how gdufa could kill your us business plan

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NPT | The Community of Big Thinkers GENERICS HOW GDUFA COULD KILL YOUR US BUSINESS PLAN - GENERICS by David Rice T he Food and Drug Administration Safety and Innovation Act (FDASIA) was recently signed into law by President Obama. This bill represents an impressive effort by a US Congress that is often seen as being plagued by partisan politics. Surprisingly, the Administration did not laud the effort, but rather the President unceremoniously signed the bill without fanfare or acclamation. From the perspective of the generic drug industry, the legislation was historic due to the inclusion of the Generic Drug User Fees Act (GDUFA) and a focus on drug safety through increased inspection of all participants in the US drug system. These components have long been discussed, but a framework could not previously be settled upon by the USFDA and the generic drug industry. An overwhelming 2700 backlogged generic drug applications now require a faster and more predictable review. A process that once took up to 31 months can now be accomplished in 10. The act has been in the works since 2004. It is seen as a strategy to level the playing field by applying a different lower-fee structure to domestic manufacturers and enforcing the same FDA inspection schedule for international facilities. The FDA is also moving from a pre-approval approach to one of continual surveillance; a mechanism intended to prevent the quality issues that have plagued the industry of late. GDUFA has been called “possibly the biggest step since Hatch- Waxman”. With this law, the FDA is expected to collect an annual $299 million; 80% coming from finished doses, and the other 20% from API manufactures1. These fees are intended to help the FDA ensure that participants in the US generic drug system comply with US quality standards and to increase the likelihood that American consumers get timely access to low- cost, high-quality generic drugs. The legislation also allows for more transparency in this process. Identification of facilities involved in the manufacturing of generic drugs and the improvement of the FDA’s communications and feedback with the industry are two effective efforts to expedite product access. The drug supply-chain safety provisions addressed a hole in US law that required facilities in the US to be inspected by USFDA every two years, while not requiring the facilities outside the US to do the same. Without a mandate, the USFDA was only inspecting foreign facilities, on average, once every nine years. The new legislation provides foreign and domestic parity of inspections that are to be issued bi-annually using a risk-based approach. This was certainly an important legislative chapter for the generic industry in the US, but now the industry faces the next phase of FDASIA: regulatory framework and implementation. For the majority of generic manufacturers API companies and others within the generic pharmaceutical chain the continued efforts will be worth watching, not only as FDASIA is finalized, but as other issues like Quality by Design, track-and-trace and drug shortage solutions are debated. 1 Actual fees depend on the number of companies requesting action. $299 million will be spread across companies on the federal register. Experts believe that fees could be up to three times higher. For example, FDA estimates 750 ANDA reviews per year, whilst there are currently 290 active ANDA’s. Many companies will not file now once fees are calculated into the business case. 2 Generic Pharmaceutical Association, “New Study Finds Use of Generic Prescription Drugs Saved Consumers and the U.S. Health Care System $931 Billion Over Past 10 Years,” news release, Sept 21, 2011, http://www.gphaonline.org/sites/default/files/Savings%20Report%20Press%20Release%20Sep21%2011.pdf. Sources: “Generic Drug User Fee Act Program Performance Goals and Procedures”, U.S. Food and Drug Administration, 2012, http://www.fda.gov/downloads/ ForIndustry/UserFees/GenericDrugUserFees/UCM282505.pdf. “Generic Drug User Fee Amendments of 2012”, U.S. Food and Drug Administration, 2012, http://www.fda.gov/downloads/ForIndustry/UserFees/GenericDrugUserFees/ UCM287735.pdf. e most significant legal step since Hatch-Waxman How GDUFA Could Kill Your US Business Plan Why GDUFA Matters The Generic Pharmaceutical Association (GPhA) and IMS Health recently released an independent analysis showing the financial impact of the US generic drug industry. Over the past ten years they have saved the US healthcare system an average of $931 billion, a saving of about $3 billion a week.2 This analysis clearly shows the benefits of the generics industry for consumers and the nation’s healthcare system. The FDA had not anticipated this mass adoption of generics and has been crushed under the weight of the growing industry; it is grossly underfunded and this has caused severe delays in bringing new products (and consumer savings) to the market. How might GDUFA affect your business now and in the future? There are two key elements that should be considered: 1) The fees to be paid and how to build them into your commercial strategy • It is possible that an ANDA review could cost up to $300,000 • How do you recover this unplanned cost? • What impact might this cost have on your ability to invest in more products? • Do you have available cash flow to pay for existing ANDAs in the backlog? 2) The timetable for reviews and inspections • Over the next 5 years, the ANDA review time will be reduced to 10 months • Revenue might come earlier, but unforeseen competitors might also enter the field • Do you have the resources to capitalize on the reduced timeframe? FDASIA and GDUFA are significant steps for the generic industry and US consumers. The system puts generics in line with NCEs, who have had the PDUFA (Prescription Drug User Fee Act) since 1992. It allows expediency for the availability of generic drugs, greater predictability in the ANDA review times, and a scheme available for biosimilars and medical devices. Now is the time to start thinking about how they will affect your business, both now and in the future. David Rice; Executive Director at the Generic Federation. For more information about Gen Fed, please visit the website at: www.genericfederation. com or email [email protected]. Additional comments from Asa Cox, CEO of Generic Pharma 2.0. An FDA ANDA review could cost up to $300,000 under GDUFA Want to talk about the latest industry issues? Join the discussion forum. August 2012

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The Food and Drug Administration Safety and Innovation Act (FDASIA) was recently signed into law by President Obama. The act has been in the works since 2004. It is seen as a strategy to level the playing field by applying a different lower-fee structure to domestic manufacturers and enforcing the same FDA inspection schedule for international facilities.

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Page 1: How GDUFA Could Kill Your US Business Plan

NPT | The Community of Big Thinkers

GENERICS HOW GDUFA COULD KILL YOUR US BUSINESS PLAN - GENERICS

by David Rice

The Food and Drug Administration Safety and Innovation Act (FDASIA) was recently signed into law by President Obama. This bill represents an impressive effort by a US Congress that is often

seen as being plagued by partisan politics. Surprisingly, the Administration did not laud the effort, but rather the President unceremoniously signed the bill without fanfare or acclamation.

From the perspective of the generic drug industry, the legislation was historic due to the inclusion of the Generic Drug User Fees Act (GDUFA) and a focus on drug safety through increased inspection of all participants in the US drug system. These components have long been discussed, but a framework could not previously be settled upon by the USFDA and the generic drug industry. An overwhelming 2700 backlogged generic drug applications now require a faster and more predictable review. A process that once took up to 31 months can now be accomplished in 10.

The act has been in the works since 2004. It is seen as a strategy to level the playing field by applying a different lower-fee structure to domestic manufacturers and enforcing the same FDA inspection schedule for international facilities. The FDA is also moving from a pre-approval approach to one of continual surveillance; a mechanism intended to prevent the quality issues that have plagued the industry of late.

GDUFA has been called “possibly the biggest step since Hatch-Waxman”. With this law, the FDA is expected to collect an annual $299 million; 80% coming from finished doses, and the other 20% from API manufactures1. These fees are intended to help the FDA ensure that participants in the US generic drug system comply with US quality standards and to increase the likelihood that American consumers get timely access to low-cost, high-quality generic drugs.

The legislation also allows for more transparency in this process. Identification of facilities involved in the manufacturing of generic drugs and the improvement of the FDA’s communications and feedback with the industry are two effective efforts to expedite product access.

The drug supply-chain safety provisions addressed a hole in US law that required facilities in the US to be inspected by USFDA every two years, while not requiring the facilities outside the US to do the same. Without a mandate, the USFDA was only inspecting foreign facilities, on average, once every nine years. The new legislation provides foreign and domestic parity of inspections that are to be issued bi-annually using a risk-based approach.

This was certainly an important legislative chapter for the generic industry in the US, but now the industry faces the next phase of FDASIA: regulatory framework and implementation. For the majority of generic manufacturers API companies and others within the generic pharmaceutical chain the continued efforts will be worth watching, not only as FDASIA is finalized, but as other issues like Quality by Design, track-and-trace and drug shortage solutions are debated.

1 Actual fees depend on the number of companies requesting action. $299 million will be spread across companies on the federal register. Experts believe that fees could be up to three times higher. For example, FDA estimates 750 ANDA reviews per year, whilst there are currently 290 active ANDA’s. Many companies will not file now once fees are calculated into the business case.

2 Generic Pharmaceutical Association, “New Study Finds Use of Generic Prescription Drugs Saved Consumers and the U.S. Health Care System $931 Billion Over Past 10 Years,” news release, Sept 21, 2011, http://www.gphaonline.org/sites/default/files/Savings%20Report%20Press%20Release%20Sep21%2011.pdf.

Sources: “Generic Drug User Fee Act Program Performance Goals and Procedures”, U.S. Food and Drug Administration, 2012, http://www.fda.gov/downloads/ForIndustry/UserFees/GenericDrugUserFees/UCM282505.pdf.“Generic Drug User Fee Amendments of 2012”, U.S. Food and Drug Administration, 2012, http://www.fda.gov/downloads/ForIndustry/UserFees/GenericDrugUserFees/UCM287735.pdf.

The most significant legal step since Hatch-Waxman

How GDUFA Could Kill Your US Business Plan

Why GDUFA MattersThe Generic Pharmaceutical Association (GPhA) and IMS Health recently released an independent analysis showing the financial impact of the US generic drug industry. Over the past ten years they have saved the US healthcare system an average of $931 billion, a saving of about $3 billion a week.2 This analysis clearly shows the benefits of the generics industry for consumers and the nation’s healthcare system. The FDA had not anticipated this mass adoption of generics and has been crushed under the weight of the growing industry; it is grossly underfunded and this has caused severe delays in bringing new products (and consumer savings) to the market.

How might GDUFA affect your business now and in the future?There are two key elements that should be considered:

1) The fees to be paid and how to build them into your commercial strategy

• It is possible that an ANDA review could cost up to $300,000

• How do you recover this unplanned cost?

• What impact might this cost have on your ability to invest in more products?

• Do you have available cash flow to pay for existing ANDAs in the backlog?

2) The timetable for reviews and inspections

• Over the next 5 years, the ANDA review time will be reduced to 10 months

• Revenue might come earlier, but unforeseen competitors might also enter the field

• Do you have the resources to capitalize on the reduced timeframe?

FDASIA and GDUFA are significant steps for the generic industry and US consumers. The system puts generics in line with NCEs, who have had the PDUFA (Prescription Drug User Fee Act) since 1992. It allows expediency for the availability of generic drugs, greater predictability in the ANDA review times, and a scheme available for biosimilars and medical devices. Now is the time to start thinking about how they will affect your business, both now and in the future.

David Rice; Executive Director at the Generic Federation. For more information about Gen Fed, please visit the website at: www.genericfederation.

com or email [email protected]. Additional comments from Asa Cox, CEO of Generic Pharma 2.0.

An FDA ANDA review could cost up to $300,000

under GDUFA

Want to talk about the latest industry issues? Join the discussion forum. August 2012