As the chaos at the US Food and Drug Administration over the past several months somewhat settles down, the realization of the new future is alarming.
The changes are set to be especially disruptive for the generic drug industry, as amidst the tsunami of reduction-in-force terminations, the agency said goodbye to the policy division in the Office of Generic Drugs.
The Division of Policy Development in the Office of Generic Drug Policy was created over a decade ago, in part to implement the first iteration of the Generic Drug User Fee Amendments.
This division also wrote thousands of product-specific guidance documents to lay out approval pathways for first-in-class or complex generics, explained former FDA commissioner Scott Gottlieb during a segment with CNBC earlier this week.
Given his previous post at the FDA, Gottlieb was asked by one of the news anchors if the government had consulted with him about the reductions at the agency.
“These things are happening very quickly. From my understanding, DOGE [Department of Government Efficiency] is prescribing the level of headcount reductions that they want to achieve, and then the leadership of the different agencies is actually implementing the plan to achieve that. So, DOGE isn’t actually directing that this office should be eliminated or [that] this office should be eliminated,” he explained.
So, why did the OGDP end up on the chopping block? The clue might be in its name, Gottlieb suggested.
“The presumption is that they eliminated the office that had policy in its title, thinking it was redundant. Now, maybe it was misnamed, but it wasn’t a policy office, it was a review function office. I don’t know how they’re going to approve new first-in-class generic drugs without the function of that office,” he cautioned.
“This will have profound implications on access to generics."
According to Gottlieb, during the first Trump administration, the FDA approved 970 generic drugs in 2018, beating the record the following year with 1,170 approvals – statistics that were touted by the president.
“This was something the administration was very focused on. Now, I believe the White House doesn’t know that this office was eliminated and what the implications are going to be. They’re not dealing at that level. This will have profound implications on access to generics,” he warned.
OGDP and specifically its Division of Policy Development had other functions outside publishing PSGs. These included leading the FDA’s implementation of the Drug Competition Action Plan, processing voluntary ANDA withdrawals, managing the process of issuing covered product authorizations, and many more.
As Kurt Karst, director at Hyman, Phelps & McNamara, wrote in the firm’s FDA law blog, it is all in the past now.
“How these functions critical to the development and approval of generic drugs will now be handled (and by whom) is unclear. But what seems quite clear is this: generic drug access, availability, and affordability will suffer without DPD. We can only hope that the powers that be will promptly reconsider this move,” he highlighted.
Tariffs To Clash With Section 232 Investigation
Earlier in April, Gottlieb also discussed tariffs and their potential impact on generic drugs on CNBC.
The former FDA commissioner argued that when president Donald Trump discusses national security concerns, it is not about big brand companies manufacturing drugs in Europe, but overreliance on countries like China for antibiotics and basic generics.
However, if tariffs are placed on generic drugs, they may not only lead to increased prices but also halt production. This is because off-patent firms do not have the same cushioning and price absorption ability as branded drug makers, feared Gottlieb.
While it might be easier to move European-based branded drug manufacturing to the US – with some firms already announcing some plans to do it – shifting the supply of key starting materials, of which 70% come from China, and active pharmaceutical ingredients, which are mostly manufactured in India, will not be solved by the same remedies.
“That whole supply chain is going to be hard to move to the US without some kind of effort on the administration to reduce regulatory barriers, maybe provide some targeted subsidies to move that back, because those are very low margin products,” he said.
Similar sentiments were shared last year, when the BIOSECURE Act made the headlines, with experts pointing to tax incentives to reshore drug substance and product manufacturing.
Gottlieb also found some irony between potential tariffs and the recently announced Section 232 national security investigation, which aims “to determine the effects on the national security of imports of pharmaceuticals and pharmaceutical ingredients.”
“The very thing they’re trying to do with this Section 232 provision, which is a national security provision, is to try to address this supply chain that’s moved to China. Most of that supply chain is these generic drugs, and they’re just going to get out of the market, I fear, if the tariffs are imposed on them,” he explained.
As such, the “China issue” and the “Europe issue” should be treated separately as they require different solutions.
“The European issue is largely a trade deficit issue. The China issue is a national security issue, but it’s not going to be amenable to the same remedies that they’re trying to oppose on the European issue,” Gottlieb added.
The off-patent trade group Biosimilars Forum has also expressed its concerns about the impact of the Section 232 investigation.
While the organization welcomed a national conversation on strengthening the pharmaceutical supply chain, “tariffs that directly target the biosimilar supply chain – from the original ingredients to the finished products – could threaten the future viability and existence of the biosimilars industry,” said Juliana Reed, executive director of the Biosimilars Forum.
Executive Order To Promote Generics And Biosimilars
Yet, at the same time, president Trump has signed an executive order to “expand on the historic efforts of his first term to lower prescription drug prices.”
The EO would also bring “radical transparency and competition to prescription drug markets,” such as increasing the availability of generics and biosimilars and reevaluating the role of pharmaceutical benefit managers.
This action was applauded by the Biosimilars Forum, which was “pleased to see the Trump administration announce meaningful action on several fronts, including reforms to make biosimilars available quickly and efficiently to all Americans who need them.”
