Is the process of trying to ensure overall safety worth the increased cost of manufacturing if the net result is an unknown improvement in safety?
It’s a question facing factories that are being threatened with new emissions control regulations for the sake of global warming. The extra requirements, without an evidence-based benefit, drives up prices, and could force companies out of business.
The same goes for the generic drug market. Everyone wants to know that the drugs they put into their bodies are safe and clean and doing the job they’re supposed to do. But generic-drug makers are being held to regulatory standards despite doubts about a proven need for the extra layers of rules. And these extra rules are making it too costly to create lower-priced alternatives to more expensive, brand name drugs.
From a former Food and Drug Administration official:
(I)n a push to reduce the risk of contamination, the (FDA) in 2009 forced generic-drug makers to retool their sterile manufacturing plants and make production lines less intricate. The abruptness of the change caused many facilities to be shut down, creating drug shortages and driving up prices.
The complexity and cost of completing a generic-drug application has also grown enormously. In 2003, when I began working at the FDA, we estimated that it cost less than $1 million for a firm to file a generic-drug application. A drug would have to fetch about $10 million in annual revenue before it would be subject to generic competition. Today, filing a generic application requires an average of about $5 million and can cost as much as $15 million. This means that a drug may not face brisk generic competition until it exceeds $25 million in annual revenue. Thanks to these changes, infrequently used generics — such as clomipramine for major depression — may now have only one competitor and cost as much as branded drugs.
Author Scott Gottlieb, a physician and clinical assistant professor at New York University School of Medicine, says that the biggest drug-price increases are the result of a small number of old medicines that could be cheaper if more than one generic competitor entered into the market. But with new regulations, including a new draft rule about defensive labeling that exposes generics to costly litigation, generic drug-makers are being driven from the market.
In another example, Gottlieb writes:
Generic-drug makers usually manufacture dozens of different drugs on each production line and hundreds of drugs in a single plant. The FDA is now trying to require production lines to be dedicated to one or two drugs, citing potential safety hazards. But generic-drug makers say this can triple manufacturing costs. While brand companies typically run only one or two products on each manufacturing line, generics run 30 to 50 products. The FDA’s safety concerns could be addressed through better quality controls and improving its inspection capabilities.
Gottlieb notes that if the rules were less burdensome — and that doesn’t mean generic drug makers becoming more irresponsible — generic drug costs in some cases could be driven down by nearly 80 percent. Seems like an area where reducing federal interference could create a robust marketplace that improves Americans’ lives literally.
Read the entire Wall Street Journal article on generic drug regulations here.
