Challenges continue, but generics companies see a bright future with biosimilars
More than just inexpensive substitutes, generic drugs offer a glimpse into certain issues that pharmaceutical companies are facing now. While consumers depend on generics as a low-cost alternative to brand medications, the category is a complex one that is enduring the usual challenges plus some unusual barriers to success. Meanwhile, the state of the generics category is also benefiting from exciting innovations, notably biosimilars.
One of the biggest trends right now relates to pricing. While other categories are seeing inflation, generics are experiencing deflation. That’s due to many factors, but one of the main drivers is the influx of newly approved medicines, resulting in increased competition in a crowded market. Meanwhile, the industry is also handling more typical challenges of supply chain constraints, rising manufacturing costs and the emergence of buying groups. Industry executives say they are adapting by moving manufacturing and focusing on biosimilars.
Although the U.S. Food and Drug Administration approved fewer generic drugs during the COVID-19 pandemic than during previous years, there were still plenty of approvals. According to annual reports from the Office of Generic Drugs, or OGD, in 2019 the generic drug program approved or tentatively approved 1,014 generic drug applications, known as Abbreviated New Drug Applications, or ANDAs, and 107 first generic drugs. In 2020, the OGD approved 948 ANDAs and 72 first generics. In 2021, the figures were 776 ANDAs and 93 first generics. The reports noted that first generics, which provide access to therapies where no previous competition existed, are particularly important to public health and the OGD prioritizes the review of first generic drug submissions.
Competition Increases
Naturally, increasing competition is presenting challenges for the industry. “The past several years has been a difficult time for generics,” said John Dillaway, executive vice president of Parsippany, N.J.-based Ascend Labs. “The rate of product deflation has been unprecedented. The number of competitors versus the available number of customers has created a super competitive environment.”
Add to that, Dillaway said, is the supply of active pharmaceutical ingredients, or API, and the supply of key starting materials, or ingredients used to make the API, have been challenging. “In order to grow, generic companies must be well positioned to gain continued approvals and have a strong supply chain,” he said. “Also, releasing new off-patent molecules allows for new revenues that can offset some of the deflation on legacy items and provide a pathway for growth.” For its part, Ascend aspires to gain between 12 to 15 new approvals each year, and Dillaway said the company is on pace to achieve that this year.
The generics space has dozens of players, according to Andy Boyer, executive vice president and chief commercial officer at Amneal Generics in Bridgewater, N.J. Citing a Wall Street analyst’s report, Boyer said the average generic product has six competitors. “Ongoing competition in the U.S. generics market continues to increase pressure for inline and pipeline product rationalization,” he said.
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Boyer also noted that there has been much movement of manufacturing to lower-cost countries. Manufacturers are evaluating R&D investment in the United States versus the rest of the world, and finding that return on investment in the U.S. for traditional products has little value, except for complex products. “Significant perpetual pricing pressure due to competition and buying power of large retail pharmacies — particularly for the less complex products such as oral solids, which can have 10-plus competitors — has led to product rationalization and discontinuance of many products,” he said.
To respond to these challenges, Amneal is evolving its pipeline. “We’ve prioritized complex products,” Boyer said. “Over half of our generics revenue and 86% of pipeline is non-oral solids.” In small molecule generics, the shift from oral solids to complex generics is important, he said, as there is less competition, often two to three players. Also, these innovations are more impactful, such as new affordable therapies for patients in areas like women’s health or cancer. Among Amneal’s recent innovations are Zafemy birth control patch and Abiraterone Acetate for metastatic pancreatic cancer, both launched in 2021.
Other manufacturers agree that innovation will be the key to success in the current environment. “The name of the game is ‘First to Market,’” said Milan Kalawadia, senior vice president of U.S. commercial operations at Dr. Reddy’s. “As the dynamics are getting ever more aggressive and competitive, if you are late to the game, chances are you missed your opportunity.”
The Princeton, N.J.-based Dr. Reddy’s is focused on new product launches and continuing the momentum that it gained over the last three years, which saw 70 or more launches. There are challenges though, and not just the usual issues of supply chain constraints and ingredient shortages. Kalawadia points to the emergence of buying groups that negotiate on behalf of their members. “Over the years, more and more of these groups have started to pop up, so we’ve got a smaller subset of customers to work with as a result,” he said. “We’re still talking with the same pharmacies, we’re still strategizing with the same buyers, but when it comes to the decision-making process, we’re working with these buying groups.”
The solution for Dr. Reddy’s, Kalawadia said, has been the three pillars of product quality, ability to supply product on time and being competitive with price points.
The use of branded and generic drugs is increasing. According to “U.S. Medicines Trends 2022 Report,” released in April by the IQVIA Institute for Human Data Science, prescription drug use reached a record 194 billion daily doses in 2021. Days of therapy from all types of prescription medicines grew 3.3% in 2021, a rebound from the 1.9% growth in 2020 when usage was disrupted by the pandemic. When people canceled or postponed certain healthcare appointments, new prescriptions for acute and chronic therapies decreased. COVID-related medicines accounted for part of the growth, and the non-COVID medicines market grew more slowly at 5%.
[Read more: Avalere analysis examines Medicare Part D’s plan tier placement of generics]
The IQVIA report also showed that generics make up 92% of prescriptions and account for 16% of invoice-level spending. At the same time, generics account for 65% of patients’ out-of-pocket costs.
Biosimilars Generate Excitement
Among the trends, the report noted, is the growing impact of biosimilars, which increased significantly, offsetting increased use of branded medicines. Oncology is a big area for biosimilars, and manufacturers have an opportunity to generate revenue from biosimilar versions of three molecules in the oncology market, in particular — bevacizumab, rituximab and trastuzumab — because these three had recent losses of exclusivity, or LOE. Biosimilars will reduce biologic spending by $40 billion through 2026, the report projected.
Manufacturers acknowledge that biosimilars are the future. “Biosimilar adoption in the U.S. continues to grow at a healthy rate,” said Harsher Singh, senior vice president of Amneal Biosciences. “We expect savings created in the healthcare system from biosimilars to outstrip generics over time.”
[Read more: Alembic intros generic Olux foam]
Amneal announced three products approved this year: Releuko, a filgrastim biosimilar referencing Neupogen; Alymsys, a bevacizumab biosimilar referencing Avastin; and Fylnetra, a pegfilgrastim biosimilar referencing Neulasta. “We see this as the next wave of affordable medicines that’s still in its early innings,” Singh said. “We are positioning ourselves to play a large, critical and long-term role in this market, where portfolio and key capabilities across the value chain matter, similar to complex generics.”
The industry expects much from biosimilars. “FDA-approved biosimilars are beginning to deliver on their promise to reduce costs,” said Dan Leonard, CEO of the Washington-based Association for Accessible Medicines. “These medicines have scientifically comparable quality, safety and efficacy to their reference biologic and create competition in high-cost markets, resulting in lower costs and broader patient access.”
Leonard also said that biosimilar medicines have an average cost savings of nearly 50% versus the brand biologic. “Importantly, biosimilar competition also results in lowering brand biologic costs by more than 25% on average,” he said.
According to AAM’s “2021 Generic Drug and Biosimilars Savings in the U.S.” report, biosimilar uptake has reduced the growth rate of oncology spending roughly by half since 2019. This reduction in growth, along with continued use of generic cancer medicines, contributed to a total of $18 billion saved on oncology medicines in 2020.
“Generic and biosimilars represent the only segment of health care in the U.S. that consistently reduces costs,” Leonard said. “The use of generic and biosimilar medicines generated more than $338 billion in savings for the healthcare system in 2020.”
[Read more: Elixir debuts specialty generic enhancement for plan sponsors, members]
Manufacturers agree that this is an exciting time to be in the generics, and especially biosimilar, space.
“Some of the biggest opportunities in generics are in the more complex molecules, including but not limited to biosimilars,” said Paul McMahon, president of commercial operations at East Windsor, N.J.-based Aurobindo Pharma USA. The company is expanding into biosimilars via a partnership with another company.
Another area of growth is product differentiation, through formulation development and novel delivery methods of complex products. This list of specialty products includes metered-dose inhalers, dry powder inhalers and transdermal patches. Aurobindo has a 40,000-sq.-ft. facility in North Carolina, where the specialty research and development team works on inhalers, patches and other products.
[Read more: ANI gets FDA nod for generic Tranxene]
In fiscal year 2022, McMahon said, Aurobindo Pharma filed 57 ANDAs and received final approval for 45 ANDAs. The company, which also launched and relaunched 24 products, has approximately 200 pending approvals. “In addition to our robust organic pipeline, we recently acquired a portfolio of 45 product families, as well as a new FDA-approved 269,000-sq.-ft. manufacturing facility located in Puerto Rico,” he said.
The Puerto Rico manufacturing facility acquisition provides Aurobindo with a steady stream of new competitive medicines to launch in the future, and increases the company’s U.S.-based manufacturing footprint. The timing is opportune, McMahon said, as there is an ongoing push by the government and private stakeholders for more onshoring of drug manufacturing.
“We believe there is opportunity in continuing to build scale and self-sustainability into our operation to drive efficiency into the process and costs and overheads out,” McMahon said. “This is a highly competitive market, so there must be a vigilant focus on growing and simultaneously leaning the operation to maintain our ability to produce the enormous scale of life-saving and -sustaining medicines that we do for the U.S. and globally.”
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The future will likely see more deflation and more competition. Also according to the IQVIA report, spending on oncology drugs will slow over the next few years, as expirations of brand drug patents will drive more biosimilars and generics, which will offset the price increases of new treatments. Also, upcoming innovations, which include generics for Humira in 2023 and ustekinumab (Stelara) as early as 2024, will also contribute to lower costs.
Generics firms are confident that they are ready for the challenge. “We are positioned to handle the realities of this marketplace,” said Dr. Reddy’s Kalawadia. “Our generics division has navigated such challenges in the past, and we will continue to be a leading player in the generics industry in the U.S. Our current and future growth strategies will only help strengthen our position in the industry while also driving significant growth for Dr. Reddy’s.”
Barriers to keeping drug prices down
Certain practices are resulting in patients unnecessarily paying more at the pharmacy counter.
By Nora Caley
Generics help save consumers and other payers money, but certain practices are resulting in higher prices and delayed access to generics and biosimilars, said Dan Leonard, CEO of the Association for Accessible Medicines, or AAM.
Leonard noted two of the practices contributing to higher prices: placing generic drugs on nongeneric formulary tiers and preferring high-cost, high-rebate drugs over lower-priced alternatives. One issue is that first generics are usually not covered by plan formularies. He noted that in 2021, in the Medicare drug program, only 21% of first generics that were launched in 2020 were covered by plan formularies. “Data show that it normally takes three years for first generics to be covered on more than half of Medicare Part D formularies,” he said. “And once generics do get covered by Part D formularies, the story does not improve.”
Leonard said an ongoing review of generic drug formulary placement in Medicare plans from 2016 to 2022 showed a trend of pharmacy benefit managers placing more generics on nongeneric tiers with higher cost sharing. More generics were on nongeneric tiers (57%) than on generic tiers (43%). “While this data comes from the Medicare market, anecdotal reports suggest that similar behavior occurs in the commercial market,” he said. “These practices allow PBMs to generate additional revenue through higher co-pays for generic drugs, but result in patients unnecessarily paying more at the pharmacy counter.”
In May, AAM filed comments with the Federal Trade Commission outlining the two above practices and noting PBMs’ negotiating power. The AAM and its Biosimilars Council urged the FTC to investigate the practices and study the vertical consolidation of the PBM industry.
Separately, legislation could offer a solution. The Access to Lower-Cost Medicines for Seniors Act (H.R. 2846), introduced in April 2021, establishes additional requirements for prescription drug plan, or PDP, sponsors that use formularies under the Medicare prescription drug benefit. The bill requires PDP formularies to include covered generic drugs and biosimilars for which the wholesale acquisition cost is less than that of the reference (brand) product. PDP sponsors must also establish a dedicated specialty tier for covered generic drugs and biosimilars. The bill also prohibits PDP sponsors from instituting certain requirements relating to access to such covered generic drugs and biosimilars that are more restrictive than those for brand-name products.
“The work to encourage biosimilar adoption in Part D is just beginning and will grow in importance as more biosimilars enter the Part D market,” Leonard said.
Mark Cuban’s generics play
What will the billionaire’s new drug company mean for the industry?
By Nigel F. Maynard
Billionaire businessman and owner of the Dallas Mavericks professional basketball team Mark Cuban shocked the retail pharmacy world when he announced earlier this year the creation of a new online pharmacy to drastically expand access to affordable pharmaceuticals.
“We will do whatever it takes to get affordable pharmaceuticals to patients,” Alex Oshmyansky, CEO of Mark Cuban Cost Plus Drug, said at the time of the announcement. “The markup on potentially lifesaving drugs that people depend on is a problem that can’t be ignored. It is imperative that we take action and help expand access to these medications for those who need them most.”
[Read more: Study: Medicare could have saved $3.6B buying generics from Mark Cuban Cost Plus Drug]
As the company explained, it is a registered pharmaceutical wholesaler, so it will bypass middlemen and outrageous markups. The pharmacy’s prices reflect actual manufacturer prices plus a flat 15% margin and pharmacist fee. With the help of digital healthcare company Truepill, patients can expect a seamless, secure e-commerce experience as they navigate the pharmacy’s website, built and powered by Truepill’s digital health platform, the company said.
“As an entrepreneur, any time I see an industry that’s been run the same way for decades, if not generations, and it’s been obfuscated to the point where there’s no transparency and you have associations trying to protect that opaqueness, to me that’s an opportunity and that’s exactly what we saw with the prescription drug industry,” Cuban told the “PBS Newshour” in June. “And by adding transparency and our approach at Cost Plus Drugs, which is we’ll show you our actual cost, we’ll mark it up 15%, we’ll add $3 pharmacy handling fee and $5 shipping. And that’s all you ever pay.”
Reviews are mixed on what this new endeavor will mean for traditional retail pharmacies.
Generics new product launches
The following are some recently announced or launched generics and biosimilars.
By Nora Caley
Alembic, Bedminster, N.J.
Cosette Pharmaceuticals, in collaboration with Aleor Dermaceuticals, a wholly owned subsidiary of Alembic Pharmaceuticals, announced that the FDA approved the ANDA for an NBE version of Abreva (docosanol cream 10%) in a 2 g tube and pump formats. Abreva is a licensed trademark of GlaxoSmithKline.
This approval represents the first ANDA approval in the pump format, and Cosette plans to launch the product across the U.S. retail channel.
Amneal Pharmaceuticals, Bridgewater, N.J.
Amneal Pharmaceuticals announced FDA approval of the Biologics License Application, or BLA, for filgrastim-ayow, a biosimilar referencing Neupogen. The product will be marketed under the proprietary name Releuko, and is used to treat neutropenia (low neutrophils, a type of white blood cells that fight infection), which is commonly experienced by patients undergoing chemotherapy. Releuko was developed in collaboration with Kashiv Biosciences in Chicago.
[Read more: Amneal debuts 2 generics]
According to IQVIA, U.S. annual sales for filgrastim in 2021 were $407 million, of which $275 million represents biosimilars.
Amneal also announced that the FDA approved the company’s BLA for bevacizumab-maly, a biosimilar referencing Avastin. The product, which will be marketed under the proprietary name Alymsys, represents the third bevacizumab biosimilar approved in the United States. Alymsys was developed by mAbxience, a global biotech company. Bevacizumab-maly is a vascular endothelial growth factor inhibitor used in oncology. According to IQVIA, U.S. annual sales for bevacizumab for the 12 months ending February 2022 were $2.6 billion, $1.6 billion of which represented biosimilars.
In May, Amneal revealed that the FDA approved the company’s BLA for pegfilgrastim-pbbk, a biosimilar referencing Neulasta. Developed in collaboration with Kashiv Biosciences, the product will be marketed under the proprietary name Fylnetra, which is used to treat neutropenia.
[Read more: Amneal receives FDA blessing for 4 generics]
ANI Pharmaceuticals, Baudette, Minn.
Misoprostol tablets, 100 mcg and 200 mcg, are the generic version of the reference listed drug, or RLD, Cytotec. The current annual U.S. market for misoprostol tablets, 100 mcg and 200 mcg, is approximately $15.3 million, according to IQVIA/IMS Health, a healthcare data and analytics provider.
The company also announced that it has received FDA approval for the ANDA for fludrocortisone acetate tablets USP, 0.1 mg, the generic version of the RLD Florinef. The current annual U.S. market for fludrocortisone acetate tablets, 0.1 mg is approximately $24.2 million, IQVIA/IMS Health said.
Aurobindo, East Windsor, N.J.
Azelastine hydrochloride nasal spray 0.1% (137 mcg per spray) is Aurobindo’s first product launch in the United States utilizing a pump nasal spray delivery system. The development and launch of azelastine demonstrates Aurobindo’s strategic push into alternative delivery systems, which includes metered-dose inhalers, prefilled syringes and transdermal patches. Azelastine hydrochloride nasal spray 0.1% is an AB-rated generic equivalent to the reference listed drug Astelin by Mylan Specialty LP. According to IQVIA, azelastine hydrochloride nasal spray 0.1% has an estimated market value of $48.6 million for the 12 months ending April 2022.
Dr. Reddy’s Laboratories, Princeton, N.J.
A collaboration between Dr. Reddy’s Laboratories and Senores Pharmaceuticals, ketorolac tromethamine tablets USP, 10 mg is a therapeutic generic equivalent of the reference listed drug Toradol tablets 10 mg.
Ketorolac tromethamine tablets USP, 10 mg is an NSAID indicated for the short-term (up to five days in adults) management of moderately severe acute pain that requires analgesia at the opioid level and only as continuation treatment following intravenous or intramuscular dosing of ketorolac tromethamine. The Toradol tablets, 10 mg brand and generic, had U.S. sales of approximately $16.8 million moving annual target, or MAT, for the 12 months ending March 2022, according to IQVIA.
[Read more: Fresenius Kabi intros generic Alimta]
Fresenius Kabi, Lake Zurich, Ill.
Fresenius Kabi introduced bortezomib for injection, a new generic equivalent to Velcade in the United States.
Fresenius Kabi bortezomib for injection is available in a 3.5 mg per 10 ml single-dose vial presentation for subcutaneous or intravenous use. It is an affordable treatment option for adult patients with multiple myeloma and mantle cell lymphoma.
Hikma Pharmaceuticals, Berkeley Heights, N.J.
Hikma Pharmaceuticals launched benztropine mesylate injection, USP through its U.S. affiliate, Hikma Pharmaceuticals USA. The company released 2 mg/2 ml dose in vial format. Hikma also markets ampoules of this product, and this launch broadens the choice of medicines available to hospitals. Benztropine mesylate injection, USP is indicated as an adjunct in the therapy of all forms of parkinsonism. According to IQVIA, U.S. sales were approximately $5 million in the 12 months ending December 2021.