Branded generics offer new ways to reformulate drugs
In the classic “Arabian Nights” tale of Aladdin and his magic lamp, the evil sorcerer who made Aladdin retrieve the lamp containing the genie attempts to get it back by tricking Aladdin’s wife into giving it to him by roaming through the streets offering to trade “new lamps for old.”
Today, many drug makers are taking old drugs and turning them into new drugs, but there’s no sorcery here. Branded generics offer drug makers an opportunity to find new ways to formulate drugs that have lost patent protection and gone generic, and some are making quite a bundle in the process.
“It’s part of a movement to get out of the commodity part of the generics business,” IMS Health VP industry relations Doug Long told Drug Store News. “Branded generics is part of that, but also injectables, nasal and [dermatology drugs].”
“Commodity generics” are drugs that might have had a good run for the first company, winning approval for the generic version and getting 180 days in which to compete directly against the branded manufacturer, but have since seen a huge reduction in price due to the market entry of companies that sometimes number in the dozens.
By contrast, IMS defines branded generics as either novel dosage forms of drugs that have lost patent protection and were not developed by the company marketing the branded generic, or simply as a generic drug that’s given a trade name. Well-known drugs that fall into the first category are Purdue Pharma’s OxyContin, an extended- release formulation of the generic opioid oxycodone, or Johnson & Johnson’s attention-deficit hyperactivity disorder drug Concerta (methylphenidate), which uses the same active ingredient as Novartis’ Ritalin, originally approved by the Food and Drug Administration in 1955. According to IMS, OxyContin ranks as one of the top-selling drugs in the country, with 2010 sales of $3.1 billion.
Many drugs in the second category are generic contraceptives, such as Teva Pharmaceutical Industries’ Camrese (levonorgestrel and ethinyl estradiol tablets), which is a generic version of Duramed Pharmaceuticals’ Seasonique, of which Watson Pharmaceuticals also makes a generic version under the brand name Amethia. The reasons why Teva, Watson and others adopt brand names for these drugs: The generic names are simply too much of a mouthful.
“If you didn’t invent the product, you could come up with a superior delivery system like OxyContin,” Long said. “That could certainly be quite lucrative.”
FDA regulations treat branded generics as branded drugs. For example, when Purdue Pharma filed for regulatory approval of OxyContin, it filed a new drug application; FDA approval entitles a branded generic to five years’ market exclusivity, but with less patent protection than there is for a newly developed molecule. By contrast, a company making a generic immediate-release formulation of oxycodone would use an abbreviated new drug application.
Branded generics appear to be one example of a broader industry move in recent years toward what might be termed “value-added generics,” which could also include knockoffs of difficult-to-make drugs like Sanofi’s blood-thinning drug Lovenox (enoxaparin sodium) and Teva’s multiple sclerosis treatment Copaxone (glatiramer acetate) and, thanks to provisions in the Affordable Care Act, follow-on biologics.
“Now you have other people trying to get into the market where there are higher barriers to entry. It’s a little less competitive, and there’s a chance to get higher profit margins,” Long said.
Q&A: Prez perspective
In September, the Generic Pharmaceutical Association announced the appointment of Ralph Neas — former president and CEO of the National Coalition on Health Care — as its new president and CEO, replacing Kathleen Jaeger, who stepped down as president and CEO of the organization in May 2010. Drug Store News recently spoke with Neas about his plans and vision for the organization and the industry as a whole.
DSN: Your predecessor, Kathleen Jaeger, was from the industry, as a former pharmacist. How do you plan to draw from your background in civil rights during your tenure at the GPhA?
Ralph Neas: Prior to joining GPhA, I had the opportunity to work on healthcare issues going back to my days with Republican Sens. Edward Brooke and David Durenberger. In addition, I have had the privilege of serving as the CEO of two of the largest and most diverse coalitions in the nation, the Leadership Conference on Civil Rights and the National Coalition on Health Care. Those experiences taught me about coalition building and how to work collaboratively to achieve a bipartisan consensus on important national issues. Additionally, they provided extensive opportunities to be an advocate before the legislative branch, the executive branch and the media. Hopefully, my training in how to frame a debate and define an issue will be an asset in my new job and help make GPhA a more proactive, aggressive and effective association.
DSN: With the departure of Teva Pharmaceutical Industries and the longer exclusivity period for biotech drugs before they face competition from follow-on biologics than your group had hoped for in the Affordable Care Act, how do you plan to guide the GPhA going forward?
Neas: Teva has rejoined GPhA and is playing a leading role as a member of both our board of directors and executive committee. After the Federal Trade Commission recommended zero years — and the administration had recommended seven — for the exclusivity period for biotech drugs, it was a major and inexplicable disappointment for Congress to pass a 12-year period of exclusivity. I believe that a massive and effective public education campaign can change the current situation and also help create a workable pathway to biogenerics. If something is not done, I fear that exponential growth of biologics over the next 10 to 20 years, without adequate generic alternatives, could bankrupt the healthcare system and the national economy.
DSN: What do you see as the greatest challenges facing the generic drug industry right now?
Neas: As I mentioned, one of the biggest challenges we face right now is ensuring that a workable approval pathway for biogenerics is implemented by the [Food and Drug Administration]. It is critical that the approval process is not fraught with unnecessary and unwarranted roadblocks, such as mandatory clinical trials or repetitive exclusivity periods. …
It is also vital that the FDA and the Office of Generic Drugs receive adequate funding so that consumers continue to have access to safe and affordable generic medicines in a timely manner. Along those lines, we have just completed a historic generic user fee agreement that will provide the agency with nearly $300 million in additional funding each year. We must make sure that this added funding is used to alleviate the current backlog of pending generic applications and conduct additional foreign inspections.
In addition, we must continue to work to stop any kind of restriction on patent litigation settlements. The fact is that these settlements do result in earlier access to generic medicines and allow generic manufacturers to have date-certain launches of their products.
DSN: What do you see happening in the industry over the next several years?
Neas: No one knows for sure, of course. But it is likely we will see continued consolidation through mergers and acquisitions in both the brand and the generics sectors — and not just generics manufacturers buying other generics companies or brand companies merging with each other. Rather, we could see more companies emerging in the Novartis model, where brand and generics businesses exist within the same company.
As I mentioned before, we will certainly also begin to see an increase in the presence of biogenerics. And after emerging from the forthcoming patent cliff, generic utilization likely could top 80%. …
DSN: How do you plan to deal with various attempts to ban patent settlements?
Neas: We believe we can defeat attempts to ban patent settlements by sharing the facts with legislators and the public about how these agreements are, in reality, pro-consumer and pro-competitive. Patent settlements have provided millions of consumers with access to affordable medicines far earlier than if they were forced to wait for a branded product’s patents to expire, and in the process have saved consumers hundreds of billions of dollars.
If there are any patent settlements that are not pro-consumer, the Federal Trade Commission and the Department of Justice currently have the authority to challenge such settlements in court. What the FTC is attempting now would overturn nearly a century of intellectual property law and undermine an effective legal remedy that has benefitted millions of consumers.
With 2012 near, generics still face challenges
In February, Drug Store News discussed three issues concerning generic drugs that would figure prominently throughout the year: drug safety, user fees and patent settlements.
None of those issues have gone away. Fears recently surfaced that Ranbaxy might not get to launch its generic version of Pfizer’s cholesterol medication Lipitor (atorvastatin) this month due to concerns about safety at two of its plants in India, but it appears the scheduled launch is back on track. The Food and Drug Administration’s Office of Generic Drugs needs increased funding to address its massive backlog of generic drug approval applications, something that user fees would address, but the Generic Pharmaceutical Association has been pushing Congress to maintain funding for the OGD. Meanwhile, the Federal Trade Commission and such members of Congress as Sens. Herb Kohl, D-Wis., and Chuck Grassley, R-Iowa, continue their push to ban patent litigation settlements that involve any type of payment from branded drug companies in exchange for generics companies holding off product launches, even when those product launches happen months or years before the branded drug’s patents expire.
But IMS Health VP industry relations Doug Long recently told Drug Store News of another major issue emerging. “What’s really come to the forefront is this drug-shortage stuff,” Long said. According to the GPhA, the reasons for drug shortages are numerous and complex: insufficient supplies of raw materials; inadequate and delayed communications about shortages; changes in clinical practices that have altered volume production; and stockpiling of drugs within the gray market.
In September, the GPhA called for a broad effort by various stakeholders — ranging from branded and generics drug makers to component suppliers, from healthcare providers to regulators — to combat the problem.
Whatever the issues for 2012 turn out to be, it’s the trends in various disease-state markets that will continue to drive prescribing, dispensing and marketing of generic and branded drugs alike. Click here to see the highlights.