Generic tsunami eases, but leaves transformed Rx landscape in its wake

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1 Generic tsunami eases, but leaves transformed Rx landscape in its wake The generic drug tidal wave became a tsunami in 2012, with some of the world s top-selling pharmaceuticals swamped by generic competition, and health plan payers scrambling to reap billions of dollars in financial savings. Pharmaceutical industry insiders commonly termed last year s market a patent cliff for Big Pharma, and the description fits. Close on the heels of Lipitor s loss of patent protection in late 2011, makers of blockbuster drugs like Bristol-Myers Squibb and Sanofi (Plavix), AstraZeneca (Seroquel), Merck (Singulair), Forest Labs (Lexapro) and Takeda (Actos) joined a cascade of expiring patents and the loss of market exclusivity for their biggest-selling products. What followed was inevitable: plummeting sales that dropped as much as 90% for some branded drugs, and a massive shift of business in some therapeutic classes like statins to the steeply discounted me-too side of the drug sales spectrum. With more than 80% of a branded drug s prescription volume replaced by generics within six months of patent loss, according to IMS Health, the impact on retail pharmacy s top-line sales and bottom-line profitability and to consumers and health plan payers pocketbooks also was clear. The contributions made by generics both in terms of firming profit margins, and as a cost-saving boon to patients and pharmacy customers aren t lost on drug retailers large and small, including regional chains like Kerr Drug. continue to be extremely important to Kerr, said Ted Lingerfeldt, senior director of pharmacy procurement and analysis for the 80-store, Raleigh, N.C.- based drug chain. Kerr, he told DSN, has recently constructed a new and expanded pharmacy room within our distribution center to handle an increased number of generic pharmaceuticals, including Schedule III to V controlled substances. Recent financial results at Walgreens, the $ Overall generics savings* New generic products Older generics 2004 $481 billion over 10 years $588 billion over 10 years *In billions Source: Generic Pharmaceutical Association nation s top pharmacy retailer, illustrate the dual-edged impact that generics typically have on a pharmacy retailer s sales and bottom line. Walgreens has the best generic dispensing rates in the industry, according to Jeff Berkowitz, Walgreens SVP pharmaceutical development and market access, and in fiscal 2012, generics grew as a percentage of the company s overall prescription sales as big-selling branded drugs like Pfizer s Lipitor fell victim to generic competition. The effect of generic drugs, which have a lower retail price, replacing brand-name drugs, reduced prescription sales by 3.5% for 2012, 2.4% for 2011 and 2.2% for 2010, Walgreens reported. However, added the company, the positive effect of generic drug sales helped bolster pharmacy margins. Doug Long, IMS VP industry relations, concurs. Pharmacy retailers, he agreed, generally make more margin for a generic product than they do for a branded product, particularly during the exclusivity period. Right now, there s plentiful generic opportunities, Long told DSN. It s almost a who s who list of patent expiries. That flood of patent expirations will ease somewhat this year, but at least two blockbuster products Pfizer s groundbreaking erectile dysfunction treatment Viagra and Purdue Pharma s $3 billion pain reliever OxyContin will face generic competition for the first Savings from use of generics by year* $60 $65 $ $158 $139 $121 $101 $86 $ $ *In billions Source: Generic Pharmaceutical Association time. The patent-loss tide will surge again in 2014, with AstraZeneca s $6 billion heartburn treatment Nexium for gastroesophageal reflux disease, Eli Lilly s $3.7 billion NSAID pain reliever Cymbalta and Pfizer s NSAID arthritis treatment Celebrex all joining the post-patent market fray. Add the multiple sclerosis drug Copaxone from Teva to the patent cliff in 2015, followed in 2016 by the blockbuster statin Crestor from IPR Pharmaceuticals and AstraZeneca. The number of impactful generic launches anticipated for 2013 will be less than what we experienced in 2012, noted Kerr s Lingerfeldt. But we will see a continuation of new generic launches throughout the year, with third quarter seeing several significant launches. All told, IMS predicts, drugs generating more than $102 billion in combined annual sales will reach the end of their patent life over the next five years. Overall, patent expiries in developed markets will yield a five-year patent dividend of $106 billion, reflecting reduced brand spending of $127 billion offset by $21 billion in higher generics spending, IMS predicted in a 2012 report on global pharmaceutical trends. For pioneer drug manufacturers, IMS Continued on page february 18, 2013 drugstorenews.com

2 Generic tsunami Continued from page 20 researchers foresee minimal growth in their branded products through 2016, with flat to 3% annual growth through 2016 to $615 billion to $645 billion, up from $596 billion in And in the major developed markets, branded medicine growth will be severely constrained at only $10 billion over the five-year period due to patent expiries, increased cost-containment actions by payers and modest spending on newly launched products, IMS reported. The impact of patent expiries primarily will be felt in the United States. In Europe, limited savings from expiring patents are prompting policy shifts to encourage greater use of generics and lower reimbursement for these products. At the same time, manufacturers of small molecule generics will experience accelerating growth, noted the report. Global generic spending is expected to increase from $242 billion in 2011 to $400 billion to $430 billion by 2016, fueled by volume growth in pharmerging markets and the ongoing transition to generics in developed nations. Already, some 80% of all retail prescriptions filled in the United States are filled with generic drugs, said Margaret Hamburg, commissioner of the Food and Drug Administration. The most powerful fuel igniting the accelerating boom in me-too substitutions, of course, is the obvious and wide cost differential between brands and generics. The unprecedented savings generated by market competition from generic pharmaceuticals is now saving U.S. consumers and public and private health plan payers more than $1 billion in savings every other day, the IMS Institute for Healthcare Informatics reported. That adds up to $1 trillion in savings over the past decade, according to IMS and the Generic Pharmaceutical Association. The use of lower-cost generic prescription drugs is a vital component to holding down the growth rate of healthcare spending, IMS noted in its most recent report on generic drug savings. Generic drug use has saved the U.S. healthcare system approximately $1.1 trillion over the past decade, with $192.8 billion in savings achieved in 2011 alone. More than half those annual savings 57% occur through generic switching of drugs to treat central nervous system disorders like antidepressants and anticonvulsants and cardiovascular treatments, according to IMS. Federal and state health administrators and strategists should do more to capitalize on generics cost-saving potential, the research firm asserted. Considering that the government s share of healthcare spending will soon exceed 30% as the oldest baby boomers become eligible for Medicare, the money saved by using generic medicines is critical to bending the cost curve and providing sustainability to our healthcare system, warned IMS. Given recent federal efforts to create a pathway for FDA approval of biosimilar versions of biologically engineered drugs, that proven track record of savings for consumers using traditional drugs can be duplicated in the biopharmaceutical market, added the research report, to inject competition needed in the biologic market to lower costs and provide significant savings for patients in need of these Cancer - 5% savings by disease state Dermatological Blood disorders - 1% 1% Hormones 1% Other - < 1% Respiratory - 2% Parasitology - < 1% Sensory organs - 2% GU system - 4% Musculo-Skeletal - 5% Anti-Infectives 8% Metabolism 14% Nervous system 33% Cardiovascular 24% Source: Generic Pharmaceutical Association lifesaving treatments. GPhA president Ralph Neas touted IMS findings. The Generic Drug Savings study shows conclusively that, as Congress and the White House gear up for the fiscal challenges facing them in the coming year, generic and biosimilar utilization are the best places to go for the offsets that everyone will be desperately seeking, Neas said. The sustainability of the healthcare system and the national economy depend in significant measure on the availability of affordable medicines. Also driving the explosive growth of me-too medicines: the growing gap between what patients pay out-of-pocket for branded vs. generic medicines. A recent survey of 424 U.S. employers by the Pharmacy Benefit Management Institute found that retail co-pays for 3.7 million members covered by those employers health plans are rising for all tiers of prescription drugs, with out-ofpocket costs rising 10% for generics, 13% for branded drugs and 26% for specialty medications. But the cost gap between tiers continues to widen, researchers found, with the differential between generic and preferred brand co-pays now averaging $19, compared with $7 in For its part, the branded drug industry appears to have recovered its balance after being staggered by the wave of patent expirations. The industry marked something of a milestone in 2012 in its efforts to regain its momentum, as the FDA approved a total of 39 new drug applications, including eight in the final month of That wave of approvals the most NDAs to pass FDA muster in 16 years could position Big Pharma for a new growth surge, albeit at a more modest pace, as the industry adjusts to a new era of fewer blockbusters and a profound shift of its resources and research efforts into more targeted, patient-specific medicines, biopharmaceuticals and genetic engineering. The pickup in new drug development (see related story on p. 24) bodes well for the generic industry, as well, since its future viability depends on a steady stream of newly hatched molecular entities and breakthrough products that will eventually succumb to me-too competition. 22 february 18, 2013 drugstorenews.com

3 10 th* Largest Drug Chain Serving Over 2000 Independent Pharmacies Member Owned Warehouse Generic Rx items 300+ Top Brand Rx items Select OTC items Third Party Contracting Program & Services Audit Assistance Reimbursement Monitoring Help Desk Services Monthly, Quarterly and Annual rebates plus Patronage for Members Join Us Today! Learn more at: RxAAP *Jim Frederick (2012). AAP Levels Playing Field. Drug Store News, April 23, stifling pioneer drug development? No way, say industry watchers and big pharma and Alaric DeArment Has the explosion in generic utilization curbed pioneer-drug research and development? That s one concern floated by some pharmaceutical industry watchers, who claim that the stunning market share gains made by generic drug makers could reduce incentives for branded drug companies to spend to develop new molecular entities, conduct lengthy clinical trials, gain FDA approval and bring those new drugs to market. Not so, says IMS Health. Some claim that Hatch-Waxman [the 1984 Drug Price Competition and Patent Term Restoration Act] has worked too well for the generic side, at the cost of harming the innovation of new or improved medicines, IMS noted in a 2012 report. But the facts do not support that claim. Citing a cautionary article in the journal Health Affairs that urged Congress to take another look at Hatch-Waxman and consider amending the law to delay generic competition by increasing the market monopoly for branded drugs, IMS countered that pioneer-drug R&D has surged in the face of generic competition. Although generic utilization has reached new levels, more new medicines were launched in 2011 than in any other year of the past decade, IMS reported. New medicines launched last year brought improved efficacy, safety and convenience for diseases affecting millions of patients battling chronic conditions; important breakthroughs for rare diseases transformed treatment options through personalized medicines based on genetic markers for subtypes of cancer and individually cultured immunotherapies. Each of these new treatments represents vast improvements in therapy that were spawned by competition to the older medicines, the report added. By creating a fair balance between innovation of New molecular entities launched in the United States New mechanism Existing mechanism Orphan Source: IMS Institute for Healthcare Informatics, 2011 new medicines and accessibility to lower cost generic medicines, federal law has established a win-win for providers and American consumers. The brand-name drug industry concurs. According to the trade group Pharmaceutical Research and Manufacturers of America, more than 5,000 medicines are under development, 70% of which are potentially the first of their class. In a report released Jan. 17, PhRMA called the drug pipeline innovative and robust, with 158 drugs under development for ovarian cancer, 19 for sickle cell disease and 41 for small-cell lung cancer. Biopharmaceutical companies, working with other partners in the American research ecosystem, have made incredible progress in helping confront some of the most challenging and costly diseases facing patients around the world, said PhR- MA president and CEO John Castellani. The report also noted that personalized medicines accounted for an increasing proportion of the pipeline, with the number of potential new medicines for rare diseases averaging 140 per year in the last 10 years february 18, 2013 drugstorenews.com

4 FDA: new user fee program to speed generic approval process It s been long accepted that politics makes strange bedfellows. That s certainly the case with the reauthorization in 2012 of the Prescription Drug User Fee Act. Leaders in both the branded and generic drug industries praised the reauthorization last June of PDUFA, the 20-year-old system by which research-based pharmaceutical companies help fund the government s expensive review and testing process for new drug applications. The concept of charging user fees to pharmaceutical manufacturers to help fund the Food and Drug Administration s review and approval process was first established in 1992, and by law Congress must vote to reauthorize the User Fee Act every five years. But now, for the first time since PDUFA was created, the generic industry also is helping to foot the bill. The law included Generic Drug User Fee Amendments [GDUFA], creating a system of user fees that generic drug companies will pay to the FDA when they apply for approval of a drug. The new user fee system took effect Oct. 1, 2012, and is projected to raise $299 million per year over five years, adjusted for inflation. GDUFA will help the agency hire extra staff and add other resources to help clear a huge backlog of 2,500 generic drug approval applications awaiting review. The money will supplement what Congress appropriates to the FDA each year, and will enable the FDA s Office of Generic Drugs to hire the scientific resources needed to provide timely approval of generic medicines, said the Generic Pharmaceutical Association. GPhA president and CEO Ralph Neas called PDUFA and its GDUFA amendment the most important pharmaceutical legislation since the 1984 Hatch-Waxman Act, referring to the landmark compromise that unleashed generic competition, while ensuring that all participants in the U.S. generic drug system, whether U.S.-based or foreign, comply with our country s strict quality standards. And John Castellani, president and CEO of the Pharmaceutical Research and Manufacturers of America, said the law served the best interests of America s patients. GDUFA could dramatically speed up the pace of generic approvals, providing a boon to the me-too drug industry and potentially saving health plan payers and patients billions of dollars in coming years. But the new funding also will spur development of bioengineered and biosimilar medicines by providing the FDA with the resources necessary to help build new scientific and regulatory capabilities and promote ongoing biopharmaceutical innovation, according to Castellani. In an address to generic industry leaders at a meeting of the GPhA in 2012, FDA commissioner Margaret Hamburg acknowledged the agency s desperate need for the funding provided by GDUFA. It s no secret that there s a significant and growing backlog at the FDA of applications for new generic drugs, she said. Currently, it s about 2,500. And over the last several years, the time it takes to get a generic drug approved has nearly doubled, while the backlog is growing. Applications have grown at an astounding rate, reflecting the success of the industry. But resources have not grown at the same rate, Hamburg continued. Chronic underfunding has left us without the necessary scientific and human resources to evaluate applications as quickly as we would like. We are seeing applications for more complex products. And applications frequently involve products manufactured outside of the United States. Indeed, said the FDA s top official, in our increasingly globalized economy, up to 40% of all drugs Americans take are imported and up to 80% of the active pharmaceutical ingredients in those drugs come from foreign sources. This certainly complicates our inspection process. Hamburg cited one Government Accountability Office report, noting that in the absence of a paradigm shift including new resources and new ways of doing things it would take the FDA nine years to inspect all foreign facilities. FDA sets generic drug user fee rates for 2013 silver spring, Md. The Food and Drug Administration has set user fee rates for generic drug companies, the agency said Jan. 27. The FDA announced that it had published a notice in the Federal Register for companies that make finished dosage forms, meaning drugs in their final form, and active pharmaceutical ingredients, meaning the main ingredients of the drugs. The fees for domestic factories making final dosage forms and active pharmaceutical ingredients are $175,389 and $26,458, respectively. For foreign factories, the fees are respectively $190,389 and $41,458. The agency said that under the Generic Drug User Fee Amendments to the Prescription Drug User Fee Act, the fee for a factory outside the United States should be $15,000 to $30,000 higher than the fee for a domestic factory. The FDA said it calculated the fee using data submitted by generic drug facilities through the self-identification process mandated under GDUFA. User fees for generic drugs or GDUFA will address our current generic drug review backlog caused by the increase in generic drug applications, their growing complexity and the number of generic drug facilities now located overseas where inspections are more challenging, noted Hamburg. The added money from user fees will reduce this backlog and eventually ensure that the FDA is able to inspect overseas facilities as often as it does domestic facilities. The agency predicts that by the fifth year of the program, the FDA will review and act on 90% of complete electronic generic applications within 10 months after the date of submission. Agency officials predicted that GDUFA fees would cost the generic drug industry less than 10 cents for the average generic prescription. The annual fee total for GDUFA represents only about one half of 1% of generic drug sales, the FDA predicted in a report. This relatively small cost to the industry could be offset by faster review times that bring products to market sooner. 26 february 18, 2013 drugstorenews.com

5 Battle over pay for delay intensifies The battle over pay for delay continues to heat up, and its resolution likely won t come until the nation s highest court decides on the legality of the practice. At issue is the long-standing, but controversial, practice of reverse payments, by which branded and generic drug makers agree to delay introduction of a no-name medicine usually for a cash settlement or other incentive as its branded counterpart nears the end of its patent protection. The U.S. Supreme Court agreed in December to review three cases arising from court challenges filed by the Federal Trade Commission and some pharmacy chains opposed to the practice. The high court is expected to take up the case in March. Defending the practice will be three generic companies involved in the separate legal challenges: Watson Pharmaceuticals, Par Pharmaceuticals and Solvay Pharmaceuticals. Typically, a generic drug maker seeking to be the first to market a generic version of a drug will file for Food and Drug Administration approval for it before the branded drug has lost patent protection. This usually prompts a patent-infringement lawsuit from the branded drug company; and while the suits often go to trial, in many cases, they will reach a settlement that allows the generic drug maker to launch at a later date. The FTC has long been a staunch opponent of the pay-for-delay settlements, asserting that they are illegal and anti-competitive, and that they cost U.S. consumers and health plan payers $3.5 billion a year in higherthan-necessary drug costs by delaying the introduction of lower-cost generic alternatives to Final settlements Potential pay for delay Potential pay for delay with first filers Source: Federal Trade Commission some branded drugs. In mid-january, the FTC intensified its opposition to reverse payments with the release of a new report. Citing an internal study, the commission reported that the number of potentially anti-competitive patent dispute settlements between branded and generic drug companies increased significantly in fiscal 2012, jumping to 40 such settlements compared with 28 the previous year. The study also found that in nearly half of these settlements, branded firms may have used the promise that they would not develop or market an authorized generic [or AG] as a payment to stall generic drug firms from marketing a competing product, the FTC reported. Overall, the agreements reached in the latest fiscal year involved 31 different brandname pharmaceutical products with combined annual U.S. sales of more than $8.3 billion. Such no-ag promises are valuable to generic firms, as they significantly reduce the level of competition the new generic entrant will face, allowing the generic firm to secure greater market share and extract higher prices from consumers, the agency charged in its report. Sadly, this year s report makes it clear that the problem of pay for delay is getting worse, not better, FTC chairman Jon Leibowitz asserted. More and more brand and generic drug companies are engaging in these sweetheart deals, and consumers continue to pay the price. Until this issue is resolved, we will all suffer the consequences of delayed generic entry: higher prices for consumers, businesses and the U.S. taxpayer. Besides the FTC and pharmacy retailers, the American Medical Association also has declared its opposition to reverse payments and called them anti-competitive. But countering those charges are such Number of pharmaceutical patent settlements per year, industry trade groups as the Generic Pharmaceutical Association and the Pharmaceutical Research and Manufacturers of America. GPhA feels compelled to set the record straight, said Ralph Neas, president and CEO of the generic industry group. Despite claims to the contrary, settlements actually help bring affordable generic medicines to market sooner, to the benefit of consumers and the healthcare system. Over the past 10 years, patent settlements have enabled dozens of first-time generics to come to market many months before patents on the counterpart brand drugs expired, including the top-selling medicines Lipitor, Effexor and Lamictal, Neas added. These early launches saved patients hundreds of billions of dollars. In addition, GPhA s top executive said, the federal courts have repeatedly recognized that settlements can be desirable options in patent litigation. The record is clear: Settlements allow generic drugs to come to market long before patents on the counterpart brands expire, resulting in billions of dollars in annual savings. Our shared goal must be to ensure that patent settlements benefit, not harm, consumers and the healthcare system. To accomplish this, we must avoid an outright ban on settlements as a means of resolv- Continued on page February 18, 2013 drugstorenews.com

6 PBMs leverage generics as effective cost-saving tool Pay for delay Continued from page 28 ing patent litigation. The FTC is wrong on the facts, wrong on the public policy and wrong on the law. If successful, the FTC position would dramatically undermine the law of the land and cost patients and consumers billions of dollars every year, Neas asserted. Also urging the Supreme Court and FTC to exercise caution is the pharmaceutical industry research giant IMS Health. In a report last year, the company warned that with more than a third of annual savings generated by generic medications coming from products that have entered the market since 2001, it would be misguided to enforce a ban on patent litigation settlements since most new generics get to market as the result of a settlement. In fact, 17-of-the-22 first-time generics launched in 2011 were the result of patent settlements, Pharmacy benefit managers are becoming increasingly adept at leveraging the power of generics to save client healthcare dollars and improve their own standing, reports indicated. The opportunity for lowering costs by promoting generics over brands has never been greater, given the unprecedented number of drugs set to lose patent protection over the next few years, noted the 2012 Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care. In its 2012 Insights Report, pharmacy and PBM giant CVS Caremark noted that its success at promoting a high generic dispensing rate worked to drive drug trend down. Behind its ability to boost GDR, the company reported, was the combination of a stream of patent expirations for blockbuster branded drugs and the company s successful implementation of formulary and plan design strategies to encourage the use of cost-effective generic drugs. The Pharmaceutical Care Management Association noted, PBMs use several tools to encourage the use of generic drugs and preferred brands. These include formularies and tiered cost sharing, prior authorization and step therapy protocols, generic incentives, consumer education and physician outreach. As PBMs and plan sponsors strive for greater savings, drug mix becomes even more important, association president and CEO Mark Merritt added. PCMA asserted in a recent report that PBMs will save consumers and payers almost $2 trillion in prescription drug costs over the next decade, in part by promoting generic substitutions at the pharmacy counter. including [generic versions of] Zyprexa, Solodyne, Levaquin and Lipitor. Over the past 10 years, patent settlements have enabled dozens of first-time generics to come to market many months, and even years, before patents on the counterpart brand drugs expired, IMS asserted. Patent litigation settlements have never delayed the launch of the generic past the expiration of the brand patent. U.S. courts repeatedly have ruled that patent settlements are pro-consumer and pro-competitive. IMS cited a study by RBC Capital Markets, Analyzing Litigation Success Rates, which found that generic companies succeed in bringing their product to market before patent expiration in just 48% of cases overall. But when factoring in settlements, generics are successful in bringing the generic product to market before patent expiration in 76% of cases, the firm reported. Newsbytes expected to hit double-digit growth LONDON The world market for generic drugs will jump more than 15% this year and reach a global total of $127.8 billion, predicted a report from British market research firm Visiongain. Generic Drugs: World Market estimated branded drug manufacturers will see a $50 billion decline in total revenues this year as patents expire and generic competitors slice up the sales pie for more of the world s biggest-selling medicines. A number of factors have contributed to the growth of the world generics market, Visiongain senior pharmaceutical industry analyst Syed Ahmed said. Prominent blockbuster drugs will lose patent protection in the next few years, with many having done so already. Sales of generics in the United States represent more than 40% of worldwide sales and account for about 70% of prescriptions dispensed within the country, while U.S. generics sales have more than tripled since 2000, according to the report. Watson changes name to Actavis PARSIPPANY, N.J. Watson Pharmaceuticals has formally changed its name to Actavis and changed its New York Stock Exchange ticker symbol to ACT, the company said. The generic drug maker, now the world s third largest, announced its plan to change the name last year after it acquired Actavis. The combined company expects combined 2012 sales to exceed $8 billion. Dr. Reddy s launches allergy drug HYDERABAD, India Dr. Reddy s Labs has launched a drug used for treating allergies, the generic drug maker said. The Indian drug maker announced the launch of desloratadine orally disintegrating tablets in the 2.5-mg and 5-mg strengths. The drug is a generic version of Merck s Clarinex Reditabs and is available in unit-dose packages of 30. The branded version of the drug had sales of about $5.3 million during the 12-month period that ended in November 2012, according to IMS Health. FDA approves Lupin generic contraceptive BALTIMORE Lupin Pharmaceuticals announced the Food and Drug Administration approval of levonorgestrel and ethinyl estradiol tablets in the 0.1-mg/0.02-mg strength, a generic version of Watson Labs contraceptive Lutera. Lutera had sales of about $103.6 million during the 12-month period that ended in September 2012, according to IMS Health. 30 February 18, 2013 drugstorenews.com

7 Outlook for biosimilars remains cloudy Biosimilar medicines have been approved and routinely prescribed in Europe for nearly seven years, and creation of a clear pathway for Food and Drug Administration review and approval of generic versions of bioengineered drugs was enshrined into law in the United States with the passage of the Patient Protection and Affordable Care Act nearly three years ago. But IMS Health and other industry experts agree it could still be years before biosimilars are available to pharmacies and patients in this country. The availability of biosimilars would save health plan payers and patients billions of dollars annually estimates from various economic impact studies range from $42 billion to as high as $108 billion over the first 10 years they re on the market. The Congressional Budget Office estimated that biosimilar competition would lead to substantially lower prices for biotech medicines that can cost thousands of dollars per prescription, with prices for the me-too versions of those medicines initially discounted about 25% below the branded versions and prices dropping further as competitive forces fully take hold. Nevertheless, challenges to the approval and marketing of lower-cost, no-name alternatives to today s biopharmaceuticals are daunting. Would-be manufacturers of these bioengineered alternatives face several hurdles. One big one: Federal mandates notwithstanding, an abbreviated pathway at the FDA for approval of biosimilars has yet to be established. As we ve been working to address the backlog in applications for new generic drugs, we re also working on creating an abbreviated approval pathway for biosimilar biologics, FDA commissioner Margaret Hamburg told generic industry leaders last year. But although that approval pathway was authorized as part of the Patient Protection and Affordable Care Act of 2010, she said, a review and approval regimen for biosimilars is far more complex than that for traditional generic abbreviated new drug applications. There are scientific issues in determining biosimilarity and quality-related issues to Biosimilar market size, in billions* $ consider, among other issues. This will not be a one-size-fits-all program, Hamburg promised. Our requirements will depend upon the product. One development that could speed the process was the establishment, for the first time, of a user-fee system for biogenerics, or BsUFAs, as part of the reauthorization of the Prescription Drug User Fee Act in BsUFA would collect fees for products under development shown to be biosimilar to or interchangeable with an innovator FDA-licensed biological product, Hamburg said. The funds would support early meetings with companies. Meanwhile, devoid of a specific regulatory pathway, the United States currently has no established industry for biosimilars, IMS Health noted in a report. Nevertheless, IMS reported, with leading manufacturers, including Pfizer and Merck, already positioned to compete, and patients and health insurers stepping up the pressure for access to lowcost, high-value drugs, the United States is forecast to be the single biggest opportunity for biosimilars by Whether this opportunity is realized is therefore the most important differentiator between success and failure for biosimilars in the next decade. An approval process at the FDA isn t the only roadblock biosimilars face on the way to eventual marketing, however. Led by such Global biosimilars market evolution, $1.9 billion to $2.6 billion Slow uptake in the United States due to new legislation enabling innovators to delay the approval process of new biosimilars Uptake in Europe accelerates due to more mature framework Emerging countries (Asia specifically) ramping up 2020 $11 billion to $25 billion Key upside drivers represented by the U.S. market $25 10 Upper bound 5 Base case Lower bound Share of biologics market * Constant U.S. dollars Source: IMS Health biotech giants as Amgen and Genentech, the biotech industry is intensively lobbying state lawmakers around the country to block metoo competition by restricting the ability of pharmacists to substitute generic versions of biological drugs, even if approved by the FDA. According to a Jan. 28 report in the New York Times, at least eight states have introduced bills to curb biosimilar competition on patientsafety grounds, and other states are developing similar legislation. Generic Pharmaceutical Association president and CEO Ralph Neas called the moves a pre-emptive strike by Amgen and Genentech designed to choke the flow of safe and affordable life-saving biologic medicines to patients even before these products have been approved by the Food and Drug and Administration. Such efforts, Neas added, are doubly worrying for state legislators because not only will they slow availability of safe, effective and more affordable therapies to patients, but they also will dramatically decrease the much-needed cost savings that biosimilars will provide. At a time when legislators are desperately seeking ways to keep their state fiscally sound, these bills will encourage needless and wasteful spending on name-brand therapies even after FDA-approved lower cost biosimilar products become available. 32 February 18, 2013 drugstorenews.com $20 $11 10% 8% 4%

8 The GO-TO drive-thru system built specifically for pharmacies We take care of all your drive-thru needs: Multiple bullet-resistant window options and sizes Powered and manual drawers designed to handle all your prescriptions Industry s best 2-year warranty on powered drawers Secure credit/debit/signature card kits Large carrier multiple height 2nd lane delivery system Industry s only SOLAR-powered products All products UL-Listed Made in the USA THE Pharmacy Drive-Thru Equipment Specialist For information on our complete line, contact us: 201 Grandin Rd., Maineville, OH Tel: info@bavis.com Web: Survey: Many doctors ignore generic savings Are doctors needlessly raising the costs of America s healthcare system through their prescribing habits? Absolutely, say researchers. A new report appearing in the Jan. 7 issue of JAMA Internal Medicine highlighted the powerful role played by branded drug advertising on consumer preferences and physicians prescribing habits, and asserted that many doctors ignore the cost-saving benefits of generic drugs when writing prescriptions by acceding to patients wishes. Approximately 4-of-10 physicians report that they sometimes or often prescribe a brand-name drug to a patient when a generic is available because the patient wanted it, researchers reported in JAMA. These numbers suggest that the unnecessary costs associated with this practice to the healthcare system could be substantial. The JAMA report is based on a survey conducted by the Harvard Medical School and the Colorado School of Public Health of 1,891 randomly sampled prescribing physicians practicing in seven medical specialties. Approximately 37% of the doctors surveyed told researchers that in many cases they prescribe a specific branded drug the patient asks for, rather than an available generic alternative, despite the higher costs involved. Advertising by pharmaceutical companies prompts many patients to pressure their doctors for the brand-name prescription drug, the report suggested. Prescribing brand-name drugs when generic drugs are available generates unnecessary medical expenditures, the costs of which are borne by the public in the form of higher co-payments, increased health insurance costs and higher Medicare and Medicaid expenses, the report noted. The result is is a huge source of wasteful spending that can be prevented, wrote Four-of-10 physicians reported sometimes or often prescribing a brand-name drug to a patient when a generic is available because the patient wanted it. Eric Campbell, professor of medicine at Harvard Medical School and team leader of the study. Researchers found that older physicians are more likely to acquiesce to their patients requests for the branded medicine. The survey, the authors noted, shows that 43% of physicians in practice more than 30 years sometimes or often give in to patients demands for brandname drugs compared with 31% physicians in practice for 10 years or less. In addition, doctors working primarily in sole or two-person practices were significantly more likely to acquiesce to patient demands than those working in a hospital or medical school setting [46% vs. 35%], JAMA reported. But pediatricians, anesthesiologists, cardiologists and general surgeons were significantly less likely to acquiesce patient demands relative to internal medicine physicians. The Generic Pharmaceutical Association was quick to seize on the survey findings. The JAMA Internal Medicine study demonstrates that we are still leaving savings on the table that could be achieved by increasing the use of generic drugs, GPhA president and CEO Ralph Neas asserted. 36 February 18, 2013 drugstorenews.com

9 Partnerships That Power Independent Pharmacies There s an for that! Power in Purchasing 10th Largest Drug Chain Serving Over 2,000 Independent Pharmacies Power in Quality High quality vendors and suppliers screened through AAP s thorough evaluation process Power in Front-End Sales Retail Planograms that pay you! - Zero Enrollment Fees - Power in Your Bottom Line Quarterly Rebates paid to members for products and services used daily Power in Numbers Join Us Today! Learn more at: RxAAP Canadian provinces to cut generic payments By Alaric DeArment Canadian generic drug makers expressed dismay over a new plan to reduce reimbursements for a half-dozen generic medications in most of the country s provinces. According to published reports, a group of premiers had reached a coordinated deal to reduce the prices their governments paid for six generic drugs, hoping to save the provinces nearly $100 million. Quebec did not take part; that province announced in November 2012 the elimination of its 15-year rule, a rule unique to the province that required its prescription drug plan to reimburse the price of the original drug even after patent expiration had made cheaper generics available. Currently, provinces pay between 25% and 40% of the cost of branded drugs for six key generics, but under the deal, they will pay 18% starting in April. The drugs are the generic versions of Pfizer s cholesterol drug Lipitor (atorvastatin); King Pharmaceuticals blood pressure drug Altace (ramipril); Pfizer s Alabama s Supreme Court ruled in January that brand-name drug companies could be sued if patients suffer complications from generic versions of their medicines, according to published reports. According to the New York Times, an Alabama man named Danny Weeks claimed he developed tardive dyskinesia after taking generic versions of Pfizer s acid reflux drug Reglan (metoclopramide). Pfizer acquired rights to the drug when it bought Wyeth in 2009, and generic drug makers Teva and Actavis, now owned by Watson, make generic versions. antidepressant Effexor (venlafaxine); Pfizer s angina drug Norvasc (amlodipine); AstraZeneca s gastroesophageal reflux disease drug Prilosec (omeprazole); and Eisai and Johnson & Johnson s GERD drug Aciphex (rabeprazole). While praising a decision by the provincial governments not to pursue a plan to tender for generic drugs, the Canadian Generic Pharmaceutical Association was displeased with the reimbursement reduction. CGPA is pleased that provincial governments have decided not to proceed with tendering for generic pharmaceutical products. Tendering for generic drugs could result in drug shortages and delayed savings to Canada s healthcare system. CGPA president Jim Keon said. We are, however, disappointed by the provincial governments announcement of further cuts to retail or reimbursed prices for generic prescription medicines. While generics account for 80% of dispensed prescriptions in the United States, the equivalent rate in Canada is more than 60%, according to IMS Health. Court OKs suit vs. branded firms over side effects of generic drugs Weeks had originally filed the suit in federal court, but the court asked the Alabama Supreme Court to determine if Weeks could sue the branded drug makers. Under Food and Drug Administration regulations, generic versions of branded drugs must use the same safety labeling as the branded versions, and the Times noted that a 2011 Supreme Court decision, Pliva v. Mensing, determined that generic drug companies had no control over what drug labels said, meaning they could be sued for failing to inform patients of safety risks. 38 February 18, 2013 drugstorenews.com