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What FDA Can and Can’t Do to Help Lower Rising Drug Prices

Posted 18 November 2015 | By Zachary Brennan 

What FDA Can and Can’t Do to Help Lower Rising Drug Prices

Ask any US Food and Drug Administration (FDA) official how the agency can help lower prescription drug prices and you’re likely to hear the same answer: Drug pricing is not under FDA's purview.

And sure enough, FDA doesn’t dip its toe into the pricing bog while deciding whether to approve or reject a new drug, and it also doesn’t negotiate with pharmaceutical companies over how to price drugs.

But some FDA regulations do have a direct impact on drug prices, and with some tweaking, the agency could maneuver its way into helping lower consumer costs without actually jumping into the issue with both feet.

Friday’s pharmaceutical forum at the Department of Health and Human Services may also offer some clues as to how FDA and other agencies will look to combat rising drug costs.

But many of the options likely to be presented by government, potential presidential candidates or pundits to lower drug prices aren’t new. Just take a look at the testimony George W. Bush’s FDA commissioner Mark McClellan provided to Congress back in 2004 on FDA and drug pricing. He echoes nearly all of the proposals put forth so far this year, particularly around generic drugs and imports.

ANDA Backlog

Anytime a lawmaker or presidential candidate mentions drug pricing, generic drugs are usually mentioned in the same breath.

As Chip Davis, president and CEO of the Generic Pharmaceutical Association, said in an op-ed Wednesday: “Generic drugs now comprise 88 percent of total prescriptions in the United States, but remarkably only account for 28 percent of pharmaceutical expenditures."

Similarly, at Tuesday’s confirmation hearing for potential FDA commissioner Robert Califf, Sen. Lamar Alexander (R-TN) opened his questioning with one on how FDA can potentially lower the cost of drugs, and particularly on how FDA can reduce the abbreviated new drug application (ANDA) backlog, just as Sen. David Vitter (R-LA) did early last month.

It seems simple: Increase FDA approvals of generics and prices will decline.

But as Alexander noted in the hearing, FDA is having some issues addressing the gargantuan backlog of nearly 3,000 ANDAs and the median approval time for an ANDA has increased from about 30 months in 2011 to 48 months in 2014.

Califf made clear that the agency has work to do to reduce the backlog, though he also said a couple of the reasons the agency isn’t approving them more quickly is because FDA is still receiving incomplete applications and dealing with some manufacturing issues.

But the agency noted recently that it's actually making some strides with so-called "first generic drugs," which do the grunt work of lowering the cost of their brand-name counterparts.

A closer look reveals FDA thru October has approved slightly less first-time generics this year (75) compared with the same period last year (85).

The recent budget deal also took the matter of generic prices a step further by putting in place new rebate requirements for generic companies that increase the price of these drugs too quickly.


Another major topic that presidential candidate Sen. Bernie Sanders (D-VT) brought up at the Califf hearing yesterday is the issue of why FDA won’t allow drugs to be imported from Canada and other countries that have regulatory systems similar to the US.

Sanders took issue with the fact that FDA allows the importation of seafood, but not brand-name drugs.

But that stance may be an over-simplification of the complexity the pharmaceutical supply chain, and how costly and difficult it would be for FDA to monitor the flow of such imports, which Califf mentioned.

As McClellan noted back in 2004 before Congress: “Even if a drug bound for a foreign market is produced in the same plant as a similar drug approved for the US market, FDA is not able to track that drug in foreign commerce before it enters the US.

“Consequently, it is difficult for the agency to determine that a drug appearing at a US border is in fact the one produced in the FDA-inspected plant, pursuant to FDA approval. Clearly, there are many foreign Internet operators, counterfeiters, and others who are already showing they are willing and able to take advantages of weaknesses in our drug security system," he said.

"Taken together, these practical problems mean that simply declaring that only drugs ‘equivalent’ to FDA-approved drugs are legal to import fails to provide consumers with safety protections because the declaration is not accompanied by the resources and authorities needed to achieve the intent of the law while protecting the US drug supply,” McClellan added.


Perhaps the biggest elephant in the room for FDA is the US biosimilars market– an area where the agency has lagged behind its European colleagues, with still only one approval to date. The agency has also yet to issue a number of FDA guidance documents (some of which are on the agenda for this year) that would further help industry get a foothold in the US market.

Leah Christl, associate director for therapeutic biologics and biosimilars at FDA, told attendees at the Biopharma Congress last week in Washington, DC that the agency “underestimated” the biosimilars space. The agency is currently reviewing six 351(k) applications from four companies, though there are 58 biosimilars at some point in development for the US market for 17 different reference products.

And although the cost savings for biosimilars haven’t, at least initially, been as extensive as for generics, the cost of bringing biosimilars to market is likely to decrease over time, which could also mean lower costs for consumers.

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