Tuesday, June 27, 2017

Much Ado About Little or Nothing

The FDA announced its new efforts to "to increase competition in the market for prescription drugs" and in my view it is likely to do little or nothing to affect spending on prescription drugs in the United States. The first step announced by the FDA is simply that that the FDA will publish and maintain a list of off-patent branded drugs with no generics. The second step announced is that the FDA will prioritize review of ANDAs for generics where there are less than three generics approved for that drug. The first step is likely to have little impact because it simply ignores the fact that the major generic companies devote significant resources to research the patents on the drugs for which they would like to compete, making the FDA’s effort largely superfluous. The second step is also likely to do very little. The attractive generic markets draw many entrants while the less attractive attract far fewer. It is the market size, not the lag in review, that largely shapes competition in the generic market. No, despite the periodic and well-publicized spikes in the price of a small number of generic drugs, the problem with prescription drug pricing has very little to do with the speed of entry into the generic market and has much more to do with the marketing-driven sales of branded drugs. The FDA has proposed nothing in that regard nor is there anything yet proposed by the Trump Administration in that direction.

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