Generics—lower-cost versions of brand drugs that compete both with the original drug and with subsequent generic versions as they come to market—can significantly reduce prices.
The Generic Drug User Fee Amendments (GDUFA), passed by Congress in 2012, were intended to speed U.S. Food and Drug Administration approval of new generic drugs, which create competition for brand drugs and reduce drug prices for consumers. GDUFA created a five-year program to provide FDA with industry user fees to support regulatory review of new prescription generic drugs and to address a growing backlog of applications for new generic drugs. The legislation was reauthorized for another five years in 2017 as GDUFA II.
This brief examines how FDA’s review of generic drug applications changed during the first GDUFA period, including review times and GDUFA’s potential impact on competition. It also discusses the implications for FDA as it implements GDUFA II. Among the findings …
- Over the five years of the first GDUFA program, from fiscal years 2013 through 2017, FDA approved 2,700 new generic drugs, compared with 2,309 from fiscal 2008 through 2012, an increase of 16.9 percent. However, the median approval time did not significantly decline.
- The increase in approved drugs was largely driven by approvals of the fourth, fifth, sixth and even later versions of generics. Costs generally decline most significantly once second and third generics enter the market,1 but versions after the third generic usually reduce prices less effectively.2
- Approval times are slowed when drug applications go through multiple review cycles, which are triggered when FDA finds deficiencies in the drug application.
- Despite the increased approvals of generics overall, more than 500 brand drugs still lack competition, even though there are no patent protections or periods of exclusivity that would prevent the approval of competing generic versions.3 These “sole source” products are most at risk for price spikes.
