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FDA Generic Drug Program Shows Progress Toward Lowering Costs

November 18, 2021 – At least one generic drug approval – and ideally more than one – is needed to stimulate competition and lower the overall cost to consumers taking a particular drug. This is especially true when a drug is difficult to manufacture or has the potential to treat only a small number of patients.

Sometimes pharmaceutical companies need an incentive to develop and market such a generic alternative.

With that in mind, Congress passed the Competitive Generic Therapy (CGT) initiative in 2017, which grants an exclusive 180-day period for any company to gain FDA clearance and offer consumers a generic formulation.

A new study by FDA researchers reveals that about 10% of the nearly 3,000 generic approvals between 2017 and 2020 benefited from the new initiative. The report was published in November in JAMA.

“Based on the evidence to date, we believe that the CGT pathway successfully induces the rapid commercialization of drugs,” said lead author of the study, Harinder Singh Chahal, PharmD..

To retain exclusive rights, a company must market its generic within 75 days of FDA approval. A second provision allows the agency to approve further applications in the interim and until the first company begins marketing.

“We were not surprised that these CGT exclusive features work as expected, but we were surprised at how quickly many companies started to market after approval,” added Chahal, who is an affiliate. in the FDA’s Office of Public Health Strategy and Analysis.

Half of the drugs approved with exclusive rights reached patients within 3 days and 75% reached the market within 10 days, Chahal says.

More generics, more savings

Chahal and his colleagues noted in the study that prices drop by about 30% when a generic option becomes available.

Asked what happens when even more generics are approved, Chahal said: “Our colleagues found that, on the basis of the prices charged alone, with two generics, the price reductions compared to a brand name drug could be. of about 46%, with three generics the relative reduction could reach about 56% and so on. “

The biggest price cuts, 90% or more, tend to happen with six or more generics on the market, he added. Further information is available in a December 2019 FDA report: “Generic Competition and Drug Prices: New Evidence Linking Greater Generic Competition and Lower Generic Drug Prices”.

Missing price comparison

The study is “a useful description of how this new program worked in its early years, showing the number of applications filed, their approval status so far, etc.” Karen Van Nuys, PhD, executive director of The Value of the Life Sciences Innovation Project said.

Proof of concept research shows the program works, which amounts to “demonstrating that a new home’s plumbing works – the pipes appear to be connected and applications can go from start to finish,” Van Nuys added, who is also an assistant research professor at the USC Price School of Public Policy and co-author of an October 2021 study that found that some common generic drugs were priced higher when purchased through Medicare compared to Costco.

The study would have been “even more useful if it had provided more context to assess whether the program is performing well or achieving its goals,” Van Nuys said. For example, the resulting price data after generic approval via CGT would have been very useful information, she added.

“To be fair, the authors cite the lack of price analysis as a limitation of the study.”

“I think of this as the bottom line by which this program should be evaluated,” Van Nuys said. “Do we have more drugs at lower prices with the CGT program than without? We don’t really know.”

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