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TIME: Almanac 1990
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1990 Time Magazine Compact Almanac, The (1991)(Time).iso
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082889
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08288900.007
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1990-09-17
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BUSINESS, Page 56A Prescription for ScandalPayoffs and faked lab results taint the generic-drug industry
For many consumers, generic drugs have been a welcome remedy
for sticker shock at the pharmacy counter. Designed to work as
effectively as their brand-name counterparts, generics often sell
for half the price. Since 1984, when Congress sought to make
generics more readily available by speeding up the
Government-approval process, competition has skyrocketed -- and so
has the opportunity for abuse. Now a yearlong investigation by the
Justice Department and the Food and Drug Administration is
uncovering evidence that some makers of generic pharmaceuticals
falsified laboratory test results and paid off FDA chemists to gain
quick Government approval for their products. While no drugs have
been found so far to be harmful or ineffective, the fraud is
shaking the reputation of the $7 billion generic-drug industry.
Hastening to restore confidence in its imprimatur, the FDA last
week launched a crash program to re-evaluate 30 of the most
commonly prescribed generic medications, including such prevalent
antibiotics as ampicillin and oral penicillin. Over the next six
weeks, the agency will test more than 1,000 samples to make sure
they are biologically equivalent to their brand-name counterparts.
In addition, the FDA, which had cut back its commercial inspections
because of budget restraints, announced that it will hire more
field inspectors and seek tougher punishments for unscrupulous
manufacturers.
Compared with an original, patented drug, a generic is much
less expensive to develop. After the patent on a brand-name product
has expired, usually involving a period of 17 years, a
pharmaceutical company simply replicates the original drug's
components. But in a two-year study released earlier this month,
the American Academy of Family Physicians found that many generics
are not as potent as their originals. Reason: unless certain
production tricks are used, it is often difficult to produce a
formulation that will work as well in the body as the brand-name
drug. In its approval process, the FDA relies on a generic-drug
manufacturer's in-house lab tests to establish a product's
effectiveness. But the temptation for the manufacturer to cut
corners can be strong, since the first companies to gain approval
are likely to carve out the largest market shares.
The current scandal started to unravel after Roy McKnight, head
of Pittsburgh-based Mylan Laboratories, began to suspect the FDA
of favoritism. Frustrated that a rival firm consistently won FDA
approval for its products before his company did, McKnight hired
private detectives to spy on the Government. The detectives'
snooping produced enough evidence of corruption to encourage the
Justice Department to initiate a probe. In July, Charles Chang, 47,
former head of the FDA's generic-drug division, and two co-workers
pleaded guilty to accepting a total of $24,300 in illegal gifts in
exchange for preferential treatment. The favored firms: American
Therapeutic Inc., Bohemia, N.Y.; Par Pharmaceutical, Spring Valley,
N.Y.; and Par's subsidiary Quad Pharmaceuticals of Indianapolis.
American Therapeutic has not been charged so far and denies any
wrongdoing.
As the FDA pursued its own probe, it discovered that Vitarine
Pharmaceuticals of New York City had taken a more drastic step to
ensure approval of its generic version of Dyazide, a standard
antihypertension drug developed by SmithKline. The generic-drug
company substituted Dyazide for its own capsules and sailed right
through the efficacy tests. Vitarine admitted the deception earlier
this month and has recalled the product.
Even if the misdeeds are limited to a few unscrupulous firms
and some greedy bureaucrats, the entire generic-drug industry is
likely to suffer. Generic products are so anonymous, says Dee
Fensterer, president of the Generic Pharmaceutical Industry
Association, that "when one company has a problem with one drug,
it is jumped on as a problem of all generic drugs."