FDA Publishes List of Off-Patent Drugs Ripe for Competition

Published July 26, 2017

The U.S. Food and Drug Administration (FDA) has declared competition against certain brand-name drugs fair game.

FDA published a list of “off-patent, off-exclusivity branded drugs” for which no FDA-approved generic version exists “to encourage generic drug development,” the agency stated in a press release on June 27. Off-patent drugs are no longer protected by patents and are therefore subject to competition from cheaper drugs with the same formulas.

The agency will expedite applications for approval of the first three generic versions of each drug listed, the release states.

Monopoly Money

Devon Herrick, a health economist and policy advisor to The Heartland Institute, which publishes Health Care News, says a lack of competition prompts drug makers to raise prices exponentially.

“The manufacturers of generic drugs with no competitors could easily adopt the strategy of raising the prices by 10 times or 100 times, knowing it may be two or three years before competitors could bring a competing drug to market,” Herrick said.

In 2015, Turing Pharmaceuticals, owned by Martin Shkreli, raised the price of the drug Daraprim from $13.50 per pill to $750 per pill. The drug, for which no generic existed in the United States at the time, is used to treat certain parasitic diseases.

Peter Pitts, president of the Center for Medicine in the Public Interest, says FDA is calling foul on Shkreli’s 5,500 percent price hike.

“What prompted it was Martin Shkreli,” Pitts said. “He showed that there are unscrupulous people out there who saw something like this not as a public health issue but [an opportunity] to exploit a gap in the system.”

Regulation Redux

Pitts says the FDA’s new policy illustrates an economic paradox.

“There are regulatory solutions that create less of a burden, the result being a more competitive marketplace that advances the public health,” Pitts said. “This is a situation where more regulation actually creates a freer market.”

FDA is essentially publicizing information that is already public but underutilized, Pits says.

“What the FDA is doing is taking public information and formatting it in a way that could potentially create free-market opportunities that would advance public health, for no other reason than to protect against profiteering [and] drug shortages,” Pitts said.

Results May Vary

Herrick says owners of the drugs on FDA’s list could raise their prices until generics enter the market.

“Such a list is a sign to the current manufacturer that the FDA is inviting competition,” Herrick said, “Thus, the firm may try to get as much money as possible while the opportunity exists. Also, it’s a signal that a drug has no competitor, which invites unscrupulous pharma investors like Martin Shkreli to buy the product, knowing the price can be raised exponentially, albeit temporarily.”

Pitts says FDA’s publication of the list invites competitors to enter the market and could prevent drug shortages.

“[The list] deters those manufacturers from becoming unfair profiteers,” Pitts said. “It incentivizes other people to get into the market, which would not just keep prices at a fair level but also keep an eye out against drug shortages.”

David Grandouiller ([email protected]) writes from Jamestown, Ohio.

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