Drugs

Ways to Improve FDA Unapproved Drugs Initiative

David McFarland

— 2 min read
Share

Yale University and Johns Hopkins University School of Medicine researchers say FDA’s 2006 Unapproved Drugs Initiative (UDI) intended to strengthen the agency’s regulatory oversight of unapproved marketed drugs has led to significant increases in drug prices after UDI regulatory action or approval. Writing in the Journal of the American Medical Association, the researchers say FDA estimates that in the U.S. as many as several thousand drug products are marketed without agency approval, many of which entered the market before the 1938 Federal Food, Drug, and Cosmetic Act.

They note that manufacturers often obtain approval for previously unapproved drugs based on literature reviews or bioequivalence studies, rather than new clinical trial evidence, suggesting that the UDI is not motivating new studies of those old drugs.

“Once a manufacturer obtains approval for a formerly unapproved marketed product,” the article says, “several hurdles may delay entry of competitors.” First, approval of an ANDA can take 24 to 36 months. Second, drug companies can prevent generic competitors’ access to raw pharmaceutical product source material by signing exclusive agreements with specialty chemical manufacturers. Third, NDA holders may list new patents for the drug product in the FDA Orange Book, giving ANDA filers an automatic 30-month delay for patent litigation. Fourth, in some cases the newly approved drug product is eligible for statutory marketing exclusivity. And fifth, manufacturers may implement closed distribution systems, removing the drug from regular pharmacies and wholesalers to prevent generic companies from accessing the necessary product to complete bioequivalence studies for ANDAs.

The article lists steps FDA has taken recently to remove obstacles to new generic competition that are relevant to the UDI. And the authors suggest additional reforms that could be considered to mitigate the harms of monopoly price increases that have resulted from the UDI: 

  •          FDA should better coordinate with the Federal Trade Commission to identify and publicize anticompetitive practices that delay generic entry;
  •          to better contextualize the price increases on formerly unapproved marketed drugs, the federal government should require drug companies to disclose development expenditures required to achieve approval through the UDI; and
  •          to encourage voluntary compliance with the UDI, the federal government could provide pre-specified, fixed monetary payments to reimburse the development of previously unapproved drugs.

“Ultimately, although FDA’s goal of strengthening regulatory oversight related to unapproved drugs is laudable,” the article concludes, “monopolies carry societal harms, and the current system appears to lead to reward out of proportion to manufacturer investment.”

Read more