CLIN. RESEARCH & REG. AFFAIRS, 14(2), 139-154 (1997)

AN UPDATE ON THE GENERIC DRUG APPROVAL PROCESS

Michael R. Hamrell, Ph.D., President MORIAH Consultants

Yorba Linda, California 92886

ABSTRACT

In 1984 the Drug Price Competition and Patent Term Restoration Act changed the regulatory climate for generic drugs. This law allowed for the approval of generic 'me-too' Copies of many approved drug after the patent had expired. Although the road has not been smooth, the generic drug approval process has had a significant impact on the availability of generic versions of approved drug. This article discusses the evolution and changes that have occurred in generic drug approvals since the 1984 Act.

INTRODUCTION

A generic drug is a drug product that is an identical copy in composition,

formulation, strength, packaging, and labeling that is marketed by a company other

than the company that did the original research on the drug product (the innovator

firm)(l). These drugs are also often called 'me-too' drugs. The innovator firm

will have completed many years of chemical development, preclinical animal

testing and clinical testing in humans before gaining approval from the Food and

Drug Administration for the product. Generic drugs on the other hand, do not

139

Copyright 0 1997 by Marcel Dekker, Inc.

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140 HAMRELL

undergo such extensive testing and are currently approved by FDA through an

abbreviated application process.

The drug approval process for generic drugs has evolved over the last 60 years as

the Food Drug and Cosmetic Act has changed. In 1938, Congress amended the

Food Drug & Cosmetic (FD&C) Act to impose a premarket approval requirement

for new drugs. It also charged FDA with setting up rules and regulations for the

interpretation of the new law. However, this premarket approval was only based

on the safety of the drug. The FD&C Act was amended again in 1962, this time

adding the burden of effectiveness to the drug approval process as well as safety.

During the period of 1938 - 1962, a number of new drug products were placed on

the market along with a number of Copies of these products. As a result of the new

requkments for efficacy, the FDA determined it needed to evaluate the drugs on

the market Pre-1962 that had never been evaluated for efficacy. It set up an administrative procedure to retrospectively review the drugs approved before 1962

for efficacy. The Drug Efficacy Safety Implementation (DESI) Review was

conducted to review the efficacy claims for all Pre-1962 drugs on the market. As

a result of this review, a number of ineffective drugs were taken off the market,

reformulated, or modified to meet the findings of the DESI Review (2).

Since the DESI review had evaluated many copies or generic versions of pioneer

drugs, the FDA established a policy in 1968 at the end of the DESI review that

would allow for a shortened form of the New Drug Application or an

'Abbreviated' NDA (ANDA) for the generic drug. For drugs found to be effective

by the DESI Review, the FDA published the conditions under which an ANDA

could be submitted to market an identical version of the product. Under the

statues, the ANDA policy only applied to Pre-1962 drugs that had been reviewed

by the DESI panel and found to be effective.

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GENERIC DRUG APPROVAL PROCESS 141

During the 1960s and 1970s, many drug products were introduced onto the market

and subsequently had their patents expire. The FDA policy however, did not allow

for ANDAs for these drugs. In 1978, the FDA expanded the scope of its ANDA

policy somewhat to include post-1962 drugs. The FDA concluded that if adequate

published studies exist to support the safety and efficacy claims of a particular drug

entity, another manufacturer of that post-1962 drug should not be required to

conduct new studies to support the same claims. This would unnecessarily expose

additional humans to risk, consume clinical resources and cause FDA to review

duplicative studies. The FDA therefore adopted a policy for requirements for an NDA for a duplicative drug product for a post-1962 drug. This policy allowed for

the submission of copies of published studies (scientific) concerning the safety and

efficacy of the original drug product. This became known as the "Paper-NDA".

The paper NDA was not widely used due to the lack of published literature on most

post- 1962 drugs

and was not considered a substitute for a full ANDA program that addressed all

post-1962 drugs (3).

The Drug Price Competition and Patent Term Restoration Act of 1984

The need for a full ANDA program for post-1962 drugs led to the passage by

Congress in 1984 of the Drug Price Competition and Patent Term Restoration Act.

Also know as the 'Waxman-Hatch' Bill after its Congressional sponsors, the 1984

Law amended section 505 of the FD&C Act to allow for an ANDA for any generic

version of an approved new drug (4). This was subject only to patent or

exclusivity provisions that may exist for the product. In order to determine what

new drugs were approved and their status, the FDA was required to publish a list

of all approved drugs, their patent status and information regarding bioequivalence

requirements. This information is available in the Approved Drug Products and

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142 HAMRELL

lhempeutc Quivalence Rating Book (Orange Book), published by the FDA on a

monthly basis. In 1989 the FDA published regulations for implementation of the

1984 Law, and the regulations were finalized in 1992. The regulations permit an

ANDA only for a product that is the same as the listed drug with respect to active

ingredients, route of administration, dosage form, strength, and conditions of use.

Any modifications or deviations from the exact product must be submitted and

approved in advance by the FDA through a suitability petition.

Post 1984 Generic Approvals

As a result of the passage of the Waxman-Hatch bill in September 1984, the FDA found itself dealing with a large backlog of demand for generic versions of post-

1962 drugs that had long since been off-patent. In the first full year after the

Waxman-Hatch took effect, the FDA's Office of Generic Drugs received over lo00

original ANDAs, compared to only 400 in 1983. This increased number of

submissions continued for the next few years with 900-1200 applications received

each year. In addition, there were a significant number of supplements to

approved ANDAs covering changes that inevitably follow a large number of

approvals.

In order to meet this demand, the Office of Generic Drugs was given new

expanded facilities

within the FDA and additional reviewers were added to the staff. The

Bioequivalence Branch in the Division of Biopharmaceutics was transferred to the

Office of Drug Standards and made into the new Division of Bioequivalence to

support the generic drug approval process. Overall, almost 50 new reviewers and support staff were added to meet the generic drug approval demand.

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GENERIC DRUG APPROVAL PROCESS 143

Industry Challenges and Opposition to Generics

The passage of the 1984 Law was a landmark in compromise legislation to satisfy

the m n m s of two sides of the industry. The generic drug industry and consumer

groups wanted generic versions of post-1962 drugs to be readily available. The

innovator or pioneer drug firms were very much against the expansion of FDA's

ability to approve ANDAs for generic versions of post-1962 drugs. Additionally,

they wanted some regulatory relief from the valuable patent life 'lost' during the

FDA review process. As a result, the 1984 amendment includes Title I1 that

covers patent term restoration for the administrative and review time lost to the

patent life of a product. In return for patent term restoration, the innovator firms

conceded generic versions of post-1962 drugs.

Although, the law changed the rules, many innovator firms found new ways to try

to moderate the approval of generic versions for their drug products. These firms

mounted legal challenges to FDA's approval criteria, submitted petitions charging

bioinequivalence of generic versions of their products, poor manufacturing

compliance by generic firms, and arbitrary, inconsistent suitability decisions by

FDA. They also started an advertising campaign to 'alert' the public to the

dangers of non-equivalent versions of their medicines (5). When a company was

unsuccessful in stopping the FDA approval for a generic version of its product,

they took their challenges to state and hospital formulary boards with some degree

of success.

In an effort to gather information on claimed problems with FDA's Bioequivalence

program, and with generic drugs in general, the Agency sponsored a three day

informal public hearing in September 1986 in Washington, D.C. The Hearing

consisted of five sessions on topics related to the issue of bioequivalence of

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144 HAMRELL

immediate release solid oral dosage forms drug products. Despite a noted lack of

scientific data to back many of the concerns expressed regarding bioequivalence

testing, the meeting was attended by more than 800 representatives of academia,

industry, the medical profession and government. Following the Hearing,

Commissioner Young appointed a Task Force to analyze the issues raised at the

Hearing and the comments submitted to the Public Docket. The purpose was to

make recommendations to the Agency for action it should take in response to the

comments conceming the Bioequivalence Program. The Task Force Report, issued

in February 1988, concluded that the underlying fundamental principle, that drug

products delivering comparable blood levels of a therapeutic substance yield

comparable therapeutic results, was scientifically sound and that it saw no need to

recommend major changes in the way FDA approves generic drug products. The

report supported the long-standing policy that if a drug product is declared by the

Agency to be therapeutically equivalent, a physician, in managing a patient, can feel secure that authorizing a substitution of that product for any other generic,

therapeutically equivalent, product will provide the same intended effect (6).

The passage of the Waxman-Hatch Bill had opened the market for the approval of

generic versions of many top selling drugs developed post-1962 whose patent had

expired. The potential generic market was estimated at over $900 million dollars

and growing, as insurance companies, managed care providers, and the

government tried to control the costs of health care. This broad new market stirred

the development of many new generic drug manufacturers, as well as leading to the

expansion of many older, established ones. The competition to be the fust generic

version of a product on the market was seen as key to penetration into the market

and quick cost recovery for the generic manufacturer,

The FDA was receiving well over lo00 ANDA applications each year for generic

versions of drug products. Along with supplements, amendments, suitability

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GENERIC DRUG APPROVAL PROCESS 145

petitions and citizen petitions challenging FDA's policy, the Generic Drug group

was overworked and understaffed. In an effort to speed up the generic drug

approvals, an em of openness between FDA and industry existed that saw industry

regulatory representatives fresuently visit the FDA reviewers in an effort to rapidly

deal with any issues that came up during the review of an ANDA. As a result, a

few companies tried to seek an edge in this highly competitive marketplace.

The Generic Drug Scandal

In late 1987, one company became increasingly concerned that their applications,

which were apparently submitted earlier than other companies, were delayed and

acted upon after the applications submitted later. Company representatives took

their concerns to the Director of the Division of Generic Drugs at FDA who

dismissed them as unfounded. Still convinced of a problem at FDA, the company

hired its own private investigator to look into the allegations. What the

investigator uncovered would subsequently shake the generic drug industry, and the

FDA, with a major scandal of significant proportions.

The investigator discovered initially that one FDA Chemist in Generic Drugs was

receiving large gifts of money and furniture at his home. The items seemed to be

coming from persons associated with a small generic company that had recently received some first generic approvals. The company this time took their evidence

this time to Congressman Dingell, a longtime critic of FDA, and Chairman of the

House Oversight and Investigations Subcommittee on FDA. As a result of this

evidence, the Secretary of HHS took the unusual step of alerting the Inspector

General's Office, and an immediate investigation of the FDA Generic Drug

approval process and personnel associated with the process was begun. Offices

were sealed, records and notes gathered as evidence, and key staff members were

interviewed. The Inspector General and US Attorney's office began looking into

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146 HAM R E L L

the allegations for the fist time. Much to their dismay, the allegations appeared

true. It appeared that some companies had tried to subvert the integrity of the

review process by paying bribes and kickbacks to a few FDA reviewers for either

favorable or more timely reviews.

At the same time, in response to growing allegations of problems and

inconsistencies with the generic approval process, the FDA changed policy on

industry meetings, increased training in the area of conflict-of-interest and ethics

for government employees, and increased management review of all pending

ANDAs. Additional FDA reviewers and support staff were now under

investigation and were transferred from Generic Drugs. In April 1989, the US Attorney announced criminal indictments against two FDA reviewers and a number

of generic drug industry representatives. This was the first of many indictments

to follow. The Commissioner immediately called for a complete audit of the

generic drug program by the Inspector General. The FDA also began an inspection

of all generic drug firms for possible compliance problems, focusing on certain

companies accused of illegal activities.

As the extent of the illegal activity began to unfold, the participants involved began

to fall. One company official pleaded guilty to giving an unlawful gratuity to an

FDA official. Two FDA reviewers pleaded guilty to accepting bribes and

racketeering. Three other FDA persons were removed from their positions, two

subsequently plead guilty to accepting bribes. The other, the Director of Division

of Generic Drugs, would later be convicted of accepting illegal gratuities from

company officials and perjury (7).

The problems did not occur with a only few dishonest FDA reviewers and

company officials. As a result of the audit of generic drug manufacturers, it was

uncovered that there was major problems in the manufacturing compliance part of

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GENERIC DRUG APPROVAL PROCESS 147

the generic drug approval process. Apart from overt instances of fraud and

misrepresentation, a number of companies were found to be out of compliance in

their manufacturing operations. This included unapproved changes to

manufacturing processes, lack of quality control procedures, use of unapproved

raw material suppliers, as well as many other manufacturing problems. Following

extensive inspection and investigations, over 50 products were withdrawn from the

market due to questions about the integrity of the application. Another 75 products

were voluntarily recalled to correct deficiencies in GMP procedures.

To deal with the issues raised by the generic drug scandal, the FDA announced in

late 1989 an action plan to ensure the safety and effectiveness of generic drugs.

This included intensified inspection programs for generic manufacturers,

reorganization of the generic drug review process, a strengthening of the

relationship between the FDA and Inspector General's office, and new resources

for intensified surveillance activities. The FDA also issued a set of revised Policy

& Procedures guides to the review staff for the handling of ANDAs. Additional

staff were hired in Generic Drugs to help with the workload as well. Finally, in

early 1990, as a result of mounting pressure from the industry to obtain outside

input into the generic drug process, the FDA announced the establishment of a

Generics Drug Advisory Committee. In addition, the Agency transferred the

authority for generic drug approvals from the Office of Drug Standards to the new

Office of Generic Drugs.

The inspection of generic drug manufacturers prior to approval of an ANDA

revealed that not only did generic manufacturers have GMP compliance problems,

but many innovator firms did as well. Many firms did not have complete

validation procedures in place, lacked adequate QC and sampling routines, and

many other examples of manufacturing controls that would ensure the quality and

integrity of drug products produced. The inspectional experience also revealed that

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148 HAMRELL

there were many discrepancies between what some generic firms submitted to the

FDA and their actual manufacturing operations. The FDA's observations,

although based largely on the generic industry, also included some innovator firms.

The Agency felt that additional inspections were warranted to audit application

commitments and statements against actual manufacturing practices used by

applications before final marketing approval was granted. As a result, the FDA

expanded the policy on inspections for new drug applications, and made a Pre-

Approval Inspection (PAI) of the manufactwing plant a requirement for final NDA

or ANDA approval (8). This policy was proposed and implemented provisionally

in 1991, and finalized in 1993. As a result of this program, many NDA and

ANDA approvals were delayed while firms completed validation and testing

procedures to document their manufacturing operations. A number of firms had

much difficulty meeting FDA's criteria for GMP compliance prior to granting

approval for a product. The need for better written Chemistry and Manufacturing

sections of applications, full quality assurance procedures and good documentation

practices was clear from FDA's inspectional observations. Companies that could

demonstrate a clear understanding of GMP regulations and a fully implemented

compliance program were able to pass a PA1 while those f m s that did not have

procedures and processes in place often had much difficult with FDA inspections.

Another area of concern during the generic scandal was the admission by one

company that it had substituted the innovator's product for its own in

bioequivalence testing. In attempting to audit the bioequivalence study and data,

no samples had been retained by the company or the testing lab to validate what

drug product had in fact been used in the testing. The FDA realized that there was

no specific requirement in the regulations to require retention of bioequivalence

samples for such purposes. As a result, the FDA issued an interim rule in

November 1990 (later finalized in 1993), immediately requiring firms to retain

samples of all drug products used in bioavailability and bioequivalence testing for

new drug applications (including abbreviated NDAs) (9).

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GENERIC DRUG APPROVAL PROCESS 149

In January 1992, Congress passed a bill to establish procedures to restore and

ensure integrity of the ANDA approval process and to bar individuals convicted of

crimes pertaining to the regulation of drug products from working for companies

that manufacture and distribute such products. Known as the Generic Drug

Enforcement Act of 1992, the law adds a new section to the Food Drug and

Cosmetic Act. The law authorizes FDA to debar any individual or firm, convicted

of certain crimes or found to have engaged in certain types of conduct, from

providing services to any drug product applicant (10). The new laws applies not

only to ANDAs, but also to NDAs, AADAs, NADAs, ANADAs, PLAs, and

export applications for certain unapproved products. All applications submitted

after the effective date of the law must now contain a statement that no individual

debarred from the drug approval process has participated in the preparation of the

application. The FDA can also under this law, deny temporarily approvals of

ANDAS for any lirm if the sponsor is under criminal investigation. The FDA can

also suspend the approval of a generic company's products if it can demonstrate to

a judge that the approvals were tainted by repeated misconduct. This misconduct

may include a "pattern of practice" of making false statements to the FDA, or

having committed "flagrant and repeated" GMP or GLP violations during a short

time period. Finally, the law also includes civil penalties of up to $250,000 for

individuals and $1 million for corporations for fraudulent activities (1 1).

The final toll for the generic scandal included five FDA officials were either

convicted or pleaded guilty to various crimes, more than 28 company officials from

various generic companies were convicted of bribery, fraud, obstruction of justice,

racketeering and other crimes. A number of generic companies were put out of

business as a result of these activities. Companies and guilty officials paid a record

over $18 million in fines and penalties as a result of the government's

investigation. It was clear that the FDA approval process and the generic industry

would never be the same again.

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ANDA Review Process

The review process for an Abbreviated New Drug Application (ANDA) is similar

in many respects to the review for an full New Drug Application. After receipt, the

ANDA is reviewed for acceptability and completeness. Under FDA's 'Refusal to

File" Policy, incomplete or unacceptable applications can be refused for

consideration by FDA. In addition the FDA confirms that the application

references the proper 'listed drug' for that product or contains information that a

suitability petition for a variation has been approved by the FDA. Each ANDA

must also contain a patent certification, a statement that either no patent is in effect

for the product (or will expire on a certain date), or that the application uses a

product or process that does not conflict with the patent (12,13).

The format of the ANDA must follow the general requirements for NDA

submissions as a result of the 1985 NDA rewrite, with a blue archival copy and a

technical review copy. In addition, as a result of the PA1 program, an additional

copy of the manufacturing and controls section must be submitted in a separate

binder for distribution to the regional FDA Office for use by the investigators

during the Pre Approval Inspection.

Once an application is approved, certain types of changes to the approved

application must also be sent to the FDA for review and approval. This may

include a change in manufacturing information, supplier, or formulation changes.

These changes must be formally submitted to the FDA as a supplement to the

approved application. The types of changes that require prior approval by FDA

are clearly defined in the regulations and the recent guideline on Scale Up and Post

Approval Changes (SUPAC) (14).

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GENERIC DRUG APPROVAL PROCESS 151

Generic Drugs Workload

Prior to the generic scandal, from 1984 to mid-1988, the Division of Generic

Drugs received an average of 80 - 100 original applications per month for generic

drugs. Actions on applications was averaging around 200 letters per month during

this same time period, with 30-40 original approvals granted each month. This

high workload and the pressures of keeping up may have contributed to the

problems associated with the generic scandal.

Immediately following the revelations of the generic scandal, the FDA severely

restricted approval of new applications and supplements until they were sure of the

integrity of applications and the companies involved. Likewise, companies stopped

submitting ANDAs knowing that FDA was not acting on applications in the wake

of the scandal. By early 1989, the number of applications received had dropped to

30-40 per month while approvals had dropped to less than 10 per month, with

some months having no applications approved. As the FDA tried to sort out the

problems, action letters also dropped significantly with only a handful being issued

per month on average. This trend continued through 1990 and into 1991 as the

FDA slowly sorted out the process, instituted changes, and instituted new

procedures and programs to ensure the integrity of the application process (15).

One of the biggest impacts on the generic drug approval process was the

implementation of the Pre-Approval Inspection program (described earlier). As

a result of this program, the FDA found that a significant number of firms were

not in compliance with GMP requirements, had numerous undocumented and

unapproved changes for approved applications, and an overall lack of

understanding of GMP practices. This lead to a very high level of review and

scrutiny of the chemistry, manufacturing and controls sections of applications.

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152 HAMRELL

Additionally, due to the evidence of fraud found in the application process, both

innovator and generic companies are required to provide certification that they did

not use any debarred individual in any capacity in the application.

The heightened emphasis on GMPs and compliance by FDA led to a distinction

between the quality of submissions from various generic manufacturers. Most of

the generic firms had high quality operations, and good documentation and GMP

practices. For these firms, the new emphasis on GMPs was just another item to deal with in order to gain approval of their products. A few other firms had been

operating with the best of intentions, but their operations were deficient in many

areas. For these firms, the emphasis on GMPs caused them to spend a great deal

of time, effort, and often money to get their manufacturing operations and

documentation up to the new standards expected by FDA. As a result, approvals

were held up or delayed for a significant time period while the firms complied with

the FDA standards for GMPs and pre approval inspections. Finally ,there was a

very small number of firms who, despite all of the problems in the recent years in

the generic industry and FDA's expectations, tried to do business they way they

had before. These few firms repeatedly failed pre approval inspections, did little

or nothing to address the issues raised by the FDA, refused to comply with FDA

requests for additional information, testing or documentation, and often argued that

FDA's demands were unfair and should not apply to them. These pleas of

unfairness fell on deaf ears, and did not gain much sympathy from the public,

FDA, or Congress. Given the level of scrutiny being placed on FDA, the generic

drug industry, and the individuals involved, there was little hope of any leniency being granted. These few firms found out very quickly to either comply with

FDA's new expectations and demands regarding GMP compliance or they would

go out of business.

Since the changes in the Office of Generic Drugs have been implemented and

incorporated, the workload has returned to a level that approximates the pre-

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GENERIC DRUG APPROVAL PROCESS 153

scandal level. Although the rate of review and action letters has returned towards

earlier levels, the level of scrutiny of applications has remained higher.

summary

The approval of Generic Drugs by the Food and Drug Administration has made a

significant impact on the availability of generic versions of many leading drugs.

Although the regulatory approval system for these drugs has suffered through a

major scandal and a lack of confidence, it still continues to approve generic drug

products. These products are required to meet the FDA standard for a new drug

product, and generic drugs are subjected to the same rigorous standard for approval

as innovator products. Despite much discussion and attempt to prove otherwise,

generic drugs are approved based on bioequivalence requirements that support

interchangeability and substitution.

REFERENCES

1.

2.

3.

4.

5.

6.

7.

Food and Drug Law. ed. Richard M. Cooper, 1991. pp. 249-252,

Food and Drug Law; Case Materials. eds. Memll & Hutt, 1980. pp.370- 378.

NDAs for Duplicative Drug Products of Post-1962 Drugs. FR 46:27396, 1981.

Pub. L. NO. 98-417, 1984.

The Big Lie about Generic Drugs. Consumer Reports, 52(8):480-487, 1987.

Report of the Bioequivalence Task Force on Recommendations from the Bioequivalence Hearing Conducted by the Food and Drug Administration, FDA, January 1988.

Ander, G, Rumore, MM, Torre, GM, and Hyman, L. Major Consequences of the Generic Drug Scandal of 1988., Regulatory Afuirs 6: 137-159. 1994.

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8. New Drug and Abbreviated New Drug Applications; Preapproval InSpection Requirements; Final Rule. FR 58:47340-47352, 1993.

9. Retention of Bioavailability & Bioequivalence Testing Samples; Final Rule. FR 58:25918-25928, 1993.

10. Generic Drug Enforcement Act of 1992. Pub. L. 102-282, 1992.

11. Civil Money Penalties: Biologics, Drugs, and Medical Devices; Proposed Rule, FR 58:30680-30689, 1993.

12. Abbreviated New Drug Applications, Final Rule. FR 57: 17950-18001, 1992.

13. Understanding and Preparing ANDAs. Speech given by David Rosen at RAPS Seminar, July 1987.

14. Immediate Release Solid Oral Dosage Forms; Scale-Up and Postapproval Changes (SUPAC) Notice. FR 60:61638, 1995.

15. Generic Drugs: A New m. Speech Given by Roger Williams at RAPS Annual Meeting, September 1991.

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