"We are seeing a lot more people a little afraid of them," said Robert Maycon, a pharmacist at the store and board member of a Philadelphia organization of retail druggists. "They will say, 'Don't give me generics.' . . . Their confidence in generics has been compromised."
The federal government's efforts to restore confidence in generic drugs are now supposed to move beyond appraising the problems and into solving them.
The House Energy and Commerce investigations subcommittee, which has investigated the industry for the last 18 months, soon will draw up proposals to better regulate makers of generic drugs. And the FDA says it must strengthen its drug-review policy and beef up plant inspections.
Despite all the revelations, industry insiders say, the scandal has not hurt sales. But they acknowledge that the public's opinion of generic drugs has been lowered.
"How do you feel when you are being beaten up and the beating is just about over?" asked Jay Molishever, a spokesman for the Generic Pharmaceutical Industry Association. "The industry has worked very hard and very long to provide patients and physicians with the assurances that it has of generic quality and safety and efficacy. . . . These instances have marred all our good work."
At first, the instances involved companies that received favored treatment after paying off FDA officials. To date, three former agency employees, two companies and three corporate executives have been convicted.
The scandal widened in the summer as the FDA investigated 11 firms suspected of wrongdoing. The agency uncovered "serious" problems with nine of them, including instances of filing fraudulent drug applications and cutting corners in manufacturing.
More than 300 companies make generic drugs.
The FDA then inspected 20 of the top generic firms to find out whether the problems were more widespread. The agency has found one company that falsified product records and three with manufacturing problems, according to FDA Commissioner Frank Young.
In another review, the FDA analyzed more than 2,500 samples of the 30 most- prescribed generic drugs and determined that nearly 99 percent of the drugs met accepted standards.
In all, Young said, the investigations resulted in 83 recalls of products.
"Clearly, these violations constitute unacceptable practices and have demanded strong corrective actions," he testified. "Yet it is important to
put these recalls into proper perspective from the standpoint of public health."
He gave generic drugs a qualified endorsement, saying, "We are cautiously reassured, since we have seen no evidence to date indicating that generic medications now in use pose a serious safety threat."
U.S. Rep. John D. Dingell (D., Mich.), who chairs the House investigations subcommittee, is not satisfied. He described the process of approving generic drugs as "in disrepair." He warned that unless the system was reformed, the arbitrariness that led to corruption would remain.
Though Young acknowledged that the agency had considerable work ahead, he emphasized that "we are eager to continue on the path of full reform."
Young, however, is about to leave the agency to become deputy assistant secretary in the Department of Health and Human Services. Though he has critics, some observers have expressed fear that his departure will make it more difficult to reform the generic-drug industry.
"I think it is a terrible thing to happen," said Arthur Kibbe, director of scientific affairs for the American Pharmaceutical Association. "Unless the administration acts quickly to find a quality replacement who has an understanding of the generic-drug business, the progress that might have been made over the next few months might be slow."
Subcommittee staff members say that early next year they will issue a report recommending at least four changes. They said some changes could affect industries beyond generic drugs, from brand-name pharmaceuticals to seafood. Among the changes likely to be considered are:
* Opening the approval process to public scrutiny. Applications are now shrouded in secrecy for competitive reasons. The change may help ensure that one application is not improperly favored over others.
* Increasing the FDA's clout to impose sanctions on companies. The measures could allow the FDA to prohibit a firm from applying for product approval or make it easier for the agency to yank drugs off the market.
* Giving the agency more authority to quickly recall generic drugs when it finds a problem. The FDA now must ask companies to voluntarily withdraw a product. Though the firms usually comply, sometimes the two sides argue about it, delaying the recall.
* Requiring companies to pay user fees, perhaps for filing applications or for FDA plant inspections. The fees could enable the agency to add staff, improve its record-keeping or add space.
The House investigations subcommittee is waiting for the FDA's legislative proposals.
"I think regulatory changes are needed to ensure an even playing field," said William Haddad, chairman of the Generic Pharmaceutical Industry Association. "That means that regulation is clear and precise and provides a clear road map."
But if the past is any indication, one of industry's larger concerns could well center on the imposition of user fees. Haddad doubts that such a proposal could make it through Congress.
Some observers say user fees could force some smaller companies out of business.
"The danger is, if you make the ante so high, you keep players out of the game," said Molishever of the Generic Pharmaceutical Industry Association. ''It's competition that keeps prices low. . . . We are anticipating that prices won't go up."
Hemant Shah, an independent health-care analyst for HKS & Co. Inc. of Warren, N.J., said: "The FDA might ask for more regulations, but all those regulations are not going to add much to making and marketing generics."
Ironically, Shah said, the scandal has not affected the sales of 13 widely prescribed generic drugs he monitors.
Shah said the average market share of those generic drugs had grown to 63 percent in August from 51.9 percent in January. It was the sharpest rise, he said, since he started to track the group almost four years ago.
"Our perception is that though there is some concern out there among patients, there has not been a major business falloff," Molishever said.
The main problem that may yet hit a number of companies has been the dearth of generic-drug approvals this year, industry observers say. From a high of 59 approvals in April, the FDA approved only two drugs in July, seven each in August and September and just one in October.
Nevertheless, industry insiders say the shakeout may be all for the best.
"It will mean, every time a cop comes around the block, it will make you more sure of yourself," said Martin Zeiger, executive vice president for
Rugby Laboratories in Rockville Centre, N.Y. "We think that is beneficial for the industry and for those of us who try to do a good job.
"We think it will result in more confidence by the consuming public," he said. "But how long that will take, I don't know."
