FDA Fact Sheet
FDA Acts to Lower Drug Prices By Implementing New Regulation
to Improve Generic Drug Competition
June 12, 2003
TODAY'S ACTION
- President Bush, Secretary of Health and Human Services Tommy Thompson, and
FDA Commissioner Dr. Mark McClellan announced a final rule to lower drug costs
for millions of Americans by improving access to generic drugs, which is expected
to save Americans over $35 billion in drug costs over 10 years.
- This regulatory action has closed legal loopholes in the implementation
of the Hatch-Waxman law which have delayed the marketing of generic drugs
and limited access to safe, effective, low-cost generic alternatives to brand-name
drugs.
DETAILS OF FDA'S FINAL RULE ON GENERIC DRUGS
- Provide billions of dollars in savings for public and private health
insurance programs: The rule not only will save patients over $35 billion
in drug costs over 10 years, but also it will reduce costs for state Medicaid
programs and employer-provided coverage
- Encourage innovation while providing quicker access to generic drugs: The
FDA's final rule would provide the generic industry with enhanced predictability
and certainty, while avoiding unnecessary and lengthy litigation, preserving
intellectual property protections and protecting the process of developing
new breakthrough drugs.
- Allow one 30-month automatic stay at most in the delay of generic and
505(b)(2) drug approvals when patent infringement litigation is filed: Brand-name
drug manufacturers will be limited to one 30-month stay to resolve allegations
that a generic drug maker is infringing a listed drug patent. This action
is consistent with a recommendation by the Federal Trade Commission that
a single 30-month stay is an appropriate time period for courts to resolve
cases of patent infringement. Multiple 30-month stays, which have led to
delays in generic entry of an additional 4 to 40 months, will not be permitted.
- Tighten requirements and increase information for drug patent submission
and listings: Brand-name drug manufacturers will not be allowed to delay
access to generic drugs by submitting additional patents for listing in the
FDA Orange Book for drug packaging or other minor matters not related to effectiveness,
in order to prevent generic competition. Required submission of information
includes patent information on active ingredients, drug formulations/composition,
and approved uses of a drug. In addition, a more detailed signed attestation
accompanying a patent submission will be required, and false statements in
the attestation can lead to criminal charges. These actions significantly
reduce opportunities to list inappropriate patents just to prevent access
to a low-cost generic alternatives to brand name drugs.
BACKGROUND ON TODAY'S ACTION
Today's action improves the FDA regulations implementing the Hatch-Waxman
law. These regulations govern when generic and 505(b)(2) drugs can compete
with brand-name drugs. As a result, patients will benefit from greater and
more predictable access to effective, low-cost generic alternatives to brand-name
drugs.
- Under the Hatch-Waxman law passed in 1984, generic and 505(b)(2) approval
is allowed when a new drug's patent and market exclusivity protection
expires, or when a 30-month stay terminates. The intent of the law is to
provide incentives to develop valuable new drug treatments through patent
and exclusivity protection, but also to facilitate access to generic versions
of the drug after the innovator's patent or exclusivity expires.
- FDA-approved generic drugs are safe and effective alternatives to many
brand-name drugs, at a cost that is often only one-third as great. Almost
half of all prescriptions filled today are for generic drugs, and generic
alternatives exist for many commonly-used brand name medications providing
an equally safe and effective but much less expensive alternative for millions
of Americans.
- In recent years, however, access to generic drugs has sometimes been delayed
by litigation. Under FDA's past interpretations of the Hatch-Waxman
law and the Orange Book patent submission and listing process, drug manufacturers
have been able to file patent information on packaging, ingredient combinations,
and other matters in order to get repeated automatic 30-month stays in approval
of generic and 505(b)(2) applications that significantly delay access to
generic drugs.
- In response to bipartisan Congressional concern about this issue, the
FTC conducted a detailed study of Generic Drug Entry Prior to Patent Expiration.
The study was issued in July 2002. It identified cases involving eight major
brand-name drugs between 1994-2000 where the repeated application of automatic
30-month stays on later-issued patents had delayed access to generic drugs.
The FTC made the following general recommendations:
- Allow only one automatic stay per generic drug application; and
- Tighten the Orange Book patent submission and listing process to
help ensure that only appropriate patents are submitted.
The final rule, along with other background documents explaining today's
actions, can be viewed at www.fda.gov/oc/initiatives/generics.
