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FDA In Brief: New analysis highlights link between generic drug competition and lower drug prices, underscores importance of FDA efforts to spur generic drug development and market entry

December 13, 2019

Media Inquiries

  Michael Felberbaum
   240-402-9548

The following quote is attributed to Acting FDA Commissioner Adm. Brett Giroir, M.D.:

“Access to affordable medicines is a public health priority and bringing more drug competition to the market and addressing high costs are top priorities of the Administration, the Department of Health and Human Services and the FDA.

“This new analysis underscores the critical nature of the work the FDA is undertaking to encourage timely market competition from high-quality, safe and effective generic drugs, which can help provide patients with access to affordable therapies that treat a wide range of medical conditions.

“The FDA will continue to do all it can to support a robust, competitive generic drug market by helping facilitate a strong pipeline of applications, improving agency processes and providing industry with thoughtful, clear guidance and recommendations to support generic drug development and approval.”

Related Information

• Today, the U.S. Food and Drug Administration posted a new analysis showing greater competition among generic drug makers is associated with lower generic drug prices.
• It updates and expands on a previous analysis from 2005 and includes two different sources of wholesale drug prices – average manufacturer prices (AMP) reported to the Centers for Medicare and Medicaid Services and invoice-based wholesale prices reflecting pharmacy acquisitions from IQVIA’s National Sales Perspective database.
• The analysis looked at all drug products that had initial generic entry between 2015 and 2017 and showed that as competition increases, generic drug prices decline.
• For products with a single generic producer, the generic AMP is 39% lower than the brand drug price before generic competition, compared to a 31% reduction using invoice-based drug prices.
• With two competitors, AMP data show that generic prices are 54% lower than the brand drug price before generic competition, compared to a 44% reduction using invoice-based drug prices.
• With four competitors, AMP data show that the generic prices are 79% less than the brand drug price before generic entry, compared to a 73% reduction using invoice-based drug prices.
• With six or more competitors, generic prices using both AMP and invoice-based drug prices show price reductions of more than 95% compared to brand prices before generic entry.
• This analysis builds on earlier FDA workExternal Link Disclaimer comparing generic and brand drug prices and follows related studies.
• Through ongoing efforts under the FDA’s Drug Competition Action Plan and the Generic Drug User Fee Amendments, the agency is further encouraging robust and timely market competition for generic drugs and helping bring greater efficiency and transparency to the generic drug review process, without sacrificing the scientific rigor underlying our generic drug program.

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The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.