Generic Drug Backlog Just Another Brick in the Wall

Pete Rose is baseball’s all time career hits leader. He retired with 4,256 hits. He has more than Ty Cobb, Hank Aaron, and Derek Jeter. The FDA has him beat. There are currently 4,300 generic drug applications waiting for approval at the FDA. This Hall of Shame statistic has many contributing factors, but no matter the cause, the approval backlog limits consumer access to cheaper generics. Both insurance companies and patients pay more for name brand drugs when generic options languish at the FDA. Access is everything in healthcare, and generics are no exception. Despite high cost increases in the last few years, generics are one of the few things keeping drug spending from lifting off into space.

While an individual consumer may not be keeping score when certain generics are approved by the FDA, the healthcare industry certainly is. The stakes are always high when the FDA is approving drug applications. However, most of the attention is paid when new patent protected drugs are approved. These become the headline grabbing blockbusters; the billion dollar behemoths that keep insurance executives up at night. While the numbers involved in generics may seem small, they play large. As reported by recently, these small potatoes add up to a whole lot of fries.

“For consumers, the debate might not seem to matter much, but there is no doubt that the availability of generic drugs matters to their bottom line. They account for 88 percent of all prescriptions in the United States, but only 28 percent of the cost, according to the Generic Pharmaceutical Association.”

Generics have always been a safe harbor for patients and payers in the drug market, but the approval process is getting in the way. Many drug applications wait multiple years before being accepted or rejected. While the applications remain in limbo, the US patients and payers remain exposed to high name brand drug prices. Generic drug makers are frustrated because they believe that they are not treated as deferentially as name brand manufacturers.

They “complain that less than 1 percent of their applications are approved on the first try. In comparison, applications for new drugs have an 88 percent approval rate. Sherwood notes that back in 1992, only 27 percent of brand name drugs were approved on the first try, and that over time, better guidance from FDA improved quality of submissions.”

Congress to the rescue?

There is hope that the FDA will be able to expedite generic drug approvals. They will have to be better at guiding applications through the process and strengthening companies’ applications in the future. This could be achieved with a more transparent process that quickly pointed out application deficiencies. Congress saw an opportunity and responded to the problems they saw at the FDA. In 2012 Obama signed legislation into law that included provisions that should help the FDA speed up the approval process.

“The measures, [known as the the Generic Drug User Fee Amendments], required drug makers to pay user fees to help defray the costs of reviewing applications and inspecting facilities. In exchange, the FDA was put on a strict timeline to finish applications that were languishing. The fees provided an estimated $1.5 billion over five years — enough for the FDA to hire and train 1,000 more staffers for the generic drug office, update its technology, and inspect more manufacturing plants.”

Like most bureaucracies, the changes to the FDA have been slow to manifest in speedier outcomes. All generics that were approved in 2015 averaged 4 years from application to acceptance. Despite these numbers, the FDA is still in compliance with the new legislation, but drug makers contend that the wait is still too long. The FDA argues that the applications are full of problems.

Kenneth Phelps, owner of Camargo Pharmaceutical Services, which develops generic drugs, said “People threw in all kinds of garbage, so the FDA had to wade through the sewage to find out what was good and what was bad. It’s true, the dirty little secret of the generic industry is that they always submitted deficient [applications].”

While this issue lives in a darkened corner of the prescription drug market, overshadowed by specialty drugs and patent evergreening, its consequences are real. Every contributing factor of pharmaceutical’s double-digit price increases are worth exploration. These delays illustrate that even with industry regulations, an effective agency is required to execute them. The FDA may be improving, but the waits are still costing patients and payers by limiting their access to cheaper generics.

Because Pete Rose gambled on baseball while he played and managed, he received a lifetime ban from the sport. Despite all of his 4,256 hits, the Hall of Fame will always be out of reach. It does not matter how revolutionary and effective a drug is if it too expensive for consumers to afford.

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