Generic Drugs Name: the three biggest challenges to generic growth

NEW YORK -- Last year, the generic drug industry faced a crisis aslegislatures in 35 states considered 80 bills that would effectivelytreat generic drugs as inferior substitutes to their branded counterparts. Generics "carve-out" bills--promoted by brand drug companies and the Epilepsy Foundation,
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and bolstered by anecdotal accounts of epilepsy patients experiencing breakthrough seizures while taking generic drugs--would have prevented pharmacists from dispensing generics for such conditions as epilepsy and psychotic disorders without the approval of the patient's doctor, even if the doctor had not stated on the prescription that a branded drug was necessary. Of the 80 bills, three passed.

To date, research has indicated that generic drugs are as safe andeffective as branded drugs, and the Food and Drug Administration treats them as therapeutically equivalent. While the generic carve-out issue hasn't disappeared, it is not the looming crisis this year that it was last year. Other issues, however, have persisted and become amplified. In 2008, biosimilars were a matter of speculation; in 2009, a regulatory pathway to give them government approval could be imminent. The GenericPharmaceutical Association has long had a dictionary's worth of choice words for authorized generics--branded drugs marketed under their generic names designed to compete with generics--but a Federal Trade Commission report left it displeased. The generics industry soon tookanother blow when the Department of Justice and the FTC criticized so-called "pay-for-delay" patent settlements. Issue 1: Biosimilars On March 11, Rep. Henry Waxman, D-Calif.--known as the second nameon the Hatch-Waxman Act of 1984, which permitted the FDA approval ofgeneric pharmaceutical drugs--introduced a bill to give biotech drugs--five years' market exclusivity before facing biosimilar competition. Six days later, fellow California Democrat Anna Eshoo introduced abill to give them 12 years' to 14 years' exclusivity. The GPhA announced its support for Waxman's bill, while the Biotechnology Industry Organization supported Eshoo's. The most likely scenario, some experts have said, is that supporters of short and long exclusivity periods will have to reach a compromise of some sort. But the latter appear to have the most traction, with more than 130 co-sponsors for Eshoo's bill and a recent Senate committee vote to allow 12-year exclusivity periods. Whatever the outcome, the next major question will be how much less biosimilars will cost compared with novel biotech drugs. Increasingly, the answer appears to be "not much." According to the GPhA, generic pharmaceutical drugs are 30% to 80% cheaper than their branded counterparts. According to the FTC, however, the difference for biosimilars would be more like 10% to 30%, and drug industry consultant BruceMackler told Drug Store News that he had seen biosimilars in Europe that were 25% to 30% cheaper. The reference is due to the higher costof obtaining approval from the FDA, and biosimilars' lack of automatic substitutability for novel biologics would slow the rate at which they could acquire market share, the FTC report said. Biosimilars also would cost a lot to make; according to one study,building manufacturing facilities for biotech drugs costs between $250 million and $450 million--a price out of reach for most generics companies. For all these reasons, while a pharmaceutical drug can eventually face competition from 20 or more generic products after losingits patent protection, a biosimilar market is unlikely to become so heavily commoditized, IMS Health analyst Doug Long told Drug Store News. But that hasn't dampened enthusiasm. Despite questioning the ability of biosimilars to reduce prices, the FTC report also criticized the biotech industry's call for long exclusivity periods, calling them a barrier to innovation. Global generics manufacturers Teva, Dr. Reddy's Labs and Sandoz already make biosimilars, while Pittsburgh-based Mylan, and even branded drug makers like Pfizer, have expressed an interest. Issue 2: Authorized generics Under the Hatch-Waxman Act, the first company to file for regulatory approval of a generic version of a branded drug gets six months inwhich to compete directly with the branded drug once it receives final approval from the FDA. When this happens, the generics company's profits go up, while that of the innovator company goes down. Some branded drug makers have sought to circumvent this with "authorized generics," marketing their drugs directly or through third-party companies under their generic names. The FDA considers authorized generics to be branded drugs, but they create the perception of two competing generics when legally, there can be only one. The GPhA opposes authorized generics, but according to an FTC report released in June, retail drug prices are 4.2% lower with the presence of an authorized generic than without it. The GPhA gave the report a sub-zero welcome. "Authorized generics undermine Congressional intent by undercutting the 180-day exclusivity period for generic manufacturers," GPhA president and CEO Kathleen Jaeger said in a statement responding to the FTC's report. "Congress provided the 180-day incentive as a means to foster investment by generic companies to challenge questionable and weak brand patents, with the ultimate goal of providing more timely access to, and greater choices of, affordable medicines." [ILLUSTRATION OMITTED] Issue 3: Pay-for-delay If a generics company fears authorized generic competition during its exclusivity period, it has the option of accepting payment from the branded drug maker as part of a settlement in a patent litigation suit in exchange for not challenging the branded drug maker's patent and delaying entry into the market. The FTC considers "pay-for-delay" deals costly to citizens and thegovernment. In June, FTC chairman Jon Leibowitz said in a speech at the Center for American Progress that eliminating such deals would save American consumers and the federal government at least $3.5 billion a year over 10 years. Last month, the Department of Justice's antitrust division said the deals should be considered illegal except when it can be demonstrated that they don't stifle competition. The GPhA said that despite delays, the settlements bring generic drugs to market sooner than would otherwise be possible, and patent litigation ending in such settlements counts for a "small number" of the lawsuits anyway. Average retail generic discount: Unweighted means Month of exclusivity Drug group 1 2 3 4 ANDA-only mean * 12.1% 13.1% 13.2% 13.5% ANDA+AG meant 15.8% 17.1% 17.6% 17.9% Difference 3.7% 4.0% 4.4% 4.4% One-sided 6.6% 1.1% 0.5% 0.3% difference in means test, p-value Month of exclusivity Drug group 5 6 All ANDA-only mean * 14.2% 12.4% 13.1% ANDA+AG meant 17.6% 17.4% 17.2% Difference 3.4% 5.0% 4.2% One-sided 2.5% 0.3% 0.0% difference in means test, p-value Source: "Authorized Generics: An Interim Report" by the Federal Trade Commission Average retail generic discount: Dollar weighted means Month of exclusivity Drug group 1 2 3 4 ANDA-only mean * 17.3% 14.9% 15.0% 14.9% ANDA+AG mean ([dagger]) 14.7% 15.4% 15.9% 16.1% Difference 2.6% -0.5% -0.8% -1.2% One-sided difference No test 36.0% 31.0% 23.0% in means test, p-value Month of exclusivity Drug group 5 6 All ANDA-only mean * 14.9% 15.4% 15.2% ANDA+AG mean ([dagger]) 16.1% 15.9% 15.8% Difference -1.2% -0.5% -0.6% One-sided difference 24.0% 41.0% 14.0% in means test, p-value * ANDA only: Generic ([dagger]) ANDA + AG: Generic and authorized generic Source: "Authorized Generics: An Interim Report" by the Federal Trade Commission.

Source from: http://www.allbusiness.com/government/government-bodies-offices/12697758-1.html