Interview With Ralph G. Neas, President and CEO, GPhA

US Pharm. 2015;40(6)(Generic Drugs suppl):32-40.

The year 2014 ushered in the 30th anniversary of the Hatch-Waxman Act, which serves as a reminder of how one law can change the business aspect of current healthcare. This legislation, sponsored by Senator Orrin Hatch of Utah and Representative Henry Waxman of California and signed into law by President Ronald Reagan, has helped many Americans access generic medications and affordable, safe care. The Hatch-Waxman Act was launched in 1984 and has framed the generic-drug approval process for the last 3 decades. Formally designated the Drug Price Competition and Patent Term Restoration Act (Public Law 98-417), this federal law incentivizes generic-drug innovators and establishes generic-drug regulation in the United States.¹ The Hatch-Waxman Act allows a generic-drug company to file an application with the FDA to create a generic version of the original product. Since 1984, more than 10,000 generic drugs have entered the market, representing roughly 50% of all prescriptions filled in the U.S.¹

The FDA works to enhance innovators’ and manufacturing firms’ ability to achieve the goals outlined in the Hatch-Waxman Act by speeding up the drug development and approval process, thereby increasing the availability of generic drugs while simultaneously maintaining the same degree of safety. The cost saving to the U.S. consumer has far surpassed the initial projections of up to $1 billion; the actual savings from generic drugs in 2013 alone was $239 billion. “At a time when health costs in America are threatening the sustainability of the nation’s budget…generic drugs have saved 1.46 trillion dollars over the past 10 years,” stated Ralph G. Neas, president and chief executive officer (CEO) of the Generic Pharmaceutical Association (GPhA), in a recent press release.²

The GPhA is a trade association founded in 2000 that represents manufacturers and distributors of generic prescription drugs, manufacturers and distributors of bulk active pharmaceutical chemicals, and suppliers of other goods and services to the generics industry. Mr. Neas joined the GPhA in 2011 after serving as president and CEO of the National Coalition on Health Care (NCHC), where he championed efforts to control costs and improve care in the U.S. healthcare system.

Medicare Part D

Q: What is the recent news regarding generic-drug access for Medicare Part D patients?

A: Generic drugs are instrumental in lowering healthcare costs in Medicare, but there is still unrealized potential for even greater savings. Embracing measures that promote market competition from generic drugs can be critical to increasing access and savings for millions of people. In fact, as the recently released U.S. Senate Special Committee on Aging report, Medicare Part D Prescription Drug Benefit: Increasing Use and Access of Affordable Prescription Drugs, states, competition from generic drugs translates into real savings for both taxpayers and beneficiaries. Additionally, the analysis points to the role of generics in slowing healthcare spending growth and boosting medication adherence, underscoring that generic drugs play a critical role in patient savings and also put safe, more affordable generic drugs within reach for millions of Americans.

Congressional Budget Office estimates show that changing Part D low-income subsidy cost-sharing policies can improve generic utilization and could save the federal government $24.2 billion over 10 years while improving access for its beneficiaries. The GPhA welcomes further conversation on increasing generic-drug utilization in government programs, particularly Medicare Part D.

The GPhA is hopeful that, in 2015, Congress will address the misuse of programs designed to protect patient safety, such as Risk Evaluation and Mitigation Strategies [REMS]. Some brand-drug companies have been known to misuse REMS to decrease competition from more affordable generic products, which has cost the U.S. health system billions of dollars.

Read the full report at www.aging.senate.gov/download/generic-drugs-report.

E-Labeling

Q: What is happening with the FDA proposed rule on e-labeling, and how does this affect generic drugs? Is this the same thing you wrote to Congress about in your letter dated August 26, 2014?

A: The GPhA welcomes the FDA’s proposed rule to amend its prescription drug and biological-product labeling regulations to require electronic distribution of the prescribing information intended for healthcare professionals. The proposed rule takes steps to ensure that prescribing information, which is currently delivered to health professionals in paper format, is distributed electronically. This information could include critical details necessary for effective use of the product or timely updates to safety. Highlights of the proposed rule include the following:

• Information received by patients will not change.

• E-labeling gives prescribers and dispensers immediate access to the most current, FDA-approved drug prescribing information.

• Manufacturers can provide electronic updates to labels in weeks—rather than the months, or even years, currently required for paper labels.

• Electronic information-sharing removes obsolete drug information in circulation and can reduce prescribing errors.

• The electronic format is environmentally sustainable and supports savings throughout the drug-supply chain by reducing unnecessary storage, shipping, and printing costs currently incurred by paper labels.

Q: The FDA has reopened the comment period on labeling and will have a public meeting [held in March 2015]. Interestingly, e-labeling is a key component of the Expedited Agency Review, an alternative supported by the GPhA and PhRMA [Pharmaceutical Researchers and Manufacturers of America]. Can you comment?

A: The GPhA is pleased that the FDA announced it would hold a listening meeting to consider alternatives to the proposed rule, as well as provide stakeholders the opportunity to comment further on the rule. The GPhA has developed and submitted to the FDA the Expedited Agency Review (EAR), a science-based alternative proposal that would establish defined time parameters for the FDA to take action on updates to safety labeling while also expediting the labeling process. The EAR recognizes that the FDA is the only recipient of all of the relevant data needed to make label changes. A key component of the EAR is e-labeling. This technology helps ensure that the most current drug-safety information is publicly accessible as soon as possible.

The GPhA welcomes all indications that the FDA is taking a deliberate approach to finalizing the proposed rule on generic labeling. Serious concerns raised by minority providers, patient and disability advocates, members of Congress, drug-supply chains, generic manufacturers, and others merit thoughtful and thorough consideration. When it comes to matters of patient safety and the potential impact on vulnerable populations, these diverse voices must be heard.

The GPhA is hopeful that the FDA will continue to evaluate the proposed rule and the potential patient risk of allowing multiple safety labels for the same product. We also urge the agency to take a closer look at the data projecting negative economic implications for millions of patients and stakeholders. Indeed, a Matrix Global Advisors study has found that the proposed rule would increase spending on generic drugs by $4 billion annually. This drives up costs for patients, payers, and taxpayers and for federal and state governments.

The GPhA and its member companies look forward to working with the FDA so that any final rule avoids confusion, ensures that the agency preapproves safety-labeling changes by all manufacturers once the drug becomes multisource, and does not hinder patient access to safe, affordable generic drugs.

Concerns About Proposed Rule

Q: Can you discuss the survey in which 81% of healthcare professionals had concerns about label changes occurring before FDA approval?

A: Healthcare providers and others have expressed serious concerns regarding the FDA’s proposed rule on generic drug labeling. The proposed rule, Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products, would allow generic-drug manufacturers to change their safety labeling without prior FDA review. A recent Fairleigh Dickinson University PublicMind survey of doctors, physician assistants, and pharmacists reports that the proposed rule would create confusion and decrease the likelihood that these healthcare providers would recommend and prescribe generic drugs. Further, 86% of respondents indicate that the current information they receive about generic drugs is adequate. And 81% believe that FDA approval should be required before any safety-label changes.

Read the GPhA survey at www.gphaonline.org/media/cms/GPhA_Report_v2_4_FINAL_2_.pdf.

FDA Draft Guidance on REMS

Q: What is your position regarding the FDA draft guidance on REMS procedures?

A: The GPhA applauds the FDA for taking helpful steps to address, and hopefully limit, scenarios in which some brand-drug companies misuse REMS programs to thwart competition from more affordable generic drugs. The ongoing abuse of REMS and REMS-like programs costs the American health system and its patients $5.4 billion annually, according to a study conducted by Matrix Global Advisors. Interestingly, as the U.S. market readies for biosimilars, this same study identifies $140 million in lost savings that would occur for every $1 billion in biologics sales.

The FDA draft guidance comes at a time when this issue is also receiving increased attention in Congress. The GPhA is pleased that Congressmen Steve Stivers [R-OH] and Peter Welch [D-VT] introduced the bipartisan Fair Access for Safe and Timely [FAST] Generics Act, which effectively prohibits companies from adopting restricted-access practices to avoid generic competition, a maneuver that comes at the expense of patient access to affordable medicines. The GPhA and its members look forward to working with legislative and regulatory partners to ensure that millions of people have safe and timely access to more affordable generic drugs and biosimilars.

Read the GPhA statement at www.gphaonline.org/gpha-media/press/statement-from-ralph-g-neas-president-and-ceo-gpha-regarding-fda-draft-guidance-on-rems-procedures. Read about the FAST Generics Act at www.gphaonline.org/gpha-media/press/gpha-applauds-new-bill-seeking-to-limit-costly-misuse-of-drug-safety-programs. Read Matrix study findings at www.gphaonline.org/media/cms/REMS_Studyfinal_July2014.pdf.

Misrepresentation of Generic-Drug Price Data

Q: What trend have you seen in price erosion of generic drugs, and what misrepresentation has been occurring that has disappointed the GPhA?

A: Generic medicines are a critical part of systemwide efforts to hold down healthcare costs. Indeed, the world’s leading healthcare analytics firm, IMS Institute for Healthcare Informatics, found that generics saved $239 billion in 2013 (a 14% increase in savings from 2012) and more than $1.46 trillion over the recent decade. Further, the Express Scripts 2013 Drug Trend Report issued in 2014 shows that, since 2008, the price of brand drugs has almost doubled, but the price of generic drugs has been cut roughly in half. Generics manufacturers can proudly point to a legacy of savings and access that will continue to bring expensive treatments within reach for millions of people.

That is why the GPhA is disappointed by how some have mischaracterized the facts about generic-drug prices. Their data are missing one crucial element: perspective. The examples cited by the Healthcare Supply Chain Association on recent purchases by group purchasing organizations focuses on 10 drugs in a marketplace of more than 12,000 safe, affordable generic medicines. In fact, thousands of generics have seen significant price erosion over time, owing to the competitive nature of the marketplace. One such example is Lipitor, for which generics have saved all involved an estimated $7 billion per year. In addition, many generics prices are so low that thousands of stores across the country offer them to consumers for $4, or even for free.

The most effective way to continue to keep prescription drugs affordable for patients is to increase competition. Millions of patients and the entire healthcare system would benefit from streamlining and expediting the approval process so that more generics can reach the market sooner. As the newly released report from Matrix Global Advisors shows, there are opportunities for the FDA to facilitate pharmaceutical competition. In order to continue to save American patients and the healthcare system trillions of dollars in drug costs, the GPhA believes that policymakers should take the following key steps to increase generic competition:

• First, in partnership with the industry, Congress should encourage timely FDA review of the more than 3,000 generic drug applications that have been filed with the agency. Once those are approved, consumers will have more options than ever, and that will help drive down prices.

• Second, Congress should review the abuse of programs designed to protect patient safety, such as REMS. The practice of some brand companies of misusing these programs to keep generics out of the market lowers competition and keeps prices high. The recent study by Matrix Global Advisors estimates that countering this misuse could save the health system $5.4 billion.

• Finally, Congress should encourage the FDA to increase competition for cutting-edge biologics by enacting regulations for biosimilar approvals and supporting a naming policy that encourages competition from safe, more affordable biosimilar medicines.

Taken together, these policies would provide American consumers with more choices, greater access to medicines, and billions of dollars in increased generics savings.

Read the GPhA statement on costs at www.gphaonline.org/gpha-media/press/statement-by-ralph-g-neas-president-and-ceo-gpha-regarding-generic-medicine-costs. Read the GPhA statement on proposed legislation for curbing costs at www.gphaonline.org/gpha-media/press/statement-by-ralph-g-neas-president-and-ceo-gpha-regarding-proposed-legislation-on-generic-drugs.

Generic Drug User Fee Amendments of 2012 (GDUFA) Outcome

Q: Do you have any statistics or comments regarding the outcome of GDUFA? Some have stated that the income to FDA is $300 million annually, but there has been no improvement, and the backlog of New Drug Applications (NDAs) has even increased. How many NDAs are pending?

A: The FDA must approve Abbreviated New Drug Applications [ANDAs] filed by generic-drug companies, and GDUFA was supposed to guarantee faster approval, leading to lower costs to companies and lower prices for new drugs to be introduced more quickly. Generic manufacturers give the FDA more than $300 million annually in user fees to support safety, access, and transparency—the core goals of GDUFA. As the FDA develops fiscal year 2015 priorities, it will be important to accelerate review activities to meet our shared goals. The GPhA also urges the FDA to dedicate resources to address the enormous and growing backlog of ANDA and Prior Approval Supplement submissions. Various sources show there are currently more than 3,000 pending ANDAs.

The GPhA looks forward to the continued dialogue on improving GDUFA, particularly efforts to make generic-drug approvals more predictable and consistent. This could include more communication with applicants and continued meaningful interaction with the generics industry during agency development of new guidance or before agency enforcement of draft guidance as final. Approval wait time increased to 36 months in 2013 and is expected to be as long as 43 months in 2014, possibly related to training time required for FDA employees to provide consistency in their review process.

Drug Shortages

Q: According to the FDA, the number of drug shortages has tripled over a 6-year period (from 61 drug products in 2005 to 178 in 2010), and the generic sterile injectable supply market has been disproportionately affected. What is the status of shortages now, and are there any changes?

A: The only way to mitigate current shortages and prevent future shortages from occurring is a collaborative effort. This means more communication between regulators and manufacturers, enhancing the ANDA review and approval process, and making sure that generic manufacturers continue to be part of the solution to this complex issue. Together, we can ensure that patients have access to safe, more affordable generic therapies.

Shortages are complex and multifaceted, and different therapies face different circumstances. Some therapies in shortage are made by only one or two manufacturers. Other shortages are the result of unplanned disruptions in manufacturing for a variety of reasons. There is no single cause or single solution. Still, the FDA and stakeholders at all levels of the supply chain are working tirelessly to make sure that treatments are within reach for millions of patients.

As the FDA numbers show, some progress is being made, with fewer new products going onto the shortage list. GPhA and its members enthusiastically support the full implementation of actions enabled by generic industry–generated fees from GDUFA, which total nearly $300 million annually. This includes expediting the approval process, completing site inspections, reducing the ANDA backlog, and other critical functions of the FDA, each of which plays a role in getting generics to patients as quickly and safely as possible and potentially alleviating drug shortages.

REFERENCES

1. FDA. Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Amendments). www.fda.gov/newsevents/testimony/ucm115033.htm. Accessed February 27, 2015.
2. Generic Pharmaceutical Association. Statement by Ralph G. Neas, President and CEO, GphA, regarding the 30th anniversary of the Hatch-Waxman Act. www.gphaonline.org/gpha-media/press/statement-by-ralph-g-neas-president-and-ceo-gpha-regarding-the-30th-anniversary-of-the-hatch-waxman-act. Accessed February 27, 2015.

This interview was conducted for U.S. Pharmacist on February 27, 2015, by Tammie Lee Demler, BS, PharmD, BCPP, Director of Pharmacy Services and Pharmacy Residency Training, New York State Office of Mental Health at the Buffalo Psychiatric Center, Psychiatric Pharmacy Practice Residency Program, University of Buffalo School of Pharmacy and Pharmaceutical Sciences, Buffalo, New York.

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