Pharmaceutical Issues for 2003

I. Functionally equivalent/ generic biological products.
A recent court decision upheld a Johnson & Johnson effort to create functional equivalence for reimbursement of its Procrit, immediate acting erythropoetin, with Amgen's long acting Aranesp, which is darbepoetin alpha. This decision opens the door for generic biological products in both inpatient and outpatient use, especially in light of the Food and Drug Administration's merger of the drug functions of the Centers for Drug and Biologics Evaluation and Review and the resignation of the CBER Director.

II. Interaction between the Food and Drug Administration and the Centers for Medicare and Medicaid Services.
The issues of promotion for unapproved uses and fraud and abuse have been gaining increased prominence as the federal government through the Office of the Inspector General of the Department of Health and Human Services and the Department of Justice raises its scrutiny of the pharmaceutical industry's promotional practices. In addition, FDA and CMS are increasing their interaction when drug products are approved to assess the issues associated with reimbursement for approved and unapproved uses. This dynamic issue requires constant monitoring and development of new procedures for product development and marketing.

III. Prescription Drug Advertising.
The Food and Drug Administration's authority to regulate prescription drug advertising and other promotional activities has been severely restricted by the courts. Promotional practices are booming because $80 billion of product sales come off patent in the next four years. Promotion is one way to maximize sales. FDA's limitations come as the CMS and DOJ are monitoring the area to detect fraud and abuse. HHS has also issued guidelines for compliance by the pharmaceutical industry that have an impact on the area. This area will be the most dynamic FDA area over the next few years.

IV. Product Life Cycle Extension.
Drugs with global sales of over $80 billion will come off patent by 2007. Strategies to increase the life cycle of these products are essential, and value added strategies exist with new technologies. But the federal authorities are subjecting strategies to economic and antitrust scrutiny. Agreements reached in litigation and others are under attack. Caution and planning are essential.

V. Prescription Drug Benefit for the Elderly.
There is new control of the Senate and new leadership with a medical background. The issue of a prescription drug benefit for the elderly has become a potentially larger legislative priority. A number of options are being considered; e.g., importation, parallel pricing. Many states are also considering individual options. For this reason a federal plan may be the most efficient. The issue will be heated and requires monitoring for long term planning.

VI. Risk-based Current Good Manufacturing Practices.
The Food and Drug Administration is in the process of revamping its program for cGMP compliance by developing a program of risk-based criteria. The plan is being almost unilaterally developed and threatens to create more problems than it solves, especially for companies that are seeking new approvals. FDA is holding periodic meetings that must be followed, and participation is essential to protect one's interests.

VII. Consolidation of the Centers for Drug Evaluation and Review and Biologics Evaluation and Review functions.
FDA is consolidating functions of CDER and CBER to avoid the problems that led to the fiasco of Imclone Systems, Inc. A review of the consolidations is necessary to keep projects on track and to identify problems that may arise in the future. In addition, the nuances of any switches must be considered. The failure of communications between Imclone and CBER confirm the need for a meaningful assistance in dealing with FDA.

VIII. Legislation to reform product liability and medical malpractice liability laws.
With a physician now leading the Senate majority, there will be a new effort at modest product liability and medical malpractice liability reform. In a number of states, physicians can no longer afford to practice medicine due to their excessive insurance premiums. The plaintiffs' lawyers have been successful in defeating legislation for decades, and major reform is doubtful. But some reform, especially if linked to Medicare-Medicaid reform will be considered. This legislation will benefit elements of the industry. Careful monitoring is necessary to ensure any benefit accrues will benefit you.

IX. Increased GMP requirements on the manufacturers of Active Pharmaceutical Ingredients.
FDA has embarked on a program of increasing the cGMP requirements of bulk API manufacturers. The legality and necessity of this effort has not been established. The effort is reeking havoc on suppliers from around the world.