Cost and Approvals – A Give and Take

Almost every health-related headline today mentions costs.  Whether it be cost of health insurance, cost of hospital stays, doctor’s charges, and (of course) cost of drugs.  While there are some shockers out there for drug costs, most are in line with expectations.  One of the big problems is that even moderately priced drugs are most expensive if they are not taken, and actually, they can be much more expensive from an overall healthcare cost if the patient is hospitalized.  I often hear that the most expensive prescriptions are ones the patient never gets filled.

But drug costs are only a fraction of the cost of all healthcare spending, yet drug costs constantly seem to make headlines.  This bad press persists despite the savings consumers, the government, and third-party payers enjoy from generics drugs.  Just look on the Association for Accessible Medicines (AAM) website for the numbers – the actual savings are reported to be $4 billion a week. But still the debate sharpens and continues.  Are there outliers? Sure, but still the majority of generic drugs offer substantial savings over their brand name counterparts.

As the number of generic approvals increases, those savings should also increase.  The good news is that as we await the official approval statistics from the Office of Generic Drugs for February, informally, the total of approvals posted on the FDA New and Generic Drug Approvals daily posts shows 60 ANDA approvals and 7 tentative approvals.  Knowing that those posted figures are sometimes about 10-15% less than actual results for the month – there is a hope that the true and final February approval numbers will be the best numbers we have seen in a while. And given that February is a short month with a Federal holiday or two, this may be some really good news.  We will report on the official February numbers as soon as they are released.

In addition, in looking at the ANDA numbers for the February approvals, a significant portion of the applications appear to be from the pre-GDUFA bolus of applications.  There are also a number of post-GDUFA approvals as well, but remember that many ANDAs are not ripe for approval given the GDUFA 15- or 10-month goals dates.  During Dr. “Cook” Uhl’s address at the AAM annual meeting in February, she noted that many of the older pre-GDUFA and cohort year 1 & 2 GDUFA ANDAs have already gone through multiple review cycles, and thus, should be reaching approval stage.  It looks like that prediction is becoming a reality.

But getting back to costs, we must realize that, as the debate rages on about how to speed up drug approvals, whether it be for brand name products or generic products, it must not, in my opinion, result in approvals of anything other than high quality products that are both safe and effective.  With some arguing that relaxing the effectiveness standard might allow products to come to market faster, just like the health “expense” of products that are not taken, the expense of taking products that might not be effective may be just as great. So, let’s keep our eye on the prize – lower healthcare costs, but let’s not fool ourselves into believing that reducing requirements for efficacy are going to contribute to improving the health of the American public.  Streamlining the generic review and approval process, and assuring that OGD only asks for what is necessary to know, as opposed to what is nice to know, could help speed the process.  But the process is working, we may just need to tweak it a bit.  Let’s not try to reinvent the wheel, but rather see where a little oil can make the wheel turn more efficiently.