Remarks by Scott Gottlieb, M.D.
Commissioner of Food and Drug Administration
FDA Part 15 Public Meeting
Generic Drug Competition
White Oak, MD

(Remarks as prepared for delivery)

Thank you for coming today to discuss how we can make sure that, in places where Congress intended for there to be vigorous drug competition, such competition actually reaches the market. This is especially true as it relates to the generic drug approval process, because generic medicines deliver so much value to consumers, and price competition to the marketplace.

The fact is that too many people can’t afford the medicines that they need. I know there are complex reasons for this. The structure of health insurance and formularies has changed, at times leaving some patients underinsured for the drugs they use. The pharmaceutical supply chain has also become more complex, and at times, more costly. A long series of middlemen sometimes extract premiums as drugs pass from manufacturers to patients, while adding uncertain value.

FDA doesn’t have a direct role in how drugs are priced. But at FDA, we do play a key, if indirect, role in the eventual cost of medicines. For one thing, our regulatory requirements impact the cost of drug development. On some level, drugs are ultimately priced to some measure of the cost of the capital needed to create them. These costs aren’t just a reflection of the direct cost of drug development, but also lots of indirect costs. They include the cost of scientific and regulatory risk. They also include the costs associated with the time it takes to develop a drug and gain its regulatory approval, and the costs associated with the research and development of experimental products that ultimately do not make it to market.

To the extent that FDA can make sure our own regulatory requirements are efficient, predictable, and science-based, we can also help reduce the time and uncertainty of drug development for both generic and branded drugs -- and ultimately impact the cost of these endeavors.

There’s another important way FDA can have an impact on drug costs. That’s by encouraging competition. Consumers derive greater value when they have access to more choice and competition. This is especially true when it comes to new drug categories. Novel drugs that are therapeutically similar, or can be used interchangeably, can provide price competition. In other instances, they offer important clinical differentiation for patients who might not respond to one particular drug, but benefit from a medicine that works through a slightly different mechanism.

The benefits of competition are equally obvious when it comes to generic drugs. But in some cases, we know that branded companies are using our rules that are intended to protect consumers, or meant to make the regulatory process more predictable, and taking advantage of these rules in order to deliberately forestall the entry of expected generic drug competition.

In other words, they are “gaming” our system. Let me give you some examples.

In some cases, this takes the form of activities meant to make it hard for generic drug makers to physically purchase the branded drug that the generic firms need in order to develop their own generic versions of these medicines. In other cases, it may take the form of raising scientific objections with us that are timed to maximize the potential for delaying the approval of a generic drug application. In other cases, it may take different forms entirely. This sort of gaming is wrong. It undermines the careful balance Congress struck between access and innovation.

We have a system that supports market-based pricing for innovation, as a way to provide proper incentives to entrepreneurs for taking on the uncertainty of these costly and high risk endeavors. But that means we also have to have a system that allows for vigorous competition once the patent and exclusivity rights have lapsed on these new inventions. This is the careful balance that Congress crafted when it created the modern generic drug framework in 1984. This careful compromise worked well for many years. We need to make sure it continues to support patients.

At FDA we want to hear from the public today, about the ways that we can continue to make sure that this system is benefiting consumers. We want to know how we can prevent a select few from disadvantaging many, by exploiting loopholes in our rules in ways that upset the careful balance between access and innovation. Ultimately, this sort of activity undermines the market-based incentives needed to attract the sort of entrepreneurship that supports new innovation.

It’s part of our public health mission to ensure access to safe and effective medicines. It’s part of our public health mission to help make sure, within the scope of our legal authorities, that new technology can be more affordable. It’s part of our public health mission to address the gaming and abuse of our rules by a small number of actors bent on taking advantage of consumers.

We also need to make sure people can’t use our approval process as another way to take advantage of consumers. In some cases, we’ve seen speculators purchase niche products that are not protected by patent or exclusivity but face little competition, often because these drugs are infrequently used. These speculators then undertake very large and seemingly gratuitous price increases that appear untethered to any market conditions or other practical considerations. They do this knowing it can take years before another generic can enter the market to compete with them and force down their price. They’re exploiting a regulatory arbitrage, born of the growing complexity of our regulatory system, and its occasional slowness.

That’s changing already, as our outstanding generics team has made substantial investment in process improvements that are already yielding faster review and approval times, and direct benefits for consumers. Our review times are coming down dramatically, while we continue to carefully apply our standards to ensure that the generic drugs we approve are as safe and effective as their brand name counterparts. This month we approved the highest number of generic medicines ever, in FDA’s history. But there’s still more we can do.

We’ve already taken steps to address some of these issues as part of our “Drug Competition Action Plan.” That plan has three major elements. Each area is focused on places where I believe there to be barriers to intended competition when it comes to the market entry of generic drugs.

Our goal, in each case, is to find ways we can adapt or change our own rules and practices, to make sure that in places where Congress intended for there to be vigorous competition – and yes, lower prices –these kinds of benefits are being realized on behalf of consumers.

So let me tell you about the key components of our Drug Competition Action Plan, and some of the new steps that we’re announcing today as part of this broader effort.

First, we’re looking for places where this sort of gaming is happening, and we will change our rules where we can, to make sure the competition that Congress envisioned is taking place. It’s these sorts of scenarios that we hope to learn more about from this meeting today.

For example, we undertook an effort in 2014 to facilitate access for generic drug applicants seeking quantities of branded drug products covered by REMS in order to perform bioequivalence testing. We published a guidance that describes a procedure by which generic applicants can obtain a letter from FDA stating that their proposed study protocols contain sufficient protections such that sale of the medicine to the generic drug applicant by the branded manufacturer would not be considered by FDA to be a violation of the branded drug’s REMS.

In other words, FDA sends a letter saying it is OK for the branded company to sell the drug to the generic manufacture for these purposes. We’re now taking a close look at that guidance and actively considering whether it achieves its goals or whether we can and should do more.

One of the things we’re considering is whether to make these letters from FDA publicly available, to make more widely known the instances where generic drug makers may be having trouble getting access to branded drugs. These letters could contain important information that can help inform broader discussions about access and competition. Their public release could be one step to help ensure that unnecessary hurdles to generic drug development are removed.

Second, we’re looking at places where there are scientific and regulatory obstacles to the entry of generic medicines. In these cases, our aim is to address these obstacles by ensuring that our own regulatory processes are in line with the most current advances in science. We’re also taking steps to further improve our scientific knowledge, enhance communication with developers.

These obstacles can arise, for example, when it comes to complex drugs. In many cases, the traditional requirements used to demonstrate sameness may not be appropriate when it comes to complex drugs that can’t be easily measured in the blood, or where the drug’s therapeutic affect is delivered locally to a particular organ, rather than systemically, through the blood. 

We’ve made significant progress on these fronts in the last few years. But we believe there continue to be additional steps we can take to improve our own regulatory framework, to make it easier to demonstrate sameness in these settings, and to bring new generic competition to the market for complex drugs where the relevant patents and exclusivities have lapsed.

Finally, we’re going to focus on the efficiency and throughput of our overall generic drug program. We need to make sure we’re evaluating new generic applications in an efficient way, and making sure that we keep the costs of filing generic applications low. By making sure the barriers to market entry are not unnecessarily inflated through the regulatory process, it helps keep costs low, and promote competition.  So we’re taking new steps to build on the generic program’s many successes and to continue to make sure that its efficiency improves, and that our own review times continue to come down.  I want to close by describing these new efforts.

The generic drug program has made substantial progress over the past several years. Thanks to the first generic drug user fee program, GDUFA I, beginning in 2012, FDA hired and trained more than 1,000 new staff, reorganized key offices, made significant business process improvements. We’ve also implemented a new Generic Drug Review information platform.

Last month, we fully approved 88 ANDAs and tentatively approved 12. That is a new record for full approvals in a month, breaking several other such records set since the start of GDUFA I. Working together, we’re increasing the speed at which generic drugs can enter the market.

The biggest remaining challenge is that it has taken on average about four review cycles for an ANDA to reach approval. That’s highly inefficient. It entails a great deal of re-work by FDA and industry alike. It can needlessly delay consumer access to affordable medicines and raise costs.

The GDUFA II proposal, currently pending before Congress, is designed to reduce the number of review cycles for an ANDA to reach approval. It would expand the frequency and scope of communications between FDA and ANDA filers, giving applicants more opportunities to cure deficiencies and get ANDAs approved more quickly, including within the first review cycle.

It would also create a pre-ANDA program, with a special focus on complex generics. Applicants would obtain regulatory clarity earlier in product development, so they can submit ANDAs that are “right the first time.” Moreover, the program size envisioned under GDUFA II would be commensurate with the overall generic drug workload. Right-sizing the program will help us manage our workload and optimize resources for generic drug review and approval.

All of this is very good. But we can do more to build on the success that we have experienced in the generic drug program. So we will be taking some additional steps I’d like to announce today.

By the end of this year, FDA will develop and issue two key documents to streamline the ANDA review program. First, we will issue a “Good ANDA Assessment Practices” MAPP. MAPP stands for Manual of Policies and Procedures. These documents are internal CDER policies that are posted on our website for transparency. This particular MAPP will outline ways that we intend to streamline the ANDA review process inside FDA, by among other things, eliminating unnecessary, duplicative procedures and greatly increasing the efficiency of our review.

This efficiency doesn’t mean lowering our standards.  In the United States, approximately 90 percent of drugs that are dispensed are generics. That’s because when consumers go the pharmacy, they can be confident that a generic will work the same as the brand.

FDA will continue to be the gold standard for review and approval of all drug applications, and we will make sure that consumers can continue to trust in that gold standard.

It also doesn’t mean altering GDUFA II review goals or program enhancements. One lesson that we learned from GDUFA and PDUFA alike is that truncating review prevents applicants from fixing their submissions and getting them approved. The result is additional review cycles, not faster approval. The goal of the MAPP is to help make sure we work smarter.

The primary ANDA assessment should focus on “need to know” regulatory requirements. Supervisors should validate, not re-do, the assessment. The level of supervisory scrutiny should vary according to the experience level of the primary reviewer and the risk and complexity of the product. At the end of the review cycle, if the ANDA is not approved, the Complete Response Letter should clearly say what needs to be fixed. If the written communication is unclear, FDA should follow up and explain it over the phone in a direct, scientist-to-scientist exchange.

These improvements will increase efficiency and output, benefitting industry and consumers alike. These new changes will also free up program staff to communicate more with applicants. It will also give us more time to engage in more strategic, value-added policy and scientific initiatives. This includes, for example, the initiatives concerning complex generics.

We hire highly trained, talented, and extremely dedicated staff to engage in critical thinking on behalf of the nation’s public health, not to administer unnecessary paperwork. I’m proud of the staff’s hard work and resilience, especially over the past five years. I’m strongly committed to supporting their work and enhancing their professional growth.

The MAPP and its related improvements are critical to the continued success of the generic drug program. However, at the end of the day, FDA can only approve submissions that are approvable. Industry must do its part, too, by submitting complete applications that are ready to be approved. Towards that end, FDA will issue a second key document. This “Good ANDA Submission Practices” guidance will also issue by the end of this year. It will set forth common, recurring deficiencies that we see in applications, and provide advice on how these problems can be avoided in the first place, so applicants can send us ANDAs that are “right the first time.” 

Neither our internal MAPP nor the guidance alone can ensure that ANDAs will be approved more efficiently. But taken together, I believe they will help effectuate real and measurable change. So why am I highlighting these two efforts now, while we’re here to discuss the broader goals of the Hatch-Waxman Amendments? Because at the heart of the law is an effort to ensure access to life-saving medications. The efficiency of the review process is central to this effort.

Our discussion today, the efforts that I’ve just described, and other efforts that we are continuing to work on together and will announce soon, all form what I’ve referred to as our “Drug Competition Action Plan.” FDA is committed to ensuring that we balance innovation with access to fully realize Congress’s intentions when it originally passed the Hatch-Waxman Amendments. 

I’d like to close by thanking each of you for coming today. I’d also like to thank our staff for organizing and working to put this meeting together. My colleagues and I look forward to hearing from you and considering your thoughts in connection with our Drug Competition Action Plan and our ongoing implementation of the Hatch-Waxman Amendments.