Not All Generics Are Created Equal

The generic drug industry didn’t exist until the passage of the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Amendments). This piece of legislation, better known in the pharmaceutical industry as the Hatch-Waxman Act, was proposed and adopted by the US Congress because of the escalating costs of brand name drugs manufactured by large pharmaceutical companies (sound familiar?). The act provided the US Food and Drug Administration (FDA) with a regulatory pathway to approve and bring to market “generic” versions of branded drugs that lost patent protection. During the debate over the amendment, and for many years thereafter, branded pharmaceutical manufacturers tried to stifle the growth of the generic drug industry by suggesting that generic versions of their branded medications were unreliable and unsafe. This tactic was partly responsible for the stinted growth of the generic pharmaceutical industry until the mid 1990s when the price of branded pharmaceutical drugs began to skyrocket and insurance companies began to realize that something had to be done to manage rising drug reimbursement costs. To that end, insurers and third party payors began requiring patients to use generics (when available) instead of branded products to cap rising prescription drug costs. Because of this, the generic industry has grown by leaps and bound over the past decade and now threatens the stability of the branded pharmaceutical industry! 

Unfortunately, while increased generic drug use may be good for generic drug manufacturers and insurance companies, it isn’t always in the best interests of patients who use prescription medications. For example, there are a growing number of stories and complaints from patients who were forced to switch from a brand name drug to a generic one and had side effects, or found that their symptoms returned or may have been worse than before. In fact, this happened to my mother who was switched from a brand name pain reliever that worked to a generic version that no longer controlled her symptoms and induced some untoward side effects. Scientifically, there ought to be little difference in the efficacy, safety or tolerability profiles of a branded drug and its generic equivalent. This is because both medications contain the same active pharmaceutical ingredient. However, differences in the formulation of the branded and generic versions of the drugs may be responsible for reduced efficacy or safety and tolerability issues.

While clinical studies conducted by the insurance industry suggest there are no safety or tolerability differences between brand name and generic drugs and the American Medical Association’s assertion that, as a whole, generic drugs do work as well as branded drug, there is some evidence to suggest that some generic drugs may not be interchangeable or substitutable for certain branded medications. This appears to be the case for certain drugs that are used to treat neurological conditions and mental health diseases like seizures, depression and bipolar disease. Lesley Alderman, in an article she wrote in today’s New York Time business sections provides excellent examples of this.   

The problems with some generic drugs may arise as a result of the approval process for this class of drugs. According to provisions outlined in the Hatch Waxman Act which stipulate that a generic version must have the same active ingredient, strength and dosage form as the brand name drug or reference product. The generic version must also be demonstrated to be “bioequivalent” to the brand name drug. This means that the generic product must be shown to reach blood levels (drug concentration) that are very similar to the brand name product. This is usually determined by administering the generic and brand name drugs to a relatively small number (24 to 36) of healthy human volunteers. Generally speaking, once bioequivalence is established it paves the way for regulatory approval of the product. Typically, once approved, many generics receive what is known as an AB rating. Generics that are AB-rated can freely be substituted (by a licensed pharmacist) for a brand name product even though the physician may have written the prescription for the branded product.

In the past, patients were usually given a choice between a generic and a brand name drug —a decision that was largely based on the percentage of the cost of drug that would be covered by insurance. These days, patients no longer have a choice and are generally forced to use generic drugs rather than brand name products based on formulary lists compiled by insurance companies. While I am not practically or philosophically opposed to using generic drugs, there is a growing body of evidence which suggests that not all patients respond the same way to branded and for that matter generic drugs. Therefore, I contend that allowances ought to be made for these differences and patients who don’t respond to (or experience side effects) after taking generics shouldn't’t be denied access to the branded product that, in most cases, was originally prescribed by that patient’s physician. It is one thing to cut costs; it is another to increase a patients suffering or anxiety. If you are concerned about switching from a branded medication to a generic, please read this for some helpful tips and guidance.

Until next time...

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Obama Seeks Compromise on Length of Data Exclusivity for Follow-on Biologics

As the Congressional debate over follow-on biologics slogs on, the Obama Administration has finally weighed in and backs 7 years of data exclusivity for follow-on biologics. As you may recall, innovator companies want a 12-14 year data exclusivity period whereas follow-on biologics manufacturers are seeking a 5-year period (which is identical to the data exclusivity period for small molecules generic drugs outlined in the Hatch Waxman Act). What this means—based on the Obama Administration's proposal—is that a follow-on biologic manufacturer must wait seven years from the date of approval for the innovator (branded) drug before the US Food and Drug Administration could consider approval of a follow-on version of the molecule.

It is not surprising that the Obama Administration supports a 7 data exclusivity period--it is, after all, a compromise between the 5 year period sought by the follow-on manufacturers and the 12-14 years that the innovator companies are seeking. And, Mr Obama has repeatedly shown a willingness to compromise when it comes to getting important legislation passed. Hopefully, Congress will take the Obama Administration's compromise to heart and pass follow-on biologics legislation as quickly as possible.

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The Follow-On Biologics Debate: Innovator Companies Lose Round 2

A much-anticipated Federal Trade Commission (FTC) report was released on Wednesday that will likely help House Energy and Commerce Chairman Henry Waxman bolster support for his fledgling follow-on biologics (FOB) bill. For those of you who haven’t been closely following the debate over proposed legislation to create a regulatory framework for approval of FOBs in the US, I provide a brief synopsis.

The Promoting Innovation and Access to Life-Saving Medicines Act (H.R.1427) introduced by US Representatives Henry Waxman (D-CA), Frank Pallone (D-NJ) and Nathan Deal (R-GA) calls for an abbreviated development pathway (at the discretion of the agency), the possibility of substitution or interchangeability (if the follow-on biologics manufacturer can prove a high degree of structurally similarity and an identical mode of action) and five years of data exclusivity. In contrast, The Pathways for Biosimilar Act (H.R. 1548) introduced by US Representatives Anna Eshoo (D-CA), Jay Inslee (D-WA) and Joe Barton(R-TX) requires clinical data, rigorous immunogenicity testing and limits on interchangeability and substitution provisions for follow-on biologics. Further, it calls for a minimum of 12 or up to 14 years of data exclusivity for innovator companies—a period during which FDA can’t rely on innovator data to approve follow-on biologics. For example, if a biotechnology drug was approved in 2009, the earliest that FDA could consider and approve an application for a competing follow-on product is 2021.

The FTC report concluded that a 12- to 14-year wait is unnecessary because follow-on biologics will not be offered at the same steep discounts as traditional generic drugs. It also pointed out that no evidence exists that biologic patents will not hold up. The agency estimates follow-on biologics would be sold at discounts ranging from 10 percent to 30 percent. Not surprisingly, the FTC did not recommend a specific number of exclusivity years. This allows legislators to continue to squabble and debate the point ad nauseum, until concessions are made by both innovator and follow-on biologics proponents.

The measure by Eshoo and Barton has garnered 88 co-sponsors, while Waxman and Deal's bill has 11. In the Senate, the Health, Education, Labor and Pensions Committee reached a bipartisan compromise on follow-on biologics in 2007 that allowed for 12 years of exclusivity, but that deal seems unlikely. Democrats are trying to address generic firms' concerns that brand companies could make slight changes to their products and start the exclusivity period over again. Some senators introduced a more generic-friendly bill like Waxman's earlier this year.

Conventional wisdom suggests that the data exclusivity provisions in the final legislation will be five years—a period identical to that provided stipulated in the 1984 Hatch Waxman Act, which created the US generic pharmaceutical industry. 

Stay tuned for new updates on this unfolding drama!

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Pfizer and Ranbaxy Settle Lipitor Patent Dispute

As many of you may know, Ranbaxy was involved in a bitter patent dispute with Pfizer over Lipitor, Pfizer’s blockbuster multibillion, dollar anti LDL-cholesterol drug. Ranbaxy was challenging the validity of Pfizer’s intellectual property estate for Lipitor which would have extended patent protection for the drug until 2013 or longer. The patent dispute began after Ranbaxy filled an ANDA with the US Food and Drug Administration to sell generic Lipitor after uncontested Lipitor patents expire in early 2010.

Conventional wisdom suggested that Pfizer would ultimately lose the patent dispute and that Ranbaxy would be able to immediately flood the market with a much cheaper generic version of Lipitor. This would have an enormous negative impact on Pfizer’s financial stability and its future (Lipitor had $12.8 billion in sales in 2007). Nevertheless, untilDaiicho-Sankyo announced its intention to acquire Ranbaxy last week, Pfizer was willing to gamble and run the risk of losing the lawsuit. Apparently, Ranbaxy impending sale was enough of an impetus for Pfizer to settle the patent dispute which has grown increasingly acrimonious over the past year or so.

According to agreement (which needs to be approved by the US Federal Trade Commission), Pfizer was able to get Ranbaxy  to agree to delay the release of generic Lipitor until November 2011 — up to 20 months later than many analysts had been expecting (some insiders believed that generic Lipitor could reach the market as early as March 2010). Further, as part of the agreement, Pfizer will allow Ranbaxy to sell its version of Lipitor in Australia, Canada, Belgium, Germany, Italy, the Netherlands and Sweden two to four months before Liptor’s patents expire. This is likely the sweet part of the deal for Ranbaxy because all of the above mentioned markets are top sellers for anti-cholesterol drugs. Finally, because Ranbaxy was the first to file an ANDA for generic Lipitor with the FDA, it will get 6 months of market exclusivity guaranteed (in the Hatch Waxman Act) to a generic manufacturer that is first to file for generic production of a brand name drug nearing patent expiry.   However, after quickly perusing the terms of the deal, I think that it more closely resembles an authorized generics deal rather than a “true” competitive generics launch.

Currently, Lipitor costs about $2.50 to $3 a day. Analysts predict that Ranbaxy can sell its generic Lipitor for about 75 cents to $1 a day, or as low as 10 cents a day at some discount pharmacies. The potential drastic price reduction coupled with Daiichi-Sankyo’s intention to purchase Ranbaxy (which would have provided Ranbaxy with more money underwrite and press on with IP lawsuit, it what I believe forced Pfizer’s hand to act as quickly as it did to settle the suit. The deal, if approved, allows Pfizer to dodge a near fatal financial bullet and will provide it with a potentially lucrative revenue stream from it authorized generics deal that it struck with Ranbaxy. 

Nevertheless, given the financial stakes associated with the Lipitor franchise, it may make more sense for Pfizer to purchase Ranbaxy rather than enter into the pending deal. Also, a Ranbaxy purchase would allow Pfizer to enter the biologics and biotechnology fields—something that Pfizer executives have been talking about publicly to insure the company’s future. Like most other pharmaceutical generics manufacturers, Ranbaxy has active research programs on biosimilar and other biotechnology products. If I was driving the boat at Pfizer I would offer Ranbaxy a lucrative counteroffer to block its sale to Daiichi-Sankyo. I don’t know—the deal just makes sense to me. That said, not many recruiters have been calling me about CEO jobs lately!!!!!!

Until next time…

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