Generic Drugs Hit Backlog At FDA

By Marc Kaufman
Washington Post Staff Writer
Saturday, February 4, 2006

At a time when the use of low-cost generic drugs is being embraced as one of the few ways to rein in skyrocketing health care costs, the Food and Drug Administration has a backlog of more than 800 applications to bring new generic products to the market -- an all-time high.

As a result, experts say, fewer generic drugs will be available to consumers in the years ahead than the industry is ready and able to provide. The FDA, however, has told Congress that the office that reviews new generics needs no additional money, and the agency has no plans to hire more reviewers.

"We are very aware that many, many people are waiting for more generics to be approved and that there is frustration about the backlog," said Gary Buehler, director of the agency's Office of Generic Drugs.

He said he expects a record number of applications this year -- and an even larger backlog -- because "we don't believe we'll be getting any staff increases in 2006." Buehler said his office received an all-time monthly high of 129 applications in December.

The Bush administration has strongly advocated generics as a way to hold down health care costs, and the director of the Centers for Medicare and Medicaid Services, Mark B. McClellan, said in an interview this week that an ever-growing number of generics is essential to controlling the cost to the government and seniors of the new Medicare prescription drug program.

In a recent federal report on health care costs, one of the few bright spots was a slowdown in the rate of prescription drug spending that was credited largely to the growing use of generics, which now account for more than half of all prescriptions.

"This huge backlog of generic applications is just unacceptable," said Rep. Henry A. Waxman (D-Calif.), one of the sponsors of the law that made generics more easily available two decades ago. "This is the time for the FDA to be ramping up its generic reviews, not to be falling so badly behind."

Last year, the generics office approved more than 450 applications, 23 fewer than the year before. The office took an average of 20.5 months to review each application, compared with 19.9 months in 1999, although by statute the agency is obliged to do the job within six months.

The FDA's Buehler said the agency gives priority to "first generic" applications, for drugs just losing patent protection, but documents show that the backlog for all generics is double what it was just three years ago.

As the backlog of generic applications has soared, the number of applications for new or reformulated drugs and biologics submitted by brand-name companies has remained consistently smaller than predicted. But while the Office of Generic Drugs had about 200 employees to process almost 800 new applications last year, the offices that review new drugs had more than 2,500 employees for about 150 applications in 2004.

The generics office's budget was about $26 million last year, a fraction of the more than $400 million spent to evaluate and monitor new drugs and biologics, according to FDA documents. In response to questions from Congress, the agency said the generics program would have to make cuts in 2006 to offset pay raises.

"We have a kind of crazy situation now where the FDA's generic reviews -- which are supposed to be quicker because they're less complicated -- on average take longer than the new drug reviews," said Kathleen Jaeger, president of the Generic Pharmaceutical Association. "The flood of applications is coming in generics, but the review resources mostly go to new drugs."

A generic drug, which comes on the market after another drug's patent expires and must have the same active ingredients as the drug it mimics, usually costs 60 to 90 percent less than the brand-name version. The cost drops the most with the first generic alternative to a brand-name drug, and it falls more as each new competitor reaches the market.

Consumer acceptance of generics has increased markedly in recent years. Drug experts say the tidal wave of demand reflects the high price of branded products, the large number blockbuster drugs going off patent, a big push by insurers and the government to encourage generic usage, and an influx of cheap medicines made by Asian manufacturers. These companies are filing applications to market drugs just coming off patent as well as lesser-used older medications that do not have generic competition.

Generic drugs now account for about 12 percent of the nation's $250 billion a year in drug spending and more than 53 percent of prescriptions filled. IMS Health, a company that tracks the industry, predicts that the percentage will exceed 65 percent within four years as several blockbuster drugs go off patent. Express Scripts, which manages pharmacy benefits for many insurers, estimates that the figure could be 70 to 75 percent by 2010.

Drug experts say more widespread use of generics could save billions. The Express Scripts study estimated that wider generic use could have saved $20 billion in 2004 alone. But because many generic drugs are antibiotics or other drugs that treat short-term conditions -- rather than the chronic problems treated by brand-name cholesterol, blood-pressure and antidepressant drugs -- only 37 percent of drugs dispensed, as opposed to prescriptions, are generic, according to IMS Health.

The FDA backlog is expected to balloon in the next few years. An unprecedented $60 billion to $70 billion a year in brand-name drugs -- such as Zocor, Zoloft, Pravachol and Ambien -- will come off patent in the United States over the next four years, creating opportunities for spirited generic competition and greatly reduced prices.

"It's pretty simple -- the more generics we have, and the more quickly we get them, the more savings for consumers," said Steve Miller, author of the Express Scripts study.

Mark Merritt, president of the Pharmaceutical Care Management Association, which represents pharmacy benefit managers, said 90 percent of the time doctors and patients agree to switch to a newly approved generic by the next refill.

But without an increase in staffing at the Office of Generic Drugs, advocates of generics say, the public will get those savings more slowly, and sometimes not at all.

The view within the FDA appears to be quite different. In testimony before Congress last summer, then-FDA Commissioner Lester M. Crawford said the agency was approving on average one generic drug per day, calling that a sign that "the system seems to be working" and that "we are meeting our deadlines." He said there was no need for additional staff in the generics office.

Some at the agency and in the industry say the answer is to have generic-drug makers do what brand-name makers did in the early 1990s -- pay "user fees" to finance new hires by the FDA. Today, user fees support about half the FDA staff that reviews new drug applications.

But the generic drug industry includes hundreds of small firms, and its leaders say they cannot reach consensus on whether to accept user fees.

Others argue that since the low cost of generics has broad benefits for the public, Congress should be willing to pay for added staffing. That the administration has not asked for more money, some say, indicates that it favors the big drug companies.

"The branded industry has to be delighted by this backlog," said Jake Hansen, vice president for government affairs for Barr Laboratories Inc., a maker of generic drugs. "If they can't stop competition in the courts, stopping it as applications go through the regulatory process is just as effective. For consumers, to flatline or cut funding makes absolutely no sense."

Sharon Levine, who oversees drug utilization for the Kaiser Permanente health plan in Northern California, said it is essential for the FDA to speed the approval of new generics.

"The agency has done a good job of getting a wide range of generics onto the market so far, so it's worrisome if that flow might be slowing down," she said.

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