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Annual Meeting Generic Pharmaceutical Manufacturers Association

Margaret A. Hamburg, M.D.
Orlando, Florida
February 22, 2013

Good morning, and thank you, Ralph, for that generous introduction.
It is a pleasure to be back here again to speak at your annual meeting. You might be interested in knowing that GPhA is one of the few organizations I have chosen to address every single year since becoming Commissioner. No, it’s not because of your warm Florida destination in the middle of February but rather it’s because of the dynamic character of this group, your prominent role in the nation’s health care system and the importance of the work you do.

Today, we have a lot to celebrate. First and foremost, the extraordinary accomplishment we achieved together in the GDUFA negotiations and in the swift—and I might add near unanimous—passage of the FDA Safety and Innovation Act or FDASIA. This was no small undertaking, and it required a serious, clear-eyed look at the challenges before us and what needed to be done. Then you all stepped up to the plate to make sure it got done…even though it came at some cost, literally and figuratively. But it was the right thing to do.

Similarly, when confronted with the growing problem of drug shortages in critical areas of medical practice, you took a hard look at what role the generic drug industry could play to address this truly worrisome situation. You focused on both short term responses to specific drug shortages and also on the strategies, policies and investments needed to resolve the problem for the longer term, including innovative new approaches like the Accelerated Recovery Initiative.

These efforts, and others, have underscored our shared goals – our commitment to cooperate – and the importance of partnership. We need to strengthen and build this partnership, because it forms the basis for so much of the important work we need to do together.

There can be no doubt that your industry—your companies—are playing an increasingly central and transformative role in our nation’s health care system. Generic drug companies provide 85 percent of all of the prescriptions filled in the United States, and they do so while providing considerable cost savings to patients, health care providers, and third party payers. Indeed, over the past decade the generic drug industry has contributed an estimated 1 trillion dollars in savings to the health care system.

Generic companies manufacture some 10,000 different drug products that millions of patients rely on every single day for their health and well-being.  They include parents who are counting on an antibiotic to cure their toddler’s ear infection, teenagers who are taking anti-seizure medication for their newly-diagnosed epilepsy, middle-aged men and women who are managing to keep their type II diabetes in check with the help of a few daily pills…and so many others.

There are few American households who have not benefited from the success of the generic drug industry.  Your task, and our task, is ensuring that the medications that these millions of Americans take every day are safe, effective and of high quality. And as we talk today about the many challenges before us, and the many things we can and must do together, I want to take this opportunity to really focus on how we can assure that the American people will get the products they need, in a timely way and of the highest quality possible.

Year in and year out we say much about safety and efficacy. But without product quality, none of us can feel confident that the product will be either safe or effective. These concepts go hand and hand.  And unfortunately, we’ve seen far too many quality lapses throughout the pharmaceutical industry over the past few years. Quality concerns are not exclusively the province of generic drugs, as you well know. I’m sure you’ve cringed when you heard some of the stories -- glass shards and other particulates in products, leaking IV bags, too much medication in syringes; bacterial or endotoxin contamination found in products manufactured in an aging sterile injectable facility, and concerns  about prescription meds mixed in with bottles of over the counter medication. These are not the norm, but they are warning signals that we can and must do more.   

That’s why we’ve chosen to make quality one of our highest priorities this year and we’d like you to do the same.

Whether innovator or generic, building quality is how you build your reputation and build trust in your products. Quality is the basis of the public’s confidence in pharmaceuticals… and confidence in the high quality of products being produced at American facilities is what has helped to make the U.S. pharmaceutical industry the gold standard for the world.

Quality should have a special resonance for generic drug manufacturers. I don’t have to remind you of what it was like in the early days of the generic industry and the hard work it took to convince a skeptical public that a generic drug was a therapeutic equivalent of a brand name drug. And assurance of quality was an essential element in winning over the public’s confidence – and can be all too quickly undone.

A few years ago, researchers at Harvard Medical School surveyed 506 physicians and found that almost half reported negative perceptions about the quality of generic medications.  That’s certainly troublesome – and assuredly not very fair, but there was something else of interest in those findings: physicians over the age of 55 – who began their practice when the generic drug program was just getting started -- were 3.3 times more likely to report negative perceptions about generic quality.

We know that physicians today—and their patients—are using generic drugs in record numbers.  Overall, they are an integral and welcome part of our health care landscape…and making a vital difference for health. But this is also a time to reaffirm the strongest of commitments to the fundamentals of your business…and certainly quality is the foundation on which everything else must rest.

You want providers and the public alike to never have to question their confidence in high quality generic products. This is a goal we share.

It takes time to build your reputation, but unfortunately, it takes only a few lapses to potentially damage it.

Just now I said that quality is the foundation on which everything else must rest— in fact, to be successful, quality must be built into every aspect of what is done.  Certainly quality is related to facilities, and we have grappled together in recent years with some of those matters, especially related to aging facilities. But instilling quality is equally important for your future pipeline as well.  As we see increased numbers of marketing applications for new innovator and generic drugs, including more complex dosage forms and delivery systems, the need for greater focus on quality is all the more imperative.

We know your industry is committed to quality.  We see that clearly in so many ways. That’s why you’ve engaged in FDA’s Pharmaceutical Quality Initiative for the 21st Century and Quality by Design programs in recent years. That’s why you work closely with the U.S. Pharmacopeia and collaborate with international standard-setting bodies. A concern for quality is also an important reason why you joined other prescription drug manufacturers in successfully negotiating the generic drug user fee agreement, which Congress incorporated in the FDA Safety and Innovation Act of 2012 or FDASIA.

Since FDASIA was enacted last July, we have made impressive strides in implementing GDUFA.

For a new program of this sort, spreading the word about any new requirement is essential. In the case of GDUFA, the challenge was even greater due to the industry’s complexity and diversity, and the short period of time between enactment and implementation.

 FDA responded by issuing guidance five weeks before the program was implemented and by engaging in significant outreach efforts to educate and inform industry. As an example, FDA staff called, emailed and sent letters to over 2,000 facilities identified in agency records and responded to over 1,000 questions from industry.

As you know, the overall goal of the generic drug user fee program is for all manufacturers – whether they are foreign or domestic – to abide by the same manufacturing quality system standards; to expedite the availability of more affordable high quality generics drugs; and to enhance FDA’s ability to identify and track registration of all contributors involved in each drug product sold in the U.S..

The opportunities are enormous, and you know what was happening before GDUFA:  FDA was drowning in generic drug applications that arrive at the rate of almost 1,000 a year, pushing the backlog of ANDAs above 2,500, and stretching the median time for generic drug approvals to 31 months.  GDUFA gives us the funding that is necessary to reduce that backlog.  

In the few months since the program has been up and running, we have collected almost $125 million in fiscal year 2013 user fees that will help us begin recruiting and training additional staff we need to achieve the program’s performance goals. I find it gratifying -- and indicative of your commendable support -- that the only fees that remain outstanding are for less than one percent of unprocessed ANDA’s. And in these difficult fiscal times, these user fee dollars will make even more difference.

A key feature of the new program is requiring manufacturers to self-identify to help us build a new database of facilities. As a result, we now have a list of 2,000 facilities involved in supplying generic drug products to the U.S. market.

Before the user fee program, the disparity in the degree of oversight experienced by domestic versus foreign facilities created an uneven playing field. Within five years, we will be able to conduct biennial inspections for both domestic and foreign facilities, allowing us to identify any noncompliant players in the drug supply chain -- wherever they are based – so we can focus on the generic drug industry worldwide.

Quality was also an important factor when Congress created an abbreviated approval pathway for biological products as part of the 2010 Patient Protection and Affordable Care Act.

Biological products are some of our most important and expensive drugs used to treat patients with a variety of serious medical conditions that are often life-threatening and certainly life-altering. But instead of being chemically synthesized like most drugs, these biological products are generally made from living material and are complex in structure…and in their action.

As I think you know, products approved under this new abbreviated pathway can be of two types—they can be “biosimilar” to, or “interchangeable” with, an FDA-approved biological product.
Congress deliberately set a very high bar for a biosimilar product approval. Manufacturers must demonstrate that their product is highly similar to, and differs in no clinically meaningful way from, the previously licensed product (known as the reference product), in terms of its safety, purity, and potency.  In fact, only minor differences in clinically inactive components are allow-able in biosimilar products.

There’s an even higher standard to meet for an interchangeable biological product. In addition to demonstrating biosimilarity, a manufacturer must show that the proposed interchangeable prod-uct is expected to produce the same clinical result as the reference product in any given patient.  When a product will be administered more than once to an individual (as many biological prod-ucts are), the manufacturer must also demonstrate that the risk in terms of safety or reduced ef-fectiveness of alternating or switching between use of the proposed interchangeable product and the reference product is not greater than the risk of using the reference product without such al-ternation or switch.

The 2010 law expressly states that a pharmacist or other dispenser may substitute an inter-changeable biological product for the reference product without consulting the prescribing doc-tor. Substitutability helped spur the growth of the generic drug industry at an earlier time and is similarly essential to help foster competition in the biologic drug market. Ultimately, such com-petition will spur innovation, improve consumer choice and drive down medical costs.

You might expect that building a new approval program of this complexity takes much time and deliberation, and that certainly has been the case.  Last year, to help developers interested in cre-ating biosimilar products, FDA issued three draft guidances to industry that set out the agency’s current thinking on key scientific and regulatory factors involved in submitting applications for biosimilar products to the agency. We’re moving forward to finalize those guidances now. And last month FDA issued a draft guidance on an issue common to all biologic products – how to study whether patients are at risk of having an unintended immune response to a biological prod-uct, and if they do, how to evaluate the impact of that response.
FDA has yet to receive an application for a biosimilar or interchangeable product, but we know there is much industry interest in them.  Our highly-experienced scientists tasked with reviewing biosimilar products have been meeting with manufacturers who are interested in developing such products. As of February 6, 2013, FDA’s Center for Drug Evaluation and Research (CDER) had received 50 requests for an initial meeting to discuss biosimilar development programs for 12 different reference products, held 37 initial meetings with sponsors and received 14 Investiga-tional New Drug applications (or INDs) for biosimilar development programs.

The high standards for approval of biosimilar and interchangeable products means that patients and health care professionals can be assured that, when these products go to market, they will  meet the standards of safety, efficacy and high quality that everyone expects and counts on. Ef-forts to undermine trust in these products are worrisome and represent a disservice to patients who could benefit from these lower cost treatments.

I spoke at the beginning about our joint task of ensuring that the medications that millions of Americans take every day meet those standards of safety, efficacy and quality. I believe another related task is ensuring that critical medications are available when patients need them.  

FDA’s program for preventing drug shortages has existed since 1999. It was originally developed more in anticipation of a potential Y2000 concern, but over the years, that program has become increasingly established – and valuable as drug shortages have come to represent a serious concern to patients and our health care system.  In recent years, at least until very recently, the number of shortages has increased significantly. In 2005, 61 drugs were in shortage; by 2011, the number of drugs in shortage had climbed to 251. Three-quarters of these products were generic injectables.

You know too well what happens when drugs are in shortage. According to the American Hospital Association, 82 percent of hospitals had to delay patient treatment due to shortages.  The Institute for Safe Medicine Practices or ISMP has reports of multiple deaths because a life-saving drug wasn’t available.

This is not acceptable. We all agree on that. And we all know that we have important – essential – roles to play. Certainly, our agency goes to great lengths to prevent these emergencies or to resolve them as swiftly as possible.  FDA can – and does – use its discretion for the temporary use of active ingredients from an alternate source, to find ways to keep a product safely available, or identify the potential manufacturer for the use of limited amounts of unapproved drugs. FDA can also expedite inspections required before an approval.

If need be, to address a shortage, FDA may exercise regulatory enforcement discretion for temporary importation. This is what we are currently doing to address the shortage of lipo-somal doxorubicin injection or Doxil, a critical drug for ovarian and other cancers.  

To further address this shortage, we also used our regulatory enforcement discretion to allow the use of an unapproved alternate manufacturing process for Doxil.  Additionally, FDA expedited review of a generic version of this drug. The generic is now approved and the company is work-ing to increase supplies. As a result of these combined efforts, patient needs are now being met. And it was coordinated actions with companies and the health care community that has made this possible.

However, successful FDA interventions of this sort depend heavily on early notification from manufacturers who anticipate or experience disruption of their drug production.

One of the most positive recent developments occurred in late 2011 when President Obama issued an Executive Order urging broader reporting by manufacturers of discontinuances and disruptions in drug supply. This action resulted in a six-fold increase in the number of voluntary reports to the agency.       

FDASIA includes provisions to further support FDA’s work to prevent drug shortages. It strengthens the requirements for these reports -- for example, by making clear that all manufacturers must notify FDA, regardless of whether they expect the product discontinuation to be permanent or temporary.

In line with the law’s requirements, we have appointed an internal Drug Shortages Task Force which is developing a strategic plan for preventing and mitigating drug shortages. Earlier this month, we asked the public for input on this plan – including new ideas to encourage high-quality manufacturing and to facilitate expansion of manufacturing capacity. We encourage your comments.

As a result of these many measures, the number of shortages is now less than half of what it used to be. There were 117 cases last year, down from 251 in 2011. And we’re averting many more shortages.  Last year, we prevented 282 -- 87 more than the year before. This is great news, but there is still more that needs to be done…and we must do it together.

Of course, the best way to head off a potential drug shortage is to facilitate consistent manufacturing of high quality products.  

Since 2006 there has been almost a five-fold increase - 500% - in shortages, and far too many of these have been critical, medically necessary, generic injectable products.  While the causes can be described in many ways – for example, raw material problems, component problems, or fa-cility or manufacturing problems - the underlying theme consistently takes us back to issues of quality.  In fact, quality concerns were an issue in nearly 2 out of every 3 drug shortage cases.

Although the majority of drug shortages have involved generic sterile injectable drugs, FDA has seen growing indications of quality problems across all segments of industry – brand name manufacturers, biotech manufacturers and generic drug manufacturers.

Here at FDA we are taking a closer look at the causes of quality lapses, especially those associat-ed with drug shortages. In a recent journal article, Janet Woodcock, who is director of CDER, our center for drugs, and FDA economist Marta Wosinska said that one of the fundamental prob-lems is the market’s inability to observe and reward quality.

To add transparency about quality, Dr. Woodcock is considering some meaningful manufacturing quality metrics, drawing from well-established measures that industry already uses to monitor quality both at individual manufacturing sites and company-wide. Use of such well-defined metrics will enable FDA to conduct much better surveillance of industry quality and will help reduce regulatory uncertainty for manufacturers.

You should know that we’re asking the public to weigh in on the use of such metrics in their comments to the Drug Shortage strategic plan I mentioned earlier. We welcome your thoughts and comments.

These considerations are part of the agency’s efforts this year to build a robust drug quality program that is on a par with the programs we presently have for drug efficacy and drug safety.
To do so, CDER is creating a new Office of Pharmaceutical Quality. To address the increasing complexity of products, we will optimize the use of staff talent and review expertise to improve consistency and regulatory certainty across the wide span of drug quality review – with the end goal of patient safety first and foremost.

FDA believes we must be strategic and have systems in place that are capable of continual quali-ty surveillance. This will make it possible to detect issues early enough so that steps can be taken to prevent patient harm and avert shortages. This is especially important due to the global nature of drug manufacturing and the sourcing of raw materials outside of the United States. This is true for brands just as it is for generics.

Let me emphasize that we’re not talking about new quality requirements. Our current GMP regulations have been in place for decades; there have been no recent changes that would substantially impact requirements for product manufacturing, including sterile injectables. We’re talking about complying with existing ones.  

At the end of the day, the major responsibility is not on FDA but on industry.

All segments of the pharmaceutical industry must embrace a commitment to quality of manufac-turing. And this commitment must be accepted by everyone involved -- from the top CEOs to the foremen and the line workers in the manufacturing facilities. Industry must maintain top-quality manufacturing controls and standards, and it must build robust quality and risk-management sys-tems into all levels of its operations.

This requires investments of resources, planning for redundancy and contingency production, and upgrading of technological standards. And certainly older facilities must be upgraded and better maintained. It is evident that several generic manufacturers have already begun to make such investments, and that others intend to do so as well. This will be money well spent, for pa-tients and for the bottom line.

These investments  will make a huge difference I am sure, though they are  is one of many steps that must be taken—and systems that must be assured—if we are truly going to have quality as the foundation, and built into every aspect of product development, manufacture and distribution.

Instilling and maintaining quality is a formidable challenge, but I have no doubt that your companies are capable of meeting this challenge. And if done right, FDA will have a great ability to recognize those companies that seek and maintain quality products – and to focus appropriate attention on those that don’t.

And there’s also this potential promise:  in a world where quality risk management is fully embraced, we could foresee a time when enhanced regulatory flexibility might be possible. If that occurs, it would bring us all closer to that 21st century vision for manufacturing that we would all like to see become a reality.

If past is prologue, I am optimistic about what we can achieve.  Much has been accomplished in the three years since we first met, and I am heartened by that progress.  We have come together to agree on a new user fee program.  And you are focusing as never before on building a close working relationship with FDA. In turn, we are committed to working with you. As your recent strategic plan declared, 2012 was a banner year. It is amazing how much you accomplished, and at a critical time. But don’t think that you are going to be able to relax and bask in the glow of accomplishment – at most maybe for a day in this glorious Florida sunshine.  It is now 2013 and much remains to be done.

I am confident that it will be done – and we will do it together, because we share the same goal:  the goal of bringing safe and effective drugs and biological products to patients who need them.  
We stand ready to work with you to achieve that end.  

Thank you.