The 505(b)(2) drug approval pathway is a regulatory pathway in the United States created by the Hatch-Waxman Amendments of 1984 and located under the Federal Food, Drug, and Cosmetic Act. The 505(b)(2) pathway allows for an abbreviated process for the approval of new drug applications (NDAs) that represent modifications to previously approved products. Below is a breakdown of the 505(b)(2) pathway compared to other prominent approval drug pathways: 

505(b)(2) Pathway: 

The 505(b)(2) approval process is designed for drugs that represent modifications of previously approved products. These modifications could include:

• New Formulation
• New Dosage Form
• New Dosing Regime
• New Route of Administration
• Combination Product
• New Indication for an Existing Product

During the approval process, the 505(b)(2) applicant can use the FDA’s previous findings of safety and efficacy for an existing drug, while providing new data to support the changes made to the original product. This leads to a shorter and less costly development/approval process compared to a traditional NDA. 

Traditional NDA (New Drug Application):

The traditional NDA, also known as the 505(b)(1) pathway is the standard approval pathway for entirely new drugs. The NDA requires extensive data from preclinical and clinical studies from the applicant in order demonstrate the safety and efficacy of the drug. Earning drug approval under the traditional NDA is a time-consuming and often very expensive process.

ANDA (Abbreviated New Drug Application) for Generics:

An ANDA, also known as the 505(j) pathway exists for generic version of previously-approved brand name drugs. Rather than demonstrating safety and efficacy through new clinical trials, the generic drug manufacturer must demonstrate bioequivalence to the reference listed drug (RLD). In other words, that the drug is the same in terms of quality, performance, and intended use. The provides a timely and efficient manner for generic drugs to gain approval and enter the market. 

The 505(b)(2) pathway provides an intriguing option for manufacturers seeking a hybrid between the traditional NDA process and the ANDA for generic products. 

The 505(b)(2) pathway is uniquely suited for drugs that aren’t completely new (which would generally go through the traditional NDA process) and aren’t generic replicas (which would go through the ANDA process). As explained previously, drugs that qualify for 505(b)(2) might involve changes in dosage form, strength, formulation, administration route, or indication. To delve a bit deeper into the modifications that might warrant a 505(b)(2) approval: 

• New Formulation: If a manufacturer removed a certain preservative or chemical from a drug, to create a similar but mildly-different product. 

• New Dosage Form: If a previously approved drug was in tablet form, and another company develops a liquid formulation or a controlled-release version.

• New Dosing Regimen: If an approved drug is taken twice daily, and a new formulation allows for once-daily dosing.

• New Route of Administration: If a drug was initially approved as an oral drug, and another company later develops an injectable form.

• Combination Product: A manufacturer combines two or more previously approved drugs into a single new product.

• New Indication for an Existing Product: If a drug was initially approved for depression and later is found to be effective for anxiety.

In the year of 2023, there has been a tremendous wave of new 505(b)(2) pathway drug approvals. Although 505(b)(2) has existed since 1984, it was not actively enforced and perpetuated by the Centers for Medicare & Medicaid Services until late 2022/early 2023.

During this period of time, the Centers for Medicare & Medicaid Services along with various pharma manufacturers have actively worked to achieve 505(b)(2) approvals and enforce 505(b)(2) status to certain drugs. More specifically, CMS has granted HCPCS codes to a very large number of drugs that had previously been approved under the 505(b)(2) pathway or qualified for 505(b)(2) status, but had not yet recieved their own distinct HCPCS codes. Many drugs and NDC codes previously mapped to generic or miscellenous HCPCS codes, recieved their own unique HCPCS during the year of 2023. 

This shift has created quite a few issues in the office-administered drug ‘Buy and Bill’ process: 

• NDC-HCPCS mapping: The sudden surge of 505(b)(2) HCPCS codes has made the NDC to HCPCS cross-walking process exceedingly complex. Many 505(b)(2) HCPCS are not listed on the CMS HCPCS-NDC crosswalk file, leaving providers stranded when it comes to NDC-HCPCS mapping. 

• Diminishing Importance of NOC: With the implementation of 505(b)(2) HCPCS codes, CMS has begun clearing out the various NOC (Not Otherwise Classified) files published on their site. A large number of NDCs previously linked to NOC codes no longer appear on the CMS database. This presents a confusing situation for providers using these NDCs. 

• Exteme ASP Fluctuation: The administration of new HCPCS codes for NDCs that were previously aligned to a single HCPCS can create heavy quarter-to-quarter ASP price fluctuations. Providers must be keenly aware of the HCPCS code they are utilizing to track how its ASP might be changing every quarter. 

Luckily for healthcare providers, BuyandBill.com provides highly accurate NDC-HCPCS alignments and several ASP monitoring tools. Just Login or Register to access our advanced features. 

Below is a table containing all 505(b)(2) drugs and HCPCS codes as of October, 2023: