Government shutdown could make hospitals wait longer for new generic drugs

Hospitals may have to wait longer to obtain new, generic copies of pricey drugs because of the lingering government shutdown.

The U.S. Food and Drug Administration is still reviewing and approving generic-drug applications submitted before the partial government shutdown, now in its 27th day, began in December, thanks to user fees that drugmakers pay to the agency. However, the FDA isn't fully funded, so it can't collect new user fees during the shutdown, thus it is not considering any new drug applications.

"An unintended consequence of the government shutdown is the FDA will not be able to bring generic drugs to market as quickly as it otherwise might," said Peter Pitts, a former FDA official and the president of the Center for Medicine in the Public Interest. "Nobody thinks that is a good idea, except perhaps brand-name drugs that get an unexpected windfall of extra (market) exclusivity."

The agency has been on a record pace in approving new generic drugs. The FDA approved or tentatively approved 781 generic drugs in federal fiscal 2018, up from 763 in fiscal 2017 which was also a record.

FDA Commissioner Dr. Scott Gottlieb and HHS Secretary Alex Azar frequently tout generic-drug approvals as progress on combating high prices.

"Generic approvals under President (Donald) Trump have saved people billions of dollars already," Azar said on Tuesday at an event in Washington.

Hospital spending on prescription drugs has soared in recent years. A report released Tuesday from the American Hospital Association, Federation of American Hospitals and American Society of Health-System Pharmacists found that average spending on drugs per hospital admission rose 18.5% from fiscal 2015 to fiscal 2017. The report was based on a survey of more than 1,200 hospitals.

But that same report found a majority of hospitals reported generic competition had only a "small impact on the price of drugs with about one-quarter of the hospitals reporting that competition from new entrants resulted in more competitively priced drugs to a 'moderate' or 'large extent.' "

A June report from PricewaterhouseCoopers concluded that generic competition hasn't had as big an impact on prices because of the growing influence of pricey biologic drugs; competing biosimilar drugs must be approved by the FDA. The agency is able to continue working on biosimilars because of leftover user-fee funding, but it also is not taking new applications.

The FDA is making it a priority to approve more generic drugs that compete with existing generics in an attempt to lower prices for such drugs.

However, the shutdown puts the FDA's record-setting pace in doubt, especially if it stretches far into February.

Speaking via teleconference during the J.P. Morgan Healthcare Conference this month, Gottlieb said that the agency has about a month left of user-fee funding for generic drugs.

"We continue to operate the programs using carryover user fees, and we'll prioritize work that impacts public safety, as this is our foremost priority," Gottlieb tweeted on Tuesday.

Even once the FDA does get funding, the impact of the shutdown could severely affect the timing of new generic-drug approvals.

Under the generic-drug user-fee program, the agency collects user fees for each application and promises to meet deadlines to decide on that application. FDA has 10 months since the date of submission to decide whether to approve, reject or ask for more information on a generic drug.

When the government reopens there will likely be a flood of new applications from generic, brand name, biologic and medical-device makers, Bob Pollock, a consultant with Lachman Consultants, wrote in a blog post Wednesday.

"How will the agency be able to meet its user-fee goals when more applications will arrive in a thirty?day period (perhaps more than the FDA has ever seen before)?" he wrote.