GPhA: FDA’s proposed rule on prescription drug labeling adds $4 billion to healthcare costs

WASHINGTON — The Food and Drug Administration’s proposed rule on prescription drug labeling would add $4 billion annually to the nation’s healthcare costs, undercutting the cost savings that generic medicines have brought to America’s patients and healthcare system, according to an analysis released Wednesday by economic consulting firm Matrix Global Advisors.

“Flooding the marketplace with multiple versions of labels for the same medicines would not only seriously jeopardize patient safety, but also would burden consumers, taxpayers, large and small businesses, and state and federal governments with billions of dollars in increased costs for generic medicines,” said Ralph Neas, president and CEO of the Generic Pharmaceutical Association. “The study demonstrates that in proposing this rule, the FDA overlooked its very real financial impact on the affordability and availability of generic medications for patients and all stakeholders in the drug supply chain.”

Of the projected increase in healthcare costs, MGA estimates that Medicare and other government programs will incur $1.5 billion in annual new spending, while private insurers and patients will pay $2.5 billion per year. 

The proposed rule would expose generic drug manufacturers to substantial new tort liability costs, which in turn would require them to adjust prices to stay in business, withdraw products or decline to launch new affordable versions of brand medicines, the report cautioned. Increased liability also would accrue to pharmacists, physicians and the other principal participants in the healthcare system, beyond the substantial confusion for all stakeholders, impeding healthcare decisions and delivery.

“New labeling regulations should protect patients, facilitate care and reduce costs,” Neas said. “Unfortunately, the Proposed Rule does none of these things — the unintended consequences of this rule would be nothing short of catastrophic. The FDA and others need to take a hard look at the potential harmful impact on patient access and national healthcare costs of a Proposed Rule that changes 30 years of law requiring generic and brand medicines to have the same labels, and permits for the first time labeling changes for generic drugs without FDA approval."