Biomedical Engineering Reference
In-Depth Information
from the FDA before the expiry of the exclusivity period for the original drug, they
would have to carry out all requisite clinical trials. For obvious economic, practical,
and ethical reasons, generic entrants are often unlikely to attempt to reproduce the
entire set of test data. The costs associated with replicating the rigorous clinical tri-
als seem prohibitively dissipative and the wasted time would only extend the
monopolistic reign of the original drug.
In 1984 new legislation enabled the extension of the original NDA process to all
generic drugs, effectively allowing generic drug manufacturers to gain marketing
approval by relying on the safety and effi cacy data from the original drug's NDA,
but only after the expiration of the 5-year exclusivity period and any further exten-
sions granted by the FDA. Thus, the mechanism of exclusive rights bestowed on the
original drug prevents generic drug manufacturers from relying on its clinical data,
or denies them the so-called right of reference for the duration of the exclusivity
period, effectively deterring their entry.
If generic drug manufacturers can get access to the results of the original brand's
clinical trials, all they would need to do is demonstrate that the generic alternative
is released in a similar way in the human body. In that case, the testing of the generic
drug is performed on a sample of healthy volunteers, which is far less costly than
conducting the full cycle of clinical trials. The results are then compared to those
obtained in the original brand's Phase 1 trials. For the generics, this approach repre-
sents a shortcut to market that is sanctioned by the FDA as it demonstrates the cri-
teria for safety and effi cacy are met. Formally, the generic drug manufacturer
submits an Abbreviated New Drug Application (ANDA). When it is approved, the
FDA adds the new alternative to its Approved Drug Products list (also known as the
Orange Book), and annotates the list to show the equivalence between the original
brand and the approved generic. The fi r s t generic drug that obtains FDA approval
may be granted 6 months of market exclusivity.
2.2.7
Market Changes Following Generic Entry
The FDA reports that 70 % of all fi lled prescriptions are presently fi lled with generic
drugs. However, the overall cost of dispensed generic drugs is only about 20 % of
the total drug spending in the USA (Kanavos et al. 2008 ). The cumulative annual
savings from generic drugs bought instead of their original branded counterparts are
estimated to be in the range of $8-10 billion in the USA alone. These facts suggest
that generic entry triggers dramatic shifts in the competitive landscape of a thera-
peutic class.
2.2.7.1
Changes in the Within-Molecule Competitive Dynamics
Upon patent expiration and in the presence of generic alternatives that replicate its
formulation on a molecular level, the original brand starts losing market share rela-
tively fast. Brand name recognition and the secured loyalty of patients or physicians
Search WWH ::




Custom Search