New Rules Will Speed Access to Generic Drugs

Big savings seen for consumers

WASHINGTON, June 12, 2003 -- HHS Secretary Tommy G. Thompson today announced new Food and Drug Administration (FDA) regulations to streamline the process for making safe, effective generic drugs available to consumers by limiting a drug company to only one 30-month "stay" of a generic drug's entry into the market for resolution of a patent challenge.

The FDA also will implement changes in its review procedures intended to help improve the speed and reduce the cost of determining that a new generic drug is safe and effective, and therefore can be made available to patients.

The changes in the regulations alone will save consumers an estimated $35 billion over 10 years by making generic alternatives to certain more costly brand-name drugs available more quickly by avoiding time-consuming legal delays. The improvements in the efficiency of review procedures, which will require changes by both FDA and generic manufacturers, are expected to save consumers billions more by reducing the time for determining that most new generic drugs are safe and effective, and therefore can be made available to patients.

"These changes will enable consumers to save billions of dollars each year by making it easier for generic drug manufacturers to get safe and effective products on the market when the appropriate patent protection expires," Secretary Thompson said. "The increased availability of lower-cost generic drugs will benefit all Americans, especially seniors."

President Bush's fiscal year 2004 budget request includes a $13 million increase for the FDA's generic drug program - the largest one-year increase ever proposed for the program. In conjunction with the expansion of its generic drug program, the FDA is implementing other reforms to reduce the time and cost of generic drug approvals substantially, and to strengthen public education and scientific study of additional kinds of generic drugs.

The new regulations make the procedures that govern generic drug approvals more efficient to promote competition. The changes close loopholes in the implementation of the "Hatch-Waxman" act, which, according to the Federal Trade Commission, have delayed competition from generic drugs in certain important cases.

The new regulations limit the "innovator" drug company to only one 30-month delay in approval for each generic drug application (if the innovator sues the generic company over patent issues). In the past, generic versions of certain important drugs have been kept from the market by multiple, consecutive patent challenges. The regulation also clarifies the types of patents innovators must submit for listing in the "Orange Book," FDA's official register of approved pharmaceutical products. The changes are consistent with concerns raised last year by a Federal Trade Commission report on generic drugs.

Greater access to generic drugs can reduce health care costs because the price of generic drugs is typically much lower than the brand-name drug: a generic version of a $72 average brand-name prescription drug costs about $17. Reducing expensive lawsuits about drug patents and making the approval process more efficient will also help to lower national health care costs by reducing the cost of bringing safe and effective generic drugs to market.

"Americans deserve greater access to affordable, safe and effective medications," said FDA Commissioner Mark B. McClellan, M.D. Ph.D. "Helping patients get lower-cost generic medicines, once the appropriate patent protection has expired, is therefore one of our major priorities. Our new rule and our new procedures are important steps in making more generic drugs available more quickly."

FDA generally can approve generic drugs for the marketplace as soon as the patent protection on brand-name drugs expires or when a court determines that the generic product will not infringe on the innovator's patent or that the patent is invalid. The generics' manufacturers must demonstrate to the FDA that their products are therapeutically equivalent to an approved brand-name drug in terms of safety, strength, quality, purity, performance, intended use and other characteristics.

The proposed increase in the FDA's generics budget will allow FDA to hire 40 experts in its generic drugs program to review generic drug applications more quickly and initiate targeted research to expand the range of generic drugs available to consumers.

FDA also has begun internal reforms to improve the efficiency of its review process for generic drugs. In particular, FDA is implementing a new system of early communications with generic drug manufacturers who submit applications. FDA also will provide additional guidance for generic manufacturers preparing and submitting quality, complete applications.

The new regulations will be published as a final rule in the Federal Register on June 18, 2003. The changes will be effective on Aug. 18, 2003.

More information about today's announcements is available at www.fda.gov/oc/initiatives/generics.