Pharmaceutical competition is critical to the U.S. health care system. It yields cost savings, as both generic drugs and competing brand drugs lead to lower prices. In the current political climate, marked by outrage over high drug prices, the benefits of competition are particularly important. This is where the Food and Drug Administration (FDA) comes in. While the FDA does not directly control drug prices, what the agency does (or fails to do) can affect drug prices for the simple reason that it can affect the number of suppliers.
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The report recommends five ways the FDA could foster competition and help reduce prescription drug costs:
- Encourage “First Generic” Applications. The FDA should reduce the review time for first generics – that is, generics for products that do not yet have a generic equivalent.
- Prevent Misuse of Risk Evaluation and Mitigation Strategies (REMS) Programs. Congress must give the FDA authority to prevent the misuse of REMS programs. Some brand manufacturers use these programs to deny access to drug samples for manufacturers that want to develop generic versions of brand products.
- Reduce Barriers to Generic Entry. The FDA should reduce the review period for standard ANDAs and ensure that generic user fees do not discourage firms from seeking approval for generic drugs.
- Dedicate More Resources to Brand-to-Brand Competition. Improve operational processes inside the FDA and, if necessary, provide more resources for the agency to expedite approvals for competing brand products.
- Streamline the Application Process for Biosimilars. The FDA should carefully review biosimilar guidance and regulations and look for ways to facilitate the application process and reduce review times. The agency should also provide additional clarity and predictability to stakeholders on biosimilar interchangeability.