US regulator tightens drug approval norms

Companies asked to give data for three batches instead of one; move may lead to significant rise in development cost of generics

Pharmaceutical companies operating in the US might be in for a significant rise in development cost of generic products from next year. That’s because the US Food & Drug Administration (FDA) has mandated companies to give data — including on safety, efficacy and stability — for three batches of products, instead of one at present, while seeking drug approvals in that country.

“The US FDA has mandated data will have to be filed for three batches from January 2014,” an industry representative, involved in development of generics at a domestic pharma company, told Business Standard.

The move was expected to increase the cost — by up to three times in cases where ingredients used were expensive — as well as the time taken for various studies, he added. One batch of a drug product contains approximately one million units of medicines.

According to an analyst, the total cost of generic drug development is estimated at around $3 million a product. “The major cost increase will come due to active ingredients. The more the number of batches, the more will be the ingredients required. Besides, we will also have to do studies for a longer period,” the official said.

Major domestic drug makers like Sun Pharma, Lupin, Dr Reddy’s, Cadila Health and Ranbaxy annually file 15-20 generic drug applications each, seeking approval from the US drug regulator. Even smaller companies like Torrent Pharma and Alembic file five to 10 abbreviated new drug applications (ANDAs) every year.

According to Praful Bohra, senior research analyst at Nirmal Bang, around 800 ANDAs have so far been filed by major domestic companies, including Sun Pharma, Aurobindo, Dr Reddy’s, Lupin, Glenmark, Cadila Health and Torrent.

A company executive explained, while seeking approval for commercialisation of generic drugs in the US, companies were required to file data, such as from stability study, where a drug was kept in accelerated conditions with a temperature of 40 degrees Celsius and humidity of 75 per cent for three months. “This period will also increase from three months to six months,” the official said. Besides, a drug will also have to be kept in real-time conditions for 36 months.

The official said it was difficult to quantify the exact increase in time and cost because those would depend on some factors that would vary for different drugs.

According to Bohra, the US generic market is estimated at around $30 billion. Of this, Indian pharmaceutical companies account for 10 per cent of the market, or $3-3.5 billion.

Given that Indian companies are major suppliers for generic drugs and the US is the biggest market for them, the move, going forward, is set to have a mounting cost impact on their businesses. However, it is believed some companies may be able to mitigate the impact if they have capacities and staff for conducting extended studies.

Europe already asks for data for three batches of a drug.