This Generic Drug Threat Won't Go Away

Editor's Note: In the video, Michael Douglass refers to a quote from Mylan's president. The quote is actually from the president of Mylan's North American operations, Anthony Mauro. The Fool regrets the error.

"The unintended consequences of this rule would be nothing short of catastrophic."

That was the response from Ralph Neas, president of the Generic Pharmaceutical Association, or GPhA, to a recently-proposed FDA rule to require generic drug makers to update product safety information when they become aware of new potential safety issues.

GPhA fears that potential liability lawsuits would force generic pharmaceutical companies like Teva (NYSE: TEVA  ) , Novartis (NYSE: NVS  ) , Actavis (NYSE: ACT  ) , Mylan (NASDAQ: MYL  ) , and Abbott (NYSE: ABT  ) to raise prices for their drugs to remain profitable. Generic drugs, after all, are notably lower-margin than branded pharmaceuticals. The same press release from the quote above predicted that the rule change would cost Medicare and other government programs $1.5 billion annually and private insurers and patients $2.5 billion annually. 

How worried should generic drug makers, and their investors, be about this potential rule change if it comes to pass? And what are the implications for patients? Motley Fool health care analysts David Williamson and Michael Douglass answer in the video below.

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  • Report this Comment On March 24, 2014, at 10:15 AM, formerFDAer wrote:

    Too bad but you guys got this totally wrong. The generic must always update its label to be the same as the Brand name drug - the FDA proposed rule would allow generics to unilaterally change their labels before FDA review and prior to the brand name label change which could mean that there could be multiple sets of labeling with different warnings in the market for the same drug product and thus confuse patients and healthcare providers and provide a false sense that the generic was somehow less safe or effective than its brand name counterpart upon which the generic approval was based. if you are going to do a story on a very important issues like this you should at least have your facts and understanding straight.

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