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FDA White Paper
New FDA Initiative on 'Improving Access to Generic Drugs'
June 12, 2003

Executive Summary
Bringing low-cost generic drug alternatives to consumers more quickly can significantly reduce overall health care costs, and increase access to life saving medicines that are just as safe and effective as their brand-name counterparts.

Part of the FDA's mission is to make sure that the generic drugs approved for use in the United States are just as safe and effective as the brand-name versions of the drugs. Generic drugs can be very helpful for patients because their price is typically much lower: while the average price of a brand-name prescription-drug is $72, the average price of a generic version is about $17. This is an especially important source of drug savings now, because a growing number of important brand-name medications coming off patent -- more than 200 of them in the next few years.

FDA's new final regulation to improve implementation of the Hatch-Waxman amendments to the FFDCA -- the section of the law that governs how and when generic drugs can compete with brand-name -- will lead to billions of dollars in lower drug costs each year. But this rule and the legislative proposals involving the Hatch-Waxman amendments only affect a fraction of new generic drugs. There are two other obstacles to helping all consumers get greater savings from generic drugs:

Long approval times for generic drugs: On average, it takes more than 20 months for a new generic drug to be approved by the FDA. Companies need to demonstrate that their products contain the same active ingredient, are manufactured to the same quality standards, comply with good manufacturing practices, have similar labeling, and have the same 'bioavailability' (that is, the same availability of the active ingredient when used in the body) as the brand-name drug. Generic drug applications take long to be approved because it typically takes multiple 'review cycles' for these generic drugs to be approved by FDA -- a long process that adds to the costs of developing generic drugs and significantly delays the availability of these low-cost alternatives for consumers.
Opportunities to improve consumer knowledge and safe use of generic drugs: Surveys have indicated that many health care practitioners and patients are not aware that generic drug alternatives are available, or that the generic alternatives act the same way as the brand-name drugs -- that they are just as safe and effective. Health care practitioners and consumers may also be concerned about the state of scientific knowledge about generic drugs that are available, and want assurances that the science base is strong and that adverse events can be discovered and addressed just as quickly as with brand-name drugs.
As a result of these factors, even with improvements in the Hatch-Waxman law, many additional billions of dollars in potential savings are likely to go unrealized each year. With rising drug costs and the potential for far more generic drugs to become available in the near future, these are sources of savings that should not be overlooked.

The FDA's initiative on Improving Access to Generic Drugs was designed to address these challenges to the availability of safe and effective, low-cost drugs. The initiative includes the following components:
Unprecedented increase of $13 million in FDA resources devoted to improving access to generic drugs: The President's 2004 budget proposes an additional $13 million in spending for FDA's generic drug programs. This will be the largest infusion of resources into the generic drug program ever, increasing the program's size by about one-third.
New regulatory processes to reduce the time and cost of generic drug approvals: Beginning in the next fiscal year, the FDA will make significant changes in its processes for approving generic drugs. In particular, the FDA will implement early communications with generic drug manufacturers to discuss their applications. FDA will increase the number of guidances available for generic manufacturers regarding what is required to prepare and submit quality, complete applications. FDA will also institute regular meetings with generic trade associations to discuss the process for improving the quality of applications and to impart information on changes in policies and procedures. Studies of FDA processes for new drugs indicate that early communications and more explicit guidances can often improve drug applications and allow deficiencies to be corrected while an application is under review, rather than having to wait for additional review cycles to fix problems. This can significantly reduce the time it takes to approve a drug.
Enhanced public education and scientific study of generic drugs: The FDA will expand its educational programs and partnerships involving generic drugs, to help health care practitioners and consumers get accurate information about the availability of generic drugs for their health care needs. FDA will also undertake additional scientific studies of certain types of generic drugs where adequate bioavailability methods have not been adequately developed, to make it easier to approve these generic drugs. FDA will also enhance the monitoring of the safety of generic drugs currently on the market.
These steps to improve access to generic drugs are expected to reduce the average time for most generic drug approvals by 3 months or more. Because this approach to increase availability will apply to all generic drugs, it can have a substantial impact on health care costs. In particular, faster access and a lower-cost approval process for the hundreds of generic drugs expected to come on the market would be expected to save consumers many billions. Improved consumer education and generic drug science will also likely lead to additional savings from greater confidence and use of generic drugs.

Background
The number of new generic applications received is expected to continue to grow above last year's record level of 361 abbreviated new drug applications, or ANDAs (these are the applications that drug makers file with the FDA for permission to sell a new generic drug). The projected figure for FY 2003, based on 8-months of data, is 465.

Encouraging rapid and fair access to generic medications is one of the FDA's major priorities. Americans need generic drugs more than ever, and FDA is implementing new programs to help make these products available sooner. There are many steps involved in achieving this goal. FDA has recently expanded its generic drug program to act on generic applications faster, but the growing number today -- and expected further increases in the coming years -- means that the FDA's resources are increasingly being stretched.

Challenges of making low cost generics available:
Despite the growth in the submissions of applications for approval of new generic drugs (original abbreviated new drug applications, or ANDAs) from 326 in FY-1999 to 361 in FY-2002, FDA's generics program during the same time increased the proportion of applications reviewed within 180 days from about 35% to 80%. The average time required for a first review of an ANDA is down to 100 days, from 135-140 days in the late 1990s.

These substantial improvements were made possible by rising efficiency in the Office of Generic Drugs, as well as by increased resources -- the appropriations for the FDA's generics program increased by $1.4 million in 2001 and by another $2.5 million in 2002.

Additional funding has helped to increase FDA's rate of reviewing and approving generic applications. The number of full and tentative generic applications approved has gone up significantly, from 266 in FY-1999 to 364 last fiscal year - an all-time record. (A 'tentative' approval granted to a generic applicant that has demonstrated their product is safe and effective, but cannot yet enter the market because relevant patents have not yet expired or are in dispute. The FDA's new final rule on implementing the Hatch-Waxman amendments will reduce the time to approval for applications with paragraph IV certifications and will reduce the number of disputes related to patent listings. These disputes occur for a fraction of generic drug applications, though they tend to involve drugs that have high annual sales.)

These significant improvements in FDA's approval times and median times to the issuance of an approval or 'tentative approval' letter -- which used to be longer than two years -- have not decreased in proportion to the percentage increase in approvals. The average total time for a generic drug to be approved still remains above 20 months. That means, even as the FDA is making large strides in increasing the number of approvals, there is still substantial room for improvement in total time to approval. Although many generic applications have been approved within one year, this timeframe is still the exception rather than the rule.

The reason that total time to approval or tentative approval is not significantly declining is due to several factors, including multiple review cycles that are required before these applications are approved. Based on FDA's most recent statistics from all generic applications in 2001 and 2002, 93% of generic drug applications are not approved on the first cycle of review; and 66% are not approved even after the second cycle of review.

A review of these multiple-cycle reviews demonstrate that many generic applications do not contain sufficient information to permit the FDA to approve the application after the first review cycle, and frequently the FDA cannot approve even after the second or third cycle. Review times and costs would be lower if generic manufacturers initially submitted high-quality applications that permit approval after the first review cycle. FDA's current policy of not providing any substantial communication about deficiencies in an application until after the first cycle is completed is contributing to these problems. It is likely that some important deficiencies could be identified earlier and possibly avoided, thus improving review times.

Among the approximately 100 generic firms that regularly submit applications to the FDA, there are many whose ANDAs usually include few deficiencies, and can be approved in a timely manner. But there are also manufacturers who lack the necessary experience in developing their applications, and, more importantly, there are many manufacturers who do not perform adequate product development before they submit their initial application. Also, often they lag in providing the additional information FDA needs, even after the application is rejected on the first cycle. The result is multiple cycles and many months of delays in generic drug availability, even if FDA handles each cycle efficiently and succeeds in reducing the 'cycle time.'

Early communication leads to better applications and faster reviews:
In the past, FDA has not provided the kind of ongoing communication with generic companies in developing their applications. This communication is an integral and expanding part of FDA's ongoing effort to implement smarter, more efficient regulation to reduce the costs of developing safe and effective regulation of new drug products. Generic manufacturers have not had the advantage of informative consultations with FDA reviewers early in the review process that have been shown to be effective in reducing the occurrence of multiple-cycle reviews for new drugs.

There have been two major reasons why FDA has not provided this type of clear and effective communication in the past. One constraint has been available resources: the staff of FDA's generic drugs program has not been sufficient to provide a high level of communication to improve understanding of approval requirements in particular cases. The second main obstacle to effective communications has been FDA's internal policies, which have discouraged early consultations between the Office of Generic Drugs (OGD) reviewers and sponsors of ANDAs.

Finally, another factor limiting the availability of low cost generic alternatives is the lack of adequate methods for determining that certain types of generic drug products (such as inhalation suspensions) are equivalent to the branded drugs. Right now, there are no clear standards for developing generic versions of certain types of drugs, because, until recently, the regulatory methods have not been developed to make these determinations.

Features of FDA Initiative on Improving Access to Generic Drugs
Improvements in FDA generic drugs programs made possible by new appropriations:
The Agency can and will do more to improve the efficiency of our reviews. Acting quickly on generic drug applications is well worth even greater FDA resources. To improve reviews, the FDA has requested a $13 million appropriation in FDA's 2004 fiscal year budget to help develop the tools and infrastructure needed to bring more safe and low-cost generic alternatives to consumers. This funding request, which increases the 2003 budget of approximately $45 million by about one-third, will help the FDA to address immediate concerns that could slow the ability of the Agency to make more, low-cost generic alternatives available to consumers.

More staff to be able to review applications on a timely basis and facilitate more extensive, early communications with generic manufacturers:
The FDA will be able to hire about 40 additional staff in generic drugs and expand the new chemistry review division in the OGD. This expansion should help reduce the average review time by at least two months, increase the percentage of reviews that are completed within 180 days, approach the goal of reviewing 100% within 180 days and further reduce the time it takes FDA to review.

The additional staff will include additional medical officers to review generic drug applications and additional scientific staff to focus on novel products for which there aren't yet clear standards. These changes will enable FDA review staff to interact more with generic drug applicants, clarifying requirements and providing more early advice. In particular, FDA will develop and implement a standard, fair protocol for providing initial feedback to applicants about obvious minor deficiencies in generic applications within 10 days after the first cycle review is completed. Generic applicants who respond to these comments in a timely fashion will be able to amend their application, potentially avoiding an additional review cycle and accelerating approval by 3 to 6 months or more.

In addition, at the conclusion of the first review cycle for all other ANDAs, FDA will initiate a teleconference with each applicant to discuss the deficiencies identified. Policies will also be revised to allow telephone communication during the initial review cycle for clarification and resolution of minor review issues. OGD will issue guidance in early FY-04 describing these policy changes. Experience in other areas of the FDA's drug review efforts have shown that these early interactions reduce the time and cost of product approvals by reducing the number of cycles an application goes through.

More efficient ways for determining that new generic drugs are as safe and effective as their branded alternatives:
About $1.3 million of this money will be appropriated to developing simple and effective ways other than comparative clinical trials to determine therapeutic equivalence of branded and generic drug products including certain dermatologic drug products. Another $1.5 million will be earmarked to developing methods for assessing the equivalence of inhaled suspension products. And another $1.5 million will be used to develop methods for assessing other novel drug delivery systems, such as liposomes.

Right now, there are no clear standards for developing generic versions of these types of drugs and the regulatory methods for approval need to be elucidated. As a result, even though relevant patents have long since expired, there are few if any low-cost generic options available for patients using certain inhalation suspensions to treat asthma and certain dermatologic medications. Patients currently spend billions of dollars each year on such medications; therefore, significant cost savings can be realized as a result of marketed generic products.

Greater efforts for informing consumers about the safety, effectiveness, and value of generic drug options:
As the President said in October, 'generic drugs are just as safe and effective as brand-name drugs.' Yet there is considerable evidence that many consumers do not view generic drugs in this way. In FY-02 and FY-03, Congress provided $400,000 to increase the consumer awareness of the rigorous generic drug review process and quality of generic drugs. An additional $400,000 will be expended in FY-04 to continue this program. Through outreach into the medical and lay community through newspaper articles, posters on buses, in pharmacies, and in magazines and partnering with many third-party prescription programs, this program will dispel many myths about generic drugs and help doctors to prescribe them, as well as assist consumers in learning about the availability and safety of these low-cost alternatives.

As generic drugs become increasingly important in American medicine, we must learn more about their potential for presenting safety and adverse event problems:

For this reason, some of the additional generics funding will be used to enhance our 'post-market' monitoring of adverse events involving generic drugs. This is an important and integral part of the FDA's agency-wide patient safety initiatives.

The Agency must have mechanisms in place to quickly learn about all drugs-associated safety concerns and take prompt corrective actions, such as informing health care providers and patients how to avoid the potential hazards. This will involve greater use of electronic health information systems, including bar coding and automatic reporting of safety data. Three million dollars has been targeted in FY-04 to hire additional safety evaluators in the Office of Drug Safety and to augment the OGD's medical staff.

Conclusion
All of these components of FDA's initiative on Improving Access to Generic Drugs will make safe and effective drugs much more affordable for millions of Americans. These steps -- including greater funding for FDA's generics program; steps to improve the efficiency of review cycles and to work collaboratively with industry to improve the quality of generic drug applications; enhanced consumer education about generic drugs; and better science to speed the development of additional generic products -- can make a big difference in the nation's public health. Overall, FDA expects to decrease the average time for approval. Combined with FDA's new final Hatch-Waxman rule, this initiative promises to provide many billions of dollars in drug cost savings each year -- without compromising FDA's high standards for safety and effectiveness of the drugs that Americans use every day.

More Information on FDA's Generic Drugs Final Rule and Initiative



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