Barriers to generics policy reform: a US case study

Submitted: 29 December 2017; Revised: 5 January 2018; Accepted: 12 January 2018; Published online first: 19 January 2018

A recent comparison of generic drug markets [1] explores the history of generics substitution and bioequivalence policies in the US, in order to understand the barriers to implementing reform of generic drug policies.

The history of generics substitution

In this case study, the authors investigated the barriers to generic drug policy reform, focusing on the history of both generics substitution and bioequivalence policies in the US.

The history of generic drug substitution in the US reveals consistent political conflicts, vested interests and lobbying by stakeholders with economic interests.

Since the beginning of generic drug substitution in the US, groups representing brand-name drug manufacturers have worked to prevent policy reform. In the 1940s, the National Pharmaceutical Council began lobbying against substitution, claiming that it would suppress innovation and reduce quality, soon joined by the American Medical Association (AMA) and the American Pharmacists Association. As a result of their activity, 44 states had banned generic drug substitution by 1959.

In the decades that followed however, support for generics substitution grew among pharmacists, boosted by the government’s efforts to find ways to cut spending in health care.

In 1981, the state of Oregon passed the first therapeutic substitution law and by the mid-1980s all 50 states had legalized the practice of generic drug substitution. In the years between 1987 and 1993, the number of organizations that allowed generics substitution (not including hospital pharmacies) doubled – reaching 70%.

Yet, substitution was not always mandatory and some states restricted it by allowing patients to refuse generics or only allowing certain drugs to be substituted. Even today, doctors in the US can easily block substitution by ticking the ‘dispense as written’ box on the prescription. There is no minimum standard of substitution, but in 2015 almost 90% of all prescriptions were filled with a generic drug.

Regulation of bioequivalence

Closely linked to changing substitution policies are changes in the regulation of bioequivalence. When regulators first began to call for generics substitution, there was no effective way to prove that generics would have the same medicinal effect as patented drugs. In fact, in 1967 it was found that generic versions of a popular antibiotic had a resistant coating that prevented the active ingredient from being released, causing a public scandal.

This was extremely damaging to the public perception of generics, but led the US Food and Drug Administration (FDA) to commission five external committees to investigate how to assess the bioequivalence of generic drugs. In 1984, FDA decided on a set of bioequivalence standards, commonly known as the Hatch-Waxman Act.

The authors say the issues of substitution and bioequivalence regulation in the US can help policymakers to avoid repeating similar mistakes and identify opportunities for reform.

What are the chances for reform?

High drug prices in the US are a persistent issue, and the rising cost of generic drugs and a lack of competition in the generic drug market in particular has gained public attention in recent years.

A 2016 poll found that the vast majority of people in the US are in favour of government action to cut prescription drug prices, and indeed the US Government has taken an increasing interest in drug prices. Several senators are investigating means of improving competition in the generic drug market, and some even suggest that the government should be able to block price increases on generic drugs.

President Donald Trump has supported calls to give the government more power to negotiate drug prices and to allow states to import cheaper drugs from other countries. He has also called for streamlining of the FDA drug approval process.

FDA Commissioner Dr Scott Gottlieb has also criticized delays to generic drug approvals and has recently taken steps to increase generic drug competition. However, there are concerns that changes to FDA processes might hamper their ability to check the effectiveness and safety of drugs. The authors also say it remains to be seen how these ideas will develop, given the uncertainty in current US health policy.

Chances for reform have in particular been hampered by recently proposed changes to the Affordable Care Act. In May 2017, a bill was passed to repeal and replace the Affordable Care Act, which would drastically change health care in the US, with huge implications for those on a low income. Although a Congressional Budget Office report estimated that this would save the government US$100 billion in just 10 years, the impact for the generic drug market was unclear.

Although the bill was defeated in July 2017, other forces are preventing intervention in generics policy. For example, AMA and the Pharmaceutical Research and Manufacturers of America (two major lobbying organizations) continue to oppose any government intervention in the generic drug market. Although they initially supported the Affordable Care Act, the authors suggest they only did so after being assured that there would be no price controls on medicines and no importation of cheaper medicines.

A more detailed discussion of this study, including investigations of European generic drug markets, has been presented in a previous paper [2].

Competing interests: None.

Provenance and peer review: Article abstracted based on published scientific or research papers recommended by members of the Editorial Board; internally peer reviewed.

Eleanor Bird, BSc (Hons), GaBI Journal Editor

References
1. Wouters OJ, Kanavos PG, McKee M. Comparing generic drug markets in Europe and the United States: prices, volumes, and spending. Milbank Q. 2017;95(3):554-601.
2. Delahunty M. A comparison of European and US generic drug markets. Generics and Biosimilars Initiative Journal (GaBI Journal). 2017;6(4):190-2. doi:10.5639/gabij.2017.0604.043

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