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Generics substitution, bioequivalence standards, and oversight of international pharmaceutical producers: Complex issues facing the FDA

Author

Listed:
  • Aparna Mathur

    (American Enterprise Institute)

  • Roger Bate

    (American Enterprise Institute)

Abstract
The rules underlying the assessment of quality of generic drugs, and their bioequivalence to brand name products, have not changed significantly since the passage of the Hatch-Waxman Act in 1984. Yet the products on the market are significantly more complicated today, which may imply that two bioequivalent products are not identical to each other. Providing evidence from medications to treat epilepsy, depression and other serious conditions this paper shows that switching from an innovator brand to a generic may result in adverse consequences for patients. Moreover, the clinical impacts of shifting from one generic to another generic are also unknown. In a self-conducted survey, we provide original data to show that in only 10% of pharmacies surveyed over four consecutive months was the same generic (atorvastatin) available. Hence consumers often have less choice with respect to the generics they buy from brick and mortar pharmacies and we need more information to understand whether this type of enforced generic switching is advisable. Additionally, generic and brand name drugs source more ingredients and even final products from outside the U.S. especially India and China, countries with poor regulatory oversight. This would impact quality in US markets. The most notable failure in this regard was with the Indian firm Ranbaxy. Even after repeated failures to ensure quality at Ranbaxy and other Indian firms, and weak oversight in China, US patients are still prescribed their products. In this paper, we document these complex issues facing the FDA and conclude that transparency as well as updating of bioequivalence standards may be important to overcome some of these challenges. Further, transparency in labelling where products are sourced from could be a first step towards improving patient safety.

Suggested Citation

  • Aparna Mathur & Roger Bate, 2015. "Generics substitution, bioequivalence standards, and oversight of international pharmaceutical producers: Complex issues facing the FDA," AEI Economics Working Papers 841152, American Enterprise Institute.
    • Handle: RePEc:aei:rpaper:841152
    as

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    File URL: http://www.aei.org/publication/generics-substitution-bioequivalence-standards-and-oversight-of-international-pharmacies-complex-issues-facing-the-fda
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    References listed on IDEAS

    as
    1. John A. Rizzo & Richard Zeckhauser, 2005. "Generic Scrip Share and the Price of Brand-Name Drugs: The Role of the Consumer," NBER Working Papers 11431, National Bureau of Economic Research, Inc.
    2. Ernst R. Berndt & Murray L. Aitken, 2010. "Brand Loyalty, Generic Entry and Price Competition in Pharmaceuticals in the Quarter Century After the 1984 Waxman-Hatch Legislation," NBER Working Papers 16431, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    pharmaceuticals; FDA; drug policy; generic drugs;
    All these keywords.

    JEL classification:

    • A - General Economics and Teaching

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