One of the areas that cause drug manufacturers problems is something called “failure to warn.” What failure to warn means is that if a known side-effect is not listed on a label, even if that side-effect was just recently discovered, then the drug company can be taken to court for not warning patients of the new side-effect in a liability lawsuit.
In 2011, the Supreme Court delivered a ruling in the case of Pliva, Inc. versus Mensing that shielded generic drug manufacturers from getting sued because of the failure to warn stipulation. Since federal laws indicate that generic drugs must have the same label as the name-brand drug they are modeled after, the Supreme Court ruled that generic drug manufacturers cannot be held liable for any warnings that do or do not exist on the labels. Since this ruling, the name-brand manufacturers have been trying to get the rules changed regarding generic drug labels, and it looks like they may have succeeded.
Hatch-Waxman And The Generic Drug Effect
The Hatch-Waxman Act of 1984 (also known as the Drug Price Competition and Patent Term Restoration Act) is a federal law governing generic drug manufacturing that was introduced to Congress by Senator Orrin Hatch and Representative Henry Waxman. Its purpose was to help reduce the costs of medication without harming the patent rights of the companies that developed those medications. It resulted in the creation of a generic drug manufacturing industry that was worth $217 billion in 2016 alone.
In the Hatch-Waxman Act, it is stated that the generic manufacturer must make a drug that is the exact bioequivalent of the name-brand drug and the generic drug must use the same labels as the name-brand manufacturer as well. The generic manufacturers must also keep up with any changes made to the warning labels on the name-brand drugs. However, generic manufacturers are not allowed to make any changes to the labels on the drugs they sell.
Each time the FDA tries to change these stipulations by allowing generic manufacturers to change the warning labels on their drugs, it is stopped by the Hatch-Waxman Act. When the Supreme Court upheld the principles behind the Hatch -Waxman Act in 2011, it became apparent that generic drug companies could never be part of a liability lawsuit because they are not responsible for any of the ongoing monitoring that results in label changes.
Changes That Are Set To Take Place
When a name-brand drug manufacturer needs to add a warning to its label, it uses what is called a “changes being effected” supplement, or CBE. This allows the manufacturer to put a warning on its label before the FDA has had a chance to do any of its own research. The purpose of a CBE is to warn patients and doctors of any new information that has been discovered as a result of monitoring and ongoing testing of the drug.
When a name-brand drug manufacturer files a CBE and puts a new warning on its label, the company becomes a target for liability lawsuits. The assertion by lawyers who sue drug manufacturers who have updated their label is that the warning should have been part of the original label. The process the FDA has put in place for testing new medications is designed to try and catch all of the side-effects, but it often falls short. Patients who had been taking the medication before the new CBE warning and were likely affected negatively by the medication will often sue to gain financial restitution.
What Does This Mean For Generic Drug Manufacturers?
Ever since Hatch-Waxman was put into effect, federal laws have prevented generic drug makers from being responsible for updating the labels on their medications. After all, the generic companies are only duplicating the name-brand drugs in every way and creating exact duplicates. It seems logical to say that the generic manufacturers should not have to worry about ongoing testing or monitoring.
However, the FDA does not agree and it is attempting to institute a rule that would allow generic drug manufacturers to update their labels if they deem it necessary, even if the name-brand manufacturer does not make any changes. The FDA wants to give generic drugs the ability to file their own CBE if they find that something is wrong with their medication. This seems like a benevolent gesture on the part of the FDA, but it is actually more of an unnecessary burden than anything else.
By April 2017, the FDA wants to make it possible for generic drug manufacturers to file a CBE and make changes on the labels of their products. This will open up the generic manufacturers for liability lawsuits, and it will change the way that drugs are priced all over the country. Not only will the generic manufacturer have to file a CBE, but it will also have to send all of the information it has found to the name-brand manufacturer as well. This could open up the generic manufacturers to massive lawsuits from the name-brand manufacturers and that could put some generic manufacturers out of business.
Can The FDA Make These Changes?
The FDA contends that Hatch-Waxman does not prevent them from being able to change the requirements regarding CBE supplements. But that argument is not gaining any traction in the Congress or the United States legal community. As far as Congress is concerned, Hatch-Waxman covers every possible aspect of generic medication labeling and the FDA’s new rules would not be legal under the act.
There has also been a very strong response from the generic drug manufacturing industry that claims that the new FDA rules violate two Supreme Court rulings and Hatch-Waxman. The FDA has responded by saying that Hatch-Waxman mentions nothing about restricting the way the FDA handles generic drug labeling. To this point, the FDA’s arguments are falling on deaf ears.
Will The FDA Change The Rules?
It seems highly unlikely that the FDA will be allowed to alter the CBE rules with their new 2017 guidelines. Hatch-Waxman is very clear in its comprehensive assertion that it is the name-brand manufacturers that are responsible for ongoing monitoring and research and that the generic manufacturers are only responsible for printing the labels that currently exist. This protects generic manufacturers from being sued, and it is a big part of what keeps the costs of medication down.
The FDA argues that altering the CBE will force generic manufacturers to keep the labels on their drugs accurate and help to protect the public. But since the generic manufacturers have nothing to do with the development of the medication and Hatch-Waxman also preserves the ownership of all patents to the name-brand manufacturers, it is impossible to fault the generic manufacturers for what appears on their medication labels.
Many people in the generic drug manufacturing industry question the FDA’s motives with these new laws and insist that the FDA and name-brand manufacturers are trying to put generic manufacturers out of business. If these rule changes go through, that could mean generic drugs would start costing just as much as name-brand drugs. Given the choice, many people think that doctors and hospitals would choose name-brand medication since there is no price difference. But as more and more congressional representatives and judges weigh in on the FDA’s new rule ideas, it is becoming increasingly apparent that the FDA and name-brand drug manufacturers are going to have to find a different way to solve their problem.