Is new generic competition enough to lower drug costs?
The FDA is approving more generic drugs than ever before. Is it enough to lower drug costs?
The FDA has new authority, resources and resolve to get generic drug approved more quickly and in greater numbers than ever before. More than just helping patients, it sees generics as a key way to bring down drug prices by increasing competition. But even as the FDA is likely to succeed in some areas, there are limits to this approach. Not all drug products are susceptible to generic competition, including biological medicines which will require biosimilar competition. This report identifies new opportunities for generic drug manufacturers, as well as emerging hurdles for the pharmaceutical industry.
How has the FDA’s regulation of generic drugs changed?
From 2014 to 2018, the FDA has made significant improvements to how it regulates generics. Review times are significantly faster. There’s a new priority review pathway. New staff have been hired to review drugs and publish new guidance document. And there’s a new market exclusivity provision. Cumulatively, these changes will substantially benefit the generic pharmaceutical industry as it tries to bring its products to market more quickly.
How many drugs are coming off patent in the coming years?
From 2018-2020, just 12 blockbuster drugs with anticipated revenues of greater than $1 billion per year are expected to come off-patent. The cumulative value of those patented drugs is also expected to decline during that period. Not all drugs coming off-patent will be eligible for generic competition, either. Biological drugs will require biosimilar competition.
What impact will biologics have on drug prices?
One reason generics may have a diminishing impact in the market: Biologics. From 2018 through 2023, biologics are expected to make up 41% of the top-selling drugs worth more than $600 billion in expected sales. These products require biosimilar competition.
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