NomenclatureGeneric drug names are constructed using standardized es that distinguish drugs between and within classes and suggest their action.
EconomicsWhen a pharmaceutical company first markets a drug, it is usually under a patent that, until it expires, the company can use to exclude competitors by suing them for . Pharmaceutical companies that develop new drugs generally only invest in drug candidates with strong patent protection as a strategy to recoup their costs of (including the costs of the drug candidates that fail) and to make a profit. The average cost to a brand-name company of discovering, testing, and obtaining regulatory approval for a new drug, with a , was estimated to be as much as US$800 million in 2003 and US$2.6 in 2014. Drug companies that bring new products have several strategies they use to extend their exclusivity, some of which are seen as gaming the system and labeled " " by critics, but at some point there is no patent protection available. For as long as a drug patent lasts, a brand-name company enjoys a period of market exclusivity, or , in which the company is able to set the price of the drug at a level that maximizes profit. This profit often greatly exceeds the development and production costs of the drug, allowing the company to offset the cost of research and development of other drugs that are not profitable or do not pass clinical trials. The impact of loss of patent exclusivity on pharmaceutical products varies significantly across different product classes (e.g., biologics vs. small molecules), largely due to regulatory, legal and manufacturing hurdles associated with such products. Indeed, the greater degree of 'brand-brand' competitive dynamics seen in the biologics and complex generics space allows manufacturers of originators to better protect market share following loss of patent exclusivity. Large pharmaceutical companies often spend millions protecting their patents from generic competition. Apart from litigation, they may reformulate a drug or license a subsidiary (or another company) to sell generics under the original patent. Generics sold under license from the patent holder are known as authorized generics. Generic drugs are usually sold for significantly lower prices than their branded equivalents and at lower s. One reason for this is that competition increases among producers when a drug is no longer protected by patents. Generic companies incur fewer costs in creating generic drugs—only the cost of manufacturing, without the costs of and —and are therefore able to maintain at a lower price. The prices are often low enough for users in less-prosperous countries to afford them. For example, Thailand has imported millions of doses of a generic version of the blood-thinning drug and in 2014, the use of generic drugs in the United States led to US$254 billion in health care savings. In the mid 2010s the generics industry began transitioning to the end of an era of giant s in the pharmaceutical industry; patented drugs with sales of around US$28 billion were set to come off patent in 2018, but in 2019 only about US$10 billion in revenue was set to open for competition, and less the next year. Companies in the industry have responded with consolidation or turning to try to generate new drugs.
RegulationMost developed nations require generic drug manufacturers to prove that their formulations are bioequivalent to their brand-name counterparts.EudraLex – The Rules Governing Medicinal Products in the European Union
United StatesEnacted in 1984, the Drug Price Competition and Patent Term Restoration Act, informally known as the Hatch–Waxman Act, standardized procedures for recognition of generic drugs. In 2007, the FDA launched the Generic Initiative for Value and Efficiency (GIVE): an effort to modernize and streamline the generic drug approval process, and to increase the number and variety of generic products available. Before a company can market a generic drug, it needs to file an Abbreviated New Drug Application (ANDA) with the Food and Drug Administration, seeking to demonstrate therapeutic equivalence to a previously approved "reference-listed drug" and proving that it can manufacture the drug safely and consistently. For an ANDA to be approved, the FDA requires that the 90% confidence interval of the geometric mean test/reference ratios for the total drug exposure (represented by the area under the curve or AUC) and the maximum plasma concentration (Cmax) should fall within limits of 80–125%. (This range is part of a statistical calculation, and does not mean that generic drugs are allowed to differ from their brand-name counterparts by up to 25 percent.) The FDA evaluated 2,070 studies conducted between 1996 and 2007 that compared the absorption of brand-name and generic drugs into a person's body. The average difference in absorption between the generic and the brand-name drug was 3.5 percent, comparable to the difference between two batches of a brand-name drug. Non-innovator versions of biologic drugs, or biosimilars, require clinical trials for immunogenicity in addition to tests establishing bioequivalency. These products cannot be entirely identical because of batch-to-batch variability and their biological nature, and they are subject to extra rules. When an application is approved, the FDA adds the generic drug to its Approved Drug Products with Therapeutic Equivalence Evaluations list and annotates the list to show the equivalence between the reference-listed drug and the generic. The FDA also recognizes drugs that use the same ingredients with different bioavailability and divides them into therapeutic equivalence groups. For example, as of 2006, diltiazem, diltiazem hydrochloride had four equivalence groups, all using the same active ingredient, but considered equivalent only within each group. In order to start selling a drug promptly after the patent on innovator drug expires, a generic company has to file its ANDA well before the patent expires. This puts the generic company at risk of being sued for patent infringement, since the act of filing the ANDA is considered "constructive infringement" of the patent. In order to incentivize generic companies to take that risk the Hatch-Waxman act granted a 180-day administrative exclusivity period to generic drug manufacturers who are the first to file an ANDA. When faced with patent litigation from the drug innovator or patent holder, generic companies will often counter-sue, challenging the validity of the patent. Like any litigation between private parties, the innovator and generic companies may choose to settle the litigation. Some of these settlement agreements have been struck down by courts when they took the form of reverse payment patent settlement agreements, in which the generic company basically accepts a payment to drop the litigation, delaying the introduction of the generic product and frustrating the purpose of the Hatch–Waxman Act. Innovator companies sometimes try to maintain some of the revenue from their drug after patents expire by allowing another company to sell an authorized generic; a 2011 FTC report found that consumers benefitted from lower costs when an authorized generic was introduced during the 180 day exclusivity period, as it created competition. Innovator companies may also present arguments to the FDA that the ANDA should not be accepted by filing an FDA citizen petition. The right of individuals or organizations to petition the federal government is guaranteed by the First Amendment to the United States Constitution. For this reason, the FDA has promulgated regulations that provide, among other things, that at any time, any "interested person" can request that the FDA "issue, amend, or revoke a regulation or order," and set forth a procedure for doing so.
AcceptanceSome generic drugs are viewed with suspicion by doctors. For example, warfarin (Coumadin) has a narrow Therapeutic index, therapeutic window and requires frequent blood tests to make sure patients do not have a subtherapeutic or a toxic level. A study performed in Ontario showed that replacing Coumadin with generic warfarin was safe, but many physicians are not comfortable with their patients taking branded generic equivalents. In some countries (for example, Australia) where a drug is prescribed under more than one brand name, doctors may choose not to allow pharmacists to substitute a brand different from the one prescribed unless the consumer requests it.
FraudA series of scandals around the approval of generic drugs in the late 1980s shook public confidence in generic drugs; there were several instances in which companies obtained bioequivalence data fraudulently, by using the branded drug in their tests instead of their own product, and a congressional investigation found corruption at the FDA, where employees were accepting bribes to approve some generic companies' applications and delaying or denying others. In 2007, North Carolina Public Radio's ''The People's Pharmacy'' began reporting on consumers' complaints that generic versions of bupropion (Wellbutrin) were yielding unexpected effects. Subsequently, Impax Laboratories's 300 mg extended-release tablets, marketed by Teva Pharmaceutical Industries, were withdrawn from the US market after the FDA determined in 2012 that they were not bioequivalent. Problems with the quality of generic drugs – especially those produced outside the United States – are widespread as of 2019. The FDA does infrequent – less than annual – inspections of production sites outside the United States. The FDA normally gives advance notice of inspections, which can lead to cover-ups of problems before inspectors arrive; inspections performed with little or no advance notice have produced evidence of serious problems at a majority of generic drug manufacturing sites in India and China.
LitigationTwo women, each claiming to have suffered severe medical complications from a generic version of metoclopramide, lost their Supreme Court appeal on June 23, 2011. In a 5–4 ruling in ''PLIVA, Inc. v. Mensing'', the court held that generic companies cannot be held liable for information, or the lack of information, on the originator's label.Steven Casey for Law360. October 24, 201
IndiaThe Government of India, Indian government began encouraging more drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970. The Patents Act removed composition patents for foods and drugs, and though it kept process patents, these were shortened to a period of five to seven years. The resulting lack of patent protection created a niche in both the Indian and global markets that Indian companies filled by reverse-engineering new processes for manufacturing low-cost drugs. The code of ethics issued by the Medical Council of India in 2002 calls for physicians to prescribe drugs by their generic names only. India is a leading country in the world's generic drugs market, with ceuticals being the largest pharmaceutical company in India. Indian generics companies exported US$17.3 billion worth of drugs in the 2017–18 (April–March) year. In 1945–2017, bioequivalence studies were only required for generics of drugs that are less than four years old. Since 2017, all generic drugs of certain classes, irrespective of age, require bioequivalence to be approved.
ChinaGeneric drug production is a large part of the pharmaceutical industry in China. Western observers have said that China lacks administrative protection for patents. However, entry to the World Trade Organization has brought a stronger patent system. China remains the largest exporter of s, accounting for 40% of the world market per an 2017 estimate. Bioequivalence studies are required for new generic drugs starting from 2016, with older drugs planned as well. In addition, ''in vitro'' dissolution behavior is required to match. Since 2018, 44 classes of drugs are exempt from testing (requiring only a dissolution check), and 13 classes only require simplified testing.
IndustryAs of 2019, several major companies traditionally dominate the generic drugs market, including Teva Pharmaceutical Industries, Teva, Mylan, Novartis' Sandoz, Amneal Pharmaceuticals, Amneal and Endo International. Prices in traditional generic drugs have declined and newer companies such as India-based Sun Pharmaceutical, Sun Pharma, Aurobindo Pharma, and Dr. Reddy's Laboratories, as well as Canada-based Apotex, have taken market share, which has led to a focus on biosimilars.
See also* Anti-Counterfeiting Trade Agreement#Criminalising generic medicine (ACTA) * Bayh–Dole Act * Generic brand * Generic pharmaceutical price decay * International Nonproprietary Name * Inverse benefit law * Me-too compound * Prescription costs * Research exemption * SOPA#Protection against counterfeit drugs * Transatlantic Trade and Investment Partnership