FDA pendulum swinging against pharma industry?

9 February 2001

Based on recent US Food and Drug Administration actions, it seems thatthe pendulum is about to swing again toward greater restrictions on the pharmaceutical industry, according to Hemant Shah of HKS & Co. The industry-friendly FDA of the 1990s has been one of the most important factors behind both the approval of dozens of major new drugs and their subsequent commercial success, he says, and the change at the agency may be partly due to the unprecedented recall of recently-approved drugs during the past couple of years, abuse by some drug companies related to their promotional activities and some shift in the political philosophy in Washington.

Other factors affecting the change in attitude at the FDA are the erosion of the drug industry's political power base due to lack of drug benefits for the elderly and perception of sharply rising drug prices. If the recent actions by the FDA are any indication, Mr Shah says, the agency may be becoming a major negative for the industry, and much less friendly, during 2001 and beyond. The approval process has dramatically slowed in recent years, with many newer drugs remaining unapproved, even though their New Drug Applications have been filed for more than two years, he notes.

Mr Shah also believes that generic competition will become ever more challenging in the future. Generics are likely to be priced at even greater discount (maybe as high as 98%), he feels, and almost all major drugs going off patent will immediately face multiple generic competitors, forcing a dramatic decline in the price of generic copies and creating further incentives for payers and providers to use more generic drugs.

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