Greater Access to Generic Drugs

by Food and Drug Administration (FDA)

You might think that lower cost means lower quality, but that's not the case with prescription drugs, says Gary Buehler, R.Ph., director of the Food and Drug Administration's Office of Generic Drugs. "The FDA ensures a rigorous review of all drugs, and consumers can be assured that generic drugs are as safe and effective as brand-name drug products," he says.

Generic drugs are copies of brand-name drugs and are available in both over-the-counter (OTC) and prescription form. For example, ibuprofen is the generic version of the OTC pain medicine Advil. Last year, the FDA approved the first generic of the prescription anti-seizure drug Neurontin (gabapentin). Generics have the same quality, safety, and strength as branded medicines. But for an average brand-name drug that costs $72, the generic version costs about $17.

At roughly one-third the price of brand-name medications, generics can bring consumers significant savings. A 2002 study by the Schneider Institute for Health Policy at Brandeis University in Waltham, Mass., concluded that if Medicare increased the rate of generic usage to that of similar high-performing private sector plans, its 40 million beneficiaries could see potential savings of $14 billion in 2003.

The FDA has made it a priority to encourage the availability of generic drugs. FDA experts say there is no question that brand-name drugs are also essential.

"Generic drugs are possible only as a result of the development of new innovative drugs, and this innovation requires significant investment," says former FDA Commissioner Mark B. McClellan, M.D., Ph.D. "Without fair compensation from meaningful patent protection, drug research and development would slow or stop." According to the Boston-based Tufts Center for the Study of Drug Development, the cost to develop a new drug averages $897 million. The Pharmaceutical Research and Manufacturers of America (PhRMA) reports that its member companies invested about $32 billion in 2002 in discovering and developing new medicines.

A brand-name company submits information to the FDA on patents it holds on a drug and their expiration dates. Then the agency lists patents on new drugs in the publication Approved Drug Products with Therapeutic Equivalence, also known as the Orange Book. Patent protection gives brand-name companies, also known as "innovator" companies, the sole right to sell a drug for a certain period of time. This allows them to fairly recoup their investment costs. Patent protection for drugs typically lasts an average of 11 years. A generic drug can only enter the market after the brand-name patent or other marketing exclusivities have expired and FDA approval is granted.

But rising drug costs remain a major challenge for consumers, especially older Americans. "This is where generics play an essential role," McClellan says. "Once the appropriate patent protection has expired, generic medicines give patients an alternative."

On Dec. 8, 2003, the Medicare Prescription Drug Improvement and Modernization Act of 2003 was enacted. Title XI of that Act provides for, among other things, limits on certain court actions that could delay availability of generic drugs. The move is expected to save consumers billions of dollars, as well as lower costs for government and employer-provided coverage.

In addition, the FDA also continues initiatives to improve access to generic drugs. These initiatives involve revamping the FDA's review process to put generic drugs into consumers' hands more quickly. The fiscal year 2005 FDA budget request includes increases in funding for the FDA's generic drug program. The additional funds would go toward increased staff and other improvements to speed up generic drug reviews. The FDA routinely evaluates the generic drug review program to find ways to increase efficiency and get quality products into the hands of consumers to improve the public health.

How Generics Get on the Market

The main reason generic drug companies can market their drugs at lower prices is that they don't face the same development costs as brand-name companies. Under the Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, generic drug companies don't have to repeat expensive clinical trials.

"The Hatch-Waxman Act essentially created the generic drug industry," says Buehler. Roughly two decades ago, generics made up only 12 percent of all prescriptions. Now, generics represent over 50 percent of all prescriptions in the United States, according to the Generic Pharmaceutical Association (GPhA). "The law paved the way for many more generic drugs because rather than repeating research, generic drug companies instead must show the FDA that their drugs are bioequivalent to the brand-name drug," Buehler says.

When a drug is "bioequivalent" to another, it means that its active ingredient works in the same way and in the same amount of time as the brand-name drug. Scientists measure a generic drug's bioavailability — the amount of the generic drug in the bloodstream and how long it takes to get there. Then they compare that measurement to the brand-name drug. While innovator companies submit full new drug applications, generic companies submit what are known as abbreviated new drug applications (ANDAs). Along with showing that a generic drug has the same bioavailability as the brand-name drug, generic companies must prove that their products have the same active ingredient, follow the same quality manufacturing standards, and have similar labeling.

The competition encouraged by the Hatch-Waxman Act helps to keep drug costs down and also spurs innovator firms to develop more new drugs, Buehler says. "The law aims to protect the intellectual property rights of innovator companies, while also encouraging the development of generic drugs," he says. As an incentive for generic drug firms to submit ANDAs to the FDA, the first generic challenger of patents is awarded a period of marketing exclusivity.

About the Author

www.fda.gov
FDA is A United States government body that oversees medical devices, including contact lenses, intraocular lenses, excimer lasers and eyedrops. In the US, these products must be approved by the FDA before they can be marketed.