IDEAS home Printed from https://ideas.repec.org/p/aei/rpaper/841152.html
   My bibliography  Save this paper

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

    Download full text from publisher

    File URL: http://www.aei.org/publication/generics-substitution-bioequivalence-standards-and-oversight-of-international-pharmacies-complex-issues-facing-the-fda
    Download Restriction: no
    ---><---

    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)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Branstetter, Lee & Chatterjee, Chirantan & Higgins, Matthew J., 2022. "Generic competition and the incentives for early-stage pharmaceutical innovation," Research Policy, Elsevier, vol. 51(10).
    2. Bate, Roger & Jin, Ginger Zhe & Mathur, Aparna, 2011. "Does price reveal poor-quality drugs? Evidence from 17 countries," Journal of Health Economics, Elsevier, vol. 30(6), pages 1150-1163.
    3. Alpert, Abby & Duggan, Mark & Hellerstein, Judith K., 2013. "Perverse reverse price competition: Average wholesale prices and Medicaid pharmaceutical spending," Journal of Public Economics, Elsevier, vol. 108(C), pages 44-62.
    4. Kensuke Kubo, 2011. "Explaining vertical integration in the generic pharmaceutical industry," Discussion Papers 11-02, Indian Statistical Institute, Delhi.
    5. David Granlund & Niklas Rudholm, 2012. "The Prescribing Physician’s Influence on Consumer Choice Between Medically Equivalent Pharmaceuticals," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 41(3), pages 207-222, November.
    6. Granlund, David & Rudholm, Niklas, 2008. "Consumer Loyalty in the Swedish Pharmaceuticals Market," HUI Working Papers 17, HUI Research.
    7. Kanavos, Panos G. & Vandoros, Sotiris, 2011. "Determinants of branded prescription medicine prices in OECD countries," Health Economics, Policy and Law, Cambridge University Press, vol. 6(3), pages 337-367, July.
    8. Costa-Font, Joan & Rudisill, Caroline & Tan, Stefanie, 2014. "Brand loyalty, patients and limited generic medicines uptake," Health Policy, Elsevier, vol. 116(2), pages 224-233.
    9. Lee Branstetter & Chirantan Chatterjee & Matthew J. Higgins, 2016. "Regulation and welfare: evidence from paragraph IV generic entry in the pharmaceutical industry," RAND Journal of Economics, RAND Corporation, vol. 47(4), pages 857-890, November.
    10. Sotiris Vandoros & Panos Kanavos, 2013. "The generics paradox revisited: empirical evidence from regulated markets," Applied Economics, Taylor & Francis Journals, vol. 45(22), pages 3230-3239, August.
    11. Berndt Ernst R. & McGuire Thomas & Newhouse Joseph P., 2011. "A Primer on the Economics of Prescription Pharmaceutical Pricing in Health Insurance Markets," Forum for Health Economics & Policy, De Gruyter, vol. 14(1), pages 1-30, November.
    12. Patricia M. Danzon & Michael F. Furukawa, 2011. "Cross-National Evidence on Generic Pharmaceuticals: Pharmacy vs. Physician-Driven Markets," NBER Working Papers 17226, National Bureau of Economic Research, Inc.
    13. Costa-Font, Joan & McGuire, Alistair & Varol, Nebibe, 2014. "Price regulation and relative delays in generic drug adoption," Journal of Health Economics, Elsevier, vol. 38(C), pages 1-9.

    More about this item

    Keywords

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

    JEL classification:

    • A - General Economics and Teaching

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aei:rpaper:841152. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dave Adams, CIO (email available below). General contact details of provider: https://edirc.repec.org/data/aeiiius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.