REMS and Restricted Distribution Programs

Alex Brill
June 2017

The sustained concern over high drug prices has led policymakers to identify undue barriers to generic entry as a contributing factor. One such barrier is brand drug manufacturers’ misuse of Risk Evaluation and Mitigation Strategy (REMS) and other restricted access programs to block generic competition. This study explains how REMS programs and other strategies are misused and estimates the parameters of the problem in terms of the number of drugs potentially affected and their total sales.

REMS programs are sometimes required by the Food and Drug Administration to help ensure the safety of certain prescription drugs. Depending on the level of risk associated with a product, a REMS program can require restricted distribution of a drug. But brand drug firms have been accused of using this requirement to deny generic manufacturers access to drug samples, which generic firms need for bioequivalence testing. Brand companies also selfimpose restricted access programs on other products for the purpose of blocking access to drug samples.

There may of course be additional barriers to generic entry that generic manufacturers need to navigate, and not every restricted distribution program is necessarily used to block generic entry. But understanding the scale and scope of the restricted access drug segment offers a picture of the size of the potential problem.

The analysis presented in this study finds that the restricted access drug segment comprises 74 drugs with total sales of $22.7 billion in 2016:

  • Forty-one of the drugs are restricted by REMS programs, with sales totaling $11.5 billion in 2016.
  • The remaining 33 drugs are restricted by nonREMS programs, with total sales of $11.2 billion in 2016.
  • Seven of the drugs (four restricted by REMS programs and three restricted by non-REMS programs) have sales over $1 billion; these seven drugs represent just over 50 percent of total sales.

Given the size and scope of the pharmaceutical market subject to a REMS or similar distribution restriction, this issue warrants attention on the scale of other high-priced drugs that have generated headlines and Congressional inquiries. There are valid public health reasons for restricted access programs for certain drugs, but misuse of these programs to block generic competition has a direct negative impact on consumers and taxpayers.

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