A Message from Kathleen Jaeger: It Pays to Invest in Generics

APRIL 01, 2006
Kathleen Jaeger, GPhA president and chief executive officer

The next time a customer walks up to your pharmacy counter and asks for a best-selling brand prescription medicine, there is a good chance you will soon be able to tell him or her that a more affordable generic version is now available.

With more than $100 billion in blockbuster brand products coming off patent within the next 4 years, including widely used medicines such as Ambien, Zoloft, and Zocor, patients could soon realize millions of dollars in savings each year through generic versions of these products. That is because generics cost 30% to 80% less than brands, yet provide the same medicine and the same results. To ensure that patients can benefit from those savings, the generic industry is working hard to get these medicines approved in a timely manner by the FDA and onto your pharmacy shelves.

Yet, despite the generic industry's efforts, bringing those medicines to market can be fraught with regulatory and legal delays. One of the looming industry concerns and potential causes for delay is the lack of adequate funding for the FDA's Office of Generic Drugs (OGD), the agency responsible for approving generic medicines. For several years, OGD has faced budget constraints and has been limited in its ability to hire more scientists to review generic applications. As a result, OGD now faces a growing backlog of generic applications, resulting in longer approval times for those applications.

Patients and pharmacies should be concerned. As more blockbuster products are expected to come off patent, more generic applications are being submitted to OGD. In fiscal year 2005 alone, generic companies filed more than 800 applications for generic medicines, increasing OGD's workload by 36%. And these numbers are only expected to increase as more blockbuster patents expire in the next few years.

Although OGD's 200 scientists are working overtime and doing all that they can to review generic applications, the review time is taking longer. Today, despite a statutory deadline of 6 months, it takes a median time of 16.3 months to review a generic application; OGD estimates that the time will lengthen to 17.5 months in 2006 because of the backlog. Those figures are in stark contrast to the offices that review new drugs, which had >2500 employees to review about 150 applications in 2004.

To its credit, OGD has been working with the generic industry to improve efficiencies and communications in the review process. But those steps can only go so far without hiring more personnel; thus, it is clear that OGD needs and deserves more funding for those purposes, and that Congress should allocate increased funds for OGD in the federal budget.

By providing a modest funding increase for OGD—even $15 million—the federal government, patients, and public and private health care purchasers could realize an enormous return on the investment. That is because the more generics that are available to patients, the more savings are generated. Those savings would enable the federal government to reach more Americans through its priority health care initiatives, such as Medicare, Medicaid, and programs to improve children's health care, assist the chronically ill, and fight AIDS. Medicare alone, for example, anticipates that its prescription drug benefit will cost $8 billion less than anticipated in 2006, due in part to the use of affordable generic medicines. And just a 1% increase in the use of generics nationwide would save $4 billion annually.

Congress should do what it can to help keep health care costs under control for patients, and providing funding for OGD would be a positive step. With more funding, OGD will be able to speed more generics to market, and you will be able to tell your customers that they can save some real money on their prescriptions.