Generic drug approvals are soaring at the FDA. Here's why.

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Alexander Gaffney Senior Manager, Health Research Institute, PwC US February 05, 2019

The FDA is setting records for the number and speed of its generic drug approvals. The approvals could help lower the prices of some drugs by introducing new competition.

What the data say:

The FDA fully approved 781 generic drugs in fiscal year 2018, according to an analysis by PwC’s Health Research Institute (HRI). That’s 90.0 percent more than in fiscal year 2014, the first year the Generic Drug User Fee Act was in full effect, when it approved 409.

Generic drug approvals increase from 2014 to 2018
Generic drug approvals increase

The agency also tentatively approved 190 drugs in 2017, compared with 91 in 2014. Such drugs can go immediately to market once patents or exclusivity lapse on the comparator drug.

What’s behind the surge in generic drug approvals?

Substantial changes to generic drug regulation were passed in 2017 under the Food and Drug Administration Reauthorization Act (FDARA), which greatly increased FDA funding and contained numerous regulatory incentives and changes meant to shorten pharmaceutical products’ time to market (see graphic below). 

The FDA has a host of new authorities to speed up generic drug reviews
FDA new generic drug authorities

Also, industry-paid user fees (known as generic drug user fees) will total $493 million in fiscal year 2018, up from $299 million in fiscal year 2013, the first year FDA collected user fees, according to an HRI review. Generic user fees account for 7 percent of the FDA’s annual budget and allow the regulator to hire more review staff and make infrastructure improvements such as new computer and data analysis systems that have helped accelerate review target times and meet targets more consistently.

Some challenges

Generics have a new pathway for faster approvals, but generic manufacturers need to invest in operations and quality. Priority reviews, new exclusivity and additional resources designed to elicit more efficient and expedited reviews can pay dividends for generic companies, but only if they have made sufficient investments in their staff, processes and technological capabilities.

More than 80 percent of generic drug companies fail to obtain approval during the first review cycle, indicating that major efficiencies have yet be found. As the number of opportunities increases in the complex generics space, companies may find development even more difficult, requiring better-trained staff, new scientific and regulatory capabilities, and new commercialization capabilities to promote their products.

Further reading

To get more information about why generic drug approvals are increasing and why, download PwC's full report, Is new generic competition enough to lower drug costs?

Contact us

Alexander Gaffney

Senior Manager, Health Research Institute, PwC US

Benjamin Isgur

Health Research Institute Leader, PwC US

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