REMS: The Regulatory Shield Blocking Affordable Generics

In pharmaceutical regulation, few programs embody a more profound paradox than the U.S. Food and Drug Administration’s (FDA) Risk Evaluation and Mitigation Strategies, or REMS. Conceived as a critical safeguard for patient safety, REMS were designed to manage the risks of powerful medications, ensuring that their benefits outweigh their potential for serious harm.¹ This noble intention allowed drugs that might otherwise be deemed too dangerous to reach the patients who desperately needed them. Yet, in the high-stakes arena of pharmaceutical commerce, even the most well-intentioned shield can be reforged into a sword.

Over the past decade, this patient safety program has been systematically co-opted into a formidable commercial weapon, a regulatory shield used by brand-name drug manufacturers to protect blockbuster profits from the threat of lower-cost generic and biosimilar competition. The very mechanisms designed to create a closed loop of safety—restricting who can prescribe, dispense, and receive a drug—inadvertently created a commercial chokepoint. By controlling this chokepoint, brand firms found they could legally obstruct the pathway Congress had established decades earlier to bring affordable medicines to the American public.

This report delves into the complex story of REMS, tracing its journey from a well-intentioned policy to a weaponized anticompetitive tool. We will begin by deconstructing the architecture of the REMS program, exploring its legislative origins in the landmark Food and Drug Administration Amendments Act of 2007 (FDAAA) and dissecting its core components, particularly the powerful Elements to Assure Safe Use (ETASU).³ From there, we will pull back the curtain on the specific tactics brand manufacturers have employed to exploit these safety protocols, from outright refusal to sell drug samples necessary for generic testing to strategic delays in regulatory negotiations and the audacious patenting of the REMS process itself.

The economic consequences of these actions are staggering. We will quantify the multi-billion-dollar annual cost imposed on the U.S. healthcare system, a burden borne by patients, employers, and taxpayers alike. But this is not merely a story of a problem; it is also one of a solution. We will provide a comprehensive analysis of the legislative response—the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act of 2019—examining its mechanics, its remarkable effectiveness in leveling the playing field, and the lessons it holds for future policymaking.⁵

Finally, we will look to the horizon, exploring the evolving challenges in this space, particularly for complex biosimilars, and offering a strategic playbook for industry professionals. For those in the generic and biosimilar sectors, understanding this landscape is not an academic exercise; it is a critical component of turning regulatory data into a decisive competitive advantage. This is the story of how a shield for patients became a fortress for profits, and how a legislative key was forged to unlock the gates.

The Architect’s Intent: Understanding the Genesis and Purpose of REMS

To fully grasp how the REMS program became a tool for anticompetitive behavior, one must first understand its origins and intended purpose. REMS were not created in a regulatory vacuum. They represent the culmination of decades of evolving thought at the FDA on how to manage the inherent risks of increasingly potent and complex medicines, ensuring that the promise of therapeutic innovation does not come at an unacceptable cost to patient safety.

From RiskMAPs to Mandates: The Legislative Power of the FDAAA of 2007

The direct lineage of REMS can be traced back to earlier, iterative FDA safety initiatives that reach as far back as the 1960s. In the years immediately preceding the formalization of REMS, the FDA utilized a more voluntary framework known as Risk Minimization Action Plans (RiskMAPs). Established in the mid-2000s, RiskMAPs were designed to support the safe use of products with known serious risks, and the agency published guidance to help sponsors develop these plans. However, these plans were largely voluntary and lacked the enforcement teeth that many felt were necessary to adequately protect the public.

The turning point came on September 27, 2007, with the enactment of the Food and Drug Administration Amendments Act (FDAAA). This sweeping legislation dramatically expanded the FDA’s authority over post-market drug safety. A cornerstone of the FDAAA was Section 505-1 of the Food, Drug, and Cosmetic Act, which officially authorized the agency to require a REMS from a manufacturer if it determined that such a strategy was necessary to ensure a drug’s benefits outweighed its risks.³ This authority could be exercised either before a drug’s initial approval or after it was already on the market if new safety information came to light.

Many of the principles that had informed the earlier RiskMAPs were carried over into the new, mandatory REMS framework. In fact, under the FDAAA, existing products with RiskMAPs that contained the most restrictive types of controls—what would come to be known as Elements to Assure Safe Use (ETASU)—were automatically deemed to have a REMS in effect, and their sponsors were required to submit a formal REMS proposal to the FDA for approval.

The FDA’s decision to require a REMS is not arbitrary. The agency considers a slate of six key factors in its determination ⁷:

The estimated size of the population likely to use the drug.
The seriousness of the disease or condition being treated.
The expected benefit of the drug.
The expected duration of treatment.
The seriousness of known or potential adverse events.
Whether the drug is a new molecular entity.

This risk-based approach ensures that the most burdensome regulatory requirements are reserved for situations where they are most needed. However, the very language of the FDAAA contained the seeds of the future conflict that would define the REMS debate for the next decade. While empowering the FDA to create these potentially restrictive programs, Congress also included crucial caveats. The statute stipulated that any ETASU must not be “unduly burdensome on patient access to the drug” and must, “to the extent practicable, minimize the burden on the health care delivery system”.⁷ This created an inherent tension within the law itself. On one hand, the FDA was directed to implement robust, and if necessary, restrictive safety controls. On the other, these controls were not to impede access or unduly burden the healthcare system. It was this very tension that brand manufacturers would later exploit, focusing on the necessity of restrictive elements for safety while their generic competitors and patient advocates would point to the “unduly burdensome” language to challenge anticompetitive misuse. The stage was set for a protracted legal and regulatory battle, with both sides able to point to the original statute to justify their position.

The Anatomy of a REMS Program: Beyond the Label

A common misconception is that all REMS programs are monolithic. In reality, a REMS can be composed of several distinct components, ranging from simple informational materials to highly complex, multi-layered systems of control.² The specific elements required for any given drug are tailored to the nature and severity of its associated risks. Understanding this anatomy is crucial, as the potential for anticompetitive abuse is concentrated almost exclusively in the most stringent and complex tier of the REMS framework.

Medication Guides and Communication Plans: The Informational Layer

The most basic and common components of a REMS are the Medication Guide and the Communication Plan.¹¹ These are purely informational tools designed to educate key stakeholders about a drug’s risks and safe use conditions.

A Medication Guide is an FDA-approved handout for patients, written in non-technical, patient-friendly language.¹³ It is typically dispensed with the prescription. The FDA may require a Medication Guide as part of a REMS if it determines that patient labeling could help prevent serious adverse events, if the drug has serious risks that could influence a patient’s decision to use it, or if patient adherence to specific directions is critical for the drug’s effectiveness.¹² For example, the REMS for the anticoagulant Xarelto (rivaroxaban) includes a Medication Guide to warn patients of the increased risk of stroke if they stop taking the drug without consulting their doctor.

A Communication Plan is directed at healthcare professionals, including prescribers and pharmacists.² Its purpose is to support the implementation of the REMS and ensure that providers are fully aware of the drug’s risks and the specific actions required to mitigate them. These plans often involve “Dear Healthcare Professional” letters, the dissemination of educational materials through professional societies, or information about specific safety protocols, such as the need for periodic lab monitoring.¹¹ The REMS for Arcapta Neohaler (indacaterol), for instance, included a communication plan to inform providers about the increased risk of asthma-related death associated with its drug class and to reinforce its proper use only for its approved indication, COPD.

From a market competition perspective, these informational components are largely benign. They educate and inform, but they do not create any physical barriers to the drug’s supply chain. As such, they offer little to no opportunity for a brand manufacturer to block a generic competitor. The strategic significance of these components lies in their prevalence. In the early years of the program, the vast majority of REMS consisted only of these informational tools. A 2014 study noted that in 2009, roughly 75% of REMS programs required only Medication Guides. The subsequent and dramatic shift toward more restrictive REMS components is a key indicator of the evolving landscape and the growing potential for abuse.

ETASU: The High-Stakes World of Elements to Assure Safe Use

At the apex of the REMS hierarchy are the Elements to Assure Safe Use, or ETASU. These are not merely informational; they are required medical interventions or other actions that healthcare professionals and patients must perform before a drug can be prescribed or dispensed.¹² ETASU are reserved for drugs with known serious risks that would otherwise be unavailable to patients. They are the FDA’s most powerful tool for managing risk, and they are the primary engine of REMS abuse.

Depending on the specific risk, a REMS with ETASU can require one or more of the following ¹²:

Healthcare Provider Training or Certification: Prescribers may be required to complete special training or become certified to demonstrate they understand the drug’s risks and how to manage them.
Dispenser Certification: Pharmacies, hospitals, or other healthcare settings that dispense the drug may need to be certified, agreeing to follow specific procedures and verify safe-use conditions.
Restricted Dispensing/Administration: The drug may only be administered in specific, controlled settings, such as hospitals or infusion centers, that are equipped to handle potential adverse events.
Documentation of Safe-Use Conditions: Dispensing may be contingent upon evidence that certain conditions have been met. A classic example is a negative pregnancy test for a drug that causes severe birth defects.
Patient Monitoring: Patients may be subject to regular monitoring, such as periodic lab tests, to detect early signs of a serious side effect like liver damage.
Patient Enrollment in a Registry: Patients may be required to enroll in a registry that tracks their treatment and any adverse events, providing valuable long-term safety data.

The very purpose of ETASU is to create a tightly controlled, closed-loop system for a drug’s distribution and use. From a patient safety perspective, this is not a flaw; it is the intended design. The system is meant to ensure that every participant—prescriber, pharmacist, and patient—is aware of the risks and adheres to the necessary precautions.

The anticompetitive nature of ETASU arises from an unforeseen consequence of this design. By creating a closed distribution network, the brand manufacturer, as the sponsor of the REMS, becomes the gatekeeper. The law governing generic drug approval, however, requires a potential generic competitor to obtain physical samples of the brand product for testing. This created a fundamental conflict: a generic manufacturer, a legitimate competitor, was now legally required to gain access to a closed system that was controlled entirely by the very company whose market it sought to enter. The brand manufacturer was handed, on a silver platter, the power to deny its competitors the one thing they needed to exist. The following table illustrates the concrete reality of these restrictions for several well-known drugs.

Drug Name (Brand)	Sponsor(s)	Indication(s)	Risk Mitigated by REMS	Specific ETASU Requirements
Vigabatrin (Sabril)	Lundbeck	Refractory Complex Partial Seizures, Infantile Spasms	Permanent Vision Loss	Prescriber certification; Pharmacy certification; Patient enrollment; Periodic vision assessment ¹⁵
Isotretinoin (e.g., Absorica, Claravis)	Multiple	Severe Recalcitrant Nodular Acne	Severe Birth Defects (Teratogenicity)	iPLEDGE Program: Prescriber, pharmacy, and patient registration; Monthly negative pregnancy tests for females of reproductive potential ²⁰
Lenalidomide (Revlimid)	Celgene (Bristol Myers Squibb)	Multiple Myeloma, Myelodysplastic Syndromes	Embryo-fetal Toxicity; Hematologic Toxicity	Prescriber and pharmacy certification; Patient enrollment in registry; Negative pregnancy tests required ¹⁸
Thalidomide (Thalomid)	Celgene (Bristol Myers Squibb)	Multiple Myeloma, Erythema Nodosum Leprosum	Embryo-fetal Toxicity; Thromboembolism	Prescriber and pharmacy certification; Patient enrollment in registry; Negative pregnancy tests required ¹⁸
Riociguat (Adempas)	Bayer	Pulmonary Arterial Hypertension (PAH)	Embryo-fetal Toxicity (Teratogenicity)	Prescriber and pharmacy certification; Mandatory baseline and monthly pregnancy tests for females of reproductive potential ¹⁸
Clozapine (e.g., Clozaril)	Multiple	Treatment-Resistant Schizophrenia	Severe Neutropenia (Agranulocytosis)	Prescriber, pharmacy, and patient enrollment; Regular blood monitoring (Absolute Neutrophil Count) ¹⁸ (Note: This REMS was eliminated in Feb. 2025 )
Sodium Oxybate (Xyrem)	Jazz Pharmaceuticals	Narcolepsy (Cataplexy and Excessive Daytime Sleepiness)	Central Nervous System and Respiratory Depression; Potential for Abuse/Misuse	Prescriber certification; Patient enrollment; Dispensing only through a single, centralized pharmacy ¹⁸
Natalizumab (Tysabri)	Biogen	Multiple Sclerosis, Crohn’s Disease	Progressive Multifocal Leukoencephalopathy (PML)	Prescriber, infusion center, and patient enrollment in TOUCH Prescribing Program; Periodic reassessment ¹⁸

The Generic Approval Gauntlet: Why Access to Samples is a Matter of Life or Death for Generics

The strategic power of a REMS with ETASU as an anticompetitive tool can only be understood in the context of the generic drug approval pathway. The entire modern generic industry is built upon the foundation of the Drug Price Competition and Patent Term Restoration Act of 1984, more commonly known as the Hatch-Waxman Act.²⁷ This landmark legislation was a grand bargain designed to balance two competing interests: incentivizing brand-name innovation through patent extensions while simultaneously encouraging robust price competition through an expedited approval process for generics.

Before Hatch-Waxman, a generic manufacturer faced a monumental task. To get a drug approved, it had to conduct its own expensive and time-consuming clinical trials to independently prove the drug’s safety and efficacy, essentially replicating the work the brand company had already done. This created an enormous barrier to entry, and as a result, generic competition was scarce.

Hatch-Waxman revolutionized this landscape by creating the Abbreviated New Drug Application, or ANDA.²⁷ The genius of the ANDA process was that it allowed a generic manufacturer to bypass the need for new clinical trials. Instead of proving safety and efficacy from scratch, the generic firm could rely on the FDA’s previous findings for the original brand-name drug, known as the Reference Listed Drug (RLD).²⁵ The core of the ANDA submission became the demonstration of

bioequivalence. The generic company had to prove, through scientific testing, that its product delivered the same active ingredient to the bloodstream at the same rate and to the same extent as the RLD. If it could prove this, along with meeting standards for manufacturing and labeling, the generic drug was considered therapeutically equivalent and could be approved.

This elegant solution, however, contained a critical dependency: the entire process hinged on a direct, physical comparison between the proposed generic and the existing brand-name RLD. To conduct bioequivalence studies, a generic developer needs a sufficient quantity of the RLD to use as the comparator in its tests.²⁵ For most drugs, obtaining these samples is a simple commercial transaction; the generic company simply buys the RLD on the open market from a wholesaler, just like any other customer.

This is where the collision course between Hatch-Waxman and the FDAAA was set. The pro-competition framework of Hatch-Waxman, designed in 1984, was predicated on the assumption of an open supply chain for approved drugs. It streamlined the regulatory pathway but made the development pathway entirely dependent on physical access to the RLD. Decades later, the FDAAA of 2007 introduced REMS with ETASU, a safety framework that, for the first time, gave brand manufacturers a government-sanctioned reason to create a closed supply chain.²⁷

This created an unforeseen and devastating vulnerability for the generic industry. The very mechanism that made generic drugs economically viable—the reliance on bioequivalence testing instead of full clinical trials—became a single point of failure. By seizing control of this single point, brand manufacturers could effectively slam the door on competition, not by challenging a generic’s science or its legal right to exist, but by simply denying it the physical materials required to complete its regulatory paperwork. A safety regulation from 2007 had inadvertently provided the means to dismantle the competitive balance carefully constructed by a landmark law from 1984.

Weaponizing Safety: The Three Core Tactics of REMS Abuse

With a clear understanding of the regulatory landscape, we can now examine the specific strategies brand-name manufacturers have deployed to transform REMS from a patient safety tool into a powerful instrument of market protection. These tactics are not theoretical; they have been well-documented by regulators, litigated in federal courts, and have been the subject of congressional hearings and legislative action. They generally fall into three distinct but often overlapping categories: the sample blockade, the negotiation filibuster, and the intellectual property gambit.

The Sample Blockade: Denying the Keys to the Generic Kingdom

The most direct and widely publicized form of REMS abuse is the “sample blockade.” This tactic involves the brand manufacturer leveraging its REMS-mandated restricted distribution system to simply refuse to sell the required RLD samples to a generic or biosimilar developer.³³

The brand company’s rationale, at least on the surface, is rooted in the language of safety. The manufacturer will claim that providing samples to a third party for testing would violate the terms of its FDA-approved REMS, potentially endangering study participants and exposing the brand company to liability.²⁵ This argument creates a powerful shield, as it frames a commercial decision in the virtuous language of patient protection.

This practice quickly became a significant concern for regulators. Dr. Janet Woodcock, then-director of the FDA’s Center for Drug Evaluation and Research (CDER), testified before Congress that these abuses were “a problem we struggle with a lot” and had definitively “delayed [the] availability of generics”. Her colleague, Dr. John Jenkins, went further, stating that companies had “gone to the extent of kind of abusing the system” and that REMS had “become an evergreening system for avoiding generic competition”. The Federal Trade Commission (FTC) echoed these concerns, filing amicus briefs in private litigation and warning that this conduct “undermines the careful balance created by the Hatch-Waxman Act” and may violate antitrust laws.³⁸

The real-world impact of this strategy is best illustrated through high-profile case studies:

Celgene (Revlimid and Thalomid): Perhaps the most notorious examples involve Celgene’s blockbuster cancer drugs, Revlimid (lenalidomide) and Thalomid (thalidomide). Both drugs carry a severe risk of birth defects and are subject to stringent REMS with ETASU that require all samples to be sourced directly from the company. Citing these REMS, Celgene repeatedly refused to sell samples to generic manufacturers, including Mylan (now Viatris), which needed them to conduct bioequivalence testing for its ANDA. This refusal sparked years of costly and complex litigation, during which Celgene continued to reap billions in monopoly profits. The lawsuit alleged a multifaceted scheme to prevent competition, with the REMS sample blockade at its core.
Actelion (Tracleer): Actelion, manufacturer of the pulmonary arterial hypertension drug Tracleer (bosentan), also used its REMS program to deny samples to generic firms Apotex and Roxane Laboratories. In a particularly aggressive move, Actelion filed a preemptive lawsuit in 2011 asking a federal court to declare that it was not legally required to supply the samples.²⁵ While the case was eventually settled confidentially, the brand company’s actions successfully delayed generic entry for a significant period.

The brilliance of the sample blockade, from the brand company’s perspective, lies in its effectiveness as a delaying tactic. The ultimate legal question of whether the refusal to sell violates antitrust law is complex and uncertain. By forcing the generic company into this legal quagmire, the brand firm achieves its primary objective—delay—even if it ultimately loses the court case or settles. Every month of delay is another month of monopoly sales, often worth hundreds of millions of dollars, far outweighing any potential legal costs.

The Negotiation Filibuster: Delaying Generic Entry Through Shared System Stalemates

A subtler but equally effective tactic involves exploiting the requirement for a single, shared system (SSS) REMS. As established by the FDAAA, when a brand drug with ETASU faces generic competition, the brand and generic companies are generally required to collaborate and implement a single, unified REMS program that covers all versions of the drug. The goal is to reduce confusion and administrative burden on the healthcare system; a doctor or pharmacist should only have to deal with one set of rules and one system for a given drug, regardless of whether the patient receives the brand or a generic.

While logical from a public health standpoint, this requirement created another opportunity for strategic delay. Brand manufacturers could engage in what can only be described as a “negotiation filibuster”.¹⁶ Because the FDA would not approve the generic’s ANDA until the SSS REMS was agreed upon and submitted, the brand company held de facto veto power over the generic’s launch timeline.

The brand company could appear to be negotiating in good faith while systematically stalling the process. This could involve ⁴¹:

Endless procedural delays and requests for more information.
Raising complex and difficult-to-resolve legal issues concerning product liability, indemnification, and data confidentiality.
Disputes over the cost-sharing formula for maintaining the shared system.
Refusing to license any patented elements of the REMS program.

The result was a widespread stalemate. As of early 2018, a decade after the REMS program began, only 10 of the 72 existing REMS programs were shared systems, a clear indicator of how difficult and protracted these negotiations were.⁴¹ The FDA itself recognized the problem, sending letters to manufacturers expressing concerns over their efforts to delay the creation of shared systems for at least four different products. This tactic was a perfect example of death by a thousand cuts. There was no single, dramatic action like a refusal to sell, but rather a slow, grinding process of attrition designed to exhaust the generic applicant’s time and resources, all while the brand’s monopoly clock kept ticking.

The Intellectual Property Gambit: Patenting the REMS Process Itself

Perhaps the most audacious and legally complex strategy involves weaponizing the U.S. patent system. In this gambit, brand-name manufacturers obtain patents not on the drug itself, but on the methods and systems used to comply with the government-mandated REMS program.²⁴

For example, a company might patent the specific process of verifying a patient’s eligibility, the software used to manage a patient registry, or the logistical system for its restricted distribution network. Celgene, for instance, holds patents on the restricted distribution program established by the REMS for Thalomid.

This strategy creates a profound catch-22 for generic competitors. To gain FDA approval, the generic company must adopt the same REMS as the brand product or a comparable one that achieves the same level of safety. If the brand company has patented that REMS process, the generic manufacturer is faced with an impossible choice: either violate FDA regulations by not having a compliant REMS, or commit patent infringement by implementing the required safety program.

The situation is exacerbated by the brand company’s ability to list these REMS patents in the FDA’s “Approved Drug Products with Therapeutic Equivalence Evaluations,” commonly known as the Orange Book. Under the Hatch-Waxman Act, when a generic company challenges a patent listed in the Orange Book, it automatically triggers a 30-month stay of the generic’s approval while the patent litigation proceeds. This allows the brand firm to secure a two-and-a-half-year delay in competition simply by listing a potentially invalid or non-infringed REMS patent and filing a lawsuit.

This tactic fundamentally transforms a public safety mandate into a private commercial asset. The logical steps are as perverse as they are effective:

The FDA, a government agency, mandates a REMS to protect public health.
The brand company develops the specific operational processes to comply with this government mandate.
The brand company then secures a government-granted patent monopoly on those compliance processes.
A generic competitor, as required by law, must implement a similar safety process to enter the market.
The brand company sues the generic for infringing its patent on the government-mandated safety process, triggering a lengthy delay.

This strategy represents a sophisticated fusion of regulatory and intellectual property law, designed to create a nearly impenetrable fortress around a brand-name drug, long after its core patents on the active ingredient have expired.

The High Cost of Delay: Quantifying the Economic Fallout of REMS Misuse

The anticompetitive tactics employed under the guise of REMS compliance are not merely abstract legal and regulatory maneuvers; they have a direct, substantial, and detrimental financial impact on the entire U.S. healthcare ecosystem. By successfully delaying the entry of affordable generic and biosimilar alternatives, brand manufacturers preserve their monopoly pricing power, forcing patients, health plans, and government programs to pay billions of dollars more than they otherwise would.

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The ongoing abuse of REMS and restricted distribution programs costs the U.S. health system $5.4 billion annually. This amount represents the annual lost savings for just forty products included in one analysis; additional products continue to become subject to REMS programs on an ongoing basis. 37

The most widely cited quantification of this economic damage comes from a landmark July 2014 study conducted by Matrix Global Advisors on behalf of the Generic Pharmaceutical Association (now the Association for Accessible Medicines, or AAM). The study’s findings were stark, estimating that the misuse of REMS and other restricted access programs was costing the U.S. healthcare system $5.4 billion in lost savings every year.¹⁶

The methodology behind this figure is crucial to understanding the scale of the problem. The researchers identified 40 specific small-molecule drugs for which generic manufacturers reported their market entry was being actively delayed by these restrictive tactics. Using 2013 sales data, they then applied a conservative model to calculate the potential savings that were being forgone. The calculation was based on two key metrics well-established in health economics:

Average Generic Price Discount: The study assumed a 75% price reduction for generics compared to their brand-name counterparts, a figure consistent with estimates from the Congressional Budget Office (CBO).
Average Generic Substitution Rate: It was assumed that once a generic becomes available, it will be used to fill prescriptions 95% of the time, a standard industry metric reflecting the rapid uptake of lower-cost alternatives.

By multiplying the brand sales of these 40 drugs by these two factors, the study arrived at the $5.4 billion annual figure. The breakdown of this financial burden reveals a system-wide impact :

$2.4 billion borne by private health insurance plans.
$1.8 billion borne by the federal government through programs like Medicare and Medicaid.
$960 million paid directly out-of-pocket by patients.
$240 million borne by state and local government payers.

This data is powerful because it translates the abstract concept of “delayed competition” into the concrete reality of higher insurance premiums, increased taxpayer burdens, and unaffordable co-pays for families. The economic logic is simple and powerful. Generic competition is the single most effective mechanism for reducing drug prices in the United States. Studies have shown that the entry of just one generic competitor can reduce the brand’s price by only a small amount, but as more generics enter, prices plummet, often falling to less than 20% of the original brand price when multiple competitors are in the market.²⁸ Every day that this competition is delayed is a day that monopoly prices are maintained.

It is critical to recognize that the staggering $5.4 billion figure, while widely cited, is almost certainly a significant underestimate of the problem’s true scope today. The analysis was conducted in 2014 and was based on a limited sample of just 40 drugs. In the years since, the number of drugs with REMS has grown, particularly among high-cost specialty drugs and biologics where the potential savings from competition are even greater. The study itself warned that if the problem were to grow, the lost savings would increase, and it specifically highlighted the enormous potential for lost savings in the biologics market—projecting approximately $140 million in lost savings for every $1 billion in biologics sales blocked from biosimilar competition.³³

Furthermore, the cost of REMS abuse cannot be measured in dollars alone. High drug prices are a significant barrier to patient access and adherence. National data shows that nearly one in four adults taking prescription drugs find them difficult to afford, and a significant percentage report not taking their medication as prescribed to save money.⁴⁵ For patients facing these affordability challenges, the delay of a generic version of their essential medication is not just a financial inconvenience; it can lead to worsened health outcomes, disease progression, and, in the most tragic cases, preventable deaths. The economic fallout of REMS misuse, therefore, is a story told not only in budgets and balance sheets but also in the health and well-being of the American public.

The Counteroffensive: Crafting a Legislative Key to a Regulatory Lock

As the evidence of REMS abuse mounted and the economic costs became undeniable, pressure grew on Congress to intervene. The existing legal framework was proving inadequate. The FDAAA’s prohibition on using REMS to block generic approval lacked a specific enforcement mechanism, and the FDA itself maintained that it did not have the authority to compel the sale of samples.³⁵ Antitrust lawsuits brought by generic companies were slow, expensive, and uncertain, with courts offering conflicting interpretations of a monopolist’s duty to deal with a competitor. A more direct and decisive solution was needed.

After years of advocacy from generic manufacturers, patient groups, and regulators, that solution arrived in December 2019 with the passage of the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act.⁵ This bipartisan legislation was not a sweeping overhaul of the REMS program. Instead, it was a piece of surgical policy, narrowly tailored to dismantle the specific anticompetitive loopholes that brand manufacturers had been exploiting.

The CREATES Act of 2019: A Surgical Strike Against Anticompetitive Loopholes

The CREATES Act was designed with two primary objectives: to break the sample blockade and to end the negotiation filibuster for shared REMS systems.³⁵ It achieved these goals by creating clear, enforceable pathways for generic and biosimilar developers to obtain what they needed to proceed with their regulatory applications.

Creating a Right of Action: Empowering Generic Developers to Secure Samples

The centerpiece of the CREATES Act is the establishment of a new private right of action.³⁵ For the first time, a generic or biosimilar developer facing a sample blockade could sue the brand manufacturer in federal court to compel the sale of the necessary RLD samples.

The mechanics of this process are straightforward and designed for expediency :

The generic developer must first make a formal written request to the brand manufacturer for samples.
If the brand manufacturer fails to deliver sufficient quantities on “commercially reasonable, market-based terms” within 31 days, the developer can file a civil action.
If the court finds in favor of the developer, it must order the brand manufacturer to provide the samples without delay.
Crucially, the court is also required to award attorney’s fees and costs to the prevailing developer, removing the financial disincentive to sue.
Furthermore, if the court determines that the brand manufacturer delayed providing the samples without a “legitimate business justification,” it can award monetary damages to the developer, capped at the revenue the brand earned on the product during the period of delay.

To address the safety concerns that brand companies had long used as a justification for their refusal to sell, the Act incorporated the FDA directly into the process for REMS-restricted drugs. If the RLD is subject to a REMS with ETASU, the generic developer must first submit its bioequivalence testing protocols to the FDA and obtain a Covered Product Authorization (CPA).³⁵ This CPA serves as an official letter from the FDA confirming that the developer’s safety protocols are comparable to the brand’s REMS and that providing the samples would not be considered a violation of the REMS.²⁵ This step effectively neutralizes the brand’s safety argument, as the FDA itself has vetted and approved the developer’s handling procedures.

Streamlining Safety Protocols: Breaking the Shared System Deadlock

The CREATES Act also decisively addressed the problem of the negotiation filibuster. It fundamentally altered the dynamic for creating shared REMS systems by “flipping the presumption”.

Prior to the Act, a generic developer was locked into a negotiation with the brand company, with no clear end in sight. The CREATES Act changed this by amending the statute to allow a developer to propose its own, different-but-comparable REMS system to the FDA as an alternative to a shared system.⁶ This means that a generic company is no longer held hostage in negotiations. It can attempt to negotiate a shared system, but if the brand company is uncooperative or engages in delay tactics, the generic developer now has a clear path forward: it can simply develop its own compliant REMS and submit it to the FDA for approval. This simple change completely removed the brand manufacturer’s veto power and its ability to use the shared system requirement as a tool for indefinite delay.

Assessing the Aftermath: Is the CREATES Act Working?

Since its enactment in late 2019, the evidence strongly suggests that the CREATES Act has been remarkably effective at achieving its goals. Its success lies not in a flood of litigation, but in a fundamental shift in the strategic calculations of brand-name manufacturers.

On the issue of the sample blockade, the impact has been dramatic. According to a 2021 analysis by Michael Kades for the Washington Center for Equitable Growth, based on conversations with numerous representatives in the generic drug industry, the “longstanding problem of sample blockades has entirely or almost entirely disappeared”. Interestingly, the formal legal process created by the Act has reportedly been used very few times, if at all. The mere existence of a swift legal remedy, complete with the threat of monetary damages and attorney’s fees, was sufficient to change corporate behavior. Brand companies, recognizing that their old delaying tactics were no longer viable and could now result in significant financial penalties, began providing samples upon request.

The effect on the shared system deadlock was equally immediate and profound. The FDA’s Office of Generic Drugs, in its 2020 annual report, provided clear data showing the Act’s impact. Within just one year of the law’s passage, the agency had approved shared protocols for two products and a standalone generic protocol for a third. This represented a rate of progress that was completely unprecedented in the decade prior to the Act’s passage. With the threat of the negotiation filibuster removed, brand manufacturers suddenly became far more willing to cooperate and reach agreements on shared protocols in a timely manner.

The success of the CREATES Act offers a powerful lesson in effective, targeted policymaking. It did not require a complete overhaul of the REMS program, nor did it compromise the underlying patient safety goals. Instead, it identified the precise loopholes being exploited and created a credible threat of swift and certain consequences for anticompetitive behavior. This threat was enough to realign the incentives, restoring the intended balance between safety and competition. The Act fixed the problem not by forcing companies into court, but by fundamentally changing the game theory of the negotiation, making cooperation the most rational business strategy for all parties.

The New Battlefield: Evolving Challenges and the Future of REMS

While the CREATES Act successfully addressed the most egregious forms of REMS abuse that plagued the generic drug industry for over a decade, the landscape of pharmaceutical regulation and competition is perpetually evolving. The passage of the Act was not an end point but a significant milestone. New challenges are emerging, particularly on the complex frontier of biosimilars, and the REMS program itself is undergoing a period of modernization and reform. Navigating this new battlefield requires an understanding of both the unique hurdles facing biologic competitors and the future trajectory of FDA’s risk management philosophy.

The Biosimilar Frontier: Similar but Distinct Hurdles

Biosimilars, which are highly similar versions of complex biologic drugs derived from living organisms, represent one of the most significant opportunities for future healthcare savings.⁵³ However, biosimilar manufacturers face all the same REMS-related challenges as their small-molecule generic counterparts, often in an amplified form.⁵⁵

The core problems of sample access and shared system negotiations persist. Brand biologic manufacturers have been accused of using the same REMS-based tactics to limit patient access to biosimilars and delay their approval. The CREATES Act applies equally to biosimilar developers, providing them with the same legal recourse to obtain samples and break negotiation deadlocks. However, the underlying stakes and complexities are greater.

Biologics are exponentially larger and more complex than traditional small-molecule drugs, and their manufacturing processes are highly sensitive and difficult to replicate precisely.⁵⁴ Consequently, the regulatory pathway for a biosimilar, established by the Biologics Price Competition and Innovation Act (BPCIA), is more rigorous than the ANDA pathway for generics. Proving biosimilarity often requires a more extensive “totality-of-the-evidence” approach, which can include analytical studies, animal studies, and clinical studies in addition to the pharmacokinetic and pharmacodynamic data typical for generics.

This increased complexity has two major implications for REMS-related challenges:

Higher Development Costs: The development and testing required for a biosimilar are significantly more expensive and time-consuming than for a small-molecule generic. This means that any delay caused by REMS abuse has a much larger financial impact on a biosimilar developer, potentially jeopardizing the entire project’s viability.
Greater Sample Requirements: The more extensive testing needed may require larger quantities of the reference biologic, making any sample blockade more impactful.

Furthermore, the legal landscape for shared REMS is more ambiguous for biosimilars. While the FDA recommends that biosimilar and reference product sponsors collaborate on a single, shared system, it is not a strict statutory requirement as it is for ANDAs. This creates a different, less defined negotiating environment that can still be exploited for delay. Given that many of the most expensive drugs on the market are biologics with REMS programs, any impediment to biosimilar competition poses a monumental threat to healthcare affordability. REMS abuse in this context is not just a barrier to entry; it can be an existential threat to the still-nascent U.S. biosimilar market.

The Regulatory Horizon: Standardization, Modernization, and the Future of ETASU

In parallel with the legislative action of the CREATES Act, the FDA has been pursuing its own initiatives to modernize the REMS program, with a focus on reducing administrative burden and improving efficiency without compromising safety. These efforts signal the future direction of risk management and could have significant long-term implications for the industry.

A central pillar of this modernization effort is standardization. For years, stakeholders have complained that because each REMS program is unique and developed by its sponsor, the lack of standardization makes it difficult for healthcare systems to integrate these requirements into their workflows.⁵⁹ To address this, the FDA has taken several key steps:

Structured Product Labeling (SPL): As of December 28, 2022, all new and modified REMS documents must be submitted to the FDA in the SPL format.⁵⁹ SPL is a standardized, computable format that allows REMS information to be easily shared and incorporated into health information technology, such as electronic health records (EHRs) and pharmacy management systems.⁵⁹ The vision is to move REMS activities out of manual, paper-based processes and directly into the digital clinical workflow, which would reduce burden and improve data quality.
Standardized Language: In its 2023 guidance, the FDA provided a template with standardized language for describing common REMS requirements, encouraging applicants to use this language to promote consistency across programs.

Beyond standardization, the FDA is also demonstrating a more dynamic and evidence-based approach to the lifecycle of REMS programs. The agency is increasingly willing to modify or even eliminate REMS when data and clinical experience suggest they are no longer necessary or that their burden outweighs their benefit.¹⁸ Recent examples of this evolution include:

Elimination of the Clozapine REMS: In February 2025, the FDA eliminated the long-standing and notoriously burdensome REMS for the antipsychotic drug clozapine, following recommendations from an advisory committee and advocacy from professional groups who argued it was a significant barrier to patient care.
Modification of CAR-T Therapy REMS: The FDA has streamlined the REMS for CAR T-cell therapies by removing the requirement for mandatory reporting of certain well-understood side effects like cytokine release syndrome (CRS), reflecting a growing confidence in clinicians’ ability to manage these risks as part of standard practice.⁶⁴

The future of REMS appears to be a delicate balance. On one hand, novel and complex therapies, such as cell and gene therapies, will likely continue to require bespoke, stringent REMS with ETASU to manage their unique risks. On the other hand, for more established products and risks, the push will be toward simplification, standardization, and integration into the digital fabric of the healthcare system. This drive toward standardization and EHR integration could, in the long run, serve as a powerful deterrent to REMS abuse. When REMS requirements are embedded in standardized, transparent digital workflows, it becomes much more difficult for a single manufacturer to use a proprietary, opaque system as a competitive shield.

The Strategic Playbook: Turning Regulatory Data into Competitive Advantage

For professionals in the generic and biosimilar industries, the complex and evolving landscape of REMS is not just a regulatory hurdle; it is a strategic variable that must be factored into every stage of portfolio management and product launch planning. The days of simply tracking patent expiration dates are over. A successful market entry strategy now requires a sophisticated understanding of the “REMS landscape” and the proactive use of regulatory and patent data to navigate it. This section provides an actionable playbook for turning this complex data into a decisive competitive advantage.

Navigating the Patent Thicket: The Role of Competitive Intelligence

A generic drug’s journey to market is a race against time, and the primary obstacles are the brand manufacturer’s intellectual property protections. Brand firms do not rely on a single patent. Instead, they often create a dense “patent thicket” by obtaining numerous secondary patents on ancillary aspects of a drug, such as its formulation, method of administration, or specific metabolites, to extend its market exclusivity long after the initial patent on the active ingredient has expired.⁶⁶

Successfully navigating this thicket is the cornerstone of generic strategy. Generic firms must decide which patents to challenge in court via a Paragraph IV certification, a high-stakes legal battle that, if successful, can lead to an earlier market entry.²⁸ Research shows that these challenges are not random; they are highly strategic. A 2024 study found that patent challenges can be predicted with over 80% accuracy, with the single most important predictor being the brand drug’s market size. Blockbuster drugs with large revenues are far more likely to attract patent challenges because the potential rewards for the generic winner are immense.

Into this complex calculation, REMS status must now be integrated as a critical variable. A high-value target drug with an expiring patent portfolio is one thing; a high-value target with a complex, ETASU-based REMS is an entirely different strategic proposition. The due diligence process for a potential generic candidate must now include a thorough assessment of its REMS landscape, asking key questions:

Does the drug have a REMS? If so, what are its specific components?
Does the REMS include ETASU that involve a restricted distribution system?
Has the brand manufacturer patented any elements of its REMS program?
Is there a history of the brand manufacturer engaging in sample blockades or negotiation filibusters for other drugs in its portfolio?

Answering these questions allows a generic firm to more accurately assess the risks, potential delays, and additional legal costs associated with a particular product, leading to more informed portfolio decisions.

Leveraging Platforms like DrugPatentWatch for Market Entry Strategy

To conduct this level of sophisticated analysis, generic and biosimilar firms increasingly rely on integrated competitive intelligence platforms. Services like DrugPatentWatch provide a comprehensive, multi-faceted view of the pharmaceutical landscape by aggregating data from the FDA, the U.S. Patent and Trademark Office, court records, and international regulatory bodies into a single, searchable database.⁶⁹

These platforms are essential tools for a modern, REMS-aware market entry strategy. While they may not be marketed specifically as “REMS trackers,” their integrated data allows a strategic analyst to build a complete picture of a target product’s competitive environment. A generic firm can use a platform like DrugPatentWatch to execute a multi-step strategic analysis:

Identify High-Value Opportunities: The first step is to use the platform’s database to screen for drugs with significant market sales whose key patents are nearing expiration. This creates a shortlist of commercially attractive targets.⁷⁰
Assess the REMS Hurdle: The analyst would then cross-reference this shortlist with the FDA’s publicly available database of approved REMS programs.⁵⁰ If a promising target is found to have a REMS with ETASU, it is flagged for a deeper, more cautious evaluation. The strategic complexity and potential for delay have just increased significantly.
Analyze the Patent and Litigation Landscape: Using the platform, the firm can conduct a deep dive into the target drug’s full patent portfolio, including any secondary or method-of-use patents that might relate to the REMS process itself. Crucially, the platform’s litigation tracking features can reveal if the brand manufacturer has previously been sued for antitrust violations related to sample access or has a history of suing generics for infringing REMS-related patents. This provides invaluable intelligence on the brand’s likely behavior and strategic posture.
Inform Strategic Timing and Resource Allocation: By combining the patent expiration timeline with a clear-eyed assessment of the REMS-related hurdles, the firm can develop a much more realistic projection for its generic launch. This informs critical decisions: When should we initiate a Paragraph IV patent challenge? How much should we budget for potential litigation related to the CREATES Act? Is the potential return on investment for this product still attractive given the heightened risk of REMS-related delays?

The ultimate prize in generic competition is often securing the 180-day market exclusivity period awarded to the first company to successfully challenge a brand’s patent.²⁸ This “first-mover advantage” is incredibly lucrative, as the first generic entrant can capture a dominant market share at a relatively high price before subsequent competitors drive prices down further. Real-world examples, such as the launch of generic Lipitor or Viagra, demonstrate how the first entrant can rapidly secure over 70% of the generic market. Platforms like

DrugPatentWatch provide the critical intelligence needed to plan and execute a successful first-to-file strategy. In the post-REMS abuse era, this intelligence is more vital than ever, as it allows firms to anticipate and navigate not just the patent barriers, but the regulatory ones as well, ensuring they are positioned to win the race to market.

Conclusion: Restoring Balance to Patient Safety and Market Competition

The story of Risk Evaluation and Mitigation Strategies is a compelling case study in the law of unintended consequences. It began with the laudable and necessary goal of protecting patients from the serious risks of powerful medicines, enabling access to therapies that might otherwise have remained off the market. The REMS framework, born from the FDAAA of 2007, was a testament to the FDA’s commitment to a nuanced, risk-based approach to drug safety.³

However, the very architecture of the most stringent REMS—the Elements to Assure Safe Use—created a vulnerability. By design, ETASU established closed distribution systems, granting the brand manufacturer unprecedented control over its product’s supply chain.¹² In the fiercely competitive pharmaceutical market, this control was too tempting a lever not to pull. Brand manufacturers systematically exploited this regulatory power, transforming a shield meant for patient safety into a commercial fortress to fend off generic and biosimilar competition. The tactics were as creative as they were effective: blocking access to legally required drug samples, engaging in endless negotiation filibusters over shared safety systems, and patenting the very processes of regulatory compliance.¹⁶

The economic toll of this strategic gamesmanship was immense, costing the U.S. healthcare system billions of dollars annually and shifting that burden onto patients, payers, and taxpayers in the form of sustained monopoly prices. This situation prompted a targeted and ultimately successful legislative intervention. The CREATES Act of 2019 did not dismantle the REMS program; it surgically repaired its most abused loopholes. By creating a clear legal pathway for competitors to obtain samples and break negotiation deadlocks, the Act effectively restored the balance between patient safety and market competition that Congress had originally intended.³⁵

The saga of REMS abuse offers a profound and enduring lesson in regulatory economics and health policy: any system that grants one market participant exclusive control over a critical resource required by its competitors—even for the most legitimate of reasons—will inevitably be exploited unless clear, predictable, and enforceable rules of access are established from the outset. The CREATES Act provided those rules, demonstrating that it is possible to preserve the vital safety intent of a regulation while simultaneously dismantling its use as an anticompetitive barrier.

As we look to the future, with the advent of even more complex therapies and the ongoing modernization of the REMS program itself, this lesson remains paramount. The challenge for regulators, policymakers, and industry stakeholders will be to apply this hard-won wisdom proactively, ensuring that the next generation of safety regulations is designed not only to protect patients but also to be resilient against strategic manipulation. True innovation thrives not in a system of protected monopolies, but in one where patient safety and vigorous competition are recognized not as opposing forces, but as two essential pillars supporting a healthy and affordable healthcare system for all.

Key Takeaways

REMS as a Double-Edged Sword: Risk Evaluation and Mitigation Strategies (REMS) are essential FDA-mandated safety programs, but their most restrictive components, Elements to Assure Safe Use (ETASU), created closed distribution systems that brand-name drug manufacturers exploited to block generic and biosimilar competition.
Primary Tactics of Abuse: Brand companies used three main strategies to delay competition: (1) refusing to sell drug samples required for bioequivalence testing (the “sample blockade”), (2) intentionally prolonging negotiations for legally required single, shared REMS systems, and (3) patenting the government-mandated REMS processes themselves to create intellectual property barriers.
Significant Economic Impact: The misuse of REMS has been estimated to cost the U.S. healthcare system over $5.4 billion annually in lost savings by delaying the market entry of more affordable generic medicines, a cost borne by patients, insurers, and government programs.
The CREATES Act as an Effective Solution: The 2019 CREATES Act successfully addressed these abuses by creating a legal pathway for generic developers to sue for access to samples and by allowing them to develop their own comparable safety protocols, breaking the brand’s ability to delay negotiations indefinitely. Evidence shows the Act has been highly effective in changing brand company behavior.
Evolving Challenges and Future Direction: While the CREATES Act solved key problems, challenges remain, especially for more complex biosimilars. The future of REMS involves FDA-led modernization and standardization efforts, such as the use of Structured Product Labeling (SPL) to integrate REMS into digital health workflows, which may further reduce opportunities for abuse.
Strategic Imperative for Generics: For generic and biosimilar firms, a drug’s REMS status is now a critical strategic variable. Success requires using competitive intelligence platforms like DrugPatentWatch to analyze not only the patent landscape but also the regulatory and litigation history of a target drug to accurately assess risks and timelines for market entry.

Frequently Asked Questions (FAQ)

1. What exactly are Elements to Assure Safe Use (ETASU) and why are they so central to the issue of REMS abuse?

ETASU are the most stringent and restrictive components of a REMS program, reserved for drugs with very serious safety risks. They involve required actions beyond standard labeling, such as mandating that only certified doctors can prescribe the drug, only certified pharmacies can dispense it, or that patients must undergo specific monitoring (like monthly blood tests) to continue treatment. They are central to the abuse issue because, to ensure safety, they create a tightly controlled or “closed” distribution system. This gives the brand manufacturer, who designs and manages the REMS, complete control over who gets the drug. This control was then used to deny legally required drug samples to generic competitors, effectively blocking them from the market under the guise of safety compliance.

2. If the FDAAA of 2007 already prohibited using REMS to block generic approval, why was the CREATES Act necessary?

While the original FDAAA did contain language stating that a REMS should not be used to “block or delay” a generic application, it critically lacked a specific enforcement mechanism or a private right of action for the generic company. This meant that if a brand company refused to sell samples, the generic company’s only recourse was to engage in lengthy and uncertain antitrust litigation or to petition the FDA, which maintained it lacked the authority to compel a sale. The CREATES Act was necessary because it created a direct, efficient, and enforceable legal pathway. It gave generic developers the explicit right to sue for samples and established clear penalties for non-compliance, providing the “teeth” that the original law was missing.49

3. Has the CREATES Act completely solved the problem of REMS abuse?

Evidence suggests the CREATES Act has been highly effective in solving the two primary problems it targeted: the sample blockade and the shared system negotiation filibuster. Anecdotal reports from the generic industry indicate that obtaining samples is no longer a major issue, and FDA data shows that progress on shared systems accelerated immediately after the Act’s passage. However, more complex and subtle challenges may remain, such as the use of REMS patents to trigger litigation and the unique hurdles facing biosimilars. The landscape is constantly evolving, but the Act successfully dismantled the most common and damaging forms of abuse.

4. How do the challenges for biosimilar manufacturers related to REMS differ from those for small-molecule generics?

Biosimilar manufacturers face the same fundamental REMS challenges but they are often magnified. Biologics are far more complex and expensive to develop than small-molecule generics, so the financial impact of any delay is much greater.54 The process of demonstrating biosimilarity is also more extensive than proving bioequivalence, potentially requiring more samples and a longer development timeline. Furthermore, the legal requirement for a single, shared REMS is less rigid for biosimilars than for generics, creating a more ambiguous negotiating environment that can still be exploited for delay. In short, the hurdles are higher and the financial stakes are greater, making REMS abuse an even more significant threat to the biosimilar market.

5. How is the FDA working to modernize REMS programs, and how might this impact future competition?

The FDA is actively pursuing several modernization initiatives aimed at reducing the burden of REMS while maintaining safety. The most significant is the mandate to use the Structured Product Labeling (SPL) format for all REMS documents. This makes REMS requirements machine-readable and standardizes them, allowing for easier integration into electronic health records (EHRs) and pharmacy software. This move towards standardization and digital integration could significantly impact future competition. By making REMS programs more transparent and embedding them in common digital workflows, it becomes much more difficult for a single brand manufacturer to operate an opaque, proprietary system that can be used to block competitors. A standardized, integrated system is inherently more accessible and harder to weaponize.