Glossary

The words the industry uses

51 terms, defined plainly.

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#A B C D E F G H I M N O P R S T U W

30-month stayExclusivity: An automatic delay of up to 30 months in FDA approval of an ANDA when the patent holder sues within 45 days of receiving notice of a Paragraph IV certification.
180-day exclusivityExclusivity: A period during which FDA cannot approve later generic versions of a drug. It goes to the first applicant that files a substantially complete ANDA with a Paragraph IV certification. It can be forfeited under rules added by the Medicare Modernization Act of 2003.
AB ratingOrange Book: An FDA therapeutic equivalence code meaning a product is considered therapeutically equivalent to its reference drug, with any potential bioequivalence problems resolved by adequate data. Most state substitution laws allow pharmacists to substitute AB-rated generics.
Active pharmaceutical ingredient (API)Manufacturing: The substance in a medicine that produces its intended effect. A finished tablet also contains inactive ingredients (excipients) such as fillers, binders and coatings.
ANDAApproval: Abbreviated New Drug Application. The application a company files with FDA to market a generic drug. It relies on FDA's prior finding that the reference drug is safe and effective, so it does not repeat clinical trials; it must show the generic is the same in active ingredient, strength, dosage form, route and labeling, and that it is bioequivalent.
ASHPShortages: The American Society of Health-System Pharmacists. It maintains a drug shortage list separate from FDA's, using a broader definition, so its counts are usually higher than FDA's.
Authorized genericMarket: A brand-name drug sold without the brand name on its label, under the brand's NDA rather than a separate ANDA. It can be marketed during another company's 180-day exclusivity period.
AWPPricing: Average Wholesale Price. A list-price benchmark published by commercial compendia. It is not an actual average of transaction prices and usually sits well above what pharmacies pay.
BioequivalenceApproval: The finding that a generic delivers the same amount of active ingredient into the bloodstream over the same time as the reference drug. FDA requires the 90% confidence interval of the ratio of key measures (AUC and Cmax) to fall within 80% to 125%.
BiosimilarApproval: A biological product highly similar to an FDA-licensed reference biologic with no clinically meaningful differences in safety, purity and potency. Biosimilars are licensed under section 351(k) of the Public Health Service Act, created by the BPCIA of 2010, and are not generics.
CGMPQuality: Current Good Manufacturing Practice. FDA regulations (21 CFR Parts 210 and 211 for finished drugs) that set minimum requirements for the methods, facilities and controls used to make medicines.
Class I recallRecalls: A recall where there is a reasonable probability that using or being exposed to the product will cause serious adverse health consequences or death (21 CFR 7.3).
Class II recallRecalls: A recall where use of the product may cause temporary or medically reversible adverse health consequences, or where the probability of serious harm is remote.
Class III recallRecalls: A recall where use of the product is not likely to cause adverse health consequences, such as a labeling issue that does not affect safety.
Cmax and AUCApproval: Two measures used in bioequivalence studies. Cmax is the peak concentration of drug in the blood; AUC (area under the curve) is total exposure over time.
Competitive Generic Therapy (CGT)Approval: An FDA designation created by the FDA Reauthorization Act of 2017 for drugs with inadequate generic competition. A designated product can receive expedited review, and the first approved applicant may earn 180-day CGT exclusivity.
Complex genericApproval: A generic with a complex active ingredient, formulation, route of delivery or drug-device combination, such as many inhalers, injectables, and long-acting products. They are harder to develop and copy, so fewer exist.
Dispensing feePricing: The amount a payer pays a pharmacy for the professional service of filling a prescription, on top of the ingredient cost.
DMFManufacturing: Drug Master File. A confidential submission to FDA with detailed information about facilities, processes or materials (often an API) used in making a drug. ANDA applicants can reference a supplier's DMF.
Drug shortage (FDA definition)Shortages: A period when the demand or projected demand for a drug within the United States exceeds its supply. FDA's database lists shortages it has confirmed under this definition.
DSCSASupply chain: The Drug Supply Chain Security Act of 2013. It requires an electronic, interoperable system to identify and trace prescription drugs at the package level as they move through the US supply chain.
ExcipientManufacturing: An inactive ingredient in a medicine, such as a filler, binder, dye or preservative. Generics may use different excipients than the brand.
FDA Form 483Quality: A form FDA investigators issue at the end of an inspection listing observed conditions that may violate the Food, Drug, and Cosmetic Act. It is not a final agency determination.
Federal Upper Limit (FUL)Pricing: A cap CMS sets on federal Medicaid reimbursement for certain multiple-source drugs, calculated from average manufacturer prices.
First genericApproval: The first approved ANDA for a reference drug that had no prior generic. FDA publishes a yearly list of first generic approvals.
FormularyCoverage: A health plan's list of covered drugs, often split into tiers with different cost-sharing.
Gag clausePricing: A contract term that barred pharmacists from telling patients when paying cash would cost less than using insurance. Two federal laws signed in October 2018 banned them for private plans and Medicare.
GDUFAApproval: The Generic Drug User Fee Amendments, first enacted in 2012 and reauthorized every five years. Industry fees fund FDA's generic drug program in exchange for review performance goals.
Hatch-Waxman ActPolicy: The Drug Price Competition and Patent Term Restoration Act of 1984. It created the modern ANDA pathway for generics and, in exchange, patent term restoration and exclusivity periods for innovators.
Import alertQuality: An FDA notice that allows products from a firm or facility to be detained at the US border without physical examination, often after inspection findings.
Interchangeable biosimilarApproval: A biosimilar that meets additional FDA requirements so it may be substituted for the reference product at the pharmacy without prescriber intervention, subject to state law.
MACPricing: Maximum Allowable Cost. A ceiling a payer or PBM sets on what it will pay a pharmacy for a multiple-source generic. MAC lists vary by payer and are often not public.
NADACPricing: National Average Drug Acquisition Cost. A CMS benchmark of the average price retail community pharmacies pay to acquire drugs, based on a monthly survey and updated weekly. It is not what a patient pays.
NCE exclusivityExclusivity: Five years of exclusivity for a new chemical entity, during which FDA generally cannot accept a generic application (four years if it includes a Paragraph IV certification).
NDAApproval: New Drug Application. The application to market a new drug, including full safety and effectiveness data. Brand drugs are approved under NDAs.
NDCIdentifiers: National Drug Code. A unique 10-digit, three-segment number (labeler, product, package) that identifies a drug package in the US. Billing systems use an 11-digit version.
NDMAQuality: N-Nitrosodimethylamine, a probable human carcinogen and one of the nitrosamine impurities behind the valsartan recalls that began in 2018.
NitrosaminesQuality: A class of chemical compounds, some of which are probable carcinogens. FDA sets acceptable daily intake limits for nitrosamine impurities in medicines.
NPIIdentifiers: National Provider Identifier. A unique 10-digit ID issued by CMS to health care providers and organizations, including pharmacies. The public NPPES registry lists them.
Orange BookOrange Book: FDA's publication Approved Drug Products with Therapeutic Equivalence Evaluations. It lists approved drugs, therapeutic equivalence codes, and the patents and exclusivities linked to each NDA.
Paragraph IV certificationExclusivity: A statement in an ANDA that a listed patent is invalid, unenforceable or will not be infringed by the generic. It often triggers patent litigation and a 30-month stay of approval.
Patient assistance programPaying less: A program, often run by a manufacturer or foundation, that provides medicines free or at reduced cost to eligible patients.
PBMMarket: Pharmacy benefit manager. A company that administers prescription drug benefits for health plans and employers, including pharmacy networks, formularies, claims processing and manufacturer rebates.
Reference listed drug (RLD)Approval: The approved drug product a generic applicant compares its product to in an ANDA, usually the brand.
Reference standardApproval: The specific drug product FDA selects that generic applicants must use in bioequivalence studies. It is often, but not always, the RLD.
Spread pricingPricing: A practice in which a PBM charges a health plan more for a drug than it pays the pharmacy and keeps the difference.
Sterile injectableShortages: A medicine given by injection that must be produced without microbial contamination. Sterile injectables account for a large share of US drug shortages because they are hard to make and many sell for low prices.
Therapeutic equivalenceOrange Book: FDA's determination that products are pharmaceutical equivalents and can be expected to have the same clinical effect and safety profile when used as labeled.
Usual and customary pricePricing: The cash price a pharmacy charges the general public for a prescription. Many payer contracts reference it.
WACPricing: Wholesale Acquisition Cost. A manufacturer's list price to wholesalers, before discounts or rebates.
Warning letterQuality: An FDA letter notifying a firm of significant regulatory violations and requesting corrective action. FDA posts warning letters publicly.