J&J boasted about defending Remicade from biosims. Now it's under FTC investigation

magnifyingglass
Johnson & Johnson has disclosed an FTC investigation into its Remicade contracting. (Flickr user nathanmac87)

Johnson & Johnson's big-selling Remicade has held most of its ground against biosimilar competition, thanks in part to some aggressive payer contracts that rivals—including Pfizer—have called into question. Now, the FTC has some questions of its own.

The Federal Trade Commission issued a civil investigative demand to J&J last month, looking into whether the company’s biosimilar defense strategy violates federal antitrust laws, the company said in a second-quarter filing with the SEC. 

The agency's probe follows years of biosimilar competition that yielded little result for Remicade's challengers until just recently. And J&J hasn't been shy about touting its brand's success in the face of rivals. The drug initially lost sales much slower than many market watchers had expected, and company executives attributed its performance to savvy contracting.

J&J used those contracts to battle copycat attack, first from Pfizer in 2016 and then from Merck the following year. Ahead of those biosim launches, the company’s then-pharma chairman Joaquin Duato said J&J planned to develop “innovative contracts” intended to “utilize the full breadth” of its portfolio. 

In July 2017, Bernstein analyst Ronny Gal wrote a note to clients detailing the company’s three-pronged approach. J&J set up exclusive contracts in nearly half the market, leveraging its large market share and the rebates it pays out, not only on Remicade, but other meds in its portfolio. 

RELATED: With its Remicade biosimilar stymied by the brand, Pfizer sues Johnson & Johnson for 'anticompetitive' dealmaking 

J&J bundled deals for drugs and devices for hospitals, disincentivizing their use of biosimilars, Gal wrote. And the drugmaker offered bigger discounts to large independent infusion centers, which have tighter budgets, in order to keep their business.  

Pfizer thus had a rude awakening when it launched its copycat, Inflectra. After the biosim failed to generate much momentum, Pfizer in September 2017 sued J&J for “anticompetitive” contracting.

The company argued J&J’s contracts with payers required them to eliminate or “drastically reduce” their use of Remicade biosimilars. J&J used rebates on the massive existing Remicade patient base as leverage to keep payers on the J&J brand, the suit claimed.  

J&J hit back and said Pfizer wasn’t offering enough value to win business. The company stood by its contracting, saying “competition is doing what competition is meant to do: driving deeper discounts that will lead to overall lower costs” for the drug. J&J further argued Pfizer is “asking the court to protect it from having to compete.” 

But even as J&J used rebates as leverage in fighting off Remicade biosimilars, the pharma industry has largely supported a push from the Trump administration to move away from drug rebating. Last year, J&J paid $21 billion in rebates and discounts, it said in an annual “transparency report."

Pfizer argued said the strategy "led to the near-total foreclosure of Inflectra with patients across the country.” Sales figures support the argument: Pfizer’s Inflectra generated $74 million in the U.S. during the second quarter of 2019, compared with Remicade’s $801 million. Merck didn’t break out Renflexis sales for the period.

Along with other critics, Pfizer argued the strategy wasn't allowing U.S. health systems to fully benefit from the launch of biosimilars.

Suggested Articles

Amgen is contributing $421 million to BeiGene's planned $2.1 billion raise.

Moderna has never scored a commercial approval for any of its drugs or vaccines, but analysts with Jefferies think the company has a winner in COVID.

The FDA will resume "prioritized" domestic manufacturing inspections after four months on near-total lockdown.