Limited distribution networks stifle competition in the generic and biosimilar drug industries

A limited distribution network (LDN) restricts the distribution channel for a pharmaceutical drug to 1 or a very small number of distributors. This strategy may allow for more effective allocation of drugs in shortage and is purported to help ensure the safe distribution of high-risk drugs to small patient populations. However, in recent years, some drug companies, including Turing Pharmaceuticals, have used LDNs to prevent generic and biosimilar companies from accessing samples of drug products necessary to perform testing required by the FDA for generic and biosimilar drug applications. LDNs also hamper provider access to pharmaceuticals and facilitate price gouging. This paper synthesizes existing knowledge on the misuse of LDNs to thwart competition, clarifies the relationship between limited distribution and the FDA Risk Evaluation and Mitigation Strategies, discusses proposed federal legislation under consideration to address this issue, and offers several policy options to remedy this anticompetitive practice, including authorizing the FDA to require the sale of approved drug products to generic and biosimilar drug developers.