Can A New Approach for Generic Drugs Lower Costs?

The Wall Street Journal published an editorial for its July 1st weekend edition that offers a glimpse inside the FDA at what may become a new playing field that could serve to lower the costs of many medications. During this past week, the FDA, which has a new director, published a list of drugs that do not have generic competitors even though their patents have long expired. In doing so the agency said that it will expedite their processes for approval “until there are three approved generics for a given drug product.” More will be forthcoming in a public meeting during July.

Even though a drug falls off patent, the cost of developing a generic and gaining approval can cost into the millions. If the expected return on sales of the generic doesn’t offer the potential for a certain level of profit, that drug generic is unlikely to be developed. Interestingly, statistics show, as quoted in the editorial, that consumer prices are 94% of the name brand cost when there is one generic in the market; 52% when there are two; and 445 when there are three.

The Association for Accessible Medicines estimates that generics saved consumers $253 billion last year in costs. Another example comes from the cholesterol medication category:: when Lipitor was still sold without a generic competitor, the copay routinely paid in this market was in the $170 range. In the first year after the patent expired, the cost fell to the $80 range, and now it is down in the $20-40 range under most plans. Crestor, which just lost patent, seems to following a similar path.

But there are barriers. Safety and efficacy studies on a generic equivalent requires the use of thousands of tablets (capsules, etc) of the original medication for comparison testing. Using FDA safety and misuse regulations, some manufacturers of brand names are avoiding providing the required samples needed for the testing. 

In other instances, there are drugs which already have generics that have encountered stiff agency resistance in gaining approvals. One case, you'll recall, involving the name brand EpiPen, is celebrated. The medication being delivered, in this case, is the well know drug epinephrine which has been available for decades. What make EpiPen different is the delivery mechanism, not the medication. FDA regulations has kept competitors at bay by requiring any generic to use the same delivery mechanism. Hopefully, with this new attention to process, and with the stated objective, consumers will gradually see the supply of generics grow, and the cost of drugs decrease.