The errors are that if a manufacturer sought approval for a follow-on version of regular, NPH or the Lente series, the manufacturer could apply today using Section 505(b)(2) of the Federal Food Drug and Cosmetics Act. That means, while it still requires FDA approval, unlike a regular NDA (new drug application), this would be an NDA for a modified form of a previously-approved product. Because of this, the manufacturers are not required to submit brand-new clinical trial results for it, but can rely on the original clinical trial results submitted with the original drug. That is a significantly faster review process than what a regular NDA under Section 505(b)(1) requires. In addition, under section 505(b)(2) of the Federal Food Drug and Cosmetic Act, a generic doesn’t have to be an exact duplicate of the brand-name original in order to be approved by the FDA.
On the cost discussion, the margins for insulin have steadily increased since analogues were first approved in 1996; in fact, the profit margins on insulin exceed those of testing supplies (most insurance companies get huge volume discounts on testing supplies), if that tells you anything, and manufacturers have aggressively raised prices in insulin in recent years, largely because they can get away with it because there is no generic competition. For your information, insulin is a $12 BILLION business – significantly larger than the figure of $100 million you cite. Humalog is one of Lilly’s biggest, most profitable businesses, and the Humulin business generates income of over $1 billion per year – that’s hardly a low-margin business. As to whether it is being driven offshore to the cheapest manufacturers, to a large extent, that is already happening. Lilly outsources the manufacture of all insulin vials sold in the U.S. to Hospira, Inc. (insulin pens and cartridges are still made at Lilly’s own factories in Puerto Rico and France), and Novo Nordisk recently expanded its Brazilian operation with the expectation that they would not be significantly expanding their North Carolina manufacturing, rather any excess capacity for insulin products would be made in Brazil. Although Hospira makes the stuff for Lilly in Kansas, there’s nothing stopping the company from shifting to an Indian manufacturer with a lower cost base (in fact, Biocon already has FDA approval to make insulin) if Hospira is too expensive.
I agree that greater government would be beneficial, as it is now, there is not sufficient monitoring by the FDA, and in 1997, the FDA stopped mandating that manufacturers’ conduct batch testing, giving the green light to even less regulation for the brand-name drug companies (since there are no generics being sold).
But because the margins on insulin are so attractive, there is NO shortage of interest from new would-be competition today. Right now there are 3 new insulins pending FDA approval, and a few more that are still in earlier-stage development (Phase II trials). Catch my recent post on that subject here.