How to bring down generic drug costs? Tweak the FDA's approval rules, health experts say

Aaron Kesselheim

As generic drug prices continue to rise and shortages abound, some health experts are calling for more creative solutions to bring down costs.

Essentially, they want President Obama to beef up a 2011 executive order that was meant to press the FDA on generic approvals.

Aaron Kesselheim of Harvard Medical School and healthcare policy leaders Alfred Engelberg and Jerry Avorn say Obama's original order "lacks the required specificity" to force the FDA to act on generic drug costs. But, as they say in a post at Health Affairs, the order "could be amended to authorize two specific actions aimed at more rapidly reducing generic drug shortages and price gouging."

First, the order should require the FDA to grant a speedy review to any company looking to make a generic drug that doesn't have a lot of competition in the U.S. If fewer than three companies actively produce the med stateside, the drug should get expedited consideration, the authors said. The highest priority should go to companies who want to market a drug only made by one manufacturer in the U.S.

The order could also give the FDA permission to clear a generic product based on an equivalent approval from a foreign country. "Just as states within the U.S. recognize driver's licenses issued by other states, it is possible to identify drug regulatory bodies in other nations that have sufficiently rigorous procedures in place and recognize their certification of a given generic product," the authors said.

The latter idea could come under fire, as critics point to potential safety issues with approving products based on foreign regulatory standards. "But no one has suggested that manufacturing standards imposed by regulators in Europe, Canada, or Japan, for example, are meaningfully different (and certainly not lower) than those used by the FDA," the authors point out.

New approaches to generic approvals would come at a critical moment. Generic drugs make up more than 85% of U.S. prescriptions but account for less than 20% of the cost of all medicines, according to the blog post. And a recent study showed that in 2013, one-third of generic drugs had an annual price increase, with about 10% of generic drugs more than doubling in price, according to data cited by the authors.

Typically, the bigger price increases hit drugs with the fewest rivals, so speeding up generic approvals to boost competition would theoretically hold down those price hikes.

"Eliminating unnecessarily burdensome regulation and maximizing competition are widely supported principles, and the changes proposed could be accomplished within the executive branch without requiring the intervention of Congress," the authors said. "This will benefit the public as well as health care payors, and would disadvantage only a small number of companies that seek to benefit unfairly from market distortions at the expense of health care systems and patients."

- here's the blog post

Read more on