Description
This ppt contains: HISTORY OF PHARMACEUTICAL INDUSTRY; THE FOOD AND DRUG ACT; THE FEDERAL FOOD, DRUG AND COSMETIC ACT; WAXMAN-HATCH ACT.
NOTE ON PHARMACEUTICAL INDUSTRY REGULATION
GROUP F1
HISTORY OF PHARMACEUTICAL INDUSTRY
BEFORE WORLD WAR 1
Use of crude Botanical products and gradual conversion to synthetic drugs.
Classification of Drugs:
1. Patent or proprietary drugs. 2. Ethical or Formulary drugs.
NEED FOR REGULATION
? Regulation on sale and distribution of drugs. ? Concern over quality of drugs. ? To create standards within the industry
numerous professional organizations and two national formularies were formed: The united states pharmacopoeia (USP,1820) and National formulary (NF,1888) were established.
PUSH FOR LEGISLATION
? Appeals for regulatory measures against
food adulteration.
? Establishment of ‘Poison Squad’.
? In 1906 Congress passed the ‘Food And
Drug Act’.
THE FOOD AND DRUG ACT (1906)
Drugs were termed adulterated or mislabeled if:
? The drug was listed in USP/NF but didn’t
abide by the standards set in the formularies. ? The drug was sold under a false name. ? The label failed to specify the identity and quantity of alcoholic and narcotic substances.
SHORTCOMINGS OF THE FOOD AND DRUG ACT ? Scope was restricted to the disclosure of drug
content and not on the curing effect of the drug.
? No restriction was placed on the customer’s
access to drugs.
? Federal drug policy was dictated by the
maxim: “caveat emptor” (Let the customer beware).
PHARMACEUTICAL INDUSTRY IN EARLY 20th CENTURY
? Problems faced by American Pharmaceutical
Industries during world war1.
? Growth of American Pharmacy industries like
Eli Lilly, Merck ,Abbott and Squibb.
DRUG REGULATION IN 1930s
? Establishment of FDA (Food and Drug
Administration).
? Impetus for a new regulation.
THE FEDERAL FOOD, DRUG AND COSMETIC ACT OF 1938 (FFD&C ACT)
FFD&C established the following rules: ? Disclosure of all contents of the drug with appropriate warnings. ? New drugs required pre-market approval by FDA ? Exempted certain drugs dispensed on the written prescription of licensed physicians from certain labeling requirements.
THE THERAPEUTIC REVOLUTION: GENESIS OF THE MODERN DRUG INDUSTRY
? New Discoveries ? Research and development
? Integration
? Profits
EXPANSION OF REGULATION
? New concerns: Disparity in pricing.
? The Kefauver-Harris Amendments.
? Regulations in Advertising.
EFFECT OF THE CHANGING REGULATIONS ON THE PHARMACEUTICAL INDUSTRY
?Decline in the number of new drugs launched. ?Drop in the average life of drug patents as lags
in regulatory process mounted.
LEGISLATIVE REFORMS
The Orphan drug act: Orphan drugs were used for curing rare diseases. Features include: ? Provided orphan drug manufacturers 7 years of market exclusivity and 50% tax credit. ? Provided grants for clinical research conducted by independent investigators without corporate support.
GENERIC SUBSTITUTION
? Formation of ANDA (Abbreviated NDA) and
paper NDAs. ? Concern then shifted to the increase in pricing of drugs with increase in medical insurances, which required prescription drugs. ? Companies stated that R&D costs were increasing whereas prices of prescription drugs were constant.
? Generic drugs were cheaper than their
Pioneer counterparts. ? In 1977 Maximum Allowable Cost (MAC) program was launched to put a cap on the reimbursement amount to pharmacies under Medicare and Medicap. ? Use of Generic drugs were mandated in Medicaid programs. ? Sales of Generic drugs tripled between 1978-1983. ? Nevertheless no compromise was done on the approving procedures for Generic drugs.
THE GREAT COMPROMISE (WAXMAN-HATCH ACT)
? Promotion of generic drugs by providing
them approval for ANDAs. ? Providing new statutory protection for pioneer drugs. ? Extending patent terms for pioneer drugs under certain circumstances. ? Provided innovator firms patent term restoration up to 5 years.
AN EVOLVING FDA
? In mid 80s more than 1 Mn people were infected with HIV. ? More streamlined process of drug approval was required. ? In 1987 FDA introduced “compassionate” IND regulations for handling life threatening diseases. ? In 1988 regulations eliminating phase III clinical trials for life saving drugs were introduced.
? The generic scandal and its after-effects. ? Increased competition from Generics.
? Orphan drug developments.
? Rise in buyer power.
GOVERNMENT COST CONTAINMENT EFFORTS
? Legislation passed to force prescription drug
manufacturers to share Medicaid costs. ? Bill Clinton during his tenure as president tried to ensure universal healthcare for all Americans. ? At the same time he wanted to control the medical costs. ? In one speech he described the industry’s price as “shocking”.
INDUSTRY’S RESPONSE
POLITICAL RESPONSE
? Merck announced voluntary price
containment. ? The Industry also argued that the prices were justified on account of the high fixed costs incurred an strict price controls in foreign nations.
BUSINESS RESPONSE
Companies began to cut costs by restructuring and downsizing. ?Horizontal integration: Many mergers were done to cut costs, share risks and increase economies of scale and scope. ?Vertical integration: Vertical Forward Integration and Vertical Backward Integration.
BUSINESS RESPONSE CONTD..
? Vertical Forward Integration: Merck in 1993 acquired Medco Containment Services, the nations largest pharmaceutical benefits company. ? Vertical Backward Integration: Acquisition of Biotech Industries by drug makers. Glaxo acquired Sandoz in 1991. ? Related Business Integration: Drug makers entered into medical-device and diagnostic businesses as well as generics.
COMPETING VISIONS OF THE FUTURE
? Future prospects were both favorable as
well as unfavorable for the drug industry. ? Increasing health insurance resulted in significant increase in demand for pharmaceuticals. ? On the other hand the drug industry was assaulted for lack of price control. ? As patents were getting expired, new and cheap generics started coming up at 10% to 20% of the price of the prescription drug.
doc_248157099.pptx
This ppt contains: HISTORY OF PHARMACEUTICAL INDUSTRY; THE FOOD AND DRUG ACT; THE FEDERAL FOOD, DRUG AND COSMETIC ACT; WAXMAN-HATCH ACT.
NOTE ON PHARMACEUTICAL INDUSTRY REGULATION
GROUP F1
HISTORY OF PHARMACEUTICAL INDUSTRY
BEFORE WORLD WAR 1
Use of crude Botanical products and gradual conversion to synthetic drugs.
Classification of Drugs:
1. Patent or proprietary drugs. 2. Ethical or Formulary drugs.
NEED FOR REGULATION
? Regulation on sale and distribution of drugs. ? Concern over quality of drugs. ? To create standards within the industry
numerous professional organizations and two national formularies were formed: The united states pharmacopoeia (USP,1820) and National formulary (NF,1888) were established.
PUSH FOR LEGISLATION
? Appeals for regulatory measures against
food adulteration.
? Establishment of ‘Poison Squad’.
? In 1906 Congress passed the ‘Food And
Drug Act’.
THE FOOD AND DRUG ACT (1906)
Drugs were termed adulterated or mislabeled if:
? The drug was listed in USP/NF but didn’t
abide by the standards set in the formularies. ? The drug was sold under a false name. ? The label failed to specify the identity and quantity of alcoholic and narcotic substances.
SHORTCOMINGS OF THE FOOD AND DRUG ACT ? Scope was restricted to the disclosure of drug
content and not on the curing effect of the drug.
? No restriction was placed on the customer’s
access to drugs.
? Federal drug policy was dictated by the
maxim: “caveat emptor” (Let the customer beware).
PHARMACEUTICAL INDUSTRY IN EARLY 20th CENTURY
? Problems faced by American Pharmaceutical
Industries during world war1.
? Growth of American Pharmacy industries like
Eli Lilly, Merck ,Abbott and Squibb.
DRUG REGULATION IN 1930s
? Establishment of FDA (Food and Drug
Administration).
? Impetus for a new regulation.
THE FEDERAL FOOD, DRUG AND COSMETIC ACT OF 1938 (FFD&C ACT)
FFD&C established the following rules: ? Disclosure of all contents of the drug with appropriate warnings. ? New drugs required pre-market approval by FDA ? Exempted certain drugs dispensed on the written prescription of licensed physicians from certain labeling requirements.
THE THERAPEUTIC REVOLUTION: GENESIS OF THE MODERN DRUG INDUSTRY
? New Discoveries ? Research and development
? Integration
? Profits
EXPANSION OF REGULATION
? New concerns: Disparity in pricing.
? The Kefauver-Harris Amendments.
? Regulations in Advertising.
EFFECT OF THE CHANGING REGULATIONS ON THE PHARMACEUTICAL INDUSTRY
?Decline in the number of new drugs launched. ?Drop in the average life of drug patents as lags
in regulatory process mounted.
LEGISLATIVE REFORMS
The Orphan drug act: Orphan drugs were used for curing rare diseases. Features include: ? Provided orphan drug manufacturers 7 years of market exclusivity and 50% tax credit. ? Provided grants for clinical research conducted by independent investigators without corporate support.
GENERIC SUBSTITUTION
? Formation of ANDA (Abbreviated NDA) and
paper NDAs. ? Concern then shifted to the increase in pricing of drugs with increase in medical insurances, which required prescription drugs. ? Companies stated that R&D costs were increasing whereas prices of prescription drugs were constant.
? Generic drugs were cheaper than their
Pioneer counterparts. ? In 1977 Maximum Allowable Cost (MAC) program was launched to put a cap on the reimbursement amount to pharmacies under Medicare and Medicap. ? Use of Generic drugs were mandated in Medicaid programs. ? Sales of Generic drugs tripled between 1978-1983. ? Nevertheless no compromise was done on the approving procedures for Generic drugs.
THE GREAT COMPROMISE (WAXMAN-HATCH ACT)
? Promotion of generic drugs by providing
them approval for ANDAs. ? Providing new statutory protection for pioneer drugs. ? Extending patent terms for pioneer drugs under certain circumstances. ? Provided innovator firms patent term restoration up to 5 years.
AN EVOLVING FDA
? In mid 80s more than 1 Mn people were infected with HIV. ? More streamlined process of drug approval was required. ? In 1987 FDA introduced “compassionate” IND regulations for handling life threatening diseases. ? In 1988 regulations eliminating phase III clinical trials for life saving drugs were introduced.
? The generic scandal and its after-effects. ? Increased competition from Generics.
? Orphan drug developments.
? Rise in buyer power.
GOVERNMENT COST CONTAINMENT EFFORTS
? Legislation passed to force prescription drug
manufacturers to share Medicaid costs. ? Bill Clinton during his tenure as president tried to ensure universal healthcare for all Americans. ? At the same time he wanted to control the medical costs. ? In one speech he described the industry’s price as “shocking”.
INDUSTRY’S RESPONSE
POLITICAL RESPONSE
? Merck announced voluntary price
containment. ? The Industry also argued that the prices were justified on account of the high fixed costs incurred an strict price controls in foreign nations.
BUSINESS RESPONSE
Companies began to cut costs by restructuring and downsizing. ?Horizontal integration: Many mergers were done to cut costs, share risks and increase economies of scale and scope. ?Vertical integration: Vertical Forward Integration and Vertical Backward Integration.
BUSINESS RESPONSE CONTD..
? Vertical Forward Integration: Merck in 1993 acquired Medco Containment Services, the nations largest pharmaceutical benefits company. ? Vertical Backward Integration: Acquisition of Biotech Industries by drug makers. Glaxo acquired Sandoz in 1991. ? Related Business Integration: Drug makers entered into medical-device and diagnostic businesses as well as generics.
COMPETING VISIONS OF THE FUTURE
? Future prospects were both favorable as
well as unfavorable for the drug industry. ? Increasing health insurance resulted in significant increase in demand for pharmaceuticals. ? On the other hand the drug industry was assaulted for lack of price control. ? As patents were getting expired, new and cheap generics started coming up at 10% to 20% of the price of the prescription drug.
doc_248157099.pptx