In a Legal Pulse post last month, Is FTC Becoming an All-Purpose Health Care Cost Regulator?, we examined a brewing controversy over some prescription drug makers’ refusal to sell certain drugs to generic drug manufacturers. Generic makers want large amount of the “reference listed drug” that they intend to copy for testing purposes. Branded drug makers have cited legal and safety concerns in refusing to sell treatments which are subject to federally mandated “Risk Evaluation and Management Strategies” (REMS).

The Chairman of the Federal Trade Commission finds such refusals to sell branded drugs to be “particularly troubling” and FTC is investigating whether Celgene’s decision not to sell a REMS-covered drug to a generic manufacturer was anti-competitive. In our May post we argued that if refusals to sell are contrary to the public interest, we’d prefer it is Congress, and not federal regulators, that takes action. Through legislation reauthorizing the drug user fee process, the Senate in fact proposed a process where branded companies would have to sell treatments to generic companies. The House of Representatives did not, however, include such a provision in its drug user fee bill.

This week, the Senate voted on a final Senate-House version of the bill, S. 3187, which did not include the provision targeted at requiring branded product sales to generics.

The action in this area now shifts back to FTC, as well as to FDA and the federal courts. It is unclear how Congress’s decision to once again consider and ultimately omit language addressing branded companies’ refusal to sell will affect ongoing antitrust litigation between innovator Celgene and generic Dr. Reddy’s, or FTC’s investigation of Celgene.

There is also a Citizen Petition pending at FDA in which Dr. Reddy’s urged agency action against Celgene. Celgene argued in its 2009 reply that Congress has not authorized FDA to compel the sale of drugs subject to REMS. It argued that Congress’s consideration and specific final omission from the FDA Amendments Act of 2007 of a provision on drug sales was “compelling evidence” that FDA lacks statutory authority. Congress’s action (or more accurately, inaction) on this issue in S. 3187 may give greater force to Celgene’s argument.