The availability and utilization of generic alternatives to brand-name drugs have had a significant effect on cost savings for health care consumers. In 2008, generic drugs accounted for more than 63% of total prescriptions filled in the United States.1 Although generics are used to fill the majority of prescriptions, the actual costs associated with these medications are less than 13% compared with their branded counterparts.2 While direct cost savings are a significant advantage for generic drug products, studies have also shown improvements in indirect costs such as therapy adherence and compliance.3
Despite the benefits associated with the use of a more cost-effective drug, the generic drug industry has had its share of challenges. To understand these challenges and what the industry faces, it is important to examine the modest history of generic drug products and review the approval process.
Generic Drugs: Definition and Legislative History
According to the FDA, a generic drug is a product that compares to the pioneer, or reference, drug product (usually a branded drug) in dosage form, route of administration, strength, quality, safety, and performance characteristics. The generic drug must have the same intended use as the pioneer product that serves as its prototype.4
The generic drug industry has been awash in controversy since the establishment of the pharmacy and medical communities in the U.S. In 1888, the American Pharmaceutical Association (APhA) published the National Formulary to help prevent counterfeiting of branded products.5,6 Congress came on board in 1906 with the passage of the Federal Food and Drugs Act. This law, signed by President Theodore Roosevelt, was the first to require product labeling in an effort to prevent misbranding and adulteration, and it enabled the government to take action if a product caused substantial injury or death.7,8 This was the beginning of pharmaceutical regulation by what was soon to become the FDA.7,8
Concern arose in 1928 regarding the substitution of generic drugs for brand-name products. A well-accepted pharmacy magazine published articles commenting on the appropriateness of this practice and voiced its concern that generic substitution might be deceptive. This came at a time when many mainstream drugs were beginning to enter the market.5,6 Then, in 1938--in response to the 1937 Elixir Sulfanilamide incident, which killed 107 people--Congress passed the Federal Food, Drug, and Cosmetic Act (FDCA).7 The FDCA designated products introduced after 1938 as new drugs and required them to be proven safe through manufacturer testing and FDA clearance before they could be marketed. While the FDCA was an important step in improving the drug-regulation system, guidelines were not always followed when an identical or similar product was introduced after a patent on a pioneer drug expired. Because the drug was not always considered to be a new drug by the FDA, the same rigorous testing for safety and efficacy was not performed, resulting in a variety of original and derivative products of varying integrity.8
The Durham-Humphrey Amendment of 1951 established two distinct categories of drugs: those that are unsafe to use without medical supervision and must be prescribed, and those that can be sold without a prescription.7 Despite the differentiation, multiple products continued to appear on the market, which potentiated difficulties with inventory and drug counterfeiting. This led to efforts by the APhA to pass antisubstitution resolutions and state legislation requiring pharmacists to dispense either the branded drug prescribed or a generic drug from a specific manufacturer unless only a generic name was provided.5,9 While these laws helped prevent substitution of low-quality products, it limited opportunities for the manufacture of generic products of sufficient quality.5
In 1962, the Kefauver-Harris Drug Amendments were mandated. These amendments were the first to require drug manufacturers to prove a product's safety and efficacy to the FDA prior to marketing it.7 Also at that time, all products on the market that had been released between 1938 and 1962 were declared once again to be new drugs, and pioneer products had to submit efficacy data for evaluation by active ingredient. If a product was found to be ineffective, all related products, in addition to the pioneer product, were removed from the market.8
The Kefauver-Harris Drug Amendments also required all manufacturers of related products to submit an Abbreviated New Drug Application (ANDA) for products manufactured between 1938 and 1962. ANDAs contained information similar to that found in a pioneer drug application, with the exception of safety and efficacy. After 1962, the FDA established a new mechanism of proving safety and efficacy by allowing the "literature-based" New Drug Application. This meant that submission of published data regarding a branded product's safety and efficacy by a generic product's manufacturer was permitted.8 Over the next several years, the Kefauver-Harris Drug Amendments were challenged, most notably in Upjohn v. Finch in 1970, in which the courts upheld the amendments by ruling that evidence of drug safety and efficacy cannot be substantiated by commercial success alone.7
The Medicaid and Medicare amendments to the Social Security Act (enacted in 1965) and additional legislation passed in 1967 helped move generic drug products into the forefront. After a cost-effectiveness analysis of drug products conducted by Congress, the use of generic products by federal health and welfare programs was strongly encouraged to safeguard against inflated pricing arising from lack of competition.5
Legislation to expedite the availability of generic drug products was passed in 1984.4,5,7 The Drug Price Competition and Patent Term Restoration Act, more commonly known as the Hatch-Waxman Act, allowed the FDA to approve applications to market generic versions of brand-name drugs released after 1962 without repeating efficacy and safety research. This legislation also allowed brand-name manufacturers to extend their patent protection for up to 5 years for new products. This meant that these manufacturers could make up for time lost while their products were going through the FDA approval process.7 Despite the increase in patent protection, the Hatch-Waxman Act is considered to be one of the most pivotal legislative moves on behalf of the generic drug industry. In 1994, through the passage of the Uruguay Rounds Agreements Act, the patent term of drugs manufactured in the U.S. was extended from 17 to 20 years after original filing.7
In the last 30 years, several controversies have arisen surrounding legislation involving generic drugs. In particular, the approval process, issues of bioequivalence, and corruption have been at the forefront of the disputes. In 1987, an investigation into the FDA Office of Generic Drugs (OGD) was conducted after a complaint from Mylan Laboratories that several of its ANDAs had been purposely delayed. The investigation revealed that some government officials had taken kickbacks to accelerate the ANDA approval process for some manufacturers. Additionally, evidence was discovered linking some manufacturers to the submission of false ANDA information in order to decrease their products' time to market. The FDA conducted its own internal review of the OGD, after which it changed the procedure for processing ANDAs, intensified ANDA requirements, and regulated other OGD procedures. A scientific advisory team on generic drugs was created, and investigations into generic drug practices were performed by an independent panel so as to limit fraud.5
In response to this corruption, the Generic Drug Enforcement Act of 1992 imposed penalties for illegal acts related to abbreviated drug applications and required generic drug manufacturers to include more scientific data concerning quality and bioequivalence. Fortunately, this legislation brought needed change and credibility to the generic drug industry and was a timely move toward restoring the integrity of the industry in a time of greatly rising health care costs.5,7
The Approval Process
Unlike the approval process for new chemical entities, that for generic drugs allows use of the ANDA, which does not require the submission of clinical data regarding safety and efficacy since this information was already provided for the pioneer product. Since the original active ingredient was already proven safe and effective, the manufacturer must now prove bioequivalence for the pharmaceutically equivalent generic drug product.
In order to receive approval for marketing, a generic drug must meet the same batch requirements for identity, strength, purity, and quality and be therapeutically equivalent to the branded product. Additionally, the drug must be manufactured according to the same Good Manufacturing Practice regulations required by the FDA.4 For the generic drug to be therapeutically equivalent, two clinical characteristics must apply: It must be pharmaceutically equivalent as well as bioequivalent. Pharmaceutical equivalence means that the active ingredient(s), dose form, route of administration, and strength are the same for both the branded product and the generic product. Bioequivalence is when both products have comparable bioavailability when studied under similar conditions.10
While pharmaceutical equivalence is relatively easy to comprehend, the concept of bioequivalence is more difficult to grasp. Bioequivalence is determined by evaluation of the AUC and the maximum concentration of drug (Cmax). A generic product is considered to be bioequivalent to the pioneer product if the 90% confidence interval (CI) of the mean AUC and the relative mean Cmax is 80% to 125%. This criterion is the same standard used for testing the bioequivalence of branded products with reformulation or manufacturing changes. Bioequivalence is determined by conducting crossover studies of at least 12 patients in which half of the patients receive the generic drug first and then the pioneer drug, with a washout period in between. The remaining patients receive the pioneer drug first, followed by a washout period and then the generic drug. The Cmax, time to reach Cmax, and AUC are determined by taking multiple blood samples from individual patients. Based on the 90% CI, if drug levels vary by more than 10%, failure to reach FDA criteria disqualifies a drug for a bioequivalence rating. According to data for bioequivalence testing performed on 224 drugs after 1962, the mean variation in bioavailability between branded and generic drug products was approximately 3.5%.11
Despite determinations of statistical bioequivalence, some health care providers still have concerns about interchangeability between narrow-therapeutic-index (NTI) branded and generic drugs. Currently, however, no data suggest that the bioequivalence criteria for NTI drugs should be more rigorous. Opponents of generic substitution have raised questions about changes in efficacy and toxicity in drugs such as antiepileptics and have voiced concerns about receiving consistent product with routine refills. In addition, it has been difficult to determine bioequivalence in products with timed-release properties.11
A common misconception in the evaluation of generic substitution relates to therapeutic equivalence. While a generic drug may be AB-rated to a branded drug, there is no testing to determine whether generic products are bioequivalent to each other, although it is expected that their efficacy would not differ significantly.11
Today, the generic drug industry is driven by many stakeholders. Consumers demanding low-cost alternatives to expensive brand-name products are at the forefront. Federal and state programs, which were some of the original supporters of generic drug development, also lead the way in encouraging healthy competition and ensuring the safety and efficacy of generic drug products. Additionally, the professional services of medicine and pharmacy, despite having a somewhat conflicting relationship in the past, now jointly advocate the development of low-cost alternatives to serve the needs of their patients and have identified some common ground regarding pharmacotherapeutic decision-making and substitution. Regardless of who is involved and in spite of the controversies surrounding economics, professional interests, and drug development, the generic drug industry is and will continue to be an invaluable player in the health care field.
1. Savage C, Gatyas G. IMS Health reports annual global generics prescription sales growth of 3.6 percent, to $78 billion. December 10, 2008.
2. Shrank WH, Cox ER, Fischer MA, et al. Patients' perceptions of generic medications. Health Aff (Millwood). 2009;28:546-556.
3. Shrank WH, Hoang T, Ettner SL, et al. The implications of choice: prescribing generic or preferred pharmaceuticals improves medication adherence for chronic conditions. Arch Intern Med.
4. FDA Center for Drug Evaluation and Research. Office of Generic Drugs. What are generic drugs? www.fda.gov/cder/ogd/# 2006;166:332-337.
5. Ascione FJ, Kirking DM, Gaither CA, Welage LS. Historical overview of generic medication policy. J Am Pharm Assoc (Wash). 2001;41:567-577.
6. Higby GJ. The early history of USP. In: Anderson L, Higby GJ, eds. The Spirit of Voluntarism: A Legacy of Commitment and Contribution: The United States Pharmacopoeia 1820-1995. Rockville, MD: United States Pharmacopeial Convention; 1995:1-189.
7. FDA Backgrounder. Milestones in U.S. food and drug law history. www.fda.gov/opacom/
8. Meyer GF. History and regulatory issues of generic drugs. Transplant Proc. 1999;31(suppl 3A):10S-12S.
9. National Association of Boards of Pharmacy. Survey of Pharmacy Law: 1998-99. Park Ridge, IL: NABP; 1999.
10. FDA Center for Drug Evaluation and Research. Approved drug products with therapeutic equivalence evaluations. 29th ed. www.fda.gov/cder/orange/
11. Generic drug variability. Pharmacist's Letter/Prescriber's Letter. 2008;24:240704.