The Trump administration plans to end the Unapproved Drug Initiative as officials look to close a loophole that inflated healthcare costs by billions of dollars a year and led to drug shortages.
HHS withdrew guidance documents Friday afternoon that were issued as part of the initiative designed to boost patient safety, but instead was used as a means to profit off decades-old drugs. It is set to take effect in 30 days.
"We are committed to putting American patients first by ending government programs like the Unapproved Drugs Initiative that, while well-intentioned, have distorted markets and produced the unintended consequences of price spikes and drug shortages," HHS Chief of Staff Brian Harrison said in prepared remarks.
Many pharmaceuticals in use today entered the market prior to 1938, before the Food and Drug Administration implemented safety reviews.
The 2006 Unapproved Drug Initiative requires manufacturers to pull these drugs and prove to the FDA that they are safe. The first company to gain approval of a previously unapproved drug could earn up to seven years of patent protection. This led to "artificial monopolies" and drug shortages, HHS said.
Those price increases already cost the healthcare system nearly $3.2 billion. If the market exclusivity of those five drugs remains intact, that would translate to more than $19 billion in inflated costs, the group purchasing organization found. There are 18 drugs that could still be approved through the program if it remains, which could potentially add at least $7.5 billion in costs if manufacturers increase prices at similar rates.
"We fully support the elimination of the UDI due to these unintended consequences of FDA's good intentions," said Dan Kistner, group senior vice president for pharmacy solutions at Vizient, adding that the potential savings are even more critical under the financial stress of COVID-19. "It is also imperative that additional manufacturers are encouraged to enter the market for the already approved drugs to increase competition and reduce vulnerability to supply disruptions."
The University of Utah and Yale found that prices of UDI-approved drugs between 2006 and 2015 increased by a median of 37%. Meanwhile, the median duration of drug shortages increased from 31 to 217 days in the two years before and after the regulatory action.
In addition, the program "rarely generated additional clinical evidence of safety or efficacy," researchers wrote.
The action largely reverts to the regulatory status quo as it existed in 2006 with respect to FDA's approach to unapproved drugs, the agency said. Manufacturers still need to register with the FDA, list their products and comply with the Current Good Manufacturing Practices regulations, HHS said.
The agency requested information on drugs that may be grandfathered or are generally recognized as safe and effective. The announcement does not apply to drugs subject to Investigational New Drug applications, any subsequent New Drug Applications based on new clinical trial investigations and existing approved New Drug Applications.