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Glossary

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180-day exclusivity -- The Hatch-Waxman amendments to the Federal Food, Drug and Cosmetic Act provide "an incentive of 180 days of market exclusivity to the first generic applicant who challenges a listed brand patent by filing a paragraph IV certification and running the risk of having to defend a patent infringement suit. The first applicant to file a substantially complete an Abbreviated New Drug Application containing a paragraph IV certification to a listed patent will be eligible for a 180-day period of exclusivity beginning either from the date it begins commercial marketing of the generic drug product, or from the date of a court decision finding the patent invalid, unenforceable or not infringed, whichever is first." (Source: FDA Web site) Learn more about GPhA’s position on 180-day exclusivity and how it relates to authorized generics.

505(b)(2) -- This section of the Federal Food, Drug and Cosmetic Act “expressly permits FDA to rely for approval of a new drug application, on data not developed by the applicant such as published literature or the agency’s finding of safety and effectiveness of a previously approved drug.”

505(j) -- This section of the Federal Food, Drug and Cosmetic Act outlines the information a generic manufacturer must include in its FDA application seeking product approval. The generic company must show that the “proposed product is identical in active ingredient, dosage form, strength, route of administration, labeling, quality, performance characteristics and intended use, among other things” to a previously approved drug product. Generic companies are required to establish bioequivalence to an existing drug product.

A

Abbreviated New Drug Application (ANDA) -- An ANDA contains data that provides for the review and approval of a generic drug product. In the application, generic manufacturers must scientifically prove that their products are bioequivalent to the brand products. Learn more about how the process works.

Active Pharmaceutical Ingredient (API) -- By FDA’s definition, an API is “any component that provides pharmacological activity or other ... effect in the diagnosis, cure, mitigation, treatment or prevention of disease, or to affect... structure or any function of the body of man or animals.”

Authorized generic -- Authorized generics are brand products masquerading as generics. They are merely products that go through the same brand manufacturing line, yet at the end of the line, one bears the brand label, whereas the other bears the generic label. So, they are identical products with different labeling. These products compete with the true generic during the 180-day exclusivity period awarded to the first generic company to successfully challenge a brand patent. Learn more about why GPhA opposes the practice of authorized generics.

Average Manufacturing Price (AMP) -- All pharmaceutical manufacturers must report the average manufacturing price to the Center for Medicare and Medicaid Services (CMS). CMS rebate prices are based on AMP. For states, rebates on generics are AMP-11%; brands are AMP-15.1% or best price, whichever is lower. Brands must sell to Medicaid at the lowest best price they sell to any commercial customer.

Average Sales Price (ASP) -- Some states, and even the federal government, have been considering referencing the average price at which prescription medicines are purchased by pharmacies, hospitals, and other dispensers as a way to reimburse under the Medicare and Medicaid programs.

Average Wholesale Price (AWP) -- AWP is a reference calculation used in some states to formulate reimbursement to pharmacies for Medicaid. AWP is published quarterly in the Red Book.

B

Biological medicine -- Biological medicines, or biopharmaceuticals, are generally large protein molecules derived from living sources, as opposed to a chemical substance. Examples include insulin, human growth hormone and antibiotics. Learn more about GPhA’s position on the creation of an abbreviated approval pathway for generic biopharmaceuticals.

C

Center for Biologics Evaluation and Research (CBER) -- CBER is the division of FDA responsible for the regulation of biological and related products. Current authority for this responsibility resides in Section 351 of the Public Health Service Act and in specific sections of the Food Drug and Cosmetics Act.

Center for Drug Evaluation and Research (CDER) -- CDER is the division of FDA responsible for the evaluation and approval of new brand and generic prescription drugs as well as over-the-counter medications. CDER also monitors drug advertisements and enforces the Food, Drug and Cosmetics Act.

Centers for Medicare and Medicaid Services (CMS) -- CMS administers the Medicare program and works in partnership with the states to administer Medicaid, State Children’s Health Insurance Program, and health insurance portability programs.

D

Data Exclusivity -- Also known as “market exclusivity,” this is a five-year period during which generic companies and the FDA cannot use data submitted by a brand company to approve or review a generic version of the brand product. A five-year period is the standard in the United States. For most developed countries, the standard is three years.

Declaratory Judgment -- This is a judgment of a court declaring what rights each party in a dispute should have, but does not order any action or result in any legal damages. It is usually requested when a party is threatened with lawsuit and the threatened lawsuit is not filed.

The Drug Price Competition and Patent Term Restoration Act (Hatch-Waxman Act) -- This 1984 law spurred the growth of the generic drug industry and streamlined the generic approval process, allowing generic companies to focus on proving that their drugs are equivalent to the brand product, without requiring extensive testing that would duplicate work already done by the brand companies. This process, the Abbreviated New Drug Application process, allows for the acceleration of the FDA approval of generic pharmaceuticals. The law also provided patent term restoration for brand companies to compensate for the FDA regulatory review period.

F

Federal Food Drug and Cosmetic Act -- Signed into law in 1938, the Act required new drugs to be shown safe before marketing and authorized factory inspections.

M

Medicare Modernization Act (MMA) -- Signed into law in 2003, the MMA reformed the Medicare program to include a prescription drug benefit. It also closed some of the loopholes in the Hatch-Waxman Act that delayed access to affordable generic medicines.

N

New Drug Application (NDA) -- An NDA is filed for the approval of a new drug product. According to the FDA, the NDA must include “scientific technical viewpoints for review, including chemistry, pharmacology, medical, biopharmaceutics, and statistics.” If the NDA is approved, the product may be marketed in the United States.

New Drug Code (NDC) -- NDC is a classification that reflects the type of drug being submitted to the FDA and its intended uses. 

New Molecular Entity (NME) -- An NME, also referred to as a new chemical entity, is a unique compound that has not previously been approved by the FDA.

O

Orange Book -- This publication identifies drug products approved on the basis of safety and effectiveness by the Food and Drug Administration under the Federal Food, Drug, and Cosmetic Act. Patent listings can be found in this online book, which is updated daily. 

Over-the-Counter (OTC) -- These are medicines that are “safe and effective for use by the general public” without a prescription.

P

Paragraph IV certification -- When a generic company files an ANDA, it must certify to all existing patents. This certification, called a "Paragraph IV filing," states that the generic product does not infringe on the listed patents or that those patents are not enforceable. If a Paragraph IV certification is filed, then the brand company is notified and has 45 days to file a patent infringement action against the generic company. After the suit has been filed, the FDA cannot approve of the application until the generic company successfully defends the suit or until 30 months, whichever comes first. (Source: paragraphfour.com)

Public Health Service Act (PHS Act) -- The PHS Act governs the submission of the biologics license application (BLA) process. Upon approval of the BLA, a manufacturer would receive a single biologics license to market the product in interstate commerce. Learn more about GPhA’s position on the creation of an abbreviated approval pathway for generic biopharmaceuticals.

Red Book -- The Red Book lists drugs and their prices. In general, the Red Book lists the average wholesale price (AWP) of drugs. The price list is updated quarterly. The AWP is set by manufacturers and used by Medicare to set reimbursement based on the AWP. (Source: healthbridgeinc.com)

Reference Listed Drug (RLD) -- An RLD is a medicine that has been approved by the FDA and is listed in the Orange Book. Generic companies must designate an RLD when submitting an ANDA so that the FDA will know to which brand drug the generic will be compared.

T

Therapeutic Equivalence (TE) -- This is a rating granted by the FDA when the generic pharmaceutical manufacturer proves that its drug has the same active ingredients, same dosage form, same standards for purity and quality, same standards for manufacturing, and same amount of drug absorbed over the same time as the equivalent brand product. Generics must meet the same stringent government standards for strength, purity and potency as the brand name version. Learn more about TE.

U

U.S. Pharmacopeia (USP) -- USP is the official public standards-setting authority for all prescription and over-the-counter medicines, dietary supplements, and other healthcare products manufactured and sold in the United States.