A recent analysis by the US Government Accountability Office shows that only 12% of the 2,030 generic drug applications reviewed by the FDA from fiscal years 2015 through 2017 were approved in the first review cycle. What is the impact for innovator and generic-drug companies and the FDA?

Generic-drug approvals overall on the rise

Despite the low approval rates in the first review cycle, overall, the number of generic-drug approvals in the US is on the rise. In 2018, the US Food and Drug Administration (FDA) approved or tentatively approved 1,021 abbreviated new drug applications (ANDAs), the regulatory filing for generic-drug approvals. This number was on par with the 1,027 approvals in 2017, which was a record-breaking year of generic-drug approvals by the FDA, 214 more than the FDA’s previous record of 813 set in 2016, according to information from the FDA.

Of these approvals, first generics (approvals for generic drug products for branded drugs that previously had no FDA-approved generic) made up nearly 10% of 2018’s approvals. Of these first generics,18% were for complex generic drugs while about 14% of all generics approvals were for complex generic drugs, according to FDA’s Office of Generic Drugs.

The FDA has made several key policy moves to improve the generic-drug approval process, including the implementation of the Generic Drug User Fee Amendments (GDUFA II), the FDA’s Drug Competition Action Plan, and the Competitive Generic Therapies (CGTs) approval pathway. Congress first enacted GDUFA in 2012 following negotiations between the FDA and industry and with input from public stakeholders, which requires the industry to pay user fees to fund FDA activity with the FDA obligated to meet certain performance goals in terms of review times and practices. In 2017, the Food and Drug Administration Reauthorization Act was signed into law, which included the reauthorization of GDUFA through September 2022.

FDA’s Drug Competition Action Plan, which was first initiated by former FDA Commissioner Scott Gottlieb in 2017, focuses on improving the efficiency of generic-drug development, review, and approval processes, including seeking to provide scientific and regulatory clarity with respect to generic drugs for complex products. Earlier this year (February 2019), then FDA Commissioner Gottlieb said that the agency plans to advance policies, including the issuance of guidances, to promote drug competition and patient access for complex generic drugs. These are drugs that, by the nature of their formulation, delivery systems, or the complexity of their active ingredients, are harder to “genericize” under traditional approaches and as a result, often face less competition. In September 2018, the FDA held a science-focused workshop to communicate to the generics industry how the FDA’s research outcomes guide and facilitate complex generic product development. The FDA is holding another such workshop this year (September 28 and 29, 2019). At the workshop, the FDA says it will link GDUFA science and research on complex drug products to product-specific guidance development, discuss pre-ANDA meetings and review, and examine various areas of complex product science.

The Competitive Generic Therapies (CGTs) regulatory approval pathway, authorized under the Food and Drug Administration Reauthorization Act of 2017, is intended to stimulate generic-drug development where inadequate generic competition exists. The CGT pathway established a process through which FDA may, at the request of an applicant, designate a drug with “inadequate drug competition” as a CGT and may also expedite the development and review of the ANDA for that drug. The pathway also includes a new type of 180-day exclusivity for the first approved applicant of a drug with a CGT designation for which there were no unexpired patents or exclusivities listed in the Orange Book, the compilation of FDA-approved drugs, at the time of the original submission of the ANDA. As of March 2019, the FDA has received more than 245 CGT requests, of which over 70% have been granted. The FDA has also approved seven ANDAs for generic drugs designated as CGTs that qualified for 180-day CGT exclusivity, which included five ANDAs approved in 2018 as CGTs.

First review cycles and low approval rates

Despite an improvement in overall generic-drug approvals and other policy efforts to improve the generic-drug review process, a recent report by the US government underscored the need for the FDA to further improve the first review cycle. In a report issued this month (August 2019), the US Government Accountability Office (GAO) found that only 12% of the 2,030 generic drug applications reviewed by the FDA from fiscal years 2015 through 2017 were approved in the first review cycle. The first review cycle begins when the FDA accepts a generic drug application for review and ends when the FDA makes its first decision about whether the drug should be approved for marketing and sale. For applications that were not approved in that first cycle, the application must undergo one or more subsequent review cycles to obtain approval, thereby delaying the generic drug’s arrival to market, according to the GAO study. 

If the FDA finds deficiencies in the application that are not resolved during the first review cycle, then it returns the application to the applicant and informs the applicant of the deficiencies. Once those deficiencies are addressed, the applicant can amend the application and seek another full review—the second review cycle. According to the FDA, in recent years (fiscal years 2013–2017), it took an average of three review cycles for a generic drug application to reach approval, which can take years, including the time it takes for the applicant to make changes to the application in response to the FDA’s comments and the time it takes for the FDA to review the changes. While the first review cycle is typically 10 months for a standard generic drug application, each subsequent cycle can be anywhere from 3 to 10 months, according to the FDA.

Under GDUFA II, the FDA committed to evaluating changes to its review process, which included communication with generic drug applicants, with one goal being to minimize the number of review cycles. Under GDUFA II, the FDA stated that, for applications in the first review cycle, it would review and act on at least 90% of them within specified timeframes (eight months for certain priority applications and 10 months for all other applications), a performance measure that the FDA stated that it met for fiscal year 2018. In its research for its study, the GAO conducted a performance audit of the FDA from July 2018 to August 2019.

First review cycle: where the problem resides

The GAO report says there are several factors, including certain characteristics of generic drug applications, which may have contributed to whether an application received approval in the first review cycle, including the sufficiency of the application, deficiencies in drug quality, the type of drug reviewed, and the application’s priority status.

Sufficiency of application. The GAO found that the sufficiency of the generic drug application, including the completeness of the application and the degree to which the applicants understood and fulfilled application requirements, affected its likelihood of receiving an approval in the first review cycle. The GAO found applications that had previously been refused were slightly less likely to be approved in the first review cycle compared with applications that had not previously been refused, and rates of approvals decreased for applications with two previously refused attempts.

Drug-quality deficiencies. The GAO’s review of documentation from the first review cycle for 35 generic drug applications included 26 that were not approved in that cycle. Among those 26 applications, the most common deficiencies that remained at the end of the first cycle were related to the quality of the drug—356 out of 435 deficiencies. These deficiencies included issues related to the drug-manufacturing facilities, which can affect the quality of the drug produced and the stability of the drug over time, among others. Officials from one large applicant told the GAO that most of the comments it received from FDA reviewers are related to the quality of the drug. Three out of five applicants the GAO interviewed also noted that the results from inspections of drug-manufacturing facilities—which the FDA includes as a component of its review of the quality of the drug—are a factor that may cause an application not to be approved in the first review cycle. Among the 26 applications the GAO reviewed that were not approved, eight had an outstanding deficiency related to the manufacturing facility.

Type of drug. The GAO also found that the rate of approval in the first review cycle differed based on certain characteristics of the type of drug reviewed, including the route of administration, which may indicate the complexity of the drug, which can also be influenced by other factors including, for example, the drug’s active ingredient or formulation. In its report, the GAO said that FDA officials noted that some complex drugs—including those that combine drug products with drug-delivery devices, such as asthma inhalers—are less likely to be approved in the first review cycle.

The GAO also found that applications for drugs with certain routes of administration—the method by which the drug is taken, such as oral, topical, or intravenous—had different rates of approval in the first review cycle. In particular, from fiscal years 2015 through 2017, the FDA reviewed generic drug applications for 41 ophthalmic and 20 transdermal drugs—types of drugs that FDA considers complex—and none of these applications received approval in the first review cycle. In contrast, generic drug applications for topical drugs, which the FDA also identifies as complex, had higher approval rates. Specifically, the analysis found that the rate of approvals in the first review cycle for generic drug applications for topical drugs was 25%—more than double the rate for all applications included in its analysis. FDA officials stated that in recent years the FDA released several product-specific guidances for topical drugs—technical guidance intended to help applicants identify the most appropriate methodology for developing certain drugs and generating the evidence needed to gain approval. FDA officials told the GAO these guidances may have contributed to the higher rates of approval in the first review cycle for topical drugs.

Generic-drug application priority review designation. In addition, the GAO found that a generic-drug application’s priority review status may affect the rate of approval in the first review cycle. The FDA may grant priority review status to applications under several circumstances, including for the first generics of brand-name drugs and other designations, such as for drugs that could help address public health emergencies. The GAO analysis of FDA data found that the rates of approval in the first cycle were lower for applications for first generics than for applications with no priority designation—6% and 14%, respectively.

Recommendations to improve first cycle reviews

In its report, the GAO said that the FDA has taken steps to increase the rate of generic drug approvals in the first review cycle. For example, the FDA has increased communication with applicants and introduced templates for reviewers to improve the consistency and clarity of their comments. “However, GAO’s review of a judgmental selection of 35 applications found examples of variation in the clarity and content of FDA’s comments to applicants,” said the GAO in its report. “Such variation may have contributed to whether applicants could adequately address deficiencies within the first cycle, and therefore whether the applications were approved.”

In addition, stakeholders the GAO interviewed expressed concern that changes to the brand-name drug’s labeling mid-cycle could delay or prevent generic drugs’ approval in the first review cycle, and some stakeholders said they believe that the labeling changes may be strategically timed to delay approvals. “Although FDA officials noted that it would be difficult for brand-name companies to time labeling changes in this way, they said that the agency has not conducted analysis that would enable it to assess the validity of these concerns. Therefore, the FDA lacks the information needed to respond to these concerns or address problems should they exist,” said the GAO in its report.

The GAO recommends that the FDA: (1) take additional steps to address inconsistency in its written comments to generic-drug application sponsors and (2) assess the extent to which the timing of brand-name drug companies’ drug labeling changes affects the approval of generic drugs and take steps, as appropriate, to limit the effect. The GAO said that the US Department of Health and Human Services, the department under which the FDA resides, concurred with the GAO’s recommendations.