ISSUES AFFECTING THE GENERIC DRUG INDUSTRY

The generic drug industry provides consumers with safe and effective, quality drug products at low costs. Generic drugs save American consumers, taxpayers, Federal and State governments, and third-party insurance payors millions of dollars each year.

In 1984, Congress fairly balanced the interests of consumers and the brand name and generic pharmaceutical industries by passing the Drug Price Competition and Patent Term Restoration Act of 1984 ( Waxman-Hatch Act or Act ). The Waxman-Hatch Act established a system for more rapid review and approval of generic drug products by the Food and Drug Administration (FDA). The Act also created a framework for patent term extensions and non-patent exclusivity periods for brand name drug products. Brand name drug companies profits and research and development expenditures have grown exponentially as a result of the Waxman-Hatch Act and new life-saving medicines have become available to patients. The generic drug industry has saved American consumers and taxpayers billions of dollars. Due to the growth of the pharmaceutical industry, new jobs and investment opportunities were created in every region of the country.

Today the generic drug industry is under siege. On federal, state, and local fronts, the industry is being attacked by brand name drug companies fighting to prolong their monopolies. Moreover, the inadequate resources for FDA review of generic drug applications force consumers to wait longer and longer for access to less expensive, quality generic drug products. The issues facing the generic drug industry today are:

Slow FDA Review Times Delay Market Entry of Generic Drugs: FDA s admitted failure to review abbreviated new drug applications (ANDAs) for generic drug products within the 180-day statutory deadline is the biggest hurdle facing the generic pharmaceutical industry. Although ANDAs for generic drug products are much simpler than the more complex new drug applications (NDAs) for brand name products, FDA is currently reviewing NDAs faster than the shorter, less complex ANDAs.

FDA Allocation of Resources Is a Barrier to Market Entry of Generic Drugs: FDA has not dedicated sufficient resources to the ANDA approval process to review and approve ANDAs in a reasonable period of time, let alone in the statutory timeframe of 180 days. This delay results in a barrier to market entry that denies consumers access to competitively-priced pharmaceuticals.

Brand Name Drug Companies Continue to Try to Extend Their Pharmaceutical Monopolies: Conservative estimates by the Wall Street Journal suggest that about 40 drugs with more than $16 billion in sales in 1996 are set to lose patent protection by the end of 2002. This represents 20% of the industry s entire U.S. revenues. In an effort to block generic competition, the brand name pharmaceutical industry has fought over the last several years to protect its monopoly of the pharmaceutical market by using tactics to delay market introduction of generic drug products:

Private Relief Patent Extensions: As soon as the monopoly period for a brand name drug is set to expire, brand name pharmaceutical companies often lobby Congress for special legislation to extend the drug product s monopoly status. Such proposals are typically tucked away in the most unlikely pieces of legislation and, therefore, rarely receive the benefit of a public hearing, much less a public debate.

Citizen Petitions: Brand name drug companies have used the citizen petition process to try to block or delay FDA approval of ANDAs.

State Substitution Laws and Narrow Therapeutic Index Drugs: In an effort to delay market entry of generic drug products after FDA approval, brand name drug companies lobby state legislatures to, in essence, over-ride FDA s drug approval decisions or to impose more stringent standards.

NAPM believes more FDA resources should be allocated for the review of applications for generic drug products. Additionally, Congress should continue its oversight of FDA s review process for generic drugs to ensure that applications are reviewed within the statutory review timeframe. Finally, legislative and administrative reforms are needed to ensure that brand name drug companies do not unfairly block or delay generic competition.

The National Association of Pharmaceutical Manufacturers (NAPM) is the national trade association representing independent generic drug manufacturers, and the suppliers of bulk active drug substances and related services to this important industry. NAPM s members are independent manufacturers representing the heart of the generic pharmaceutical industry.