Generic Pharmaceutical Association

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
Bureau of Competition
Health Care Division
August 8, 2012
E. John Steren
Ober, Kaler, Grimes & Shriver
1401 H Street NW, Suite 500
Washington, D.C. 20005
WASHINGTON, D.C. 20580
Re: Generic Pharmaceutical Association Advisory Opinion
Dear Mr. Steren:
This letter responds to your request on behalf of the Generic Phffimaceutical Association (GPhA)
for an advisory opinion concerning its proposed "Accelerated Recovery Initiative." GPhA plans
to adopt this program, known as the ARI, to help the Food and Drug Administration (FDA)
respond to the unprecedented increase in shortages of critically important medicines that has
occurred in recent years. It seeks to do so by providing the FDA with information that GPhA
believes will enable agency staff "more efficiently and effectively to accelerate the recovery of
critical drugs in short supply" ffild thereby to help ensure patients have access to the drugs they
need.! A key element of the ARI is an agreement among competitors to compile competitively
sensitive production information from manufacturers of shortage drugs.
Based on the information GPhA has provided, it appears that the proposed ARI program is not
likely to harm competition. Although the manufacturer data that GPhA proposes to collect is
competitively sensitive and the ARI would raise substantial antitrust concerns if this information
were shared with competitors, the proposed program includes many safeguards designed to
insure that such sharing does not occur. You have explained that GPhA has chosen an
independent third party to collect and transmit the data to the FDA and that no other party,
including GPhA, will have access to this information or any analysis derived therefrom. The
program also includes various other features intended to minimize the risk that the ARI could
serve to facilitate collusion among drug manufacturers. Accordingly, the Commission has no
present intention to bring an enforcement action to challenge GPhA's proposed ARI program if it
is implemented as described and the safeguards it contains are adhered to in practice.
! Letter from E. John Steren to Donald S. Clark, Secretary, Federal Trade Commission (July 16,
2012) (hereinafter "Request Letter"). Pursuant to your July 13,2012 email to Elizabeth Hilder,
your request has been treated as one for a staff opinion under Rule § 1.1 (b), 16 C.F .R. § 1.1 (b).

GPhA Advisory Opinion
Angust 8, 2012
Page 2
Background
Shortages of medically necessary prescription drugs have become a matter of widespread public
concern. Although drug shortages have occurred in the past, the extent of snch shortages has
increased dramatically in recent years. The FDA has reported that the number of drug shortages
nearly tripled from 2005 to 2010 (rising from 61 drug products in 2005 to 178 in 2010)2 In 2011,
the number increased to 250 3 You have advised that over 80 percent of the drugs on the FDA's
published drug shortage list are generic injectables, that is, medications administered by injection
or intravenously, generally in hospitals or outpatient clinics. The FDA has explained that:
"Compared to oral drugs, sterile injectables are more complex and require more specialized
processes and equipment to manufacture, leading to a higher likelihood of manufacturing
problems.,,4 The FDA has also observed that complex manufacturing processes, and the fact that
relatively few companies manufacture any given injectable product, mean shortages of these
drugs can take substantial time to resolve. Finally, the products involved are often ones that are
critically important to patients. Cancer drugs are the largest category of injectables in shortage.
Other products experiencing shortages include antibiotics, anesthesia drugs, drugs used in
emergency medicine, and products used for intravenous feeding. 5
The unprecedented extent of the current drug shortage problem has prompted congressional
hearings;6 proposed legislation;7 government studies, reports, and workshops;8 an
2 See FOOD & DRUG ADMIN., A REVIEW OF FDA's ApPROACH TO MEDICAL PRODUCT SHORTAGES
10 (2011). These figures do not include shortages of vaccines, immune globulin products, and
other biologics. See Food & Drug Admin., Consumer Updates, "FDA Works to Lessen Drug
Shortage Impact," available at http://www.fda.gov/ForConsumers/ConswnerUpdates/
ucm258152.htm.
3 Ilisa B.O. Bernstein, Acting Director, FDAlCDERJOffice of Compliance, FDA Update,
Presentation to APhA Annual Meeting, Slide 41 (March 11,2012), available at
http://www.fda.gov/downloads/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco
ICDERJUCM299785.pdf.
4 FOOD & DRUG ADMIN., A REVIEW OF FDA's ApPROACH TO MEDICAL PRODUCT SHORTAGES 13
(2011).
5 I d. at 14-15.
6 See, e.g., Review of the Proposed Generic Drug and Biosimilars User Fees and Further
Examination of Drug Shortages: Hearing Before H Comm. on Energy and Commerce, 112th
Congo (2012); Drug Shortages: Why They Happen and What They Mean: Hearing Before the S.

GPhA Advisory Opinion
August 8, 2012
Page 3
executive order;9 FDA guidance to industry;10 and numerous press reports describing the impact
on patient care, particularly on cancer patients. 11 In June 2012, Congress enacted legislation that,
among other things, will require more dmg manufacturers to notify the FDA in advance of any
discontinuance or significant dismption in production of a dmg. 12 The statute also directs the
Comm. On Fin., I 12th Congo (20 I I); Prescription Drug Shortages: Examining a Public Health
Concern and Potential Solutions: Hearing Before the S. Comm. On Health, Educ., Labor, and
Pensions, I 12th Congo (201 I); Examining the Increase in Drug Shortages: Hearing Before H
Comm. on Energy and Commerce, 112th Congo (201 I); Drug Shortage Crisis: Lives are in the
Balance: Hearing Before H Comm. On Oversight and Gov't Reform, I 12th Congo (2011).
7 See Dmg Shortage Prevention Act of2012, H.R. 3839, 112th Congo (2012); Food and Dmg
Administration Safety and Innovation Act, S. 2516, 112th Congo (2012); Food and Drug
Administration Reform Act of2012, H.R. 5651, I 12th Congo (2012), Gray Market Drug Reform
and Transparency Act of2012, H.R. 5853, 112th Congo (2012); Preserving Access to Life-Saving
Medieations Act, S. 296, I 12th Congo (2011); Preserving Access to Life-Saving Medications Act
0[2011, H.R. 2245, I 12th Congo (201 I).
8 See, e.g., OFFICE OF THE ASST. SEC'Y FOR PLANNING AND EVALUATION, U.S. DEP'T OF HEALTH
& HUMAN SERVS., ASPE ISSUE BRIEF, ECONOMIC ANALYSIS OF THE CAUSES OF DRUG
SHORTAGES (Oct. 20 I I) (hereinafter "HHS Economic Analysis of Dmg Shortages"); FOOD &
DRUG ADMIN., A REVIEW OF FDA's ApPROACH TO MEDICAL PRODUCT SHORTAGES (201 1)
(hereinafter "FDA Dmg Shortages Report"); U.S. GOV'T ACCOUNTABILITY OFFICE, GAO-12-
315T, DRUG SHORTAGES: FDA's ABILITY TO RESPOND SHOULD BE STRENGTHENED (2011); FOOD
& DRUG ADMIN., DRUG SHORTAGE WORKSHOP 12 (201 I).
9 Exec. Order No. 13588,76 Fed. Reg. 68295 (Oct. 31, 2011).
10 FOOD & DRUG ADMIN., GUIDANCE FOR INDUSTRY: NOTIFICATION TO FDA OF ISSUES THAT
MAY RESULT IN A PRESCRIPTION DRUG OR BIOLOGICAL PRODUCT SHORTAGE (2012).
11 See, e.g., Michael Muskal, FDA Acts to Increase Cancer Drug Supplies, L.A. TIMES, Feb. 22,
2012, Part AA, at 5; Gardiner Harris, Supply of a Cancer Drug May Run out in Weeks, N.Y.
TIMES, Feb. 1 I, 2012, § A, at 15; Rob Stein, us. Drug Shortages Threatening Those Whose
Lives Depend on Crucial Remedies, N.Y. TIMES, May 2,2011, § A, at AIO; Jennifer Corbett
Dooren, us. News: Drug Shortages Distress Hospitals, WALL ST. J., Feb. 1,2011, § J, at A4.
12 Food and Dmg Administration Safety and Innovation Act, Puh. L. No.1 12-1 14, § 1001 (a),
126 Stat 993, (2012). The requirement applies to non-biological prescription dmgs that are "life-

GPhA Advisory Opinion
August 8, 2012
Page 4
Comptroller General to conduct a study of drug shortages and make recommendations on how to
prevent or alleviate such shortages. 13
The FDA has undertaken a variety of activities to address the drug shortage problem. In the case
of generic injectables, this often involves asking other manufacturers of the drug in shortage if
they are willing and able to increase their production. Other FDA strategies include expediting
regnlatory reviews to accelerate approval of new sources of supply, new manufacturing lines, or
new raw material sources. The FDA also exercises regulatory discretion, for example permitting
controlled importation of equivalent products approved abroad but not in the United States. 14 In
May 2012, the FDA reported that industry response to its October 2011 request to manufacturers
for voluntary early notification of potential supply disruptions had enabled it to prevent 128
potential drug shortages over the six month period from November 2011 through April 2012. 15
The Proposed Program
You have advised that the ARI is intended to assist the FDA in responding to drug shortages by
providing the agency with information from manufacturers relating to their production and
supply of designated shortage drugs. As described in your letter, GPhA plans to engage IMS
Health Incorporated to collect information from manufacturers of shortage drugs about their
ClUTent and projected production and supply schedules. IMS will use this data, along with market
data it currently collects, to analyze whether, and to what extent, the anticipated supply of a
given drug is likely to fall short of the projected demand over the next several months and then
provide this information to FDA staff. The current focus of the program is on accelerating the
recovery of critical drugs that are in short supply, but it is possible that the ARI program could
also be used to assist the FDA to head off potential drug shortages.
Your letter states that the program will operate "under terms of strict confidentiality and with
appropriate safeguards." Request Letter at 4. In particular, IMS will report the production
supporting, life-sustaining, or intended for use in the prevention of a debilitating disease or
condition." Id
13 Id at § 1008(b).
14 FDA Drug Shortages Report, supra note 8, at 20-21.
15 Margaret Hamburg, Six Month Checkup: FDA's Work on Drug Shortages, FDA VOICE (May
3, 2012), available at http://blogs.fda.gov/fdavoice/index.php/20 12105Isix-month-check-up-fdas-
work-on-drug-shortages/.

GPhA Advisory Opinion
August 8, 2012
Page 5
information it collects and the analysis it performs only to the FDA and will not share it with any
other party.
Based on the information you provided, we understand the details of the program to be as
follows:
1. Scope of the Program: The FDA, with input from GPhA, will decide on the initial group of
drugs to be addressed through the ARI progranl. GPhA anticipates that the initial focus of the
program will be on a subset of drugs currently on the FDA's published list of drugs in shortage.
Other criteria for inclusion in the ARI are expected to include at least the following: (a) the drug
is expected to be in shortage for more than 90 days; (b) there is no therapeutic alternative (as
defined by the American Society of Health-System Pharmacists' list); and (c) it is multi-source
(that is, there are other manufacturers that might be able to increase their production).
The FDA would have discretion to include in the ARI program a drug that does not meet all of
these criteria-for example, a drug that is not currently on the FDA drug shortage list but has the
potential to go into shortage-where circumstances warrant. Drugs may move into and out of the
ARI program as requested by the FDA and depending on the circumstances. Given the benefits
of preventing potential drug shortages from becoming actual shortages, as the ARI program
evolves there may be a focus on drugs that are not currently in shortage but present a potential
for a shortage to develop.
2. Manufacturer Participation: IMS, with assistance from GPhA, will recruit drug manufacturers
to participate in the program. All manufacturers of drugs covered by the ARI will be invited to
participate, regardless of whether they are members ofGPhA and regardless of whether they are
manufacturers of branded or generic drugs. When a drug is added to the ARI program,
manufacturers of that drug that are not already ARI participants will be invited to join the
program. GPhA will not participate in recruitment of firms selling potential, rather than actual,
shortage drugs. Participation in the ARI is voluntary and the program will be "non-exclusive,"
that is, participating firms will be free to participate in a similar program by some other sponsor
(were one to be organized). In addition, nothing in the program would limit the ability of a firm
to provide information directly to the FDA or to otherwise disclose its own ARI data for other
legitimate purposes consistent with the antitrust guidelines.
Companies that choose to join must execute a participation agreement that requires them to pay
annual ARI dues and to comply with specified confidentiality rules, antitrust guidelines, and
prohibitions on misuse of the ARI process. The draft participation agreement you have submitted
includes various commitments to be made by individual companies, GPhA, and IMS to ensure
that the data participants submit is kept confidential and not shared or used in ways not
contemplated by the program.

GPhA Advisory Opinion
August 8, 2012
Page 6
3. IMS Activities: The activities to be undertaken by IMS are designed to further the ARI's goal
of providing the FDA with better information with which to address drug shortages. IMS will
gather information from manufacturers of selected shortage drugs, perform a "gap analysis" for
each drug included in the ARI program, and submit reports to the FDA. IMS will not use the
information generated under the ARI for any other purpose.
IMS will contact manufacturers of ARI drugs that have signed a participation agreement and
request current supply and production information and forecasts for the next 90-180 days for the
drug or drugs in question. IMS will ask manufacturers to update this information on a monthly
basis and to notify both IMS and the FDA immediately of unanticipated changes or potential
supply disruptions. Requests for information from manufacturers about potential shortage drugs
in the ARI program will be limited to those manufacturers that make or have made the drug in
question. IMS will use the production and supply data it collects, along with its own forecasts of
demand based on past demand data, to perform the gap analysis, that is, the projection of the
extent of a likely supply shortfall. IMS will produce a monthly report to the FDA providing both
a summary analysis for each drug along with a detailed breakdown by National Drug Code
number.
IMS will provide the gap analysis and underlying data that IMS generates under the ARI
program only to the FDA and will clearly mark each report as confidential. IMS will not provide
information contained in these reports, or any data gathered from participants, to GPhA, ARI
participants, or any other party. In addition, IMS will institute appropriate safeguards (e.g.,
firewalls) to limit internal access to this information to guard against the risk that Imowledge of
this confidential information could spill over into other aspects ofIMS' s business and be used
for non-ARI purposes.
IMS communications with individual manufacturers under the ARI program will be limited to
that which is necessary to gather the data needed to perform the gap analysis for an ARI drug.
You have advised that "IMS will only be receiving supply/forecast data for the drugs at issue and
will not be having an ongoing dialogue with the manufacturers, nor will it be requesting any
additional infonnation from these manufacturers.,,16 All communications with manufacturers
concerning their ability to increase their production or supply of a drug will continue to be
undertaken by the FDA. IMS will not make recommendations to the FDA regarding how the
agency should seek to address a given drug shortage. Instead, GPhA expects that the FDA will
use the factual information IMS provides along with non-public information possessed by the
agency to determine appropriate solutions to a shortage. Request Letter at 6.
16 Letter from E. John Steren to Elizabeth Hilder (July 30, 2012) (hereinafter "Request
Supplement") Attachment Item 2.

GPhA Advisory Opinion
Angust 8, 2012
Page 7
IMS will not disclose competitively sensitive information to GPhA. IMS will submit monthly
reports to GPhA, and GPhA expects it may share those reports with its members and the public
at large. These IMS reports to GPhA will identify the number of drugs addressed in the most
recent FDA report, the number of reports IMS sent to the FDA, and the number of drugs added
or deleted from the ARI program during the prior month. The report may identify by name the
specific drugs addressed in the most recent IMS report to the FDA, to the extent that the drug
already appears on the FDA's drug shortage list. In no event, however, will IMS disclose to
GPhA information that would identify any potential shortage drug that the FDA has requested
IMS to analyze, unless the FDA has already publicly disclosed that information. In addition, IMS
will not disclose information that would reveal the production and supply infonnation submitted
by manufacturers.
Legal Analysis
The key antitrust issne raised by the ARI arises from the fact that it involves an agreement
among competitors to pool infonnation about their output, both present and future. As a general
matter, the antitrust laws do not prohibit trade associations from collecting data from competing
sellers and collectively providing information and analysis to government oftlcials. 17 Such
activity, undertaken for a legitimate purpose, may serve to promote rather than injure
competition and consumer welfare.
Under some circumstances, however, such data gathering programs can serve to facilitate
collusion among competing sellers and thereby present a substantial risk of anti competitive
harm. 18 Trade association programs that involve sharing of competitively significant infonnation
among competitors have long been a subject of antitrust scrutiny, given their potential to
17 See generally U.S. Department of Justice and Federal Trade Commission, Statements of
Antitrust Enforcement Policy in Health Care (1996), Statements 4, 5, and 6, available at
http://www.ftc.gov/bclhealthcare/industryguide/policy/index.htm.
18 Collusion may take the form of an actual agreement, actionable in its own right, or tacit
coordination among firms in a concentrated market, which is not in itself unlawful. See, e.g.,
Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 227 (1993). Sharing of
information among competitors that makes it easier for them to collude in either form is
sometimes referred to as a "facilitating practice." See VI PHILLIP E. AREEDA & HERBERT
HOVENKAMP, ANTITRUST LAW~ 1407b, at 38 (2010) (defining as "an activity that makes it easier
for parties to coordinate price or other behavior in an anti competitive way. ").

GPhA Advisory Opinion
August 8, 2012
Page 8
facilitate collusion among rivals. 19 Such programs are not per se unlawful unless part of a larger
scheme to fix prices or other competitively significant terms of dealing. Instead, they are judged
under the rule of reason, based on their likely effects on competition in light of the particular
circumstances.2o
Certain circumstances here raise the potential for competitive harm. As GPhA recognizes, the
inventory and future production information it proposes to collect is competitively sensitive 21 In
addition, your letter notes that markets for the sale of generic injectables, which represent the
vast majority of drugs in shortage, typically have few sellers. Such market concentration tends to
make markets more susceptible to collusion. 22 .
19 See, e.g., American Column & Lumber Co. v. United States, 257 U.S. 377 (1921) (trade
association program to collect and report to members detailed information on sales, prices, and
production, including forecasts offuture production); XIII PHILLIP E. AREEDA & HERBERT
HOVENKAMP, ANTITRUST LAW ~ 2112a, at 63-64 (2005) CThe antitrust concern resulting from
trade association provision of price and output information is facilitation of collusion or less
formal coordination of output or price. The fact that the coordination is not the product of a
Sherman § 1 'agreement' does not preclude condemnation of a 'facilitating practice' that results
from an agreement.").
20 See, e.g., United States v. Container Corp., 393 U.S. 333 (1969). See also S. DeSanti & E.
Nagata, Competitor Communications: Facilitating Practices or Invitations to Collude? An
Application o/Theories to Proposed Horizontal Agreements Submitted/or Antitrust Review, 63
ANTITRUST L. J. 93, 96-99 (1994).
21 See, e,g, FED. TRADE COMM'N & DEP'T OF JUSTICE, ANTITRUST GUIDELINES FOR
COLLABORATIONS AMONG COMPETITORS 15 (April 2000) ("Other things being equal, the sharing
of information relating to price, costs, output, or strategic planning is more likely to raise
competitive concern than the sharing of information relating to less competitively sensitive
variables. Similarly, other things being equal, the sharing of information on current operating and
future business plans is more likely to raise concerns than the sharing ofhistorical
information.").
22 See, e.g., Todd v. Exxon Corp., 275 F.3d 191,208 (2d Cir. 2001) ("Generally speaking, the
possibility of anticompetitive collusive practices is most realistic in concentrated industries.");
AREEDA & HOVENKAMP, supra note 18, ~ 1407e, at 44. See also HHS Economic Analysis of
Drug Shortages, supra note 8, at 14 (noting that "strategic behavior-behavior that takes into
acconnt the likely actions of both competitors and regulator-is a common response to an
environment of constrained capacity with few participating firms. Such behavior can lead to
increases in concentration and reductions in competition in the longer Hm.").

GPhA Advisory Opinion
August 8, 2012
Page 9
On its face, however, the proposed ART program does not involve the exchange or sharing
among competitors of the output information that the program would collect. Rather, the
information would be collected and analyzed by a third party, IMS, which would share this
information solely with the FDA. Moreover, you have emphasized that the program will operate
"under terms of strict confidentiality and with appropriate safeguards." Request Letter at 4.
GPhA has designed various aspects of the program to limit the potential that the ARI might
result in harm to competition.
First, the role of GPhA itself is strictly limited to shield it from access to competitively sensitive
information. GPhA is involved in developing the initial identification of drugs to be part of the
ARI, will assist IMS in recruiting participants, and will provide financial support for the
program. Aside from publicizing the program, no other activities by GPhA are specified. GPhA
will receive monthly reports from IMS, which it may disseminate to its members and others, but
these will provide no information relating to the production data that IMS has collected, nor will
they identify potential shortage drugs that IMS has analyzed.
Second, GPhA has defined the obligations and activities ofIMS to limit the risk that IMS would
inadvertently facilitate anticompetitive behavior. IMS's duty to strictly limit disclosure of the
production data gathered from ARI participants, and any information and analysis derived
therefrom, solely to FDA staff is a binding commitment set forth in formal written agreements 24
Likewise, the agreements make clear that IMS's use of the information is strictly limited to ARI
program activities. You have also advised that IMS plans to institute appropriate internal
safeguards to prevent misuse or improper disclosure of information generated under the ART.
In addition, GPhA has defined IMS's role to be providing objective data and gap analysis reports
to the FDA, not recommendations on how to address a given shortage 25 The ARI does not
provide a role for IMS to act as a representative of ARI participant companies in matters
involving drug shortages. Nor does the ARI set up IMS as an intermediary between ARI
participants and the FDA to broker solutions to a drug shortage or potential shortage. This
carefully defined role for IMS helps to guard against the risk that the ARI could have the
unintended effect of fostering collusion among competing sellers acting through IMS.
24 In addition, we understand that the FDA has established processes to ensure the confidentiality
of competitively sensitive information it receives and that the FDA would treat confidential
information received from IMS under the ARI program in the same manner.
25 See Request Supplement, supra note 16, Attachment Item 1.

GPhA Advisory Opinion
August 8, 2012
Page 10
Third, GPhA has taken steps to discourage ARI pmticipants from attempting to use the program
for anticompetitive ends. The draft ARI pmticipation agreement (Request Letter, Exhibit 10): (I)
emphasizes the confidential nature of the production information to be collected; (2) advises
companies of the need to ensure that their employees, agents, and consultants adhere to ARI
program rules, which include confidentiality obligations embodied in the agreement and a set of
antitrust guidelines that are provided along with the pmticipation agreement; and (3) provides
that participants that breach those obligations will be terminated from the program. Moreover,
pmticipants must make an express commitment not to use the ARI program activities to
"exchange, discuss or agree on the price, output, cost, or other terms of competition, regarding
any Shortage Drug or any other product or service." Exhibit 10, § 6(e). In addition, under the
agreement, participants must indemnify GPhA, IMS, and other ARI participants for mly losses
resulting from breach of this commitment. Jd. § 8.
These various safeguards are significant to the antitrust analysis. Just as with matters of price,
collusion among drug manufacturers on output-such as agreements to limit supply or to
allocate markets by ceding production of pmticular drugs to a single seller-would threaten
substantial harm to consumers.26 The safeguards GPhA has included, however, help to assure
that the ARI is likely to operate in accordance with its legitimate purpose and limit the risk that
the program would serve to facilitate collusion among actual or potential rivals.
The ARI's protections against disclosure of confidential information may also offer other
benefits. For example, assurance to manufacturers that their confidential information will be
protected may encourage greater pmticipation in the program and thereby result in more useful
information to support the FDA's efforts to combat drug shortages. In addition, safeguarding
non-public information relating to the supply of critical drugs, pmticularly as to the potential for
a shortage, may help to reduce the risk of actions that distort the supply chain, whether abusive
conduct by other market pmticipants that may seek to exploit a shortage for their own advantage,
or the potential for hoarding by well-intentioned health cm'e providers concerned about their
patients.
Finally, it does not appear that the ARI program presents other risks to competition and
consumers. As noted above, the program is "non-exclusive," that is, it involves no agreement
among competitors to deal only through the ARI. It would not preclude ARI participants from
also pmticipating in another organization's program that sought to use similar data for legitimate
26 See, e.g., AREEDA & HOVENKAMP, supra note 19, ~ 2111dl, at 54 ("Output and price are the
two elements of a firm's decision making most directly relevant to the degree of competition in a
market.").

GPhA Advisory Opinion
August 8, 2012
Page 11
purposes. Nor would it have any effect on manufacturers' ability to use their own participant data
in other business contexts.
Because anti competitive effects appear unlikely, it is Ulmecessary to assess the likelihood or
extent of any procompetitive benefits that may result from the ARI. Moreover, various details of
the program remain to be developed, and we understand that GPhA is continuing to discuss with
FDA staff how best to make the ARI complement thc FDA's existing drug shortage activities.
But we note that the stated goals of the ARI-helping to reduce market disruptions caused by
drug shortages and thereby to increase patient access to critical medicines-suggest the potential
for such benefits, as do the FDA's comments expressing interest in development of the
program. 27
Conclusion
In sum, it appears that the proposed ARI program is Ulllikely to harm competition. Although the
supply and output data to be collected is competitively sensitive, and markets for the drugs in the
ARI are likely to be susceptible to collusion, GPhA has designed the program to safeguard
competitively sensitive information, with the aim of helping FDA to address extensive and
unprecedented supply disruptions that threaten patient care. For these reasons, the Bureau of
Competition has no present intention to recommend an enforcement action to challenge GPhA's
proposed ARI program if it is implemented as described and the safeguards are adhered to in
practice.
This letter sets out the views of the staff of the Bureau of Competition, as authorized by the
Federal Trade Commission's Rules of Practice, and based on the facts as presented by the
requesting entity. Under Rule § 1.3(c), 16 C.F.R. § 1.3(c), the Commission is not bound by this
staff opinion and reserves the right to rescind it at a later time. In addition, this office retains the
right to reconsider the questions involved and, with notice to the requesting party, to rescind or
revoke the opinion if implementation of the proposed program results in substantial anti-
competitive effects, if the program is used for improper purposes, if facts change significantly, or
if it would be in the public interest to do so.
Sincerely,
MtJA(IIJ~
Markus H. Meier
Assistant Director
27 See Request Letter, Exhibit I.

OBER
July 16,2012
VIA MESSENGER
Mr. Donald S. Clark
Secretary
KALERAttorneys 	at 	Law
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Room 135-H
Washington, DC 20580
Dear Mr. Clark:
Dber, Kaler, Grimes & Shriver
A Professional Corporation
1401 H Street, NW, Suite 500
Washington, DC 20005
202.408.8400 Main
202.408.0640 Fax
www.ober.com
E. John Steren
ejsteren@ober.com
202.326.5017 I Fax: 202.336.5217
Offices In
Maryland
Washington, D.C.
Virginia
Pursuant to Federal Trade Commission Procedure Rules 1.1 through 1.4, 16 C.F.R. §§
1.1-1.4 , the Generic Pharmaceutical Association, Inc. ("GPhA") requests an advisory opinion
addressing the Commission's enforcement intentions regarding a voluntary program referred to
as the Accelerated Recovery Initiative ("ARl"). The ARl is designed to obtain and provide to
the United States Food and Drug Administration ("FDA") key information that will enable the
FDA's Drug Shortage Program ("DSP") more efficiently and effectively to accelerate the
recovery of critical drugs in short supply. As explained in further detail below, GPhA expects
that, with the key information provided by ARl, the FDA will be better positioned to prevent or
eliminate shortages of critical, medically necessary drugs, thus helping patients/consumers
receive the drugs they need, when they need them. ARI proposes to accomplish its mission by
having a third-party vendor, IMS Health Incorporated ("IMS"), gather and provide to the FDA
supply and expected product release information from manufacturers, thereby giving the FDA
not only a better understanding of current and future market conditions for drugs in short supply
but also an enhanced ability to work with manufacturers to expand the supply of these critical
medications to patients in need. 	As competitively sensitive information collected by IMS will
be available only to the FDA, and not to manufacturers or other stakeholders, this program is not
expected to have any effect on product pricing or otherwise facilitate any unlawful agreements
between or among its participants. Furthermore, the FDA has publicly stated its support for ARI
announcing, through its spokeswoman Shelly Burgess, that the program would provide "exactly
the data FDA needs .... "
See Generics Industry's Drug Shortage Plan wins FDA Support, Law 360, April 19, 2012,
http://www.law360.com/articies/331913/print?section=lifesciences (attached hereto as Exhibit 1).

Donald S. Clark
July 16,2012
Page 2
I. 	Background on Critical Drug Shortages.
OBER 	KALER
It is an unfortunate fact that certain prescription drugs face sporadic and critical supply
shortages? As noted by the United States Department of Health and Human Services ("HHS"),
medically necessary,3 injectable drugs in particular have been disproportionally affected by
"class-wide shortages.,,4 In fact, recent studies by HHS and IMS Health Incorporated indicate
that over eighty percent (80%) of the drugs on the FDA Drug Shortage List ("DSL") (described
at pg. 3 below) are generic injectable drugs, used by acute care patients being treated by
providers in hospitals and out-patient facilities, and that as much as fifty percent (50%) of all
generic, injectable drugs used in the United States are on the FDA Drug Shortage List. 5
According to HHS, current drug shortages appear to be a consequence of a substantial
expansion in the demand that has occurred over a short period of time, without a corresponding
expansion in manufacturing capacity. The expansion in product demand and quantity, in tum,
stems from both an increase in the overall volume of drugs used and an unusually high rate of
patent expirations that began in 2008 and has continued through 2010. 6
Furthermore, HHS has indicated that current shortages may not be completely resolved
until new supply sources come on line as the manufacturing industry increases its capacity.7
However, the regulatory framework governing the industry delays by several years the ability of
new suppliers to enter or the ability of existing suppliers to add production capacity. While the
FDA continues to respond to the ever increasing drug shortages through, among other things, its
Drug Shortage Program, and moving when possible to expedite its approval process for
alternative supplies - see for example its approval of the temporary importation of certain cancer
treatments as a case in point 8 - additional actions are needed to stem the increasing tide of drug
shortages. The HHS study concludes by recommending, among other things, that immediate
responses to the problem of shortages should focus on increasing the extent of supply
A "drug shortage," as defmed by the FDA, is present when "total supply of all clinically interchangeable
versions of an FDA-regulated drug is inadequate to meet the current or projected demand at the user level." See
Economic Analysis of the Causes of Drug Shortages, ASPE Issue Brief dated October 2011 at note 1 (attached
hereto as Exhibit 2).
A "medically necessary" drug, as defmed by the FDA, is one "used to treat or prevent a serious medical
condition for which there is no other alternative drug, available in adequate supply that is judged by medical staff to
be an adequate substitute." [d. Exhibit 2 at note 1.
See Exhibit 2 at pg. 1.
See Drug Shortages: A closer look at products, suppliers and volume volatility, November 2011, IMS
Institute for Healthcare Informatics (attached hereto as Exhibit 3).
See Exhibit 2 at pg. 1.
See Exhibit 2 at pg. 2.
See Jennifer C. Dooren, Suppliers for Cancer Drugs Get Approval, Wall St. J., Feb. 22, 2012, at B3.

Donald S. Clark
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responsiveness in the market. ARI is positioned to assist in facilitating this goal by putting key
information in the hands of the FDA.
II. 	The FDA Drug Shortage Program and Drug Shortage List.
As a result of the increasing number and complexity of drug shortages, the FDA, through
its Center for Drug Evaluation and Research ("CDER") located in Rockville, Maryland,
developed the Drug Shortage Program ("DSP"). The purpose of the DSP is to ensure the
availability of safe and effective drugs to the American public by, among other means,
monitoring critical drugs and medical countermeasures, including those in the Strategic National
Stockpile, to ensure availability for emergency situations. 9 The DSP also serves as a liaison with
other FDA centers, other government organizations including the Center for Disease Control and
the Department of Defense, and private industry.
The DSP uses publicly available information to notify suppliers and the public of present
and upcoming shortages in an effort to mitigate or stem the shortage. The DSP makes use of the
mandatory disclosures by manufacturers that must report the discontinuation of production of
any sole-sourced production of a medically necessary product. See Section 506[ c] of the
Federal, Food, Drug, and Cosmetic Act 21 U.S.C. § 356c. However, all of the remaining
information used by the DSP is supplied on a voluntary basis. 1o
The DSP posts this information on the FDA publicly available web site in the form of a
list (the "DSL"), which currently includes the name of the drug, the formulation, the
manufacturer, the anticipated time frame for the agent's availability, phone numbers and other
important communications from the manufacturer relating to the product shortage. 11 ARI
incorporates information from this list as a starting point, and seeks to enhance the FDA's ability
to arrange production based solutions to mitigate or resolve the shortage at issue.
9 	CEDR Manual of Policies and Procedures ("MAPP"), dated 02/03/2012, at pg 2 (attached hereto as Exhibit
4).
10 	Under section 1001 of the recently enacted FDA Safety and Innovation Act, a drug manufacturer will now
also be required to notify the Secretary of any expected "interruption ... that is likely to lead to a meaningful
disruption in the supply of that drug ... and the reason for such ... interruption" six months prior to the expected
interruption or as soon as practical.
11 	A copy of the most recent DSL is attached as Exhibit 5. It should be noted that section 1004 of the FDA
Safety and Innovation Act now mandates that the Drug Shortage List contain the following information: 1) The
name ofthe drug and its National Drug Code number; 2) The name of each manufacturer of the drug; 3) The reason
for the shortage selecting from the following categories: A) Requirements related to complying with good
manufacturing practices; B) Regulatory delay; C) Shortage of active ingredient; D) Shortage of an active ingredient
compound; E) Discontinuation of the manufacture of the drug; F) Delay in shipping of the drug; G) Demand
increase for the drug; and 4) The estimated duration of the shortage.

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Donald S. Clark
July 16,2012
Page 4
III. 	GPhA and ARl.
GPhA is a trade association that represents manufacturers and distributors of finished
dose generic pharmaceuticals, manufacturers and distributors of bulk pharmaceutical chemicals
and suppliers of other goods and services to the generic drug industry. GPhA was founded in
2001, following the merger ofthree industry trade organizations: the Generic Pharmaceutical
Industry Association, the National Association of Pharmaceutical Manufacturers, and the
National Pharmaceutical Alliance. 12 GPhA is a tax-exempt business league under Section
501 (c)(6) of the Internal Revenue Code of 1986, as amended.
GPhA is run by a full-time staff and Executive team lead by its President and Chief
Executive Officer, Ralph G. Neas.13 The Board of Directors consists of 15 industry
representatives. 14 Regular, or voting, membership in GPhA is open to any corporation,
partnership or other legal entity that derives more than fifty percent (50%) of its net revenues in
the United States from the commercialization, manufacture, sale and/or marketing of finished
dose pharmaceutical products that are (1) products described in Abbreviated New Drug
Applications filed with the U.S. Food & Drug Administration; (2) products sold as authorized
generic drugs in the U.S., (3) biosimilar and biogeneric products, as described in Section 351(k)
of the Public Health Service Act, as amended; and (4) Drug Efficacy Study Implementation
(DESI) products. IS
As members of the public who also are affected by shortages, the generic pharmaceutical
industry is devoted to working with all stakeholders to minimize current shortages and mitigate
factors that could contribute to future shortages. In accordance with this mission, GPhA has
identified the following objectives for ARI:
12
\3
14
• 	Collect and aggregate, via an independent third party under terms of strict
confidentiality and with appropriate safeguards (as described further below),
current and future production information for those products identified on the
FDA Drug Shortage List that satisfy the ARI criteria outlined below;
• 	Through IMS, work with CDER's Drug Shortage staff to determine current and
potential supply gaps, with a focus on those products where a shortage is expected
to last longer than 90 days; and
• 	Through IMS, work with CDER's Drug Shortage staff to ensure the FDA's
connectivity with key market participants in the supply chain of the critical drugs.
Additional background information relating to GPhA can be found on its website at www.gphaonline.org.
A listing of GPhA's staffis attached hereto as Exhibit 6.
A listing of GPhA's Board members is attached hereto as Exhibit 7.
15 	Attached as Exhibit 8 is a current GPhA membership listing. This list identifies both voting ("Regular")
and non-voting ("Associate") members of GPhA.

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Donald S. Clark
July 16,2012
Page 5
Pursuit ofthese objectives will involve IMS' collection and analysis of critical public and
non-public production related infonnation, and the provision ofthat infonnation and analysis to
the FDA. Thus, ARI will position IMS to become a clearinghouse of relevant information
concerning the supply of critical drugs. As described in further detail below, IMS will not
collect pricing or price-related infonnation, and procedural safeguards will be put in place to
protect confidential data and prevent the inappropriate uses of the collected infonnation.
IV. 	Identification and Retention of an Independent Third Party Manager.
GPhA identified a number of companies capable of serving as a third party manager
responsible for the collection of relevant infonnation, and the aggregation and provision of that
infonnation to the FDA. Each of these companies was interviewed to determine their suitability
to run ARI and, although several were well qualified, IMS emerged as the candidate best suited
to supply the needed services. IMS has been providing infonnation solutions to entities in the
healthcare industry, including pharmaceutical providers, for more than 50 years and already
tracks over 80% of global phannaceutical sales activity accounting for more than 1.3 million
products. 16
GPhA and IMS have signed a preliminary non-disclosure agreement and are currently in
discussions regarding the operation of ARI. 17 Although ARI will be initiated as a GPhA
program, ARI may ultimately operate as a stand-alone, non-profit entity.
IMS is expected, based on its experience and knowledge, to develop the mechanics of the
program, including the type of infonnation that it needs to collect, the analysis that it will
conduct, and manner in which the infonnation and analysis will be transmitted by IMS to the
FDA. As a general overview, ARI, working through IMS, is expected to function as follows:
16
17
1. 	FDA, in consultation with GPhA, will identify/focus on a subset of medically
necessary products on the DSL that are expected to be in short supply for more than
90 days, and provide this list of drugs to IMS 18;
2. 	Through available market sources, including information from the DSL, IMS will
identify and, with the assistance of GPhA, individually contact all of the
manufacturers of the products identified in the subset above in an effort to sign them
up to participate in ARI;
Additional background information relating to IMS can be found on its website at www.imshealth.com.
A draft of the non-disclosure agreement is attached as Exhibit 9.
18 	Drugs meeting the following criteria are expected to be included in the subset of targeted products: 1)
currently on the FDA Drug Shortage List; 2) currently listed on the ASHP Drug Shortage List (as no single agent
can be substituted or no alternative for a particular indication); 3) it is either an ANDA product or a "grandfathered"
product; 4) it is multi-source (i.e., there are potential alternative suppliers); and 5) having a projected shortage of
longer than 90 days. In addition, the FDA will have discretion to add products to this list that it believes can benefit
from ARI if circumstances warrant.

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Donald S. Clark
July 16,2012
Page 6
3. 	Participation in ARI will be memorialized by a Participation and Confidentiality
Agreement covering the voluntary disclosure of relevant information; 19
4. 	Participating manufacturers will be expected to: a) provide IMS with their respective
90 to 180 day supply schedules/forecasts covering those products identified on the
ARI list; b) to regularly update, on a monthly basis, the supply schedules provided to
IMS; c) to provide IMS and the FDA with immediate notice of unanticipated changes
to the existing supply schedule reflecting potential and/or expected production
problems not previously disclosed on the DSL or otherwise (these communications
will occur between IMS and each individual manufacturer, not in collaboration with
any other manufacturer);
5. 	IMS, based on its industry knowledge and information received from manufacturers,
will be expected to perform a "gap analysis" that analyzes and charts the anticipated
supply and projected demand of the product and, when possible, note historical
production levels for all current and former suppliers of the product at issue;
6. 	IMS will then transmit this analysis and information to the FDA; and
7. 	The FDA is expected to review this analysis transmitted from IMS along with related
information regarding the drug at issue including time frames for expected approvals
of additional manufacturers, new capacity, and potential closings of other related
lines (information the FDA is in possession ot), and then initiate contact with the
other manufacturers of the drug at issue in an effort to increase production.
v. 	Competitive Considerations
A. 	Total Market Participation.
Total participation is key to identifying and understanding the cause of the potential
shortage, and to finding a solution to prevent or stem the potential shortage, and GPhA seeks
100% participation in ARI by manufacturers of medically necessary products. 20 	Despite the
19 A draft of the Participation and Confidentiality Agreement and Antitrust Guidelines is attached as Exhibit
10.
20 According to HHS, the "[m]anufacture of generic, sterile injectable drugs is a somewhat concentrated
market with 7 manufacturers making up a large percentage of the market. Most of the production of a given drug is
by three or fewer manufacturers. Analysis of a sample of 33 generic sterile injectable oncology drugs shows that of
33 drugs, for 28 at least 90 percent of the total unit sales in 2010 was by 3 or fewer manufacturers. These
manufacturers each operate a small number of facilities (1-10) at which injectable drugs can be produced. These
facilities, in tum, each contain several manufacturing lines. A particular drug can be produced on one or more of
these lines, in runs that may last hours to weeks. The same line may be used for multiple different drugs (produced
in separate batches), however, certain drugs (including cytotoxic drugs) may only be produced on certain types of
Jines and in certain types offacilities, so the extent of substitution is limited. Moreover, there are costs in shifting
from one drug to another on a specific line." See Exhibit 2 at pg. 6.

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July 16,2012
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anticipated level of participation, for the reasons described below, GPhA does not believe ARl
will result or enable any adverse consequences to competition for these products.
B. 	The Exchange of Sensitive Information Will be Limited and Controlled.
As previously noted, information to be collected by IMS under the auspices of ARl will
not include price, price related information, or cost information of any kind. However, in order
for the program to be successful, participants will be asked to voluntarily supply IMS with
current and projected (up to 180 days) production schedules for certain medically necessary
drugs already on the DSL. A number of protections/protocols will be established to ensure that
the confidential nature of this information is preserved.
1. 	All participants will be required to enter into a separate confidentiality agreement
with GPhA and IMS that is intended to safeguard the disclosure of this
information;
2. 	Participants will supply information only to IMS, and not, directly or indirectly, to
other participants;
3. 	IMS will establish appropriate internal protections including firewalls as needed
to ensure that information received from participating manufacturers is not
disclosed to other divisions within IMS;
4. 	IMS will not disseminate information to any of the participants but instead will
use the information to help identify manufacturers with capacity to help stem or
prevent the shortage;
5. 	IMS will transmit its analysis and conclusions only to the FDA and allow the
FDA to communicate directly with manufacturers to determine whether they are
willing to produce additional quantities of the medically necessary drug to prevent
or stem the anticipated shortage; and
6. 	Reporting from IMS back to GPhA will be limited to the identification of drugs
under review and will not include any of the competitively sensitive
production/supply information provided by ARl participants or information about
products (including the identification of any product) that is not already contained
in the Drug Shortage List.
C. 	The Disclosure of Supply Information Should Not Affect Prices.
ARI will orchestrate the provision of supply related information to IMS, and
subsequently to the FDA, that supplements the FDA's existing knowledge regarding drugs
already in short supply. As the identification of these products is already publicly available on
the DSL, it is unlikely that additional information relating to supply and capacity to produce the
drug at issue could be used in a fashion that would have any impact on prices or otherwise result

Donald S. Clark
July 16,2012
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in an agreement that would have any adverse effect on competition.21 Furthermore, the
competitively sensitive information gathered by IMS will not be posted, in its raw or analyzed
form, on the FDA website.
No price, cost or related information will be collected by IMS. Furthermore, all
information collected by IMS under the auspices of ARI is subjected to a confidentiality
agreement and will only be seen and analyzed by IMS and the FDA. Finally, how this
information gets used, including the ultimate communication with manufacturers seeking
to stem the drug shortage, is controlled by the FDA.
IV. 	Conclusion
In conclusion, we respectfully submit that the ARI Program is not likely to facilitate any
sort of anti competitive practice or effect. The benefits to patients are very significant-they will
have greater access to the drugs they need.
Pursuant to Federal Trade Commission Procedure Rule lA, 16 C.F.R. § lA, GPhA and
ARI request that documents attached hereto as exhibits 8 and 9 be treated as confidential under
Federal Trade Commission Procedure Rule 4.10, 16 C.F.R. § 4.10(a)(2), and § 6(f) of the Federal
Trade Commission Act, 15 U.S.C. § 46(f). All information to be withheld is competitively
sensitive information.
We look forward to feedback from the FTC. Please contact us if there is anything else
we can provide that would be helpful to your analysis.
21 	The study from HHS, attached hereto as Exhibit 2, gives a succinct explanation of why shortages are a
feature of the prescription drug market and why a shortage in product generally does not correspond to an increase
in price. Although we have not performed any additional analysis, we believe that its findings also support the
conclusion that ARI's efforts to gap short term supply shortages will not affect prices.