Generic drugs: cutting cost, not corners

FDA Consumer, Oct, 1985 by Bill Rados

In the words of Sen. Hatch, the new law provides "the best of both worlds--cheaper drugs today; better drugs tomorrow."

Before passage of the Hatch-Waxman amendments, firms that wanted to market generic versions of drugs approved since 1962 had two approval paths they could follow. The first was to do what was required of the pioneer company that developed the drug: conduct studies of the drug in animals and in humans to prove that the drug was safe and effective for its intended use. The firm would then compile the results of those studies and submit them to FDA for review. If all the information was acceptable, the drug would be approved for marketing.

The second path was for the firm to submit what is known as a "paper" NDA. The generic firm would not need to duplicate the research done by the innovator of the drug. It need only supply FDA with copies of journal articles or otherwise publicly available reports of scientific studies showing the safety and effectiveness of the drug. If FDA determined that those studies established the safety and effectiveness of the drug, and that the generic version was therapeutically equivalent to the original, the generic would be approved. While this provided an expeditious way for some generics to reach the market, the scientific literature contained sufficiently detailed reports for only a small percentage of the new drugs approved after 1962. Even in those cases, generic firms frequently had to perform animal studies to supplement the literature reports. The paper NDA path to FDA approval was not adequate to meet the demand for a streamlined system for getting generic versions of post-1962 drugs to market.

The new law allows companies to gain marketing approval at significantly less cost and time than if they had to submit complete NDAs. To develop and fully test a drug for safety and effectiveness and gain FDA approval costs millions of dollars and takes several years. The time spent by FDA reviewing the application averages 2-1/2 years.

But the time from product development to marketing approval through the ANDA process for the first strength and dosage form of a particular generic drug ordinarily takes only one or two years (with an average of eight months of that taken up by FDA review of the application). The average cost is a small fraction of that of a "full NDA" based on clinical trials.

Even compared to the paper NDA route to approval, the ANDA system provided for in the new law is less expensive. Compiling the studies from the scientific literature can be significant part of the cost of a marketing application for the first verions of a particular generic drug. Also, the new law applies to all drugs marketed since 1962 (except antibiotics, which already had a streamlined system in place), not just the small percentage suitable for paper NDAs.

Even though the new law makes it less costly and time-consuming for generic drugs to reach the market, it does not lessen FDA's requirements that they be safe and effective. To be regarded as therapeutically equivalent to an already approved brand-name drug, the products may differ only in such superficial characteristics as color, taste, tablet shape and packaging. A generic must: