Mark B. McClellan, M.D., Ph.D.
Commissioner of Food and Drugs

January 29, 2003

It's a pleasure to be here with you this morning. I appreciate this opportunity to meet with a relatively new group that has quickly become influential in health policy, reflecting the generic drug industry's tremendous progress in helping patients in recent years. I'd like to discuss with you some of the new policies, plans and issues that are of interest to all of us and the American public.

I will start by briefly outlining the five priority goals that guide FDA's efforts to better promote and protect the public health:

(1) We must reaffirm and strengthen our agency's scientific capacity and expertise, to enable us to meet the challenges that FDA faces today. These challenges have never been greater, but with recent legislation and creative new ideas, the opportunities for a strong FDA to meet these challenges have never been greater either.

Only a competent, scientifically up-to-date FDA has the capacity to act creatively and effectively to meet the new challenges, and to inspire public confidence in its actions.

(2) Public health is also reinforced by another important FDA priority: reducing the all-too-common preventable adverse events associated with the products that FDA regulates.

We are addressing this priority goal with new ideas and novel programs. We are placing a special emphasis on advanced information technologies for gathering data automatically that can be used to improve guidance on product use.

(3) A related top priority is to make sure the public -- consumers, patients, health care providers, and medical practitioners -- can get reliable and helpful information about FDA-regulated products, including pharmaceuticals, medical devices, food, and dietary supplements.

This priority reflects the fact that, by making the right decisions, individuals can do more for their health and quality of life than can be provided by government action or new medical treatments alone; and that the best way to help people make the right decisions is by disseminating reliable, unbiased, and non-misleading information about the health consequences of the products we regulate.

(4) Another FDA top priority is protecting our nation against terrorism in its many forms.

We are meeting this responsibility by taking major new steps to make our food supply more secure, and by advancing the development, maintenance and availability of drugs and vaccines for use against potential terrorist agents. In his state of the union speech last night, the President spoke eloquently about the urgent need to confront this challenge with Project BioShield. FDA is doing its part to fulfill these new responsibilities.

(5) The challenges and opportunities we face at FDA are greater than ever. To accomplish our critical agenda with our limited resources, we are using not only the best biomedical sciences but also the best methods of risk management to focus our programs, policies and actions where they can most effectively promote and protect the public health. The science of risk management, together with a careful economic analysis of how to achieve our regulatory goals most efficiently, are essential for guiding FDA's efforts to improve the public health.

Pharmaceuticals and pharmaceutical manufacturers play a big role in accomplishing all of these priorities.

As an internist, I am well aware of the enormous contribution to our nation's health by the more than 11,700 medications on the market for which American patients will spend an estimated $326 billion this year. I know first-hand some of the improvements in health that have been made possible by the introduction and appropriate use of better medications.

I also have high expectations for the many new kinds of therapeutics now in the pipeline. They hold unprecedented potential for saving still more lives, reducing still more suffering, and preserving still more productive energy for our nation.

Brand-name drug innovation requires great investment of scientific effort and other resources, with an uncertain return. We all therefore recognize that innovators must be able to receive adequate compensation through our patent system. Otherwise, pharmaceutical research and the development of better medical treatments could come to a halt.

But it is also clear that the high prices of many innovative drugs in the United States, where are not restricted by government controls, are sustaining pharmaceutical research and development worldwide. This is good for pharmaceutical innovation, but it also creates a serious challenge for many of our patients, who are having difficulty paying the high and rising costs of up-to-date drug treatment.

This is where the generic drug industry plays an essential role in promoting the health of Americans. Generic drug manufacturers produce medications that are just as safe and effective as their brand counterparts, and part of the FDA's mission is to make sure that's the case. Yet the prices of generics are much lower: a generic version of a $72 average brand-name prescription costs about $17. And thanks to more brand-name medications coming off patent -- over 200 of them in the next few years -- as well as to the ever-improving scientific knowledge and public awareness about the benefits of generic drugs, the health and economic benefits of using generic drugs are constantly growing.

Encouraging rapid and fair access to generic medications after the expiration of appropriate patent protection is, therefore, one of my major priorities as FDA Commissioner. Americans need more generic drugs more than ever, and the FDA has to do its part in making these products available. There are many steps involved in achieving this goal, and I want to walk through some of them.

First, we must do more to reduce the time it takes to get a generic drug approved.

One part of achieving this goal - reducing the net review time - is largely under the control of the FDA. It's a function of the efficiency of our review process and our available resources. And our Office of Generic Drugs (OGD), under the direction of Gary Buehler, has been making progress in this area. Despite the growth in the submissions of original abbreviated new drug applications (ANDAs) from 296 in 1999 to 392 in 2002, our generics program during the same time increased the proportion of applications reviewed within 180 days from about 35% to 80%. The average time required for a first review of an ANDA is down to 100 days, from 135-140 days in the late 1990s.

These substantial improvements were made possible by rising efficiency in the generics office, as well as by increased resources. The appropriations for our generics program increased by $1.4 million in 2001 and by additional $2.5 million last year. Right now, in the appropriations process for FY 2003 - yes, that's still going on - we are fighting for further increases in the resources for OGD. And we have no intention of stopping there.

We can and will do more to improve the efficiency of our reviews, and acting quickly on generic drug applications is well worth even greater FDA resources. Moreover, we hope and expect that the number of generic applications will continue to grow above this year's record level of almost 400 ANDAs. To improve our reviews and to handle the growing workload, Secretary Tommy G. Thompson and I just announced that the Administration's budget request for the next fiscal year, which starts in October, will include a $13 million increase in funding for our generics activities. This is the largest increase in dollars ever proposed for generic activities at FDA. It will increase the size of the generics programs by about 30 percent.

Granted this funding request, we will be able to hire about 40 additional staff in generic drugs, and add to OGD an additional division for the review of chemistry. This expansion should help reduce the average review time by at least 2 months, move up the proportion of 180-day reviews still closer to the 100% goal, and further reduce the waiting time in the ANDA queue.

It's important to remember, however, that lower review times by themselves don't improve the health of the public. What we need is actual improvement in generic drug availability. And to get more generics in the pharmacies and to our patients' bedsides, we have to meet two additional requirements.

First, the products we review must be safe and effective -- meaning, they must demonstrate therapeutic equivalence to the brand drug, and they must be appropriately labeled and safely manufactured. And second, there must be the minimum of legal challenges to the marketing of generic drugs. And in considering both of these very important factors, we see some positive developments -- as well as some concerns.

On the positive side, the number of full and tentative generic applications approved has gone up significantly, from 242 in 1999 to 384 last year - an all-time record. On the other hand, median times to the issuance of an approval or "tentative approval" letter -- which used to be longer than two years -- are yet to drop below 18 months. That means, even as we are making large strides in reducing our review time, there is still substantial room for improvement in total time to approval. And although many generic applications have been approved within one year, this timeframe is still the exception rather than the rule. Moreover, even after the FDA issued a tentative approval, some potentially important generic drugs have remained unavailable because of legal challenges.

The reason that total time to approval or tentative approval is not declining as much as we might hope is that, very often, multiple review cycles are required. Unfortunately, a large share of the initial generic applications are not up to the FDA's requirements. And this critical obstacle to increasing generic drug availability cannot be removed by the FDA alone.

Among the 100 or so generic firms that we deal with, there are many whose ANDAs usually include few deficiencies, and can be approved in a timely manner. But there are also manufacturers who lack the necessary experience in developing their applications, and, more importantly, there are manufacturers who do not performa adequate product development before they submit their initial application. Also, often they lag in providing the additional information we need. The result is multiple cycles and delays in generic drug availability, even if FDA handles each cycle efficiently. Based on 2001 and 2002 statistics, 93 percent of generic applications are not approved on the first round, and 66 percent are not approved even on the second round.

At this point, I could just say: it is up to your firms to make the extra effort to produce applications that can qualify for fast approval, and to avoid consuming scarce FDA resources and taxpayer dollars on multiple review failures. I am sure there are many causes of multiple filings, and that in some cases they simply can't be avoided. But that can't be the explanation for the statisics I just cited. I'd like to challenge you to look at the "root causes" of the failures to get approval in the first cycle, and to do your best to correct them.

And I promise you that the FDA will help in this effort. We would like to begin collaborating with you in reviewing the characteristics of multiple-cycle approvals, and in identifying steps that manufacturers can take, and that we can take, to avoid the problems wherever possible. I want to be clear that this doesn't mean FDA is changing or lowering its review standards. But I think we should be able to find ways to communicate more clearly, in advance, about what the standards are and how they can be met. My own experience is that clear and timely communication is essential for efficient regulation. FDA may learn something in the process, too. This effort is badly needed, if we are ever going to see large improvements in overall time to approval.

I am aware of the background. From my discussions with Gary and others involved with our generics program, I know that the FDA has not provided the kind of ongoing communication with generic companies in developing their applications that is an integral and expanding part of FDA's "smarter regulation" in reducing the costs of developing safe and effective new drugs. Generic manufacturers have not had the advantage of early and frequent consultations with FDA reviewers that have been effective in reducing the time to new drug approval.

There have been two major reasons why your industry has not received this type of clear and effective communication. One of them was resource constraints, and that problem is addressed by the two proposals for increased OGD budget that I have already mentioned.

The second main obstacle to effective communications has been FDA's internal policies that discouraged early consultations between OGD reviewers and sponsors of ANDAs. In part, these policies were necessary because the generic drugs staff has been -- and is -- overwhelmed with review work, and could not take on additional tasks. In part, the policy has been a response to improper conduct by a few FDA employees almost two decades ago.

Today, I want to tell you that we are considering modifications to our policies on communications involving generic applications during the review process.

Since the concerns about improper conduct arose, the FDA has taken many steps to assure the independence and integrity of its review processes. Times have changed, and we have a much larger, more professional generic drug regulation program than ever - and it's going to get even better. And over time, many generic drug manufacturers have matured and have taken significant steps to strengthen the integrity of their activities. So it's time to take a fresh look at our policies, and to determine whether there are ways to improve our generic drug review process -- maintaining our standards and integrity, while improving our efficiency in getting safe and effective generic drugs to the public.

For example, in the context of clear and consistent review policies articulated by FDA, generic drug reviewers should be able to advise applicants on FDA's expectations regarding evidence of drug quality and bioequivalence, and to inform them early on in the process if there are deficiencies. Such assistance, provided in a uniform and impartial manner, could help reduce the uncertainty and misunderstandings about the FDA review process that in the current system can only be identified by failing a cycle -- a system that leads not only to delays in the availability of safe and effective generic drugs for the public, but also more work at a higher cost with less to show for it by the FDA.

I have therefore asked Janet Woodcock, the director of our Center for Drug Evaluation and Research (CDER), and Gary Buehler to lead an effort to identify steps, such as improving the clarity, consistency, and timeliness of our guidance and communications for generic drug applicants, to help improve the level of understanding and quality of applications by generic manufacturers.

Let me be clear: to see substantial improvements in the overall time to generic drug approval, it's not enough for FDA just to improve its review cycle time. Rather, generic manufacturers as a whole must improve the quality of their initial applications. You must make it a priority to get it right the first time. There is a business case for doing this: less time and effort spent on the approval process, plus higher returns as a result of quicker availability of your drugs.

Higher-quality generic applications benefit the public and the FDA as well. Consistent with my goal of more efficient regulation to improve the availability and reduce the costs of safe and effective prescription drugs, FDA therefore must look closely at what it can do to help improve the product development and approval process.

A third key factor affecting the availability of safe and effective generic drugs is manufacturing processes. To ensure safety and prevent adulteration, generic manufacturers must comply with Good Manufacturing Practices (GMPs).

Pharmaceutical GMPs, and the system that enforces them, still get the job done. But they have not been updated in many years, and it's time for reform to make sure that we have a GMP system that achieves its critical goals as efficiently as possible.

As you will hear shortly from Dr. Woodcock, we are preparing a major overhaul of GMPs for all pharmaceutical firms. Our plan will incorporate new concepts of risk management and quality assurance, encourage innovation in manufacturing and technology, and synchronize GMP inspections with the product review process. This is part of a major effort at our Center for Drugs, and we look forward to your input on what we are doing.

I will now turn to another critical factor affecting generic drug availability: uncertainties in the legal landscape facing generic manufacturers.

Recently, as you well know, there has been tremendous interest in whether reforms are needed in FDA's regulations to implement the Hatch-Waxman law that governs generic drug competition, or whether there need to be reforms in the law itself.

While hundreds of generic drugs enter the market each year without substantial legal obstacles, some aspects of FDA's current interpretation of the law have been associated with disruptions, delays, uncertainty, and added costs for some generic manufacturers who are trying to compete fairly against some of the most important brand-name drugs in the country. On occasion, generic manufacturers who have geared up to compete following the expiration of what they thought were the relevant brand-name patents, only to learn that they had new patents to contend with. This practice lead to the repeated use of the so-called "30-month stays" of full approval of ANDAs and 505(b)(2) applications.

To address this problem, the FDA proposed a new regulation last fall. I am sure that you are familiar with the main proposed provisions, since you commented on the regulation in detail.

The proposed rule would allow only a single 30-month stay when a generic application includes, or is amended to include, a certification that the innovator's patents are invalid or won't be infringed. The generic applicant provides a notice of that certification to the innovator, and the brand firm has 45 days to file suit alleging infringement of a legitimate patent after receiving that notice. That is: at most one 30-month stay can delay generic drug entry.

The proposed rule would clarify that certain types of patents (for example, for packaging, metabolites or intermediates) are not allowed to be submitted for listing in the Orange Book, while others (for method of use, formulation process, product by process, and different forms of the pending or approved drug substance) must be submitted for listing. We are also reviewing comments on the listing of product-by-process patents. Further, the proposal would substantially strengthen the signed declaration accompanying the patent submission.

These measures will reduce the submission of patents for Orange Book listing that do not represent true innovation. Such irrelevant patents are not what the Orange Book process is designed to promote. Rather, it is designed to promote timely resolution of disputes involving potentially innovative patents; it should not be misused for excessive protection of brand-name pharmaceuticals.

I know that many of you supported Senate bill 812 in the last session of Congress. I think the FDA's proposed regulation shares many of your objectives:

it would allow generic drugs on the market more predictably, with at most a single 30-month stay, as does the Senate measure; it would save consumers approximately $3.5 billion a year -- a comparable amount to the savings from the Senate bill, when similar drug cost estimates are employed --; it would significantly lower the cost of improving Medicare with prescription drug coverage; and it would avoid unnecessary litigation involving irrelevant patents and repeat 30-month stays. Our proposed rule would also preserve the key intellectual property protections to encourage innovation that are at the heart of the Hatch-Waxman law.

I am aware of your reservations about some aspects of our proposal, as expressed in your comments submitted for our review before the rule is finalized. Your comments, as well as all other comments we received on the proposed rule, have raised several complex and difficult issues. We are now reviewing these critiques and suggestions carefully as we prepare a final rule.

While I obviously can't respond to these or other specific comments, I do want to describe some of the reasoning that led our agency to design the rule the way it was proposed last October, and how it addresses some of the concerns raised by S. 812 last year.

Our proposed rule addresses the issue of patents that, when listed late in the life of the innovator drug, have triggered a 30-month stay, and thus delayed the availability of the generic counterpart.

Under our proposed rule, if an ANDA or a 505(b)(2) applicant has filed one paragraph IV certification, and given notification to the NDA and patent holder, no additional notification has to be provided for any subsequent certification. There is no opportunity for a second 30-month stay.

This position comports with the views of the Federal Trade Commission, which conducted a detailed and impartial empirical study of how the Hatch-Waxman law has functioned. The FTC found that, on average, 30 months is an appropriate time period for resolving questions about patent infringement. Moreover, the FTC believed that such a process is essential to encourage innovation. In contrast, by imposing a flat across-the-board ban on the protection provided by a 30-month stay for patents filed after the NDA's approval, the Senate bill would delay drug availability and undermine important research on new methods of use of existing drugs.

Under the Senate bill, to get the necessary market protection to encourage innovation, any such methods-of-use studies and the resulting patents would have to be completed before the drug's approval. This would encourage manufacturers to postpone the product's marketing -- and thereby deny patients timely availability of new therapies. Delays in getting valuable new products to market, both brand-name or generic, is unquestionably the wrong way to go for improving the public's health.

Moreover, my experience at FDA has confirmed what I learned in my medical practice before entering the government: there is a lot of valuable knowledge to be gained about drugs after they are approved. And if we don't provide patent protection for such valuable knowledge, patients suffer. For example, postmarket studies of drugs may identify new indications for use, or we may better establish appropriate dosing for important subgroups of patients such as children, the elderly, and the growing share of Americans with comorbid diseases.

With medications-associated adverse events being as common as they are, it is absolutely crucial that we maintain strong incentives for learning more about the appropriate methods of use of new drugs after they are approved and widely used. Without meaningful patent protection, we won't learn; and if we don't learn, more patients will forego treatment benefits and experience adverse events.

I agree completely that, insofar as the Hatch-Waxman law permits, patents which do not represent valuable new knowledge should not be listed in the Orange Book. And that's why the FDA's proposed rule takes unprecedented steps to restrict Orange Book listings and to require their certification.

Some have criticized our rule as likely to lead to delays compared to current law in generic drug availability. This argument just doesn't hold up. In general, our proposed rule would allow generic drugs on the market at the same time as the Senate bill. It is true that manufacturers will still be able to file some late patents -- but only in categories highly likely to yield valuable new knowledge.

Another legal issue of concern to many generic manufacturers is application delays relating to claims of label "infringement." These cases of labeling disputes are complex, and they raise safety issues as well. We are considering these issues carefully, and we look forward to suggestions from any and all interested parties about how they can best be addressed.

Finally, I want to discuss one other area that is critical for enhancing the future availability of generic drugs as well as improving the opportunities for the generic industry. We must strenghten the scientific foundations of the generic review process. Once again, this is an area where contributions by leaders in the generic drug industry will be critical.

We intend to use some of the additional resources we have proposed for our generic drug program to promote these efforts, and to improve FDA's scientific expertise and ability to keep up with constantly developing technologies. We intend to work with other government agencies in this effort as well.

As an example of the work already done, last year our generic drugs staff conducted two day-and-a-half-long scientific symposia: one on polymorphism and one on controlled release dosage forms. A third program, on injectable drugs, is planned for March, and a fourth one, on aerosol and spray-delivered drug products, for September.

Our generics office also held the first of its monthly ANDA Review Open Forums where our reviewers discuss controversial, novel, or exceptionally complex drug issues. The meetings are primarily designed to foster communication among the review staff, to advance scientific policy decision making involving generic drugs, and to improve generic review quality and consistency.

Another new OGD project is the development of mechanism for assessing new drugs under review to identify propspectively any substantial problems for the potential approval of their generic versions.

And currently, our generic drug research is focused on several priorities that we share with your industry, and that could use your help.

One is pharmaceutical equivalence. Specifically, research is needed in characterization of complex products. For example, some brand-name estrogens have been on the market for 40 years, yet today we still don't have generic counterparts. Other complex products without generics include such drugs as insulin and human growth hormone. More recombinant drugs like this are coming in the future.

The second area where we need your help is the development of methods and standards for demonstrating therapeutic equivalence for a range of products for which equivalence cannot be shown simply by evaluating molecular composition and the dynamics of blood levels, as is the case with traditional oral, systemically absorbed drugs.

For example, among the many metered-dose inhalers, there is only one generic product (albuterol). Ipratropium, beclomethasone and numerous other products are on the market without patent or exclusivity protection. But because of the difficulty in demonstrating bioequivalence with the current clinical trials and in vitro methodology, we receive few applications for these kinds of products.

Similarly, we need better methods for evaluating bioequivalence in nasal sprays. Because they are administered directly into the nasal mucosa and are locally-acting, blood levels are not appropriate as the sole method demonstrating bioequivalence. Consequently, to get approval for these treatments for such conditions as rhinitis and allergies, generic firms must perform comparative clinical trials and extensive in vitro testing. These approaches are time-consuming and costly.

A third type of generic products that poses a special challenge for our reviewers is topical dermatologics that are applied directly to the skin and are not substantially absorbed into the body. Their approval as generics is very difficult, expensive and unpredictable because of the high variability in clinical measures used to evaluate efficacy.

Often, the bioequivalence studies are of significant size - 300 to 700 patients -- and because pharmacodynamic measures are much more variable than pharmacokinetic measures, these trials lack both sensitivity to detect differences in products and sometimes fail due to high variability and insufficient statistical power. We have investigated some surrogate measures for topical absorption, but so far, no method has been found to be scientifically valid and reliable enough for use in the approval process. We need to think hard and work with outside experts to determine what additional studies hold the most promise for addressing this shortcoming.

Finally, liposomes represent a relatively new, complex type of drug that poses new challenges for determination of bioequivalence. Liposomes can target a therapy to selected tissues and increase its effectiveness while reducing toxicity. While such targeting is advantageous, it means the usual bioequivalence method of measuring plasma concentration in the systemic circulation many not be applicable. Today, there are liposomal products available for oncologic and anti-fungal use. But there are no approved liposomal generics and there has been no research to establish appropriate bioequivalence standards for these products. We want to have appropriate methods available when liposomal products come off patent.

Supporting research in these areas makes a lot of business sense. Most of the products I mentioned are or will be very widely used, many are off-patent, and many more will be off-patent within a few years. By helping to develop the necessary bioequivalence methods and data, you would open significant new markets for your industry.

All of the new FDA initiatives that I've just described - much greater funding for our generics program; steps to improve the efficiency of our review cycles and, more importantly, to work collaboratively to improve the quality of generic drug applications; more efficient, risk-based GMPs; more effective regulations for implementing the Hatch-Waxman law on generic competition; and research to enhance opportunities for generic drug competition in the future -- all of these initiatives can help make more safe and effective generic drug options available more quickly.

As generic drugs become increasingly important in American medicine, we must learn more about their potential for presenting safety and adverse event problems. For this reason, some of our additional generics funding will be used to enhance our "post-market" monitoring of adverse events involving generic drugs. This is an important and integral part of our agency-wide patient safety initiatives. We must have mechanisms in place to quickly learn about all drugs-associated safety concerns and take prompt corrective actions, such as informing health care providers and patients how to avoid the potential hazards. This will involve greater use of electronic health information systems, including bar coding and automatic reporting of safety data.

Finally, we also need to communicate more effectively about generic drug options when they are available, and to educate health professionals and the public about the therapeutic value of generic products. As the President himself said in October, "generic drugs are just as safe and effective as brand-name drugs." In recent years, FDA funding for the Generic Drug Quality Awareness program has increased substantially. As I hope you've seen, the entire Administration is firmly committed to increasing awareness of the value of generic drugs.

In all of these areas, I'd like to both challenge you and pledge to work closely with you. This is my first major speech on pharmaceutical issues facing the agency, and it's no accident that I'm making it to the Generic Pharmaceutical Association. I know your industry is very competitive, and margins are often thin. But stepping back to think and work hard on the issues I've just discussed could help make the generic industry stronger than ever, and signficantly improve the public health at the same time.

I want to conclude by reminding all of us that the overriding goals we share are far more important than some particular issues on which our opinions may differ. I am personally committed to strengthening fair and effective competition by generic drugs, because I strongly believe that greater availability of these products, where appropriate, can have significant benefits for improving public health and help control the growing cost of health care.

I promise that you will see more FDA activity and support for achieving these goal than ever before. But the success of your industry is not up to the FDA or Congress alone. I have pointed out some important challenges for your manufacturers that they must work to meet -- with strong support from FDA and the Administration.

We all are committed to protecting and promoting the health of our consumers and the strength and vitality of our nation. The surest and most efficient way we can advance toward these shared aims is, without question, by working together.

FDA/Website Management Staff
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