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Encounters of the Third Sector

As I walked the floor at the International Generic Pharmaceutical Alliance (IGPA) conference in Toronto, I couldn’t help but feel a little gratified. Companies that were once disavowing the 505(b)(2) approval pathway are now driving the conversation. Investors that once shied away from 505(b)(2) products due to their unknown reputations despite the relatively low risks have recognized the opportunities for new drugs to gain approval.

The buzz around 505(b)(2) grows not only at IGPA, but throughout the industry as well. So what do we call these products approved through 505(b)(2)?

Typically, products are sorted into two categories: generics and innovative. Between the two groups lies a third. Products in this group have a brand, possess one or more innovative features — such as unique route of administration, new formulation or new technologies — and deliver an advantage to patients, payers or providers. The advantages could include improved drug efficacy, safety, patient experience and outcomes.

While there is yet to be an official name, I’ve seen this group be referenced a number of times at IGPA as the “Third Sector.”

IGPA slide (2)

In the past, I’ve mentioned the industry’s use of “super generic” or “hybrid applications” as descriptors. These designations, specifically the use of the word “generic,” could have a similarly negative effect as the lack of a name. “Generic” could give the perception that these products are under the same restrictions as off-patent U.S.-approved drugs. And, that is very unfortunate because products advanced through the 505(b)(2) pathway can actually gain up to seven years of market exclusivity.

As a new wave of 505(b)(2) products are used to close the gap between generics and innovative products, the lack of a formal name could be causing investors who are on the fence about 505(b)(2) to withhold resources, despite the benefits that these “Third Sector” products continue to confirm.