Generics contend in PPIs
Procter & Gamble’s Prilosec OTC still is the best-selling antacid on the market, with more than $252.7 million in annual sales for the 52 weeks ended July 8 across food, drug and mass (excluding Walmart), followed by fellow proton-pump inhibitor Novartis’ Prevacid 24HR ($104.1 million).
Both of those antacid heavy hitters are losing dollar share to their generic- equivalent competitors, however, leaving GlaxoSmithKline’s venerable Tums brand as the largest growth brand within antacids ($91.3 million in sales, up 2.5%).
GSK’s latest crack at Tums reinvigoration is its Tums Freshers line extension, which couples Tums’ heartburn relief with fresh breath and was voted the most innovative OTC product launch in the past year in DSN’s Innov-ies awards.
GSK may have another PPI switch to contend with in the near future. There is speculation that AstraZeneca may send its prescription-only Nexium brand down the same Rx-to-OTC pathway as its Prilosec OTC. Perrigo president and CEO Joseph Papa speculated a Nexium switch was likely, though not definite, during a recent conference call. “I look at the success they’ve had with the Prilosec product [and] I look at how much direct-to-consumer promotion they put behind the brand — they are clearly establishing Nexium as a very important brand for consumers. So I think, for those two reasons, I do expect to see Nexium go over-the-counter.”
The article above is part of the DSN Category Review Series. For the complete Digestives Buy-In Report, including extensive charts, data and more analysis, click here.
Generics offer affordability for specialty Rx
The U.S. healthcare system presents a paradox: It’s the most expensive system in the world, and yet it produces among the worst results among developed countries. According to the most recent report from the National Health Expenditure Accounts, spending on health care reached $2.6 trillion in 2010, or more than $8,400 per person and around 18% of the country’s gross domestic product.
Because these costs are expected to rise as more Americans retire and live longer, which will result in a greater number of people with chronic conditions, it’s as imperative to find a way to reduce the costs of health care in the long term as it is to ensure that everybody has adequate access to it. Specialty drugs for such conditions as cancers and autoimmune disorders are among the most expensive drugs in the world and already account for a rising share of drug costs overall — about 17% of global drug spending will come from biologics by 2016. Because of the unavoidably high costs of specialty drugs, one important way to reduce the cost of health care is to increase the use of generic drugs.
Generics have saved consumers and the healthcare system $1 trillion over the past decade, according to a new study released earlier this month by the Generic Pharmaceutical Association. Between 2002 and 2011, generics saved the country $1 billion every other day, totaling $193 billion in 2011.
“The remarkable findings demonstrated in this report are a testament not only to the generic industry’s tremendous accomplishments over the past decade, but [also] to the even greater achievements that are still to come,” GPhA president and CEO Ralph Neas said. “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. The sustainability of the healthcare system and the national economy depend in significant measure on the availability of affordable medicines.”
The study, commissioned by the GPhA and conducted by IMS Health’s research division, also found that 2011 had the highest year-over-year increase in savings from generics since 1998, as savings increased 22%, compared with 2010. Savings from generics that have entered the market since 2002 have increased as well, totaling $481 billion over the decade. Meanwhile, 57% of the annual savings came from generic drugs for central nervous system disorders, such as antidepressants and anticonvulsants, as well as cardiovascular drugs. Nearly 80% of the 4 billion prescriptions written in 2011 were for generics, while accounting for only 27% of drug spending.
The trend seen in the GPhA’s study has been happening for some time now. But it’s also accelerating, and that means a lot for drug makers and policy-makers alike.
According to a study last month by IMS Health, global spending on generics is expected to rise from $242 billion in 2011 to more than $400 billion by 2016. Much of that will come from volume growth in emerging-market countries, but a lot of it is also due to the transition to generics in developed countries like the United States. The report noted that limited savings from expiring patents are prompting policy shifts to encourage more use of generics. And this has been going on for some time: Last year, another report by IMS found that while spending on branded drugs decreased by 0.7% in 2010, spending on branded and unbranded generics rose by 4.5% and 21.7%, respectively. That report also found that on average, more than 80% of a brand’s prescription volume is replaced by generics within six months of the expiration of the branded drug’s patent.
As analysts like IMS VP industry relations Doug Long have said before, the blockbuster model of drug development is coming to an end. While drug companies might still develop new treatments for widespread disease states like cholesterol and gastroesophageal reflux disease, new drugs to treat those conditions are unlikely to see the kinds of sales achieved by the likes of Pfizer’s cholesterol drug Lipitor (atorvastatin), whose sales reached $7.7 billion in 2011 but which lost patent protection in November 2011. Instead, many drug companies are shifting their focus to more expensive drugs to treat disease states with smaller patient populations, like cancers and autoimmune disorders. Meanwhile, the more common conditions will be treated more and more with cheaper generic drugs.
For policy-makers, the move toward generics means drug therapies will become cheaper, which will go a long way toward making health care overall cheaper. For that reason, it behooves them and also healthcare providers ranging from physicians to pharmacists to make sure patients know when a generic drug for their condition is available so that neither they nor their payers have to spend an arm and a leg to keep them healthy.
Though specialty drugs will account for a greater share of drug spending overall, biosimilars will help mitigate the costs of those as well. On July 10, President Barack Obama signed what some called a “historic” reauthorization of the Prescription Drug User Fee Act. Starting Oct. 1, the generic drug industry will pay $299 million per year in user fees over the next five years, which will help pay for more Food and Drug Administration staff and help clear a backlog of some 2,500 generic drug applications and inspections of more manufacturers’ production plants. But there’s another important part of the law: It creates a user fee program for companies that make biosimilars, for which the Patient Protection and Affordable Care Act created the country’s first ever regulatory approval pathway.
Federal officials and drug makers are still working on regulations for biosimilars, with the FDA releasing draft guidance on biosimilars in February 2012, but once those are done and in place, they’ll make available cheaper knockoff versions of biotech drugs. Currently, Teva Pharmaceutical Industries, Sandoz and Hospira are the main manufacturers of biosimilars for the European market, but other companies have been looking into the game also. In June 2012, Indian generic drug maker Dr. Reddy’s Labs and German drug maker Merck KGaA — which operates in the United States under the name EMD to avoid confusion with American drug maker Merck — signed a deal to develop biosimilars, mostly monoclonal antibodies, for cancer.
And the generic wave is good news for pharmacy retailers as well. According to an analysis by the Federal Trade Commission, generics tend to generate higher profit margins for retailers, and an analysis by Credit Suisse showed that the generic wave could add 6% to 7% to their earnings this year. The nearly 40 drugs expected to lose patent protection through 2016 will help that figure along in the years to come as well. They also have a multiplier effect because though a 30-day supply of a generic drug can cost as little as $4, a customer who comes in to pick up a prescription may also be tempted to buy supplements, makeup or soft drinks before heading out the door.
The expanding role of pharmacy in ACOs
While the ultimate impact of healthcare reform is still being debated, one trend is clear: Accountable care organizations continue to pick up steam. An ACO is a unique healthcare delivery model defined as a network of healthcare providers who share responsibility for coordinating high-quality care across a specific patient population. The concept is not new and, in fact, is based largely on integrated health system models that have been successful for many years. However, this model was only applied to public payer models as part of the Patient Protection and Affordable Care Act two years ago. Since then, numerous ACOs have launched, and many more are in development. In fact, as of the end of May, 221 ACOs had been identified across 45 states.1 In addition, in July, the Centers for Medicare and Medicaid Services announced the selection of 88 new ACOs, translating into coverage for more than 2 million seniors in 40 states and the District of Columbia under Medicare shared savings initiatives.
Both public and private ACO models have been formed to lower costs, improve care and create better health outcomes. The ACA-mandated Medicare Shared Savings Program first sparked ACO development, and commercial payers now are creating their own private-sector ACOs. CMS also introduced the Pioneer Program, which allows ACOs to contract with the federal government and commercial payers.
The current ACO landscape appears to feature physicians and hospitals as the targeted players in the ACO model. In response, the pharmacist community has voiced its concerns that ACO programs are undermining pharmacists’ role in integrated care systems. Since the introduction of the MSSP, pharmacy groups have urged CMS to actively include community pharmacists in ACO-data sharing.2 While pharmacist groups seek ways to become recognized as integral parts of ACOs, they emphasize their lack of control over prescription drug costs — so they are not perceived as liable for ACO costs tied to drug spending.3
Pharmacy stakeholder groups have emphasized the important role of community pharmacists in improving patient outcomes and lowering overall healthcare costs. Data suggest that pharmacists in integrated delivery structures help improve patient care by managing patients’ medications.4 In fact, many pharmacists already are integrated into medical homes across the nation.
Expanded role of pharmacists
ACOs will present some key opportunities to pharmacists — from increased collaboration with providers to expanded access to patient information and interaction. Under the ACO model, all caregivers should have greater access to patient health information, enabling them to assemble more complete and accurate treatment plans. As pharmacists tend to have one-on-one interactions with patients, they are well positioned to assist patients in identifying gaps in care, seeking out appropriate care and gaining patients’ buy-in for the new ACO structure.4 Given the focus on quality performance and cost reduction, there will be a need for pharmacists in post-discharge medication management as well. Currently, some pharmacists in integrated care systems provide follow-up phone calls to ensure patients are taking the correct medications and receiving appropriate lab tests post-discharge.
Community pharmacists will face some challenges when trying to integrate into ACO programs, as the current structure minimizes the role of pharmacists in the patient care process. Currently, the MSSP and Pioneer Program do not have an explicit role for pharmacists in ACOs. Pharmacists do have the opportunity to become part of an ACO via subcontracting. It’s important to note, however, that being an official component of ACOs would lead to more meaningful collaborations with other ACO providers and would allow pharmacists to influence ACO governance, help dictate patient treatment standards and pathways, and share in savings with other providers and suppliers.4
Value-based environment depends on a more holistic view to costs and outcomes. Pharmaceutical treatment costs must be examined in the context of the total treatment received or there is a risk that expenses related to their use could be targeted for cost reduction even though the efficient use of pharmaceuticals can lead to overall lower medical costs.5
In the absence of having a clearly defined role in the ACO, pharmacists may be left out of discussions regarding program structure and metrics. And because of the gap in pharmacy-based quality metrics in ACO programs, there’s no way to track pharmacists’ contributions toward the organization. As a result, pharmacists will need to actively engage and communicate their value to ACOs and may need to redefine their workflows to collaborate with physicians, nursing staff and other suppliers within ACOs.
Pharmacist groups should continue to engage in dialogue with payers/ACOs to encourage community pharmacist inclusion in ACO structures. In doing so, pharmacists can bring attention to their involvement in helping to control costs and improving patient care. Given the ongoing pressure from the pharmacy community to include pharmacists in the ACO structure, the role of pharmacists likely will expand over the next few years. In the absence of guidance from CMS and payers, it remains uncertain how pharmacists’ scope of practice will evolve, though we may see pharmacy-based ACOs and quality metrics emerge in the near future. Regardless, pharmacists will need to remain flexible as their roles may become increasingly primary-care focused under the ACO model.
Peyton Howell, MHA, is president of AmerisourceBergen Consulting Services and SVP business development for AmerisourceBergen Corp.
Leavitt Partners, Growth and Dispersion of Accountable Care Organizations: June 2012 Update. http://news.leavittpartners.com/newsrelease-cid-1-id-43.html
Yap D. Pharmacy to CMS: Explicitly include pharmacists in ACOs. American Pharmacists Association. http://www.pharmacist.com/AM/Template.cfm?Section=Pharmacy_News&template=/
CM/HTMLDisplay.cfm&ContentID=26185. Accessed March 8, 2012.
Stein M. Pharmacists Pursue Legislative, Contractual Strategies To Gain Key Role In ACOs. Daily News Updates from Inside Health Policy. https://healthpolicynewsstand.com/Inside-
CMS/Inside-CMS-03/01/2012/menu-id-316.html. Accessed March 1, 2012.
Pharmacists as Vital Members of Accountable Care Organizations. Academy of Managed Care Pharmacy. http://www.amcp.org/aco.pdf. Accessed February 16, 2012.
ACO Success Depends on Optimal Medication Management. The Pink Sheet. July 23, 2012