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1 1 (January 17, 2019)

handle is hein.crs/govydd0001 and id is 1 raw text is: Cogrsioa ReeMhSrvc 0 January 17, 2019 FDA and Drug Prices: Facilitating Access to Generic Drugs A variety of proposals to address high drug prices have been introduced in legislation and by the Trump Administration in its blueprint to lower drug prices. According to a Food and Drug Administration (FDA) analysis, the price of a drug is associated with the number of generic manufacturers on the market. As such, absent new legislation, FDA-the primary federal regulator of prescription drugs-can help reduce drug prices indirectly by facilitating competition. This In Focus describes selected FDA actions intended to lower drug prices through generic competition, and considerations for the 116th Congress. Proposals that would not involve FDA (e.g., price negotiation under Medicare) are not discussed. Prescription Drug Regulation Before a new drug may be marketed in the United States, it must be approved by FDA. To obtain approval, the sponsor (generally the manufacturer) must submit to FDA a new drug application (NDA) containing, among other things, data from clinical trials. The Federal Food, Drug, and Cosmetic Act (FFDCA) specifies the required contents of an NDA, provides for the conditions under which FDA may deny approval of an NDA, and prohibits certain acts with respect to drugs (e.g., adulteration, misbranding, and sale of counterfeit drugs). The law does not expressly require an NDA to include price information, does not authorize FDA to deny approval of an NDA because of price, and does not prohibit the marketing of a drug whose price may be considered too high. Figure I. FDA's Statutory Authority to Approve Prescrintion Drugs source: rtuLA section 5Ub(b) and 5Ub(d). The FFDCA does not explicitly prohibit FDA from requiring drug manufacturers to submit pricing information, although the agency has consistently indicated that it does not have the authority to control or investigate drug prices. FDA can, however, affect drug prices indirectly by facilitating competition, specifically by (1) increasing access to generic drugs and (2) decreasing so-called gaming of existing statutory and regulatory requirements. Increasing Access to Generic Drugs Unlike brand-name drugs, generic drugs are approved under an expedited pathway created by the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act; P.L. 98-417). A generic drug manufacturer may submit to FDA an abbreviated NDA (ANDA), rather than a full NDA, demonstrating that the generic is the same as the brand drug (i.e., the reference listed drug or RLD). By relying on FDA's previous determination that the RLD is safe and effective, the generic drug company can avoid replicating costly clinical trials already conducted by the brand company. The Hatch- Waxman Act has been considered successful in increasing generic drug competition. Generics now account for 90% of U.S. prescriptions dispensed but 23% of prescription drug spending, while brand-name drugs make up 10% of prescriptions dispensed but 77% of prescription drug spending. According to the Association for Accessible Medicine's (AAM) 2018 Generic Drug Access & Savings Report, in 2017, savings from generic drugs in the United States totaled $265.1 billion, including $82.7 billion in savings to Medicare and $40.6 billion to Medicaid. Although FDA does not have explicit statutory authority to regulate drug pricing, the agency can prioritize the review of certain ANDAs, thus allowing a lower-priced alternative onto the market more quickly. In June 2017, as part of its Drug Competition Action Plan, FDA posted on its website a list of off-patent, off-exclusivity drugs for which there are no approved generics and announced its intent to expedite the review of ANDAs for drugs on this list until there are three approved ANDAs for each RLD. These actions were codified by Title VIII of the FDA Reauthorization Act of 2017 (P.L. 115-52). In its manual of policies and procedures, FDA specifies which ANDAs it will prioritize for review (e.g., ANDAs for sole source drugs or for drugs in shortage); the cost of the brand drug is not listed as a consideration for prioritization. To promote competition, FDA is evaluating the feasibility of drug importation from other countries in the case of price increases for sole source off-patent, off-exclusivity drugs. FDA also can increase access to generic drugs by helping manufacturers comply with statutory and regulatory approval requirements. The agency has issued various guidance documents and held public workshops to facilitate the development of generic drugs, including complex generics. Decreasing Gaming Despite the successes of the Hatch-Waxman Act, certain practices have emerged that may be disrupting the law's intended balance between innovation and competition. FDA has taken action to address two such practices used by brand companies to delay approval of generic competitors:

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