There was another groundbreaking healthcare event to come out of Washington recently, but few seemed to notice. The House and Senate overwhelmingly passed "The FDA Safety and Innovation Act," with near unanimous bi-partisan support -- a rarity in Washington these days. This act, signed into law by the president this week, requires international drug manufacturing plants to be held to the same standards and inspections as domestic facilities -- until now, this has not been the case.
While drug manufacturers in the U.S. have been inspected by FDA every two years pursuant to a 1938 law, overseas facilities have gone as many as nine years or more without an FDA inspection -- and some were never inspected at all. The Government Accountability Office says FDA inspected just 11% of the 3,765 foreign drug manufacturing sites in its database in 2009. Since up to 40% of the drugs Americans purchase are imported, and nearly 80% of the active pharmaceutical ingredients in those drugs come from outside of the U.S., this is a much-needed and long overdue provision that will enhance the safety and integrity of the nation's drug supply.
On its surface, the legislation is a renewal of FDA's user-fee programs under which brand pharmaceutical and medical device industries supplement FDA's budget in exchange for more timely reviews of their products. However, now for the first time, the generic drug industry will pay fees, contributing nearly $1.5 billion to FDA through 2018. A significant amount of this new money will provide for additional FDA inspection resources.
By mandating foreign facilities be held to the same inspection standards as US facilities, we 'level the playing field' between foreign and U.S. drug makers. Inspection disparity gave foreign drug makers a competitive advantage since complying with government 'good' manufacturing practice regulations account for as much as 25% of a manufacturer's operating cost. This legislation addresses this inequity and ensures that all pharmaceutical manufacturers supplying products to the U.S. market are held to the same quality standards. The cost of routine inspection will now be borne by all manufacturers -- domestic and international. Thus, the legislation could also be viewed as a jobs bill, as it helps to reverse the current incentive to move manufacturing jobs overseas.
The FDA funding also will provide for additional reviewers. To date there is a backlog of 2,900 generic drug applications awaiting review. The addition of staff will speed the review of new generic applications going forward, in time reducing review periods from more than 31 months today to less than 10 months. Once approved, these safe and more affordable drugs will save the government and consumers hundreds of millions of dollars by lowering drug expenditures for consumers and payors.
In short, this comprehensive piece of healthcare legislation, which was over a year in the making, improves the safety of the entire drug supply chain, combats counterfeit drugs, saves taxpayer and consumer dollars and protects much-needed manufacturing jobs in the U.S. Not a bad year's work.
In the bitterly partisan environment of Washington, this bill is a true accomplishment and can serve as a reminder of how much can get done when legislators from both parties work together. Importantly, what has been a very domestic FDA will finally be better equipped to oversee and enhance the safety of the now very global drug supply that serves American patients.
Heather Bresch is CEO of Mylan Inc., the world's third largest generic and specialty pharmaceutical company and the largest global generics company headquartered in the United States.