Some Things You May Not Know About Generic Drugs
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The rising cost of healthcare, increasing drug prices and the restrictive nature of the formularies of many insurers and third party payers is forcing a growing number of Americans to rely almost exclusively on generic prescription drugs. The trouble is that most Americans know very little about generic drugs; mainly because big pharma has done its best to minimize the discussion about generics and continues to portray generic manufacturers as less than reputable purveyors of prescription drugs. Because of this, I think that American ought to begin to understand an industry that increasingly will play a major role in the US healthcare system. So here goes:
- According to IMS Health, generic drugs accounted for 70 percent of the 2.9 billion prescriptions filled in the US in 2009
- Generic drugs accounted for only 15 percent of almost $300 billion spent on prescription drugs last year in the US
- Since 2003, the US Food and Drug Administration (FDA) received 800 new generic drugs applications; up from an average of 330 applications per year in the last decade
- Five years ago, it took FDA regulators an average of 16.3 months to review and approve generic new drug applications; by 2009 the average time to approval had ballooned to 27.7 months
- There is a backlog of nearly 2,000 pending generic new drug applications, almost double the backlog at the agency in 2005
- FDA’s division of generics had a budget of only $41 million in 2009; its budget for 2010 is $511 million
- Unlike branded pharmaceuticals, companies seeking regulatory approval for new generic drugs don’t pay user fees
- According to FDA Commissioner Dr. Margaret Hamburg generics saved American consumers almost $750 billion over the last decade.
Based on these facts, it is evident that FDA is seriously under funded, under staffed and overwhelmed by the spike of new generic drug applications in recent years. Interestingly, President Obama’s proposed 2010 budget included $38 million in user fees from generic manufacturers to process new drug applications. Not surprisingly, generic manufacturers are not willing to pay these fees unless the approval time for their products is drastically shortened. To that end, FDA is hiring 50 more reviewers and hopes that personnel increases will eliminate the generic drug application backlog by 2012.
Dr. Hamburg is also looking to streamline some aspects of the generic drug application review process. For example, she proposed giving higher priority to generic drugs applications for branded drugs whose patent expiry is imminent as compared with applications for drugs that have several more years of patent protection remaining.
Nevertheless, the bottom line is that the agency needs a much larger budget and staff to keep up with the ongoing torrent of new generic drug application. With this in mind, the agency ought to consider reallocating existing resources—rather than wait for budget increases in these financially uncertain times—to process new generic drug applications in a timely fashion. This may be possible because of the annual number of drug applications for new, branded prescription drugs has steadily been decreasing for the past five years.
Hat tip to the New York Times!
Until next time...
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