4 ways the FDA is contributing to high generic drug costs

When placing blame for high drug costs, most fingers point to the pharmaceutical companies. However, Scott Gotlieb, MD, former deputy commissioner of the Food and Drug Administration, says the regulatory agency is also to blame for high generic drug costs, reports The Wall Street Journal.

Here are four ways the FDA is contributing to high generic drug costs.

  1. In 2009, the agency required generic drugmakers to refit equipment in sterile manufacturing plants and simplify production lines to reduce the risk of contamination. The abrupt change forced many facilities to shut down, resulting in drug shortages and price hikes.

  2. The complexity and cost of earning FDA approval on a new generic drug application has increased in recent years. In 2003, it cost less than $1 million to file a generic drug application. Now, companies spend on average $5 million to file an application, with some spending as much as $15 million. A drug may not be subject to generic competition until it exceeds $25 million in revenue, leaving some infrequently used generics to have few competitors and prices as high as branded drugs.

  3. Generic drugs launched in 2015 took almost four years to earn approval, since fewer than 2 percent of applications were approved on their first submission. The FDA vowed to improve first-cycle approvals and review generic applications within 15 months, but the agency still rejects most applications and asks for resubmissions, which hinders market competition and keeps costs high.

  4. While brand-name drug companies run one or two products on each manufacturing line, generic drugmakers usually run 30 to 40 products on each production line, creating hundreds of drugs in a single plant. Now, the FDA is attempting to require production lines to be dedicated to one or two drugs due to the potential safety hazards. Generic drugmakers say this requirement would triple manufacturing costs.

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