Generic Medicine - Industry History

In the 1960s, a government effort to prove the safety and effectiveness of pharmaceuticals manufactured prior to 1962 helped to launch the generic pharmaceutical industry. In 1962, the National Research Council of the National Academy of Sciences was instructed to evaluate all drugs that had been approved for use prior to that year. Under its Drug Efficacy Study Implementation (DESI) program, the National Research Council reviewed more than 3,000 products. The list produced by this review described which products were effective for all claimed indications, and which were probably or possibly effective for claimed indications, and those which were ineffective for claimed indications.

As a result of the review of these products, generic manufacturers were able to file for approval to manufacture products that had been ruled effective without the need to conduct biostudies. Thus, a number of pre-1962 medications, if made to the prescribed chemical formula, were able to enter the market without additional study.

It wasn't until passage of the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as Hatch-Waxman, that the generic industry truly blossomed. This landmark law created the regulatory mechanism under which the Food and Drug Administration can approve affordable pharmaceuticals. As President Ronald Reagan said at the time, Hatch-Waxman provided "regulatory relief, increased competition, economy on government, and best of all, the American people will save money, and yet receive the best medicine that pharmaceutical science can provide."

Over the past two decades, President Reagan's prediction has proven to be true. The generic industry has grown dramatically, from $1 billion in annual revenues to $63 billion in the United States today. From a modest beginning, today nearly 69% of all prescriptions are filled with generic medicines. And the value remains -- roughly 16 cents of every dollar spent on prescriptions are spent on generic medicines.

The Generic Pharmaceutical Association (GPhA) itself was founded in 2001, following the merger of three industry trade organizations: the Generic Pharmaceutical Industry Association, the National Association of Pharmaceutical Manufacturers, and the National Pharmaceutical Alliance. The three groups represented similar members, with the former two placing a greater emphasis on scientific issues and the latter focusing on sales and marketing issues. As GPhA, the industry now speaks with a stronger, unified voice before federal and state governments, the courts, and the court of public opinion.

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