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FDA Approval Changes Could Impact Drug Prices

By Andrew Siddons, CQ Roll Call

October 21, 2016 -- Upcoming changes to the Food and Drug Administration's (FDA) reviews for generic drugs could have an impact on drug prices if they help introduce more competition to the market.

In separate public meetings on Thursday and Friday, FDA officials discussed their plans for renewing the programs that charge generic drugmakers a fee to go through the application process. The FDA has been scrutinized for aspects of its generic approval programs that critics contend prevent cheaper generic therapies from coming to market.

Over the last four years, the FDA has been attempting to clear out a backlog of thousands of generic drug applications that came in before the first generic drug user fee program launched in 2013. The FDA has cleared out much of that backlog and new applications that come in can expect to be completed in the agency's stated 15-month time-frame. But many applications, which were often sent back to companies for being incomplete, could take up to 48 months before winning approval.

During the congressional debate over drug prices this year, lawmakers frequently invoked that statistic as a reason why companies like Turing Pharmaceuticals can significantly raise prices on drugs with no competition.

In the next user fee agreement, the FDA is committing to a 10-month review and an accelerated 8-month timeline for completing applications that would have an important impact on public health, remedy drug shortages or be the first generic competitor.

"We want to get those out on the marketplace. We want to provide that to the public," Ted Sherwood, an official in the FDA's office of generic drugs, said Friday.

The FDA is also committing to working more closely with the manufacturers of certain complex generic products that might have trouble demonstrating equivalence to the original products. That's what happened earlier this year when generic drugmaker Teva Pharmaceuticals' application for a generic version of the EpiPen injector was rejected. Months later, when EpiPen manufacturer Mylan was publicly shamed over the injector's $600 price tag, some critics pounced on the FDA for preventing a competitor from being sold.

One aspect of the user fee agreements focuses on the meetings the FDA and drugmakers will convene during an application process. Going forward, they plan to have an extra meeting for complex products.

"When you're developing a complex product, you're trying to identify what are the appropriate equivalent standards for this product, what are the challenges in development," Robert Lionberger, another official from FDA's office of generic drugs, said Friday.

The new generic user fee agreement, which will be taken up by Congress next year, mostly focuses on setting expectations for these meetings between the FDA and industry, with the goal of increasing the number of applications that FDA can approve on their first try. In exchange for these more predictable review cycles, the generic industry will pay FDA around $493 million annually for the next five years, a substantial increase over the approximately $330 million FDA received in previous years.

The total fees the makers of biosimilars will pay to FDA has not yet been determined, but during the first five years of the program FDA collected around $20 million per year. Similar to the generic agreement, the biosimilar agreement focuses on timelines for review, which will be 10 to 12 months, and the kinds of meetings that will be held during the review process.

The FDA is also committing to deadlines for guidance documents that will have a major impact on the public's perception of biosimilars, which are a relatively new concept for many patients. Currently, only four biosimilars are approved by the FDA and only two of those are available for consumers.

The FDA has yet to release crucial guidance for determining whether a new product is fully interchangeable with the original and still needs to finalize rules for how biosimilars will be named. Without those pieces in place, there is fear that any uncertainty might lead doctors and patients to reject these cheaper versions, diminishing the potential for savings on treatments that can cost patients up to $100,000 per year and cost the health care system billions.

As part of the agreement, FDA has committed to a draft of the interchangeability guidance by the end of 2017, and a final guidance on that and naming within two years of that.

"Before then, however, self-administered biosimilars could be dispensed to our patients," Angus B. Worthing, a physician and member of the American College of Rheumatology's government affairs committee, said at Thursday's meeting.

In the meantime, insurers could make the decisions about which products they will cover. CVS Caremark recently decided it would switch patients to a cheaper biosimilar for a treatment, even though the FDA hasn't deemed it interchangeable with the original drug. While other insurers could follow suit, the FDA will surely keep getting some blame for high prices until it finishes these guidelines.

"The costs associated with biologics are not sustainable," said Leigh Purvis, director of health research services at AARP, the lobby for seniors. "Medical advances like biologics are meaningless if no one can afford to use them."

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