US Pharm. 2009; 34(6)(Generic Drug Review suppl):6-9.
Q: President Obama has said repeatedly that the health care system in the United States is in need of reform, particularly as it pertains to coverage of the uninsured. Aside from generic manufacturers and distributors offering generic drugs at a lower cost than their brand-name competitors, what other role(s) do you envision for the generic industry in any future health care reform?
A: You say "aside from…lower cost," but the fact is that reducing health care costs is the "critical" piece of health care reform. As the president has said, reducing health care costs is a key component of increasing access to quality care. By expanding access to generic medicines, you not only lower costs; you increase access to safe and high-quality care.
Although 69% of prescriptions are filled using generic medicines that saved consumers and our health care system a remarkable $734 billion over the last 10 years, the full potential of these savings has yet to be fully realized. The recent IMS Health analysis released by the Generic Pharmaceutical Association (GPhA) found that in addition to the $734 billion 10-year savings, more than $121 billion was saved in 2008 alone. When you break the savings down, the use of generics saves more than $1 billion every 3 days. This is money that can be spent on other health care programs within the health care system. By enabling the system to meet 69% of its prescription drug purchasing need with only 16% of the total spending for prescription drugs, generics help free up resources that are used to pay for needed services across the spectrum of health care.
Moreover, a 3% increase in the national overall generic utilization rate could yield approximately $10 billion in additional savings; and in the Medicaid program alone, a 3% increase in generic utilization would generate approximately $1.4 billion in added savings. Encouraging greater use of FDA-approved generic medicines in publicly funded prescription drug benefit plans, such as Medicaid, Medicare, and other federal/state programs, would also reap significant health care reform savings.
And there is no doubt that creating a workable biogenerics approval pathway for biopharmaceuticals, either as part of health care reform or separate from overall reform, will lead to considerable health care savings. More importantly, it will also increase access to affordable life-saving medicines that are currently too expensive and, therefore, out of reach for countless Americans.
Q: President Obama has mentioned that his administration might be considering the importation of approved drugs from Canada as a way of reducing prescription drug costs in the U.S. What is GPhA's position on drug importation?
A: Actually, a number of studies over the past several years have shown that generic medicines are less expensive in the U.S. than in Canada and several other countries. There was a recent story on ABC News noting that Australians pay more for generics prescriptions than consumers in the U.S. do. So, importation of generic medicines as a means of reducing prescription drug costs just doesn't work for generics.
Overall, the U.S. has the world's gold standard for ensuring the safety of prescription drugs and the pharmaceutical supply chain, and protecting the public health must always be our number one priority. Preserving that safety is one of the reasons why drug importation, although it has been discussed for many years, was not implemented by either of the past two administrations.
Q: The Drug Price Competition and Patent Term Restoration Act, better known as the Hatch-Waxman Act, recently celebrated its 25th anniversary. While the Act has arguably revolutionized the generic pharmaceutical industry, there are some critics who say there are too many loopholes in the Act to compete in today's business and economic climate, particularly in the area of patent litigation and the 180-day exclusivity period for successful patent challenges. Do you agree? What other specific areas of the Hatch-Waxman Act would you like to see reformed?
A: The approval of the Medicare Modernization Act in 2003 and the Food and Drug Administration Amendments Act of 2007 closed many of the loopholes in the original Hatch-Waxman Act to the benefit of consumers.
Issues like multiple 30-month stays, anticonsumer patent settlements, citizen petitions, and others were addressed by these important bills. All of these changes are intended to provide business certainty and more timely access to affordable, FDA-approved generics. Not all of the provisions written into the legislation have been implemented--codifying legislation into federal regulations can take years--but when they happen, consumers will be the winners. We believe that Hatch-Waxman has proven to be one of the most successful pro-consumer pieces of legislation of the past century. That is why we are convinced it should serve as a model for biogeneric legislation.
Q: Many industry observers and consumers view "authorized generics" as a positive because they provide consumers with the choice of purchasing less-expensive versions of brand-name products earlier than the branded patent expiration date. Yet GPhA has taken the position that authorized generics "undermine the Hatch-Waxman Act by devaluing the 180-day exclusivity period incentive." However, a basic tenet of GPhA has always been to make more affordable medications available to consumers earlier. This seems to be at odds with GPhA's position on authorized generics, as it would give exclusivity to only one company, which would delay competitive pricing. Can you explain this?
A: First, we are not opposed to authorized generics, per se. Rather, the generic industry is opposed only to allowing an authorized generic to compete during the 180-day exclusivity period granted under Hatch-Waxman to the first generic to successfully challenge a patent and launch the first generic product. We support the Hatch-Waxman provision that during this 180-day exclusivity period the first generic, and only the first generic, should be allowed on the market. The practice of launching authorized generics has become a common brand tactic aimed at trying to dissuade generic companies from challenging questionable brand patents by diminishing the Hatch-Waxman incentive to do so. Brand makers take advantage of an unintended loophole by claiming that because the authorized generic is really the brand drug, it does not impinge the one-generic exclusivity provision. Make no mistake, without the 180-day exclusivity incentive, there would be fewer generics on the market--and that means less competition, which ultimately means higher prices for consumers.
Q: Despite the fact that many legislators are taking a positive position on the approval of "biogenerics," the FDA and other regulating bodies have their doubts that biogenerics can be 100% substitutable for their branded counterparts and, in fact, have earned the name "biosimilars" by many in the industry. Do you believe that biogenerics are identical to their branded counterparts, and what do you see for their future as a viable alternative to branded biopharmaceuticals?
A: FDA has stated before Congress that it believes a regulatory pathway for biogenerics can be created and that it wants the authority and flexibility to create such a pathway to guarantee safety and efficacy. The generic industry concurs that approval decisions should be placed in the hands of FDA scientists and not politicians.
Biogenerics legislation should give FDA the authority to approve biogenerics based on three fundamental principles: 1) a science-based regulatory process that gives FDA the flexibility to determine specific product approval requirements and potential generic interchangeability; 2) an efficient, effective and timely patent resolution procedure; and 3) reasonable market exclusivity periods that do not lead to indefinite or excessive product monopolies.
A flexible, science-based approval pathway would be one in which FDA can use its scientific expertise to determine product approval and interchangeability for biogenerics on a case-by-case basis. The pathway must be free of needless barriers, such as a mandatory guidance process and clinical trials. In fact, the same broad statutory framework that the brand companies enjoy under the Public Health Service Act--a federal approval program that allows science to drive the system--should be used for biogenerics as well. Interchangeability is an essential component of achieving cost savings downstream.
We believe that FDA must have the authority to determine that a biogeneric is substitutable, and we believe that the maximum savings to consumers would result from such a determination.
There currently are more than 150 biologic medicines available, many of which either have lost patent protection or soon will be off-patent. And it is expected that by 2012, nearly half the products approved by FDA will be biopharmaceuticals. By every account, competition from biogenerics would save patients, insurers, and the government billions of dollars each year in treatment costs.
Q: The government is proposing user fees for generic companies to help speed up approval of generic drugs. GPhA's position relative to user fees is that the generic pharmaceutical industry would support paying user fees if "core issues" are addressed at the FDA. One of these issues is "accountability and structure of the Office of Generic Drugs" (OGD). Specifically, what would you like to see changed at OGD?
A: The generic industry is open to a generic user fee program so long as there are guarantees that the fees would result in the timely review and approval of generic applications. The shared goal should be to assure timely consumer access to safe and affordable generic medicines. The brand drug user fee program does just that by imposing specific performance metrics to ensure timely reviews. The generic industry is seeking similar guarantees to those given to the brand industry. It is important to note that the process of establishing and implementing generic user fees will not happen overnight, so without additional funding for OGD, consumers will continue to see delays in the availability of affordable generics. As the generic savings study mentioned earlier shows, just a 3% increase in generic use across the nation produces about $10 billion in added savings.
Regarding a restructuring of OGD, it is GPhA's position that, given that generic pharmaceuticals have saved the U.S. health care system more than $734 billion in the past decade and $121 billion in 2008 alone, the organizational positioning of OGD within the Center for Drug Evaluation and Research (CDER) should be commensurate with the national importance of the generic drug program. In spite of a 60% increase in consumers' use of generic medicines over the past 10 years and a four-fold increase in the number of generic drug applications handled by OGD each year, there has been no change in OGD's organizational position within CDER since 1994. As a result, OGD remains two steps removed from the CDER Director and, in this position, is not part of CDER's Senior Management Team. GPhA supports a reorganization plan that would bring OGD under the CDER Director and make OGD a member of the Senior Management Team.
