Gutting of FDA’s generic drug policy office will raise prices

President Trump often touted during his first term that his administration had “approved more affordable generic drugs than any administration in history.” He had good reason to highlight these accomplishments. Over the first two years of his presidency, the Food and Drug Administration made significant investments in staffing and policies for reviewing and approving generic drugs with an explicit goal: ensuring that once valid patents on expensive branded medications expired, these products would promptly encounter vigorous competition from lower-cost generics.

Over the past 20 years or so, the branded medications have become substantially more complex. Many are now formulated in ways that pose formidable technical challenges for generic copying, including peptide-based drugs such as Ozempic, drug-device combinations used as inhalers, and medications administered through patches, among others. By 2017, this mounting complexity had resulted in a growing roster of drugs whose patents had lapsed but remained unchallenged by generic competitors. Under the first Trump administration, when I served as FDA commissioner, we tried to correct this imbalance with our “Drug Competition Action Plan,” a strategic push to speed the approval of generic drugs by offering precise scientific guidance on replicating these complex medications.

The investment quickly bore fruit: The FDA approved a record-breaking number of generic drugs in 2017 and 2018, yielding an estimated $26 billion in savings for American consumers.

Recently, however, the FDA team responsible for paving the approval pathway for these complex generics was entirely disbanded as part of cuts demanded from the agency’s current leadership. This abrupt reversal threatens to undo the historic progress achieved during the president’s first term. It could stall the arrival of affordable generic alternatives to some of today’s most expensive medications.

At issue is the Division of Policy Development, which is part of the Office of Generic Drug Policy within the FDA’s generic drug review branch. This modest but critical division employed 13 full-time staff, whose combined experience totaled roughly 200 years of government service. All 13 FDA employees were recently dismissed by the agency and placed on administrative leave until June 2, at which point their departures could become permanent.

Why the closure of an FDA office may impact generics manufacturers — and everyday Americans

The division’s core responsibility was drafting, reviewing, and approving the policy guidance documents that defined precisely how generic versions of branded medications could be developed and brought to market. For many generic drugmakers, these documents were indispensable — step-by-step recipes detailing how to replicate complex drugs. Without these clear instructions, numerous generic firms could find themselves locked out of the market entirely.

In the prescription drug market, substantial price reductions rarely occur after the introduction of just one or two generic competitors. Instead, the true tipping point arrives with the entry of a third generic entrant, at which point competition intensifies sharply, driving prices downward by roughly 80% or more. The reason lies in market psychology and economic incentives: A solitary or second generic entrant often engages in modest price competition, content with capturing a fraction of the market from the branded incumbent. However, once a third competitor arrives, each firm is forced to compete vigorously on price to maintain its market share.

Some of the large generic drugmakers possess the in-house expertise to reverse-engineer intricate branded medicines, devising ways to produce accurate copies — but most do not. For these smaller generic firms, detailed policy guidelines from the FDA serve as an indispensable road map, enabling multiple generics to enter the market and compete effectively. Indeed, the dramatic increase in the quantity and sophistication of guidance documents issued by the FDA during Trump’s first term was instrumental to his administration’s record-setting approvals of generic drugs and the substantial cost savings enjoyed by patients. Against this backdrop, the recent dismissal of 13 FDA review staff — ostensibly a cost-cutting measure — eliminated precisely the kind of government spending that delivered the most bang for the taxpayers’ buck.

The FDA recently released a batch of guidance documents outlining the approval pathways for generic versions of 48 specific medications. However, all these documents had been drafted by the agency’s staff before January, well before the mass dismissal of these key experts.

Among other initiatives in progress were guidelines establishing a clear pathway for approving generic versions of peptide-based drugs, including the popular GLP-1 medications. These documents would have detailed the regulatory and scientific steps required to create affordable generic alternatives to these costly treatments.

Another set of proposed guidelines would have clarified the complicated process for generic manufacturers aiming to produce off-patent copies of metered-dose inhalers — devices commonly used to treat chronic obstructive pulmonary disease.

The policy specialists recently dismissed by the FDA were the principal authors of these crucial documents. Without their expertise, it’s unlikely that these documents will be completed. It’s just one illustration of the tangible losses incurred by dismantling this experienced and effective team.

The U.S. has relied on cheap, effective generic drugs for 40 years. Now that promise is under threat

The FDA’s political leaders reconsidered cuts initially made elsewhere within the agency’s drug programs, even rehiring some key scientists. However, the regulatory policy team in the generic drug group was dismissed wholesale, with no plans to restore this uniquely specialized team.

President Trump has long celebrated the groundbreaking innovations produced by American drugmakers. He has also championed measures designed to improve medication affordability, ensuring that more patients can access their lifesaving benefits. Among the most effective pro-market, pro-competition drug policies from President Trump’s first term were initiatives to swiftly bring generic medicines to market once valid patents on their branded alternatives expired.

These substantial accomplishments risk being severely undermined, if not completely reversed, should the targeted dismantling of this critical generic drug policy team be allowed to endure.

Scott Gottlieb, M.D., is a senior fellow at the American Enterprise Institute and served as commissioner of the Food and Drug Administration from 2017 to 2019. He is a partner at the venture capital firm New Enterprise Associates and serves on the boards of directors of Pfizer Inc. and Illumina.

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