U.S. Pharmacist



Q&A with GPhA President and CEO Kathleen Jaeger



Q: Many pharmacists have told us that reimbursements of Medicaid prescriptions based on AMP (average manufacturer price) instead of AWP (average wholesale price) will have devastating effects on their profits when it comes to dispensing generics. What effect do you think AMP will have on the generic industry?

A: GPhA, along with a coalition of distributors, pharmacies, and their respective trade associations, are working together to ensure that the reimbursement model does not adversely affect pharmacies or consumers' access to generics. While GPhA and its coalition partners share the goal of ensuring that CMS [Centers for Medicare and Medicaid Services] and the states have consistent data, rule changes must not undercut competition in the marketplace. When competition is reduced, costs to consumers increase and patient access to affordable generics is jeopardized.

Q: Many view "authorized generics" as a positive for consumers since less expensive versions of brand name products would be released to the market sooner. What impact do you think authorized generics have on the development of generics through ANDAs (abbreviated new drug applications)?

A: Generic companies conduct their research and development years in advance of patent challenges. That's why authorized generics, if allowed to remain unchecked by Congress, could severely curtail future patent challenges. This would allow brand companies once again to evergreen patents and substantially delay consumer access to affordable medicine.

Under provisions in the Hatch-Waxman Act, the first generic company to successfully challenge a questionable brand patent, file an ANDA with FDA, and receive approval to market that drug product is awarded 180-day exclusivity. This 180-day period was designed to permit the generic company alone to compete with the brand company, allowing the generic to recoup costs incurred for undertaking a patent challenge. Brand companies are circumventing the Act's intent by introducing an authorized generic--which is the brand's own product repackaged and marketed either through a subsidiary or third-party--during this critical timeframe. The authorized generic does not appear on the market prior to this time--so there is no early opportunity for consumers to save. Moreover, authorized generics are considered brand products by the FDA, so they do not have to go through the same rigorous approval process required for true generic products.

The 180-day exclusivity period is a critical incentive to bring generics to market in a timely manner. GPhA believes that the use of authorized generics undermines the Hatch-Waxman Act by devaluing this incentive. Ultimately, consumers pay the price as brand companies keep drug prices high and access to affordable medicine is delayed.

Q: Have any strides been made to help increase funding for the FDA's Office of Generic Drugs in effort to address the growing backlog of generic applications?

A: For Fiscal 2007, Congress approved $5 million in additional funding for the Office of Generic Drugs [OGD], but we are hopeful that more funds will be approved for Fiscal 2008. Funding for OGD has remained relatively flat over the past several years, and the backlog of generic drug applications has continued to grow. Additional funding will better enable OGD to review these applications more rapidly.

Q: Despite the fact that many legislators are positive on the approval of biogenerics, the FDA and other regulating bodies have their doubts. What do you see as the future of biogenerics?

A: Momentum is clearly growing for Congress to approve legislation to bring safe and affordable biogenerics to patients in need. More than 50 organizations representing millions of older Americans, corporations, union members, patient groups, and other organizations, as well as a distinguished group of governors, are calling for biogenerics to improve the quality of care and reduce health care costs.

FDA has testified before Congress and has emphatically stated that it has the ability to follow the science to approve biogenerics. What it needs is the legal authority from Congress to do so. In fact, FDA Deputy Commissioner Janet Woodcock stated in congressional testimony that FDA now has the ability to review biogenerics of low to modest complexity. And, in a recent white paper, Dr. Woodcock wrote that FDA uses a "scientifically based, case-by-case basis" for the approval of biopharmaceuticals--the same approach that is being advocated for biogenerics.

So it's clear that it's not a question of if biogenerics are possible, but when Congress will give FDA the authority and flexibility to review and approve them.

Q: Now that Medicare Part D has become part of the health care system landscape, what effects do you see it's had on the dispensation of generics?

A: CMS has actively promoted the use of affordable generic medicines as a way for Medicare recipients to save money. In fact, 61% of all Medicare Part D prescriptions dispensed are for generic medicines. Thanks in part to the use of generics, CMS estimates that it reduced Part D program costs by about $8 billion in 2006.

Q: The government is proposing user fees for generic companies to help speed up approval of generic drugs. You've been quoted as saying that the generic pharmaceutical industry would support paying user fees "if the FDA and the Bush administration would guarantee legislative and other regulatory changes." What would those changes be?

A: While user fees might result in faster review times, they won't guarantee that medicines get to consumers faster unless barriers to market entry are removed. The FDA can hire more reviewers and speed up reviews, but if it doesn't deal with barriers like authorized generics and citizen petitions, it won't get medicines to consumers any sooner.

GPhA is open to discussing options that would bring medicines to consumers faster, but user fees cannot be discussed in a vacuum. Paying user fees won't succeed in bringing generics to patients faster as long as barriers like authorized generics, citizen petitions, and the absence of a workable approval pathway for biogenerics continue to delay generic competition. Congress and FDA must eliminate these barriers before consumers see any real benefit from user fees.

To comment on this article, contact editor@uspharmacist.com.



U.S. Pharmacist is a monthly journal dedicated to providing the nation's pharmacists with up-to-date, authoritative, peer-reviewed clinical articles relevant to contemporary pharmacy practice in a variety of settings, including community pharmacy, hospitals, managed care systems, ambulatory care clinics, home care organizations, long-term care facilities, industry and academia. The publication is also useful to pharmacy technicians, students, other health professionals and individuals interested in health management. Pharmacists licensed in the U.S. can earn Continuing Education credits through Postgraduate Healthcare Education, LLC, accredited by the Accreditation Council for Pharmacy Education (ACPE) as a provider of continuing pharmacy education.

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