The generic drug market in the United States faces significant challenges, including price volatility, supply chain disruptions, and strategies employed by brand-name manufacturers to delay market entry. These challenges can lead to drug shortages, price spikes, and reduced affordability for patients and payers. To address these issues, several market-based proposals and regulatory reforms have been suggested.
Table of Contents
Market-Based Proposals
Restricted Market Entry: Limiting the number of manufacturers for certain drugs can bring greater transparency to the generics market, attracting more manufacturers to remain as suppliers. This approach can help stabilize the market and reduce price swings.
Long-term Contracting: The Veterans Health Administration could use long-term contracts to create a stockpile of common generic medications, moderating market prices and addressing supply shortages. However, this approach carries the risk of unused inventory if the standard of care changes rapidly.
Futures Market: Creating a futures market for generic drugs can help manufacturers predict demand, increase price transparency, and reduce long-term financial volatility. This approach, though novel in healthcare, has the potential to stabilize the market.
Regulatory Reforms
Patent Oversight: The U.S. Patent and Trademark Office should review patent applications more strictly to eliminate weak secondary patents that do not meet key standards. This can help prevent brand-name manufacturers from extending market exclusivity through frivolous patents.
Curbing Reverse-Payment Settlements: The Federal Trade Commission (FTC) should aggressively enforce antitrust scrutiny against reverse-payment settlements between brand-name and generic manufacturers. These settlements can delay generic drug market entry and cost consumers billions annually.
Streamlining FDA Approvals: The FDA should work with drug regulators in other countries to create a common portal for submitting generic drug applications. This can streamline the approval process and increase the number of generic drugs available in the market.
Addressing REMS Abuses: The FDA should ensure that brand-name and generic drugs can share Risk Evaluation and Mitigation Strategy (REMS) systems, and the FTC should investigate REMS abuses. This can prevent brand-name manufacturers from using REMS to block generic drug entry.
Industry Strategies
Developing Higher-Value Generics: Generics manufacturers should invest in innovation to create differentiated, high-value products. This can help break the cycle of downward pricing pressure and quality issues associated with offshore manufacturing.
Encouraging Competition: The FDA should work to lift barriers to generic drug competition by addressing scientific and regulatory obstacles. This can help increase the availability of lower-cost, generic medicines and reduce the cost burden on patients and the healthcare system.
Conclusion
Addressing the challenges in the generic drug market requires a multifaceted approach that involves both market-based proposals and regulatory reforms. By stabilizing the market, increasing transparency, and promoting competition, these strategies can help ensure the timely availability of affordable generic drugs, ultimately benefiting patients and the healthcare system as a whole.
References
- Schulman, K. A. (2015). Options to Promote Competitive Generics Markets in the United States. JAMA, 314(14), 1469–1470. doi:10.1001/jama.2015.13498
- KPMG. (2023). Generics 2030: Three strategies to curb the downward spiral. Retrieved from https://kpmg.com/us/en/articles/2023/generics-2030-curb-downward-spiral.html
- The Commonwealth Fund. (2017). Strategies That Delay Market Entry of Generic Drugs. Retrieved from https://www.commonwealthfund.org/publications/journal-article/2017/sep/strategies-delay-market-entry-generic-drugs
- Bollyky, T. J., & Kesselheim, A. S. (2017). Ten challenges in the prescription drug market—and ten solutions. Retrieved from https://www.brookings.edu/articles/ten-challenges-in-the-prescription-drug-market-and-ten-solutions/
- Gottlieb, S. (2017). FDA Working to Lift Barriers to Generic Drug Competition. Retrieved from https://www.fda.gov/news-events/fda-voices/fda-working-lift-barriers-generic-drug-competition
