Understanding the FFDCA and FDAAA acts of the USA and its impact

By Avishek Majumder & Priya Chetty on March 28, 2019
Image by Marco Verch on Flickr

Federal Food, Drug, and Cosmetic Act (FFDCA) of the United States were enacted to prevent the adulteration of food and drugs and their misbranding (Wozniak et al., 2012). On the other hand, the Food and Drug Administration Amendments Act (FDAAA act) was signed in 2007 to review some of the provisions of the FFDCA (FDA, 2018a). Food and Drug Administration Amendments Act (FDAAA) targeted user fee acts whereas, FFDCA focused on prescription drugs and medical devices. The FDAAA act was aimed to add new funding and resources to food and drug administration (FDA) to review the new drugs and medical devices (FDA, 2018b).

Understanding the FFDCA act of the USA

Chapter V of the FD&C Act, mentions the regulations for drugs and devices (FDA, 2018a). According to the FFDCA, it is mandatory to include the direction for safe use on drug labels authorized by the Food and Drug Administration (FDA) with factory and plant inspections. FDA was made as the regulatory authority to inspect the first use of medical devices as well as cosmetics. The Federal Food, Drug, and Cosmetic Act posed the need for pre-market approval of a new drug by the FDA to ensure public safety. The false therapeutic claims about the drugs were put to rest (Cohen et al., 2016). The act gave the FDA to regulate the safety of drugs, food and cosmetics. However, its latest amendments came into action in 2017.

The new amends are aimed to charge foreign and native pharmaceutical companies and medical device manufacturers fees. The amend also involves the speedy reviewing process mandated for FDA. FFDCA used these fees to fund faster drug and medical device review processes (FDA, 2018a). This helped the companies to manage timely availability of the latest innovations, drugs and devices to the US patients. The new amends also made it mandatory that the companies will provide full reports about the safety of new drugs and medical devices. The new amend also allowed the FDA to designate a drug as a prescription drug or over the counter (OTC) drug.

Understanding the FDAAA act of the USA

The main motive of the Food and Drug Administration Amendments Act (FDAAA) was to re-shape the risk management in pharmaceuticals (FDA, 2018b). The amends to the FDAAA gave the FDA the authority to report on the risk management of the new drugs. In addition, it also allowed the FDA to audit complex and comprehensive reviews necessary for new drugs and devices. The act mandated the need for details about the risk evaluation and mitigation strategies to be submitted by drug or medical device sponsors to FDA. The FDAAA act puts the provision of changes in the labelling of drugs and devices for public safety.

The act also allows the FDA to regulate the marketing strategies and clinical trials of the new medical inventions based on the associated potential risks (FDA, 2018b). Furthermore, the act mandates risk evaluation and mitigation strategies (REMS) as a part of the marketing application submitted to the FDA by the sponsors. Some of the requirements of REMS are (Hutt, 2009):

  • The size of the patient population,
  • the expected benefit of the medical product to population,
  • tentative duration of treatment and,
  • the extent of harm.

FDAAA act also mandates that the pharmaceutical company’s need to apply for different clinical trial applications and include additional information on clinical trials data bank.

Impact of FFDCA and FDAAA act on the Indian drug manufacturers

According to Wileman & Mishra, (2010), FFDCA for drug safety delays the review of any new Indian drug by a month. In other words, the regulatory acts as a barrier to swift drug reviews causing drug production lags. Where as it takes only a couple of weeks to review USA based drug companies. The FDA Reauthorization Act of 2017 review process also levies higher user-fee to Indian drug companies as compared to their US counterparts (FDA, 2018a). This, subsequently impacts the Indian companies, especially the small and medium scale industries to back out.

In addition, the FFDCA has also caused increased warnings and import alerts with respect to violations of Indian manufacturing standards and drug quality. This has discouraged many large scale drug companies to export generic drugs to the USA (IBEF, 2018). Furthermore, The FDAAA act has also caused increased scrutiny of Indian manufacturing plants leading to increased risks of business in the USA. As per the norms of the FDA, inspections in India has increased by 18% in 2018 as compared to 2017. As a result, Indian companies are struggling to ensure generic drugs with a low price tag and safe (Economic Times, 2018). Increased inspections and warnings led to a decrease in the production and export of generic drugs to the USA.

Increased inspections from FFDCA and FDAAA act
Increased inspections from FFDCA and FDAAA act

Financial impact of the FFDCA and FDAAA act on the Indian drug manufacturers

FDAAA and FFDCA act has caused a heavy impact on the generic drug pricing. The impact on the Indian industry is implicated by the sharp fall from 19.30% during 2012-2017 to 7%-10% during 2018-2020 (Economic Times, 2018). The exports during the period of 2015 to 2018 have also plunged by 10%. The FDAAA act and FFDCA act has not only impacted the small and medium scale industries but also the large scale manufacturers like Lupin, Aurobindo, and Sun Pharma.


Priya is the co-founder and Managing Partner of Project Guru, a research and analytics firm based in Gurgaon. She is responsible for the human resource planning and operations functions. Her expertise in analytics has been used in a number of service-based industries like education and financial services.

Her foundational educational is from St. Xaviers High School (Mumbai). She also holds MBA degree in Marketing and Finance from the Indian Institute of Planning and Management, Delhi (2008).

Some of the notable projects she has worked on include:

  • Using systems thinking to improve sustainability in operations: A study carried out in Malaysia in partnership with Universiti Kuala Lumpur.
  • Assessing customer satisfaction with in-house doctors of Jiva Ayurveda (a project executed for the company)
  • Predicting the potential impact of green hydrogen microgirds (A project executed for the Government of South Africa)

She is a key contributor to the in-house research platform Knowledge Tank.

She currently holds over 300 citations from her contributions to the platform.

She has also been a guest speaker at various institutes such as JIMS (Delhi), BPIT (Delhi), and SVU (Tirupati).