March 4, 2014

Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products

  • Todd Nesbit

    Assistant Professor of Economics, Ball State University
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INTRODUCTION

The Regulatory Studies Program of the Mercatus Center at George Mason University is dedicated to advancing knowledge about the effects of regulation on society. As part of its mission, the program conducts careful and independent analyses that employ contemporary economic scholarship to assess rulemaking proposals and their effects on the economic opportunities and social well-being available to all members of American society.

This comment addresses the efficiency and efficacy of this proposed rule from an economic point of view. Specifically, it examines how the proposed rule may be improved by more closely examining the societal goals the rule intends to achieve and whether this proposed regulation will successfully achieve those goals. In many instances, regulations can be substantially improved by choosing more effective regulatory options or more carefully assessing the actual societal problem.

SUMMARY

The proposed “Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products” rule[1] would enable Abbreviated New Drug Application (ANDA) holders of approved generic drugs to enact a safety-related labeling change by submitting a Changes Being Effected (CBE-0) supplement even when the New Drug Application (NDA) holder of the reference-listed drug has not submitted a CBE-0 for the said change. Current regulations require generic drugs to have identical safety-related labeling as the reference-listed drug. As such, an ANDA holder of an approved generic drug currently may request to change product safety-related labeling only after the respective NDA holder of the reference drug has had such changes approved by the Food and Drug Administration (FDA).[2] This rule would allow ANDA holders to independently submit a CBE-0 supplement. 

The FDA argues that this rule will allow ANDA holders to more actively participate in the updating of safety-related labeling, potentially increasing the speed of communication of important drug safety information, specifically for generic drugs, to physicians and the public. Given that 80 percent of all prescription medications dispensed are generic—and that 94 percent are generic when generic drugs are available—adequate dissemination of drug-safety information for generic drugs is certainly an important matter.

While increasing the parity between NDAs and ANDAs in relation to safety-related drug labeling may, in fact, prove to exhibit a positive net benefit on society, the analysis presented in the Preliminary Regulatory Impact Analysis (PRIA) fails to substantiate such a claim. First, the FDA fails to quantify any of the public health benefits of the proposed rule, providing a brief qualitative discussion instead. Second, the estimated costs associated with the proposed rule are greatly understated. Several factors influence this downward-biased estimate, including ignoring FDA administrative costs in the final estimate, assuming away the costs associated with simultaneous CBE-0 submissions from multiple ANDAs, and calculating the high and low estimates based on questionable assumptions. The cost estimations also fail to adequately account for changes in ANDA incentives. Specifically, the analysis does not account for how ANDA holders may increase resources devoted to post-marketing surveillance evaluation and reporting and to legal concerns in response to increased exposure to products liability suits. 

The proposed rule may, if finalized, improve the parity between NDAs and ANDAs and possibly better align the interests of ANDAs with physicians and the ultimate consumers of generic drugs. These are certainly laudable goals. Under the current rules, ANDAs cannot independently submit a CBE-0 for a safety-related label change, and an individual’s ability to access state courts to file “failure to warn” tort claims depends on whether the individual is dispensed a “brand name” or generic drug.4 With an FDA-reported 80 percent of prescription drugs dispensed being generic, a sizable share of prescription drug consumers are unable to appeal to the courts for “failure to warn” lawsuits. As such, it is quite possible that the benefits of the proposed rule are sizable. Unfortunately, the FDA presents a careless approach to the estimation of costs and benefits of this proposed rule related to safety-related drug labeling changes. 

Given the potential impact on consumer health, this regulation deserves a more thoughtful analysis than the FDA has provided to date. The FDA should improve the Regulatory Impact Analysis to estimate the benefits of the proposed rule and to more accurately estimate all of the costs stemming from it. Further, it is advisable that the FDA compare and contrast the net benefit of the proposed rule with that of other reasonable alternatives. Only after addressing these concerns is it possible to make an educated decision regarding the appropriateness of the proposed rule. 

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