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the Generic Pharmaceutical Association
Lester M. Crawford, D.V.M., Ph.D.
Acting Commissioner of Food and Drugs
This text contains Dr. Crawford's prepared remarks. It should be used with the understanding that some material may have been added or deleted during actual delivery.
Thank you, Kathleen (Jaeger, GPhA president and CEO) for the introduction, and good morning.
I want to congratulate the organizers of this conference on their choice of its theme. "Forging the Right Balance in Changing Times" is a task we face, in ways big and small, in our jobs as well as personal lives. In either setting, the options we choose usually make the difference between success and failure.
At the FDA, balancing risks and benefits is the essence of what we do. It is the foremost responsibility that Congress has entrusted to us. And the field where we are expected to be most judicious, most thoughtful, and most unerring, is pharmaceutics. It is also where the issues tend to be not only most complex, but also critical for our mission of protecting and improving the public health.
Arriving at the right regulatory balance between brand and generic products is a good example of this challenge. On the one hand, generics make an enormous contribution to the health and well-being of Americans. They have the same therapeutic value, are as safe, and share the same high quality, as their parental counterparts. And they are even more widely used, and a greater bargain, than is generally believed.
According to frequently cited statistics, in the United States, generic products account for 47 percent of all filled prescriptions, and are priced at about one third of the price of the original medicines.
We examined these data last year as part of an inquiry by a task force on drug importation and found they do not tell the full story. According to the report issued by the Department of Health and Human Services, generics actually constitute 63 percent of the total doses of prescription medicines sold in the U.S. And on a per-dose basis, generic prices are not one-third, but about 11 percent of the price of all brand products.
American generics are a true global bargain. We compared the U.S. prices for 29 commonly used molecules that are off patent with those charged around the world. It turns out that these products cost twice as much in Canada and Japan, and 40 percent more in Germany. In general, these generics are 50 percent cheaper in the U.S. than anywhere else, with the sole exception of Poland.
One of the conclusions we drew from these and other carefully assembled statistics is that if Americans would buy generics instead of their brand-name counterparts, they could save $17 billion a year.
In other words, generic drugs and the firms that produce them are a huge public health asset. But of course, so are the firms that invest billions of dollars to develop new drugs. Without innovation, there would be no generics at any price.
Balancing the sometimes conflicting interests of the brand-name and generic industries is, therefore, a critically important job. It is also a difficult job, as we've learned following the passage of the Hatch-Waxman Amendments of 1984, through which Congress tried to encourage both new drug development and the marketing of generics.
Attempting to accomplish two competing public policy goals, Congress offered something to both affected industries. To foster innovation, the Act partially restored the term of the innovator's patent to compensate for the FDA review time, and awarded brand name firms exclusivity for new chemical entities and for certain studies. The law also protects the rights of these companies by requiring that they be notified when their patents are challenged by a generic competitor. It gives them the opportunity to sue before the generic copy goes on the market. The intent of Congress was to enable the innovators to recoup their investment in the development of valuable new drugs.
The generic industry was also granted new benefits. The manufacturers no longer need to duplicate expensive research to bring their generic copies to the market when the innovator's patent runs out. In some circumstances, a generic drug can even be marketed before the patent's expiration. Hatch-Waxman was a statute designed for balance, and on the whole, it has performed as intended: both innovator and generic firms in general have prospered and increased their productivity.
But we also know that this law inadvertently allowed some practices that seriously distorted the equilibrium of benefits intended by Congress. Brand-name firms were able to list new, and sometimes frivolous, patents for products whose legitimate exclusivity was about to expire. This led to multiple 30-month stays and high profile litigation. The spirit of the law was also violated by agreements between holders of Abbreviated New Drug Applications (ANDAs) for generics and New Drug Applications (NDAs) for original products that defied the purpose of the 180-day exclusivity provision.
After the FDA concluded that these tactics were delaying the availability of generic drugs, the Federal Trade Commission launched an investigation that showed that the use of the 30-month stay provision held up the marketing of generics for up to 12 years. The FTC study, released in July, 2002, also noted that certain agreements between innovator and generic firms regarding the 180-day exclusivity blocked follow-on products from entering the market.
The playing field for the follow-on industry was clearly not level, and our agency went back to the regulatory drawing board to restore the lost balance. You will remember that in October, 2002, we proposed a rule that limited to just one the number of automatic 30-month stays of a contested ANDA approval, and tightened the patent listing provisions. The rule was later finalized and enacted as part of the Medicare Modernization Act of 2003.
Congress, which also sought to restore fairness to your industry, added several changes to forestall the 180-day abuses. It authorized one exclusivity per generic product instead of per patent; limited the trigger for the exclusivity period to the first commercial marketing; and instituted forfeiture requirements that compel marketing to prevent blocking competition. The Medicare Modernization Act also included a provision designed to facilitate proving follow-on bioequivalence.
After taking these legislative steps to restore the balance in the pharmaceutical arena, Congress added a financial one. Three years ago, it increased the appropriations for the FDA's Office of Generic Drugs so that it could hire more staff and speed up its processes. That effort, about which I'll have more to say in a minute, is now in progress.
Apart from these reforms focused specifically on your industry, our agency in the last three years has launched two seminal initiatives to boost the development and production of both brand-name and generic products.
One of them is the overhaul of the current Good Manufacturing Practices, which was launched in August 2002. Most of you are familiar with this project. This reform gives all manufacturers of medical products a greater flexibility in modernizing their facilities and equipment, and encourages them to implement cost-cutting quality-management and risk-based production technologies and methods. It also provides all pharmaceutical firms with an opportunity to benefit from FDA's streamlined, risk-focused inspection policies that ease the regulatory burden on compliant firms.
Our more recent creative innovation, the so-called Critical Path initiative, is frequently portrayed as benefiting only the innovating firms. This is not entirely accurate. While it is true that the main objective is to increase the predictability and success of clinical trials for new drugs, the Critical Path program has implications for the development of generic products, as well.
I'll give you some of the highlights of the ongoing and planned efforts of our agency to apply the Critical Path principles to your industry:
One potentially significant barrier to the development of follow-on products is the difficulty of showing their bioequivalence to the clinically tested original medications. This is particularly the case with topical products, for which we have limited methods for proving this aspect of their quality.
Our Office of Generic Drugs is therefore trying to identify the type of research that would most likely provide the missing answers. The options we're looking at include the following:
Another aspect of the Critical Path initiative that applies to generic products is the search for tools, such as computer-based models, capable of predicting the success or failure of product development. We are planning to analyze data from a wide variety of drugs and formulations and from them develop predictive models for bioavailability and bioequivalence. Here are three opportunities we think are worth exploring:
(1) Integrated absorption models. Inadequate product absorption causes 40 percent of generic product development failures. Several early mechanistic models are able to predict this critical setback, and they could be made more useful by validating them against the FDA's large set of the pertinent data.
(2) Development of in vitro/in vivo correlations for dissolution. The most common quality assurance test during product development and process changes is dissolution, but the correlation of dissolution testing with in vivo performance varies from product to product. Exploring FDA's data from dissolution tests and pharmacokinetic studies could produce models capable of predicting the connection between dissolution and bioavailability and bioequivalence.
(3) Structure-bioavailability relationships. Prediction of potential bioavailability problems based on molecular structure is another tool that would facilitate more effective allocation of resources in the drug development process.
These are some of our plans for generics-oriented research within the Critical Path framework. But we're trying to facilitate the development of follow-on products in many other ways.
Gary Buehler, the director of our Office of Generic Drugs (OGD), discussed some of them at yesterday's panel. For those of you who missed that session, I'll mention a few highlights of OGD's last year's accomplishments and current plans:
We published a guidance, which is particularly important for your industry, on standards that apply to impurities and polymorphic products.
We're continuing to revise the generic product review process to improve its efficiency, and we're going to take another look at the review format. In addition, we have strengthened Gary's office by adding to it a chemistry review division and two more bioequivalence review teams.
Thanks to the improved funding I've mentioned, we've been able to hire additional staff. OGD now has the scientific capacity to comprehensively review scientific challenges to ANDA approvals and guide research initiatives we've contracted with several academic institutions. This research includes the development of a new in-vitro adhesion testing method for transdermal drug products; development of physico-chemical and bioequivalence testing criteria for liposomal products; application of the results of a pilot study focused on relative potency of inhaled corticosteroids; and development and validation of a predictive model of particle transport and of simulation methods for designing particularly challenging bioequivalence studies.
Next, we're piloting a program focused on early review of the Drug Master File (or DMF), which as we all know, is a frequent cause why first cycle approvals continue to be scarce. There were only six last year. We're testing whether identifying and reviewing the DMF before an ANDA comes up for a review would improve the chances for a first-cycle approval.
Finally, you should know that our staff responsible for the "Orange Book" has been augmented, and we are now publishing this document only electronically. This costs less than printing it, and we're able to update the listing daily -- not only of patents, but also of the approved ANDAs and their therapeutic equivalence.
In addition to all of these projects, Gary's office last year conducted an intensive training program for its own regulatory staff as well as industry and academic scientists. More of these efforts are planned in cooperation with your association.
I have left for the end of this overview three issues that are germane to our discussion about forging the right balance in changing times.
The first one is the question of the effectiveness of the steps Congress and the FDA have taken to ensure a fair regulatory treatment for your industry.
Frankly, we don't have enough data as of now to give us a solid answer. Such data as we do have, however, suggest that we're on the right path. The best sign is what's happened in the year following the August, 2003 implementation of the regulations aimed at eliminating the registration of frivolous patents. The number of patents listed with our agency decreased by 36%.
We'll continue to monitor the balance between innovation and the availability of generic drugs, and if we find that it's tipped one way or the other, we may institute other changes. But right now, we don't see any need for further measures.
Another encouraging sign is the strong increase in generic submissions and approvals in the last two years. Approvals and tentative approvals for ANDAs are up from 373 in FY 2003 to 413 in FY 2004. During the same two years, the FDA median approval time has declined from 17.3 months to 16.2 months. Currently, our Office of Generic Drugs takes its first action on more than 90% of original ANDA submissions within the 180-day statutory time frame.
Best of all, there are more generic products being developed to take advantage of the expiring patents. Our receipts of original ANDAs have increased from 449 in FY 2003 to 569 in FY 2004, which is a new record. Moreover, since the end of the last fiscal year, we received 70 ANDAs in October, 70 in November, and 116 in December. We expect another record number of submissions this year.
The second subject I am sure you'll ask me about is the outlook for follow-on biologicals, or, more precisely, proteins. We're preparing for processing this new category of products. Ten days ago, follow-on proteins were discussed in a workshop with the Drug Information Association. This was part of our agency's plan to expand the scientific capability and understanding of the issues by our review and regulatory staff.
We also plan to provide your industry with guidance on specification for follow-on biologics. Our current intention is to develop several guidances and concept papers. First, we want to publish a background document describing our agency's policies and actions in this area in previous years. Next, our plans are to issue a policy document, most likely a guidance, outlining our current position on follow-on proteins.
We will then develop draft guidances, including an immunogenicity guidance and a chemistry guidance based in part on the information we received at the DIA workshop. As we see it now, the background document should be released fairly soon, and the subsequent guidances several months later.
Finally, I want to call your attention to the recent measures we've initiated to strengthen the safety of all marketed drugs -- brand name as well as generics . Last November, we contracted with the Institute of Medicine for a top-to-bottom study of the entire United States system for ensuring the safety of drugs in wide use. We instituted some changes to ensure full consideration for all internal views about postmarket drug performance, and we launched a nation-wide search for the director of FDA's Office of Drug Safety.
In addition, as you've probably heard, just a few days ago Secretary Leavitt announced another major postmarket drug safety initiative. The program represents a bold departure from the FDA's traditional policy of closely holding adverse events reports for processing and releasing them only if an analysis proves they indicate a serious lapse in drug safety.
Under the new system, the management of these reports will be overseen by an independent Drug Safety Board of FDA and outside specialists who were not involved in the approval of the scrutinized products. Their job will be to ensure that the new data will be rapidly and widely disseminated as soon as it is received, without waiting for their evaluation by FDA scientists. The data will be posted on a new Drug Watch Web Page and made available to health care professionals, consumers and patients in information sheets specially designed for each group.
By informing the public and health providers of emerging drug safety issues, the agency takes another long step toward empowering consumers and facilitating their participation in informed decision-making affecting their health. In the past, our agency has held drug safety reports in an FDA type of a black box until they were completely evaluated for risks. In some cases, that turned out to be too long for the public, and we've faced criticism and risked erosion of consumer confidence. The new initiatives will usher in a new culture of openness and transparency, reflecting our confidence in consumers' ability to correctly respond to drug safety information, even if it's incomplete.
I want to conclude by quoting something that Coleridge, who was a great critic as well as poet, said about balance. "Balance or reconciliation of opposite or discordant qualities," he said, "is how imagination reveals itself."
With the support of Congress, the FDA has been unsparing in trying to reconcile discordant qualities in the pharmaceutical arena, and we've pursued that goal not only with imagination, but also resources and a lot of hard work.
I believe that we're moving in the right direction; but if more changes are needed to ensure fairness for the companies and increased health benefits for our public, I can assure you that we'll make them.
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