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Pharma brand sued under the CREATES Act: Implications for generic drug developers

August 19, 2021
Joshua Harris
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Teva recently became the first generic manufacturer to sue a brand under a relatively new federal law, The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act, enacted in December 2019. While still in the early stages, generic companies and brands are keen to see how this case unfolds, given that its outcome will likely set precedent for future CREATES Act claims. 

Teva Pharmaceuticals Development Inc. v. Amicus Therapeutics US Inc.

Teva's complaint accuses Amicus Therapeutics of failing to deliver required samples of its medication, Galafold (migalastat), a treatment for a rare genetic disease. Galafold is the first and only oral therapy for Fabry disease and is priced at $315,000 for a one-year supply. It is also Amicus’ only FDA-approved revenue-generating product. A generic version should provide a low-cost competitive alternative, and so the innovator has a financial incentive to delay or deter its market entry—specifically by delaying efforts by others to develop a generic and file an ANDA with the FDA.

What does the CREATES Act say?

The purpose of the CREATES Act is “to promote competition in the market for drugs and biological products by facilitating the timely entry of lower-cost generic and biosimilar versions of those drugs and biological products.” According to the FDA, the CREATES Act provides an important new pathway for developers of potential drug and biological products to obtain necessary samples of the innovator product to support their application, for example, an Abbreviated New Drug Application (ANDA) or Biologic License Application (BLA).

Samples are a critical part of any ANDA because the approval process demands rigorous testing by the generic to prove bioequivalence to the brand drug. Without a sufficient quantity of samples from the brand, there is no way to adequately develop and test a generic version, which in turn stifles market competition and ultimately harms the consumer.

The impact of the complaint

Both generic developers and brands will be closely watching this dispute, with particular interest in how long it takes to resolve, the consequences (if any) for Amicus and whether there are any constitutional challenges. The cost of litigation, its duration and the potential monetary penalties will likely inform how generic and brand companies proceed with similar disputes. If the consequences for Amicus are severe, brands will take note and may be more likely to provide samples readily to avoid costly damage awards. Alternatively, if the penalties are a slap on the wrist, we may see brand companies saddling-up for litigation in an attempt to delay the development and approval of a generic or deter its production altogether.

The cost of avoiding risk

When facing litigation in the generics business, developers must consider how and where their funds are best utilized. The cost and risk of litigation may deter some from beginning to develop a generic drug altogether. This risk avoidance is understandable but problematic—innovative brand companies that hoard and refuse to provide samples are engaging in anticompetitive behavior, and if generics developers decide not to litigate, this behavior goes unchecked.

Finding capital for litigation

Bringing a generic drug to market is an already long and expensive process with R&D, FDA regulations, manufacturing and distribution. On top of those expenses, developers must also consider the duration risk of litigation. Can they afford to have their working capital tied up? Even if they can, could the capital generate a better return elsewhere in the business?

It’s uncertain whether we’ll see an uptick in CREATES cases as a result of Teva vs. Amicus, but if similar suits follow, generics companies will need access to capital for litigation. With a legal finance partner, they can proceed with meritorious litigation without taking on additional cost and risk.