AARP Urges Funding to Speed Approval of Generic Drugs
In response to a request from AARP, the Senate appropriations committee has added $10 million to its 2007 funding for the Food and Drug Administration’s (FDA’s) Office of Generic Drug Approval (OGD). AARP originally called for a $15 million (or 50 percent) increase in OGD funding to help speed the arrival of low-cost generics to the marketplace and reduce the mounting backlog of applications, which currently numbers about 800. The OGD has responsibility for reviewing and approving all generic drug applications so increasing its capacity is a necessary first step to streamlining the process of getting first-time generics on the market.
"Speeding up generic drug review is a win-win investment that will save precious health care dollars for both federal and state budgets and improve health care affordability for consumers. America and Americans can ill afford any delay in getting as many generics safely to market as we can," said AARP Senior Managing Director for Government Relations and Advocacy David Sloane.
Delays in getting generics to the marketplace are costing consumers and other purchasers billions. Generic drugs cost much less than their brand-name counterparts—the average price of a brand-name drug is $72; its generic twin costs $17, says the FDA
.Clearly, shifting the nation’s prescription drug consumption toward greater reliance on safe, effective generics has enormous potential for lowering overall health care spending. Some of that benefit has already begun to show up. The Centers for Medicare and Medicaid (CMS) credits lower prescription drug costs, due in part to greater reliance on generics, with helping hold the nation’s 2004 total health spending growth to its lowest levels in a decade.
The Generic Pharmaceutical Association estimates that a one percent increase in the use of generics nationwide would save $4 billion annually. Medco, one of the nation’s largest pharmacy benefit managers, estimates that getting 14 generic drugs currently in the OGD process to the market now could save consumers and purchasers $23 billion through 2010.
In a letter to the appropriations committee, Sloane specifically requested that "all funding for OGD be used exclusively to eliminate the backlog." In the past OGD funds have sometimes been diverted to other FDA projects such as preparing for an outbreak of avian flu.
AARP has pointed out that a slowed FDA approval process is only one of the bottlenecks keeping firsttime generics off the market. (See AARP Rx Watchdog, January 2006) The other is patent suit settlements between brand-name and generic manufacturers. One notable settlement between Bristol-Myers Squibb and a generic manufacturer will keep the generic version of the antiplatelet Plavix off the market until 2011.
