The Federal Trade Commission's powers to bring antitrust actions are circumscribed by public versus private and what is vs isn't "reasonable," Markus H. Meier explained.
There’s nothing stopping states from passing laws in restraint of competition, and this appears to have happened in the case of biosimilars, said Markus H. Meier, acting director for the Federal Trade Commission’s (FTC) Bureau of Competition.
“It was popular for a while for a lot of the industry—the originator [biologics] industry, to go to the states and try to seek state legislation that would make it more difficult for the uptake of biosimilars,” he said. “The FTC can’t stop that type of behavior. You have a constitutional right to petition government and to seek legislation that would disadvantage your competitor. And then if the legislature passes such a law, it’s not an antitrust violation.”
Meier spoke at the American Conference Institute’s 11th Summit on Biosimilars & Innovator Biologics. His discussion focused on the extent of the FTC’s powers to combat anticompetitive practices and its growing interest in the biosimilars marketplace, where pay-for-delay settlements between originator and biosimilars companies have aroused the FTC’s attention.
State Legislation on Biosimilars
State legislation respecting biosimilars has been controversial because it appears to some critics that originator companies have advocated for such legislation to make it tougher, not easier, for biosimilars to become established. As of May 2019, 45 states and Puerto Rico had passed laws governing biosimilar substitution requirements.
In approving biosimilars, the FDA certifies that they are as safe and efficacious as the originator drugs they are patterned after. The FDA also has power to grant interchangeable status for these products, meaning they can be given in place of original brand biologics to patients at the pharmacy without express permission from the prescribing doctors. “While these [state] laws ostensibly encourage substitution, many actually throw up impediments like requiring that doctors and patients be notified when a substitution occurs, a requirement not necessary for small-molecule drugs,” according to a 2018 report by biosimilar manufacturer Boehringer-Ingelheim.
For this reason the FTC created the Competition Advocacy Program, which is intended to advocate against such legislative encroachments on free trade. “We try to make sure that governments understand the competitive implications of some of the types of legislation that sometimes people try to lobby for," Meier said.
On the whole, federal antitrust laws are intended to prevent private business practices that unreasonably restrain competition. The key word is “unreasonable,” Meier said, because many forms of legitimate business are in essence somewhat anticompetitive. “This is basically where all of the action in antitrust is: What is a reasonable restraint of competition, and what is unreasonable restraint of competition?”
Patents can restrain competition, “but clearly they’re not an unreasonable restraint on competition, nor is getting regulatory exclusivity, and nor is contracting. Exclusive contracts generally don’t run into trouble, but at some point those restraints on trade can become unreasonable.” That’s often left up to the courts to decide, Meier said.
The FTC is somewhat misunderstood in this regard, he said. It has been the object of criticism that it is against innovation and innovators in industry, merely because it is carrying out its duties to remove impediments to free trade. “We try to seek to promote innovation, and competition can often do that, and we are very concerned about that.
Aware that he was addressing a pharmaceutical industry group with many intellectual property attorneys included, Meier stated that as much as this audience wanted to increase the profitability of its biologics, “you might appreciate that we are on the watch for you as consumers to try to protect those interests and make sure that we have robust competition among biologics and biosimilars in the hopes that consumers get lower prices, better quality services and products, more choice, and more innovation.”
For more about what Meier said at the ACI meeting, click here.
Meier MH. The FTC, antitrust & biologics. Presented at: ACI 11th Summit on Biosimilars & Innovator Biologics; September 24, 2020.