Is There a New Tactic for Generic Manufacturers to Use to Hit a Bullseye?

We have long heard arguments that traditional and Outsourcing compounding entities represent unfair competition to the generic drug industry and that they frequently circumvent the Federal Food, Drug and Cosmetic Act (especially the 2013 Drug Quality and Security Act, DQSA).

A new tactic that has been recently used by a generic firm to protect its approved product was to sue FDA on the grounds that the FDA Interim Policy on compounding using bulk drug substances (APIs) under section 503B of DQSA is contrary to law.  The argument is that this action is fundamentally inconsistent with the language and structure of the requirement for new drug approvals under section 505 of the FD&C Act because it authorizes bulk compounding of new drugs that do not satisfy the applicable DQSA requirements. The litigation sought the immediate removal of a drug from FDA’s Category 1 nominations list to assure that outsourcing facilities are not allowed to engage in bulk compounding of drug products using the Category 1 drug under Section 503B and therefore create unfair competition to a generic firm’s marketing of their approved drugs.

Following issuance of the FDA’s 2018 Compounding Priorities Plan on January 18, 2018, it was announced on January 24 that there was a temporary stay in litigation at the request of the U.S. Food and Drug Administration (FDA) in order to allow the issuance of further clarification under the Plan to continue to protect the new drug (and generic) approval process.

The litigation has been stayed in the case until March 30, 2018, subject to: (1) FDA utilizing its best efforts to provide further clarification of the proposed conditions for bulk compounding by that date; and (2) no further activity found during the period of temporary stay of any entity commencing or likely to commence bulk compounding of any Category 1 containing drug product under Section 503B pending further guidance by the FDA.

Will other pharmaceutical, biotechnology, or generic companies that have knowledge of compounders regularly or in inordinate amounts making copies of their approved products (not on the drug shortage list) follow suit and sue FDA?

We recommend that all impacted parties remain on target by reviewing upcoming releases by FDA.