Tag Archives: novartis

The Italian Administrative Supreme Court Opens New Perspectives for Therapeutic Equivalents

By rejecting an appeal from Novartis, the Italian Administrative Supreme Court, with its decision n. 1306 of April 1st, 2016, focused on the notion of therapeutic equivalence under Italian law. Having underlined the difference with the concept of bioequivalence and having broadened its possible future application, the decision is likely to push forward the trend of public health care institutions to increase competition between pharmaceutical companies in the context of public tender offers, possibly for the benefit of taxpayers and patients.

The controversy arose from an opinion issued by the Italian Medicines Agency (“AIFA”) which, in a tender procedure held by Tuscany region, evaluated the drug Lucentis by Novartis (active ingredient ranibizumab) as a therapeutic equivalent to Eylea by Bayer (active ingredient aflibercept). This allowed the regional public administration to have the said drugs compete against each other in the same tender offer.

Debates as to whether Lucentis and Eylea are equivalent in terms of functions are not indeed new in the pharmaceutical scene and have caused many headaches to Novartis, let alone the critical issues raised in relation to Lucentis by the Italian Antitrust Authority.  Not a surprise, then, that Novartis tried to defend its product, alleging the illegitimacy and erroneousness of AIFA’s evaluation, which stated that the cheaper option by Bayer (Euro 780) is equally safe and effective in the treatment of macular degeneration as it is its more expansive (Euro 902) drug.

Novartis, nevertheless, failed in its claims. The Italian Administrative Supreme Court confirmed the validity and correctness of AIFA’s evaluation, together with the decision of the lower court, affirming, inter alia, that:

  • therapeutic equivalence is different from bioequivalence because the latter implies the identity of the active ingredient whether the former does not (indeed, FDA’s indications on the issue are rather similar);
  • the authority of AIFA in determining therapeutic equivalence is legitimate under Italian law;
  • evaluations regarding therapeutic equivalence cannot be based exclusively on the products’ leaflet: they are instead well motivated if they verify that (i) the drugs belong to the same Anatomical Therapeutic Chemical class; (ii) the drugs are subject to a similar route of administration and (iii) the drugs release the active ingredient in comparable ways.

Therapeutic equivalence, as it has recently emerged from Italian legislation and case law (in particular, from the decision discussed herein), is seen as a threat by pharmaceutical companies, unnerved by the increased competition effects.

Indeed, the debate has been escalated to a more general level by the Italian association of pharmaceutical companies, which challenged in many ways AIFA’s guidelines on therapeutic equivalence. As a consequence, a few days ago AIFA precautionary suspended for ninety days the said guidelines.

It looks like the match has just begun. Nevertheless, pharmaceutical companies should consider carefully on which side they should play. In fact, the expansion of the application of therapeutic equivalence, as a general trend, does not seem to be stoppable in a constant spending review context. Perhaps pharmaceutical companies should positively contribute to shape, rather than to stop, therapeutic equivalence and exploit its potential for the business in terms of new opportunities to access tender offer procedures.

Italian Competition Authority Targets Big Pharma, Triggers Expansion Of Off-Label Prescription

I. ITALIAN COMPETITION AUTHORITY FINES ROCHE, NOVARTIS

On February 27, 2014, the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato, hereinafter “AGCM”), in an unprecedented decision concerning the pharmaceutical industry in Italy, issued fines in an amount of more than 180 million euro in the aggregate against F.Hoffman-La Roche Ltd. and Novartis AG, as well as their Italian affiliates. The two companies have been found to have restricted competition in connection with the commercialization of two drugs known by their brand name of Aventis and Lucentis.

The fines issued by AGCM, however, did not only affect Roche and Novartis. The AGCM decision triggered in fact, within a very few months, new legislation and case-law on off-label use of medicinal products, making it effectively easier for physicians to prescribe such products so long as their prices are lower than authorized alternatives.

Furthermore, the AGCM decision made painfully clear to the industry that mere compliance with the specific regulations applicable to pharmaceutical products will no longer shield companies from antitrust scrutiny.

II. PHARMACEUTICAL PRODUCTS, RELEVANT MARKET AND MARKETING AUTHORIZATIONS

Aventis and Lucentis have been employed in the treatment of several eye diseases, including in particular age related macular degeneration (“AMD”) and neovascular glaucoma. Both drugs have been approved by the European Medicines Agency (“EMA”) pursuant to the centralized authorization procedure. According to applicable legislation, medicines derived from biotechnology processes are subject to a single marketing authorization issued by EMA, which is valid in the entire territory of the European Union.

Avastin, a drug developed by Genentech (a fully owned subsidiary of Roche), has been approved by FDA and EMA, in 2004 and 2005 respectively, for the treatment of colon cancer. The marketing authorization has not been sought for the treatment of eye diseases. However, Avastin has been consistently employed off-label by ophthalmologists in the treatment of AMD. While Genentech has retained the rights to market Avastin in the US, it has assigned to Roche distribution rights in the rest of the world in exchange for royalties. Neither Genentech nor Roche have ever submitted a request for a marketing authorization for ophthalmological indications.

Lucentis has also been developed by Genentech and has been approved by FDA and EMA, in 2006 and 2007, for the treatment of AMD. Genentech has assigned the distribution of Lucentis (except in the US) to Novartis and sells to Novartis the active principle (ranibizumab).

III. OFF-LABEL PRESCRIPTION IN ITALY

In assessing the alleged restrictions on competition arising out of the marketing and commercialization of Avastin and Lucentis, AGCM extensively took into account the regulation of off-label prescription in Italy, which deeply affected the use of the concerned drugs by Italian healthcare professionals.

In the absence of any international regulation on off-label prescription of drugs, Italian legislation has developed through the adoption of a series of subsequent regulatory guidelines and ad hoc decisions. Law 648/1996 is the main legal instrument governing off-label prescription of drugs in Italy. Such law provides that, in the absence of a valid therapeutic alternative, the national health service may reimburse (i) innovative drugs that have been approved in other states but not in Italy; (ii) drugs that have not yet been authorized but are undergoing clinical trials; and (iii) drugs to be used for a therapeutic indication other than the approved one. The Italian pharmaceutical agency (Agenzia Italiana del Farmaco, hereinafter “AIFA”) holds, and periodically updates, a list of all the above drugs that may be reimbursed by the national health service, the so called “List 648”. Pursuant to such legislation, healthcare professionals may prescribe drugs included in the List 648 for off-label use and obtain reimbursement from the national health service. This legislation is peculiar to the Italian system, as in other countries off-label use is allowed but not reimbursed.

In 1998, the scope of the above provisions has been restricted, by providing that drugs may be prescribed for off-label use only if the healthcare professional is convinced, on the basis of documentable evidence, that the patient cannot be treated with approved drugs and such off-label use is in line with scientific works published on recognized international journals (Law 94/1998).

According to a brief submitted by EMA in the AGCM proceedings, the permissive legislation governing off-label use of drugs and their reimbursement has been beneficial to pharmaceutical companies, as it has allowed to sell products outside of the approved indications, while gathering at the same time scientific data to support future marketing authorizations at the expense of the national health service. The price of such products in most cases is also not established through negotiations with AIFA, as normally required for approved drugs used in accordance with their indications, thus generally yielding higher prices for reimbursement of off-label drugs. The unintended consequences of the above regulations led to a further crackdown on off-label prescriptions in 2006, when it was established that medicinal products cannot be prescribed and reimbursed unless they are at an advanced stage of clinical trials (at least in second phase) and scientific data from such trials are available (Law 296/2006).
In 2012 a change in the legislation concerning medical malpractice had the effect of further discouraging off-label prescription. Law Decree 158/2012, in fact, established that healthcare professionals are exempted from liability due to ordinary negligence if they comply with guidelines and good practices recognized by the scientific community. This has disincentivized healthcare professionals from prescribing drugs off-label, unless such practice is generally endorsed by the medical community.

IV. THE ANTICOMPETITIVE ARRANGEMENTS CONCERNING THE MARKETING OF AVASTIN AND LUCENTIS

Understanding off-label legislation and the possibility to obtain reimbursement from the national health service is essential to understanding how the Aventis-Lucentis case unfolded. The price of Lucentis is in fact significantly higher than the price of Avastin: as of November 2012 the price reimbursed by the national health service per injection was equal to €902. Avastin, on the other hand, had a price per treatment ranging from €15 to €81 and had been included in the List 648 for the treatment of AMD.

In line with then applicable legislation, the placement on the market of Lucentis triggered the cancellation of Avastin from List 648 for most of its off-label uses, since a valid alternative treatment, duly authorized for the same indication, was available on the market. AIFA definitely cancelled Avastin from the List 648 in October 2012 following a change in the summary of the product characteristics previously filed by Roche with EMA in order to account for certain adverse events in the ophthalmic use of Avastin as compared to Lucentis.

AGCM in its decision points to a concerted allocation of the market between Roche and Novartis, with this latter focusing on the ophthalmic sector and the first focusing on antitumoral drugs. In line with this shared marketing strategy, AGCM held that the two companies artificially restricted the use of Avastin, also by undertaking a variety of regulatory actions aimed at limiting its off-label use. Roche, on the other hand, claims that any such actions were in line with its pharmacovigilance duties, as they related to adverse events in connection with the use of Avastin in ophthalmic settings.

It is quite interesting to note that the actions undertaken by Roche regarding Avastin were on their face completely in line with the current regulatory framework. Roche, in fact, was under no obligation to seek a marketing authorization for the treatment of AMD and was actively (maybe too actively!) reporting any adverse events occurred in connection with the off-label use of Avastin. According to AGCM, however, all such actions in the aggregate had the specific goal of restricting competition and were instrumental to a restrictive agreement between competitors, even if they were formally in line with pharmaceutical regulations. The allegations of AGCM have been supported by the economic and contractual ties between Roche and Novartis and their common interest in the commercialization of the two products.

AGCM, in assessing whether the above practices had an impact on the market, also examined the higher costs borne by the national health service in connection with the prescription of Lucentis instead of Avastin and estimated such higher costs in the amount of €540 million in 2013 and €615 million in 2014. While such higher costs have not been taken into account by AGCM in defining applicable sanctions, but rather to show that the practice of Roche and Novartis had actual effects on competition, they quickly became the basis for a claim by the Italian Ministry of Health, who – soon after the AGCM decision – stated that it is willing to seek reimbursement for damages suffered as a consequence of the alleged anticompetitive arrangements.

V. NEW LEGISLATION AND CASE-LAW ON OFF-LABEL PRESCRIPTION

Following the decision of AGCM and the interest generated in the public opinion by the Avastin-Lucentis case, the Italian Government enacted a law decree (36/2014) significantly extending the possibilities for off-label prescription of drugs. The new legislation, in particular, provides that off-label prescription is allowed and reimbursement is warranted even if a valid alternative drug duly authorized for the concerned indication exists. The possibility to obtain reimbursement for such drugs is subject to their inclusion in the List 648, upon an assessment by AIFA that their use is appropriate and cost-effective. In addition, off-label use must be recognized by the scientific community and must be in line with Italian and international researches. Lastly, AIFA may also take appropriate monitoring measures to ensure patients’ safety, and is thus authorized to act independently in the event that the concerned pharmaceutical company fails to take action.

This new legislation appears to lessen the restrictions on off-label prescription previously introduced, and allows AIFA broad authority to expand the list of reimbursable off-label drugs. Contrary to past legislation, however, for the first time off-label regulations explicitly factor in the cost-effectiveness of off-label prescriptions in order to determine their reimbursement.

Only a few months after the AGCM decision and the enactment of new legislation, the Constitutional Court also decided a dispute regarding the prescription of Avastin. In fact, following the 2012 cancellation of Avastin from List 648, many Italian regions continued to recommend the use of Avastin in the treatment of AMD, giving rise to a dispute with Novartis. One of these disputes reached the Italian Constitutional Court, which on May 19, 2014 held that AIFA always had the power to conduct an independent assessment of valid alternative treatments, based not only on authorized indications but also on economic efficiency for the national health service, de facto authorizing AIFA to include products in the List 648 for off-label use and reimbursement, even if an alternative treatment is approved and marketed, but comes at a higher price.

VI. CONCLUSIONS

The AGCM decision already had the effect of triggering an independent investigation into this matter in France and, although still subject to judicial review, is likely to generate further litigation in the next months with the Italian Ministry of Health and other authorities abroad. In addition, the regulations enacted in the aftermath of the AGCM decision can be expected to trigger new actions from AIFA aimed at extending off-label use of drugs, to the extent that such use may serve the purpose of complying with budget restrictions.

Aside from the details of the Avastin-Lucentis case, however, the key takeaway for the pharmaceutical industry is that compliance with the regulatory framework no longer shields pharmaceutical companies from antitrust investigations. AGCM made it very clear that it will independently assess commercialization and marketing strategies of pharmaceutical companies, regardless of their formal compliance with regulatory requirements. Moreover, AGCM expressly stated that the marketing authorization is an entry barrier and cannot be used to determine the relevant market. If other authorities across the world are willing to follow this path, it might well be time for the industry to reassess their marketing strategies.