15

Walter Olson of OverLawyered writes in Yes, that $750 generic pill is a pure artifact of regulation:

if another company wanted to compete to sell the same medicine [Daraprim], it would need to apply for a new generic drug approval, by submitting an ‘Abbreviated New Drug Application’ to the FDA. Filing one of these applications with the FDA used to cost as little as $1 million; today it can run as high as $20 million, sometimes more.

Is that a resonable description of the status quo? Is it that expensive to get new generics approved by the FDA?

  • Does this include the cost to run clinical trials etc.? If it does, the claim does not seem outrageous. – gerrit Nov 18 '15 at 11:40
  • @gerrit : I think it does, but the point of a generic was supposed to be that someone else already run the studies to prove a drug effective and you just have to show bioequivalence. – Christian Nov 18 '15 at 12:48
  • I see. Is this claim US-specific? – gerrit Nov 18 '15 at 13:05
  • @Christian: Indeed. One of the more recent breathless articles on generic drugs is about how, legally, the company with the generic cannot add new warning notices for discovered side effects until the original company does so since it's contingent on that original research. – Sean Duggan Nov 18 '15 at 13:07
8

According to the US Federal Trade Commission June 2009 report Emerging Health Care Issues: Follow-on Biologic Drug Competition at page 14

small-molecule generic drugs product development costs range from approximately $1 to $5 million

It also states that small molecule generic drugs "typically take three to five years to develop" (page iii)

A wider range is given by Intellectual Property, Growth and Trade 2008, at page 426:

"...Interviews with FDA officials and several generic pharmaceutical managers generated estimated filing costs of an ANDA [Abbreviated New Drug Application] of $250,000 to $20 million"
quoting from a 1999 Morton reference.

Abbreviated New Drug Application refers to an application for a generic drug that was made simpler by the Drug Price Competition and Patent Term Restoration Act of 1984

So already by 1999 it was possible to spend $20 million on a generic drug application, but it was at the upper end of the range.

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