FedEx and Generic Drugs: Connecting Global Manufacturers to Consumer Markets
We have all heard of generic drugs and realize that they are much cheaper than the original brand name products. As a matter of fact, many pharmaceutical blockbusters already face or are about to face competition with the release of alternative generic products in the next few years. Articles mentioning this “patent cliff” appear regularly in magazines and newspapers.
Since R&D, advertising, and promotion costs are so expensive, companies who discover new drugs and file for patent protection are safe from generics by intellectual property laws for a period of 20 years. Those generics contain the same active chemical compounds, but may slightly differ in the composition of inactive substances. Still, generics need to obtain regulatory approvals and demonstrate the same quality standards within a well-defined range and therefore do not alter the effectiveness and safety of the drugs.
Manufacturers follow the “Good Manufacturing Practices (GMP)” published by regulatory agencies. Since companies producing generics compete mainly on pricing, manufacturing often takes place in countries with lower production costs such as India.
The initial market launch of generics is subject to serious regulatory constraints. Yet import issues are not well addressed in the literature. The Food and Drug Administration (FDA) in the United States allows only a handful of generics manufacturers for the first 180 days after the expiration of the patent (this rule does not apply to authorized generics sold under license from the patent holder).
Companies producing generics need to submit an Abbreviated New Drug Application (ANDA) for approval by the FDA. While the ANDA application is pending, the Pre-Launch Activities Importation Request (PLAIR) FDA program allows import and storage of finished drugs for the initial launch phase on a case-by-case basis. The PLAIR rules stipulate that drugs need to arrive in a single shipment while entering the US and must match the exact amount specified on the PLAIR form. Interestingly, several approaches can be seen among manufacturers to enter the American market for the 180-day exclusivity period.
Some companies decide to send their generics to a foreign trade zone located in the US in multiple shipments and risk taking their products back to their origin for destruction if their FDA application is rejected. Other companies wait until a few days before the launch and send a large shipment of containers at once to a single port of entry in the US trusting that containers will actually arrive all at once.
For this last option FedEx Express is the transportation provider of choice with its fleet of about 45,000 road vehicles (90,000 including other operating companies) and 700 aircraft, making it the world’s largest all cargo airline. If the company cannot handle a launch shipment on its normal routes due to the substantial volume, FedEx is very capable of arranging extra sections or even dedicated charter flights to accommodate new product introductions. The full amount listed in the PLAIR application can therefore be safely sent in a single shipment to the US regardless of its size.
The contract based Priority Alert service monitors and controls the shipment along the way, and can take corrective actions to avoid splitting the shipment. In addition, FedEx is able to provide customized, cost-effective shipping services on these charter flights including adjusted flight schedules, thermal freight blankets or specialized containers and aircraft temperature control for cold chain management. Temperature-controlled trucks can also be deployed for pickup and delivery creating an end-to-end solution for controlled room temperature or refrigerated shipments.
These are just a few of the ways that FedEx is helping manufacturers of generic drugs to launch new products into the global marketplace.