The New Jersey Civil Justice Institute has been closely monitoring the FDA’s proposed rules that would allow generic drug manufacturers to make changes to their labels. NJCJI is concerned that such a rule would greatly increase the number of lawsuits filed against generic pharmaceutical manufacturers thus raising the cost of generic drugs and clogging up the court system.


A new study from Matrix Global Advisors confirms that our concern is valid. FDA’s Proposed Generic Drug Labeling Rule: An Economic Assessment investigates the cost of the Proposed Rule and estimates the impact on public and private generic drug spending should the rule be finalized:


The Proposed Rule would drastically alter the existing legal landscape by eliminating preemption and exposing generic manufacturers, who supply 84 percent of all prescriptions, to product liability lawsuits. This, in turn, would have substantial negative consequences for national health care spending due to the increase in generic drug prices that product liability would induce. Because the FDA fails to consider liability costs for generic manufacturers, the agency reaches the erroneous conclusion that the Proposed Rule would “generate little cost.”

In brief, the Proposed Rule could be expected to increase spending on generic drugs by $4 billion per year (or 5.4 percent of generic retail prescription drug spending in 2012). Of this, government health programs would pay $1.5 billion, and private health insurance, $2.5 billion.


NJCJI urges the FDA to consider these additional costs as the proposed rule is developed.



Additional Resources

FDA’s Proposed Generic Drug Labeling Rule: An Economic Assessment: Matrix Global Advisors, Feb. 5, 2014. (make link)

Proposed Rule: FDA, Nov. 13, 2013.

Supplemental Rulemaking Documents and Public Comments