FDA reform could be key to lowering costs

After a recent spike in the prices charged for some generic drugs led to outcries from pharmacists, patient advocates and federal lawmakers, a report issued last month suggests that drug costs can be controlled if the Food and Drug Administration changes the way it handles reviews and approvals.

(To view the full Category Review, click here.)



“While drug prices are not directly within the purview of the FDA, the agency’s actions do affect the market price for drugs and can have a meaningful impact on access to medicines and consumer welfare,” Alex Brill, CEO of Matrix Global Advisors, wrote in a 12-page whitepaper for the Pharmaceutical Care Management Association.



“The FDA can have a critical impact on the degree of market competition,” he said, “Competition among pharmaceutical products leads to lower prices and, in many circumstances, encourages additional innovation.”



Brill’s conclusions echoed what proponents of the generics industry have been contending for years — more players vying for patients’ prescription business will keep prices from spiraling out of control. And, they said, the only way to do this is to expedite the approval process to make it more attractive for generic manufacturers to expand into new therapeutic areas.



“The most effective way to continue to keep prescription drugs affordable for patients is to increase competition,” Generic Pharmaceutical Association president and CEO Ralph Neas said. “Millions of patients and the entire healthcare system would benefit from streamlining and expediting the approval process so that more generics can reach the market sooner.”



Neas, Brill and others in the generics industry say that the only way to stimulate competition is to dramatically change the way the FDA works.



 Brill, for instance, said the agency needs to be more vigorous in its support of biosimilars and faster review times for new drug applications. In addition, he urges the FDA to support legislation to prohibit misuse of risk evaluation and mitigation strategies.



“Many REMS programs restrict product distribution as a safety measure, and brand manufacturers have begun using these required restrictions to deny access to drug samples for generic manufacturers who need samples to develop generic versions of brand products,” Brill wrote in the whitepaper.



In addition, he noted, many brand manufacturers have begun extending these denials to drugs that are not under REMS programs. Brill looked at 40 branded drugs that he feels have had the introduction of generic equivalents blocked by the misuse of REMS. He estimated that allowing these generics to come to market would trim the nation’s drug spending by $5.4 billion a year.



Despite the progress the FDA has made in recent years to speed up approvals of new generics, Brill said there is still a long way to go.



“Generic drugs are not given the same attention at the agency as innovative products,” he said, noting that the median abbreviated new drug application approval time for generics is six times what it takes to approve a priority new drug application or biologic license application.



Brill said the increase in the time it takes to approve generic ANDAs is a result of a growing backlog of applications that has overwhelmed the agency for the past decade. Since 2005, he said, the median time for a generic ANDA approval has gone from 16 months to 36 months.



Congress’ enactment of the Generic Drug User Fee Amendments in 2012 are expected to drive down approval times, he said, but even with the new funding provided by these fees, the FDA does not anticipate reducing ANDA review times to 10 months until 2017.



Meanwhile, federal lawmakers have weighed in on the soaring price of generics, holding hearings and proposing new legislation to help ease the impact of rising prices on federal programs. After a hearing late last month in which executives for several generic manufacturers testified before the Senate Subcommittee on Primary Health and Aging, Sen. Bernie Sanders, I-Vt., and Rep. Elijah Cummings, D-Md., introduced the Medicaid Generic Drug Price Fairness Act. The proposal calls for generics companies to pay a rebate to Medicaid if the price of their products increases at a rate greater than the national inflation rate. The Congressional Budget Office estimates that the policy change would save taxpayers $500 million over 10 years.



Generics proponents say the legislation is misguided. “Unfortunately, the newly proposed legislation makes it clear that the hearing was not intended to be a meaningful examination of ways to ensure savings,” Neas said. “The proposed bill reflects a basic misunderstanding of the pharmaceutical marketplace, and attempts to impose brand pharmaceutical provisions on generic drugs. This effort will threaten patient access to affordable medicines.”