change, saying that it could create a chaotic situation in which several different labels existed for the same drug.

Jay Lefkowitz, the lawyer who represented the generic drug makers in both Supreme Court cases, said in an e-mail, “We will obviously look very carefully at whatever the F.D.A. proposes, if in fact it ends up proposing any change at all.”

The notice posted Wednesday indicates the agency’s intent to publish a proposed rule by September, when the public would be asked to comment.

Supreme Court Lets Regulators Sue Over Generic Drug Deals

In a 5-to-3 vote, the justices effectively said that the Federal Trade Commission can sue pharmaceutical companies for potential antitrust violations, a decision that is likely to increase the number of generic drugs in the marketplace and benefit consumers.

Specifically, the justices threw out lower-court rulings that said the agreements were legal, provided that a deal did not keep a generic drug off the market beyond the term of the brand-name drug’s patent.

The decision is likely to create considerable uncertainty in the drug business and shift an important balance of power to the generic companies, industry analysts said. Drug developers may now find it harder to ward off generics, which typically cost about 15 percent of the brand-name’s price and cause the original to quickly lose up to 90 percent of its market share.

Consumer groups, drug retailers, wholesalers and insurance companies, which all benefit from the lower prices of generic drugs, could also step up their challenges to the agreements under antitrust laws.

The court did not address whether the agreements, called pay-for-delay or reverse payments, were unlawful on their face. In a standard patent infringement lawsuit, a settlement payment would be made by an infringer to the patent holder.

In the case, Federal Trade Commission v. Actavis, No. 12-416, the agency said that a payment to Actavis by Solvay Pharmaceuticals, the holder of a patent on a testosterone gel known as AndroGel, represented an unlawful restraint of trade because it was intended to keep Actavis from producing its generic version of AndroGel for a certain number of years.

Solvay’s deal with Actavis is known as a reverse-payment agreement because payment flows from the brand-name drug company to the generic competitor that is challenging the patent.

Justice Stephen G. Breyer, writing for the majority, said that “a court, by examining the size of the payment, may well be able to assess its likely anticompetitive effects along with its potential justifications without litigating the validity of the patent.”

The stakes in the case are significant. Pharmaceutical sales in the United States totaled roughly $320 billion in 2011, according to IMS Health, a research company whose statistics the trade commission cited in its arguments. Brand-name drugs accounted for 18 percent of the total prescriptions written by doctors in 2011 but 73 percent of consumer spending, IMS reported.

“No other decision this term will have as much impact on consumers’ pocketbooks,” said David A. Balto, an antitrust lawyer and a former Federal Trade Commission policy director.

“It clearly maps out how the F.T.C. can use the law to stop these anticompetitive schemes and make sure consumers receive the full benefits of a competitive marketplace,” Mr. Balto added. “At the same time it permits the broad range of settlements that pose few competitive concerns.”

Officials at the trade commission, which has fought against the pay-for-delay agreements for several years, were predictably enthusiastic.

“The Supreme Court’s decision is a significant victory for American consumers, American taxpayers and free markets,” said Edith Ramirez, chairwoman of the F.T.C. “With this finding, the court has taken a big step toward addressing a problem that has cost Americans $3.5 billion a year in higher drug prices.”

Executives at Actavis played down the decision’s significance. “The F.T.C. did not win anything with this decision,” said Paul M. Bisaro, president and chief executive of Actavis. “We think these settlements will continue, and we will continue to enter into these kinds of settlements. We believe all of our agreements were pro-competitive.”

Justice Breyer’s decision, which was joined by Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan, reversed a decision of the 11th Circuit Court of Appeals, which had thrown out the F.T.C.’s case. The appeals court said that because the exclusion of the generic drug did not extend beyond the term of the brand-name drug’s patent, a “quick look” could determine that there was no anticompetitive effect.

The Supreme Court’s decision adopted a different standard, known as the “rule of reason,” which states that the agreements must be considered in the context of their possible benefits for consumers.

Chief Justice John G. Roberts Jr. wrote a dissenting opinion, which was joined by Justices Antonin Scalia and Clarence Thomas. Justice Samuel A. Alito Jr. recused himself from the case.

In their dissent, the justices pointed out that the agreement between Solvay and Actavis allowed for the generic drug to come to market five years before the scheduled expiration of Solvay’s patent. The majority’s decision will discourage the settlement of patent litigation, the justices said.

Congress has encouraged generic drug makers to challenge the patents protecting lucrative brand-name drugs through the 1984 Drug Price Competition and Patent Term Restoration Act, also known as the Hatch-Waxman Act.

Endo Loses Bid to Block Sales of Generic Painkiller

The Food and Drug Administration announced Friday that generic versions of the painkiller Opana ER can remain on the market, dealing a blow to the brand-name manufacturer, Endo Health Solutions, which had asked the agency to declare the generic versions unsafe.

The agency also ruled that a newer, so-called tamper-resistant form of the drug sold by Endo could be misused by cutting, grinding, chewing or injecting it. Endo had asked the F.D.A. to require that older, generic forms of the drug — which did not have such tamper-resistant properties and entered the market this year — be withdrawn.

The agency’s decision came just weeks after it reached the opposite conclusion in the case of another frequently abused painkiller, OxyContin. In that case, the F.D.A. said it would not approve generic versions of OxyContin since the maker of that drug, Purdue Pharma, had introduced a new tamper-resistant formulation in 2010 that appeared to be less prone to abuse than the generic versions. The patent for the original version of OxyContin expired in April.

The agency is closely scrutinizing efforts by drug makers to develop drugs that are designed to deter abuse. This year, it released guidelines for drug makers seeking to make such drugs and has said it will work closely with companies, including Endo, that want to do so. But an agency official, Dr. Douglas C. Throckmorton, said in an interview on Friday that the F.D.A. had to ensure that these products actually worked.

“We believe that the public health value of concluding that a product is abuse-deterrent is very important,” said Dr. Throckmorton, who is deputy director of regulatory programs for the agency’s Center for Drug Evaluation and Research. However, he added, “It is very important to us to make sure that products that have that claim do so as the result of substantial scientific evidence.”

The agency said it found the reformulated Opana did prove resistant to crushing — abusers typically seek to crush or pulverize the product to release the drug’s narcotic payload — but it could still be cut, ground or chewed. The new Opana ER can also be injected or snorted, “using commonly available tools and methods.”

A spokesman for Endo did not return a call for comment on Friday. The company’s stock was down more than 5 percent at the close of trading Friday, to $34.98.

Justices to Take Up Case on Generic Drug Makers’ Liability

The injuries that Karen Bartlett suffered after taking a mild pain pill are enough to make anyone squeamish.

Ms. Bartlett, who lives in Plaistow, N.H., developed a rare but severe reaction to the anti-inflammatory drug sulindac after a doctor prescribed it to treat shoulder pain in 2004. Within weeks of taking the drug, her skin began to slough off until nearly two-thirds of it was gone.

She spent almost two months in a burn unit, and months more in a medically induced coma. The reaction permanently damaged her lungs and esophagus and rendered her legally blind.

Ms. Bartlett sued Mutual Pharmaceutical Company, which made the drug she took, a generic pill, arguing that the drug’s design was dangerous and defective. During her trial in 2010 in Federal District Court in Concord, N.H., her burn surgeon described her experience as “hell on earth,” and a jury awarded her $21 million. An appeals court upheld the verdict.

“I wouldn’t want anybody to go through what I went through,” Ms. Bartlett said in a recent interview. “It was horrible. And this medication that I took, sulindac, I don’t think it should be prescribed.”

Now, in a case that is being closely watched by pharmaceutical companies, federal regulators and others, the Supreme Court will hear arguments this month on whether Mutual can be held responsible for Ms. Bartlett’s injuries. The outcome is likely to further clarify the legal recourse for patients who take generic drugs, which now account for 80 percent of all prescriptions in the United States.

Two years ago, the Supreme Court severely limited the conditions under which consumers of generic drugs could sue the manufacturers, ruling in Pliva v. Mensing that such companies did not have control over what warning labels said and therefore could not be sued for not alerting patients to the risks of taking their drugs.

Ms. Bartlett’s case is slightly different because she did not argue that the drug’s warning label was inadequate. She claimed that the drug itself was defective. But Mutual has contended that the rationale is the same since, like the label, it has no control over the drug’s design.

Under federal law, generic companies are not allowed to deviate from the brand-name drug they are copying. Sulindac is the scientific name for Clinoril, a drug similar to ibuprofen that was approved by the Food and Drug Administration in 1978 and is sold by Merck. Like ibuprofen, sulindac is in a class of drugs known as nonsteroidal anti-inflammatory drugs or Nsaids, which are in widespread use.

Mutual is appealing a decision by the United States Court of Appeals for the First Circuit, in Boston, that upheld the jury verdict and argued that even if Mutual could not have changed the drug’s design, it had no obligation to continue selling a defective product and could have taken the drug off the market. Mutual is a subsidiary of Sun Pharmaceutical of India.

Interest groups on both sides say any decision could have serious consequences.

If the court agrees with Mutual and rules that generic companies cannot be sued for defective products, trial lawyers warn that patients will be left with very few options if they are injured by a generic drug.

“The question becomes, can you sue a generic manufacturer for anything?” said Bill Curtis, a Dallas lawyer who specializes in pharmaceutical cases.

But manufacturers of generic drugs and other business groups have said that if the court sides with Ms. Bartlett, the decisions of individual juries could trump the authority of federal agencies like the Food and Drug Administration and potentially lead drug makers to remove valuable medicines from the market. The federal government has sided with the generic drug makers in this case even though it opposed the industry in the Mensing case.

“Tort judgments second-guessing F.D.A.’s expert drug safety determination would undermine the federal regime to the extent that they forbade or significantly restricted the marketing of an F.D.A.-approved drug,” the government wrote in its brief to the court.

Keith M. Jensen, Ms. Bartlett’s lawyer, disputed this argument, saying, “that presumes the F.D.A. always has all the information and that drug companies never have incentive to hide it from them.” He said lawsuits like Ms. Bartlett’s could uncover new information about the safety of a drug.

In the case of sulindac, he presented evidence at trial that patients taking the drug were more at risk of developing the condition that Ms. Bartlett contracted, known as toxic epidermal necrolysis, a severe form of a related condition called Stevens-Johnson Syndrome, than those taking other, similar pain drugs. The conditions can be set off by a negative reaction to many drugs, but only rarely.

It is difficult to estimate how common the reactions are because some contend they are underreported, but one recent review of medical literature found that fewer than a handful of people out of a million users of Nsaids would be affected.

Like all Nsaids, sulindac carried a notice on its label that patients could develop Stevens-Johnson Syndrome. But in 2005, after Ms. Bartlett’s reaction, the F.D.A. required that all manufacturers of Nsaids strengthen their labels by specifically listing the risk of developing the skin reactions in the “Warnings” section of the label. That same year, Pfizer removed the pain drug Bextra from the market after the F.D.A. warned that patients were at a heightened risk for developing Stevens-Johnson Syndrome and other skin reactions.

In its brief, the federal government disputed the conclusion that sulindac was unsafe, saying the F.D.A. had reviewed the drug and determined that it could remain on the market.

Ms. Bartlett said that before her injury she was independent, active and loved her job as a secretary at an insurance company. In 2004, she visited her doctor because her shoulder hurt, and he prescribed Clinoril. The pharmacist dispensed a generic version of the drug.

Today, Ms. Bartlett is 53 and legally blind despite 13 eye operations. She said she struggled to reach the mailbox each day and could no longer drive or work. Her lungs are severely damaged, and she has trouble eating.

To her, it makes no difference who made the drug she took. “I think the generic companies as well as brand-name companies, they should be held accountable for the medicines that they put out there,” she said.

Drug Makers Losing a Bid to Foil Generic Painkillers

In coming months, generic drug producers are expected to introduce cheaper versions of OxyContin and Opana, two long-acting narcotic painkillers, or opioids, that are widely abused.

But in hopes of delaying the move to generics, the makers of the brand name drugs, Purdue Pharma and Endo Pharmaceuticals, have introduced versions that are more resistant to crushing or melting, techniques abusers use to release the pills’ narcotic payloads.

The two drug makers, which say they are motivated not by profit but by public safety, have also been waging a multifront political and legal war to block sales of generics that are not tamper-resistant.

The companies argue that the older designs will feed street demand for strong painkillers, drugs that are involved in more than 15,000 overdose-related deaths a year. While some experts say the new tamper-resistant products are not a cure-all for the abuse problem, others say they represent an important step forward.

“I think it would be a shame if the government would allow generics to come in without any tamper-resistant properties,” said Dr. Lynn R. Webster, a specialist in Salt Lake City who has consulted with companies developing such safeguards. Over the last year, Purdue Pharma and Endo have backed legislation in Congress that would require many opioids to be tamper-resistant, and lobbied in favor of similar state laws.

They have also urged the Food and Drug Administration to give their tamper-resistant designs a stamp of safety approval that other manufacturers would have to match. The agency does not currently differentiate between drugs that have abuse-resistant qualities and those that do not.

Thus far, the companies’ efforts have failed. In mid-December, a federal judge threw out a lawsuit by Endo that would have blocked the F.D.A. from allowing generic versions of its drug, Opana, to go on sale in January. A recent effort by some doctors and local officials in Canada to deter sales of generic versions of OxyContin there fell flat. While companies like Purdue Pharma insist the public’s health is their main concern, others note that producers introduced tamper-resistant versions of their products just as the drugs were about to lose patent protection. In court papers filed in response to Endo’s lawsuit, the F.D.A. described the company’s action as a “thinly veiled attempt to maintain its market share and block generic competition.”

An F.D.A. official, Dr. Douglas C. Throckmorton, said the agency expected to issue guidance this month that would lay out the types of scientific data that drug producers would have to submit to support a claim that an opioid’s design or formulation helped to deter its abuse.

Companies are developing a variety of methods to do that. The new OxyContin pill turns into a gummy mass when an abuser crushes it, and the Opana pill is designed to break into large pieces when manipulated. Other methods include pills that contain a second drug reversing the opioid’s narcotic effects if taken inappropriately.

“We understand the value in developing appropriate abuse-resistant technology and we want to find a way of incentivizing that,” said Dr. Throckmorton, the F.D.A.’s deputy director for regulatory programs. “But we also understand the value of generics for patients.”

A study published in 2012 in a medical journal, The Journal of Pain, found that the percentage of people treated at drug-abuse clinics who reported abusing OxyContin fell significantly since the introduction of the tamper-resistant version.

Some of those abusers said they had switched to other long-acting opioids that were easier to abuse like Opana — before its reformulation — or to illicit drugs like heroin, according to the study, which was financed by Purdue Pharma.

But the generic versions of OxyContin and Opana are expected to be significantly cheaper than the tamper-resistant versions of those drugs. At time of introduction in late 2010, the price of the new version of OxyContin was about $6 per 40 milligram tablet, the same then as the price that was not tamper-resistant. Since then, the price of the new version has risen to about $6.80 for that strength tablet. Opana costs about the same amount for a pill of the same pain-killing strength.