Generic Drug Report 2016
Transcription
Generic Drug Report 2016
February 2016 The Business of Retail Pharmacy A DSN Special Report Generic Drug Report 2016 001_GenericReport_2016.indd 1 2/12/16 11:08 AM T:9” S:8.5” S:10.25” Roxane Laboratories has been defining therapeutic standards for over a century. As a leader in generic drug development, Roxane Laboratories produces complex therapies with unique packaging and dosing options. Our innovative research and development team will continue to produce high-quality, accessible alternatives to brand-name medications to meet the challenges of today and tomorrow. B R I N G I N G Q U A L I T Y F O R L I F E Copyright ©2015, Roxane Laboratories, Inc. All rights reserved. Untitled-3 1 5/8/2015 10:11:59 AM Table of Contents February 2016 for generics 10 Demand strong, fueling steady growth in market share 4 News: GPhA briefs Congress on generics savings; Practitioners want lower drug prices, but only 3% expect it; Biosimilars Forum launches access, awareness initiative and education guides; Congressional oversight meeting looks at biosimilars naming, reimbursement 16 Pipeline: Impact of patent expiries on generics unclear 17 Biosimilars: Expiring patents set stage for biosimilars 18 Q&A with GPhA’s Chip Davis: The state of generics 19 Quality Metrics: Manufacturers await FDA’s final guidance 20 Distribution: Taming the generic supply chain 21 Pricing: Amid hike fear, most generic prices drop 22 Prescribing: Researchers tout generic savings 10 17 DRUGSTORENEWS.COM 003_GenericReport_2016.indd 3 18 FEBRUARY 2016 • 3 2/12/16 11:18 AM Generics Report GPhA briefs Congress on generics savings MONTHLY PRICE REDUCTION AFTER LOSS OF EXCLUSIVITY 00% -20-20 Price reduction The Generic Pharmaceutical Association on Feb. 1 briefed Congress about the ways generic drugs and biosimilars can drive healthcare savings, when following up on a Department of Health and Human Services issue brief. “It is clear that generics are a long-term solution to rising health costs,” GPhA president and CEO Chip Davis said. “That’s why it is puzzling that Congress chose to increase the Medicaid rebate for generic drugs as part of the October 2015 budget agreement. This provision will add significantly to generic manufacturers’ costs, making it much harder to produce generics across many therapeutic classes.” Davis pointed out that an increased rebate has the potential to lower the number of generic competitors on the market, which could drive costs up by making beneficiaries rely on branded products. GPhA suggested five ways that Congress can ensure high use of generics and a healthy amount of competition in the generics market: • Make sure that the FDA is fully resourced and able to deal with its backlog of 3,800 generic drug applications and reduce the amount of time it takes for approvals to come through; • Increase use of generics among lowincome Medicare beneficiaries — which GPhA estimates could save $17.7 billion over 10 years; • Pass the FAST Generics Act to avoid ma- n Oral medicines n All medicines -40-40 -51 -57 -60 -60 -66 -66 -67 -66 -80-80 -100% -100 -74 0 12 24 -77 36 -77 -78 -80 -78 -77 -80 -80 -81 -81 -81 48 60 72 Months since loss of exclusivity 84 96 108 120 -78 -80 Source: IMS Health, National Sales Perspectives, March 2015 • • nipulation of risk evaluation and mitigation strategies that can keep generics from coming to market; Work to create a framework for biosimilars that will improve patient access and approval time; and Repeal section 602 of the 2015 Bipartisan Budget Act. “GPhA will continue to highlight the undeniable role of generics in lowering health costs,” Davis said. “Together with Congress, the administration, regulators, stakeholders and others we can do more to ensure the generic pharmaceutical industry continues to enhance patient access and drive patient savings for years to come.” Practitioners want lower drug prices, but only 3% expect it Doctors, pharmacists and managed care executives in the United States want lower drug prices for patients, greater pharmacy reimbursement and an expanded focus on patient-centered care. However, they were strongly pessimistic about whether these changes will happen, according to data compiled by InCrowd, a provider of realtime market intelligence to life sciences and healthcare firms. “The discrepancy between what the industry wants and what it thinks it will get is stark,” stated Diane Hayes, president of InCrowd. “Over half of respondents expected 4 • FEBRUARY 2016 004_006_GenericReport_2016.indd 4 the exact opposite result of what they hoped to get — like wanting lower drug prices and expecting there would be no change at all.” “THE DISCREPANCY BETWEEN WHAT THE INDUSTRY WANTS AND WHAT IT THINKS IT WILL GET IS STARK.” — Diane Hayes, president, InCrowd InCrowd asked members of its Crowd of 1.8 million clinicians, pharmacy staff and managed care providers about important changes and innovations they wanted to see in the pharmaceutical industry in 2016 — and at the same time, what changes they realistically expected. Drug price concerns were the overriding theme of the microsurvey, with 45% of respondents wanting lower drug prices for patients. Yet, while 34% of respondents said they would like to see better price control and lower prices in 2016, only 3% predicted they would see such changes. Better pharmacy reimbursement was identified by 13% of respondents as a top issue in 2016, yet over half of respondents who Continued on page 6 DRUGSTORENEWS.COM 2/11/16 4:32 PM Apotex is everywhere. Making a difference. One life at a time. Now the 7th largest generic pharmaceutical company in the world, Apotex was built on a vision to provide affordable healthcare to patients around the globe – and we remain committed to that goal. With over 500 products and another 300 in development, we touch lives in over 120 countries with our expansive portfolio that spans a wide range of therapeutic classes and delivery systems. As a leader in R&D, we are actively working to develop a broad portfolio of biosimilars. We’re quick to adapt and poised to lead. We are Apotex – your partner in quality and service. www.ApotexCorp.com Sydney Opera House, Australia APOT 20856 - Drug Store News Ad February Insertion - Australia Image.indd 1 Untitled-1 1 1/11/16 2:18 PM 1/21/2016 8:40:37 AM Generics Report Congressional oversight meeting looks at biosimilars naming, reimbursement The House Energy and Commerce Committee convened on Feb. 4 to hold an oversight meeting about the Biologics Price Competition and Innovation Act of 2010, the first since President Barack Obama signed the legislation paving the way for biosimilars in 2010. Among the stakeholders in the enactment of the law is the Generic Pharmaceutical Association’s Biosimilars Council, whose members include companies that have developed or are developing biosimilar drugs. GPhA president and CEO Chip Davis commented on the hearings, noting the need for more straightforward naming conventions for biologics and bio- “THE BIOSIMILARS COUNCIL, A DIVISION OF GPHA, IS CONCERNED THAT DIFFERENT INTERNATIONAL NONPROPRIETARY NAMES FOR BIOLOGICS AND BIOSIMILARS COULD LEAD TO PATIENT AND PROVIDER CONFUSION, INCREASING THE LIKELIHOOD OF PRESCRIBING ERRORS AND OTHER UNINTENDED CONSEQUENCES.” — Chip Davis, president and CEO, GPhA similars and calling for price calculations that ensure sufficient reimbursement from the Centers for Medicare and Medicaid Services. Biosimilars Forum launches access, awareness initiative and education guides The Biosimilars Forum launched on Feb. 1 its new Partnership for Biosimilars Education and Access. The new initiative is aimed at raising awareness of and increasing access to biosimilars, and its launch was accompanied by the release of two education guides for healthcare professionals, patient advocacy groups and the media on the group’s website. Zarxio was the first U.S. biosimilar that was approved by the FDA in 2015. 6 • FEBRUARY 2016 004_006_GenericReport_2016.indd 6 “We know that some of the most difficult diseases that afflict people in the United States are best treated with biological medicines,” Biosimilars Forum president Juliana Reed said. “The introduction of biosimilars is anticipated to help drive lower cost burdens for the U.S. healthcare system. It will also help expand earlier, more consistent access to these important medicines for patients with cancer, anemia, inflammatory bowel disease, multiple sclerosis, rheumatoid arthritis, psoriasis and Crohn’s and other inflammatory bowel diseases.” The first U.S. biosimilar, Zarxio (filgrastim-sndz) was approved by the FDA and was launched by Sandoz in 2015. “The Biosimilars Council, a division of GPhA, is concerned that different international nonproprietary names for biologics and biosimilars could lead to patient and provider confusion, increasing the likelihood of prescribing errors and other unintended consequences,” David said. “The council also urges [CMS] to provide non-interchangeable biosimilars with a unique average sales price calculation and billing code, to ensure a competitive reimbursement. Additional clarity from currently outstanding FDA guidances on interchangeability, extrapolation and labeling are each critical to the timely availability of biosimilars in the United States.” Practitioners Continued from page 4 wanted this predicted either no change or lower reimbursement. Similarly, over half of respondents who wanted more patient-oriented care predicted either no change in this dimension, or, in fact, less patient-oriented care. “The data show how the pharma industry is largely on the same page as consumers and regulatory authorities when it comes to hot-button topics like drug prices, even if the data don’t point the way to an immediate resolution,” said Hayes. “Sometimes quantifying the size of the challenge is the first step to solving it.” The three-minute microsurvey included 118 respondents — 52 physicians, 59 pharmacists and seven managed care professionals — fielded in December 2015, using InCrowd’s real-time platform. 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Friedman INTERNATIONAL OFFICES Japan: Diamond-Friedman Co., Ltd. Takii Tokyo Building, 7th floor 1-6-1, Kanda Jimboucho Chiyoda-ku, Tokyo, Japan, 101-0051 ph: 011-81-3-3504-6750 fax: 011-81-3-3504-6752 Spain: Ediciones Y Estudios, Enrique Larreta, 9-1 A 28036 Madrid, Spain ph: 011-34-91-733-91-14 fax: 011-34-91-315-56-28 Publisher of Drug Store News, Walmart Supplier News, HBS Dealer and Chain Store Age. DRUGSTORENEWS.COM 2/11/16 4:32 PM Your lifeline for quality, integrity and value in generics From discovery to delivery, Camber is dedicated to providing the highest quality generics, at the most affordable prices. ® Camber Pharmaceuticals, Inc. | Phone 732.529.0430 | camberpharma.com Untitled-2 1 10/28/2015 3:15:00 PM Generics Report GPhA appoints VP corporate development The Generic Pharmaceutical Association announced in January that it had appointed Anna McDermott-Vitak to be the organization’s VP corporate development and administration. McDermott-Vitak’s role will be overseeing GPhA’s membership, human resources, finance, IT and meetings. “Anna will strengthen our external engagement with current and prospective member organizations,” GPhA president and CEO Chip Davis said. “Anna’s Buzz’ n vast experience will be valuable in efforts to enhance association operations, maximize our growth opportunities and help GPhA address the issues that matter most to stakeholders in the dynamic and rapidly growing generic drug and biosimilars markets.” McDermott-Vitak, who was most recently Amgen’s executive director of global government affairs, has experience in product development, investor relations and government affairs, which she has acquired during her twen- BYTES Camber launches generic Corgard Camber on Feb. 4 launched its generic version of Corgard (nadolol) tablets. The drug is indicated to treat high blood pressure and chest pain. Camber will offer its nadolol in 100-count bottles of 20-, 40- and 80-mg tablets. Greenstone intros Detrol LA authorized generic Greenstone on Feb. 2 announced the introduction of its authorized generic of Detrol LA (tolterodine tartrate) extended-release capsules. The drug is indicated to treat such symptoms of overactive bladder as incontinence or frequent urination. The drug will be available in 2- and 4-mg capsules, each sold in 30- and 90-count bottles. Dr. Reddy’s gets tentative approval for doxycycline The Food and Drug Administration on Feb. 1 gave tentative approval to Dr. Reddy’s Laboratories’ generic version of Zenavod (doxycycline) capsules. The drug is intended to treat inflammatory lesions of rosacea in adults and will be available in 40-mg capsules once it is given final approval. The approval is tentative due to an ongoing patent infringement process under the Drug Price Competition and Patent Term Restoration Act, the company said. “We are pleased to receive a tentative FDA approval of Zenavod and will be working with external parties and the FDA to gain a full approval,” Dr. Reddy’s CEO and co-chairman G.V. Prasad said. 8 • FEBRUARY 2016 008_GenericReport_2016.indd 8 ty years in biotechnology. “I’m thrilled to be part of a team that helps bring more affordable medicine to millions of patients,” McDermott-Vitak said. “At a time when health costs are under scrutiny, this industry has a consistent record of generating billions in patient and health system savings while expanding access. I look forward to growing the voice of GPhA within and beyond the Beltway while guiding the association through an exciting period of development and expansion.” FDA approves Aurobindo’s generic Vfend The Food and Drug Administration on Jan. 29 approved Aurobindo Pharma’s generic version of Vfend (voriconazole) tablets. The drug is indicated to treat fungal infections in adults and children 12 years of age and older. The drug will be available in 50- and 200-mg dosage strengths, and total sales of voriconazole tablets were $102.7 million for the 12 months ended November 2015, according to IMS Health. Aurobindo gets approval for generic Zemplar The Food and Drug Administration has approved Aurobindo Pharma’s generic Zemplar (paricalcitol) tablets, the company announced. The drug is indicated to treat and prevent secondary hyperparathyroidism in patients with stage 3, 4 and 5 chronic kidney disease, as well as stage 5 patients on dialysis. The drug will be available in 1-, 2- and 4-mcg dosage strengths. The drug had sales of $38.5 million for the 12 months ended November 2015, according to IMS Health. 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CCC is a not-forprofit organization that provides licenses and registration for a variety of uses. www.copyright.com The Audit Bureau Greenstone intros authorized Colestid generic Pfizer subsidiary Greenstone announced in January that it had introduced its authorized generic of Colestid (colestipol hydrochloride) granules for oral suspension. The drug, which is indicated to treat high cholesterol, will be available in cartons containing 30 5-g foils, 90 5-g foils and in 500-g bottles that come with a scoop. DRUGSTORENEWS.COM 2/11/16 4:33 PM Now Available from Mylan 2015/2016 GBR –Generic Brand Reference–Guide ® Reserve Yours Today! Since 2003, Mylan is proud to have produced more than 1.2 million copies of the Generic Brand Reference (GBR ®) Guide for U.S. pharmacists, pharmacy technicians, and healthcare professionals. Over the past 13 years, the GBR Guide has become recognized as a useful resource that is requested year after year. Available in print and as an app for Android™* and Apple®† devices, the GBR Guide contains a comprehensive cross-referenced listing of generic and brand pharmaceuticals. To reserve the FREE 2015/2016 print edition, go to Mylan.com/Mylan-resources. To download the latest updated FREE app, scan the appropriate code below, or visit the app store for your device. An updated version of the app can be downloaded when the 2015/2016 version becomes available. Android™* Apple®† Our Vision: At Mylan, we have a vision of “Better health for a better world”. We are committed to providing access to healthcare for the world’s 7 billion people, one person at a time. *Trademark of Google Inc. † Registered trademark of Apple, Inc. The Mylan logo is a registered trademark of Mylan Inc. Copyright 2015 Mylan Inc. All rights reserved. NON-2015-0611 MYNMKT592 11/15 Untitled-1 1 11/18/2015 10:55:16 AM Demand for generics remains strong, fueling steady growth in market share By Jim Frederick Like a powerful tide that gradually eats away at the foundations of a once-impregnable sea wall, the booming market for generic drugs advances and recedes with the rise and fall in the number of branded drug patent expirations each year. But their long-term growth momentum remains on course, making generics an implacable force chipping away at what’s left of the market domain held by traditionally derived, broadly focused blockbuster drugs. The steady advance of me-too medicines continues, even in the face of year-over-year declines in the number of branded-drug patent expirations since the peak of the “patent cliff” that hit Big Pharma in 2012 to 2013. “Blockbusters worth $35 billion [in annual sales] lost their patents in 2012 — the high point of the patent cliff,” noted CVS Health in a CVS Insights market trends report. Since then, generics have maintained their upward march, impelled by cost-saving pressures among public and private health plan payers and patients, post-patent market competition, brand-to-generic substitution incentives by payers, and the continuing impact of expiring patents on traditional blockbuster medicines facing copycat competition for the first time. In 2014, the most recent year for which full-year figures are available, “Patent expiry events resulted in a reduction in spending of $11.9 billion … mostly from the impact of the loss of exclusivity for Cymbalta in 2013 and Celebrex in 2014,” IMS Health reported. “Despite the lower level of expiry impact, the share of prescriptions dispensed as generics increased by 2% to 88% in 2014.” That rise in market share will continue — albeit at a more modest pace than in the go-go years of the past decade. “Generics will continue to dominate prescription drug usage in the United States, rising from 88% to 91% to 92% of all prescriptions dispensed by 2020,” noted Murray Aitken, executive director of 10 • FEBRUARY 2016 010-014_GenericReport_2016.indd 10 Sales of unbranded generics by top 10 corporations MAT JUNE 2015 U.S. INDUSTRY U.S. DOLLARS* % MARKET SHARE $66,189 16.6% % GROWTH 7.4% Teva 8,862 13.4 Mylan Labs 7,157 10.8 2.5 Actavis US 5,323 8.0 -15.0 Sandoz (Novartis) 5,193 7.8 9.7 Sun Pharmaceutical 2,623 4.0 -14.4 Endo Pharmaceutical 2,187 3.3 42.4 Par Pharmaceutical 1,934 2.9 -5.0 Dr. Reddy’s 1,756 2.7 8.6 Lupin Pharmaceuticals 1,646 2.5 -0.6 2.4 16.7 Hospira 1,607 TOP 10 $38,288 57.8% 12.8 3.1% * In millions Source: IMS Health, National Sales Perspectives, June 2015 the IMS Institute for Healthcare Informatics. “Spending growth in the next five years will differ from the last four, which included the largest patent expiry cluster ever in 2012 and the largest year for new medicines in 2014,” Aitken reported. “The impact of patent expiries over the next five years, while higher in absolute dollars, will be lower in percentage contribution than the past five years — and no single year will reach the level of 2012.” Older patients with chronic conditions that can be treated with post-patent multisource medicines are keeping the generic growth engine humming, said Doug Long, VP industry relations at IMS. “The primary drivers of the [prescription growth] forecast reside in older patients with chronic conditions treated with generic medications,” he reported. Indeed, 70% of all generic prescriptions dispensed in the United States “are for chronic conditions,” Long said, “and 65% are filled by patients 50 years old and older. This accounts for more than 41% of all prescriptions.” Overall, the IMS Institute reported, “U.S. spending on medicines will reach $560 billion to $590 billion in 2020, a 34% increase in spending over 2015 on an invoice price basis. This growth will be driven by innovation, invoice price increases (offset by off-invoice discounts and rebates) and the impact of loss of exclusivity.” Not to be overlooked in the steady rise of generics is the role played by pharmacy benefit managers and health plan payers. CVS Health’s Caremark PBM, for instance, makes “continuous efforts to encourage plan members to use generic drugs when they are available,” according to the company. “We believe our generic dispensing rates will continue to increase in future periods, albeit, at a slower pace,” CVS reported. “This increase will be affected by, among other things, the number of new generic drug introductions and our success at encouraging plan members to utilize generic drugs when they are available and clinically appropriate.” Over the past decade, the generic juggernaut — accompanied by the ascendancy of specialized and highly targeted large molecule biotech medicines — has upended the traditional market for branded pharmaceuticals and shifted the balance of power. “As a result of patent expirations, generic competi- DRUGSTORENEWS.COM 2/11/16 2:29 PM Generics Report tion and a withering pipeline of broad-reaching drugs, manufacturers are shifting their drug discovery, development and pricing strategies,” said pharmacy benefit management giant Express Scripts in its most recent Drug Trend Report. “Now, manufacturers are increasing their focus on medications that treat small subsets of patients with diseases like cancer, or patients with rare diseases such as hereditary angioedema.” “Manufacturers also are tailoring molecular drugs to patients with specific genetic profiles known to be affected by certain diseases, so the drugs are more effective in treating those specific patients,” Express Scripts reported. Trumpeting the cost savings It goes without saying that the primary engine driving the rise in generics’ market share is the price differential between branded and copycat medicines. Savings from generics reached an all-time high in 2014, according to the seventh annual “Generic Drug Savings in the United States” report, compiled on behalf of the Generic Pharmaceutical Association by the IMS Institute for Healthcare Informatics. “The 2015 report shows that generic drugs are an essential part of any solution to sustaining our health system and are central to efforts that increase patient access and generate savings for patients, taxpayers, em- “THE 2015 [GENERIC DRUG SAVINGS IN THE UNITED STATES] REPORT SHOWS THAT GENERIC DRUGS ARE AN ESSENTIAL PART OF ANY SOLUTION TO SUSTAINING OUR HEALTH SYSTEM AND ARE CENTRAL TO EFFORTS THAT INCREASE PATIENT ACCESS AND GENERATE SAVINGS FOR PATIENTS, TAXPAYERS, EMPLOYERS, PAYERS, PROVIDERS AND OTHERS.” — Chip Davis, president and CEO, GPhA ployers, payers, providers and others,” said GPhA president and CEO Chip Davis. “Nearly 3.8 billion of the total 4.3 billion prescriptions dispensed in the United States in 2014 were filled using generic drugs. Yet generic prescriptions account for only 28% of total drug spending.” At press time, full-year figures for 2015 weren’t yet available. But in 2014, “generic drugs were responsible for $254 billion in health system savings … bringing the total savings over the last 10 years to $1.68 trillion,” GPhA reported. What’s more, the industry group reported, “Newer generic drugs introduced within the last 10 years are making significant impacts on patient and health system savings.” Newer generics make up 57% of savings, according to GPhA. “These newer generic Prescriptions of unbranded generics by top 10 corporations MAT JUNE 2015 TRx* U.S. INDUSTRY % MARKET SHARE % GROWTH 3,605 100.0% 455 12.6 Mylan Labs 330 9.1 -4.6 Sandoz (Novartis) 259 7.2 11.8 Teva 4.0% -3.4 Actavis US 234 6.5 -4.1 Endo Pharmaceutical 200 5.5 -5.0 Lupin Pharmaceuticals 200 5.5 8.0 Amneal 151 4.2 1.6 Sun Pharmaceutical 131 3.6 -22.3 Zydus Pharmaceuticals 121 3.4 6.9 Aurobindo Pharmaceuticals TOP 10 113 2,194 * In millions Source: IMS Health, National Prescription Audit, June 2015 DRUGSTORENEWS.COM 010-014_GenericReport_2016.indd 11 3.1 8.0 60.9% -1.3% drugs also saved the health system $638 billion of the most recent decade’s $1.68 trillion,” said Davis. “Older generics generated upward of $100 billion in health system savings in 2014 and $1.05 trillion in savings in the last 10 years.” The biggest cost-saving impact, said an industry report, is “in therapy areas that address mental health conditions ($38.0 billion), treat hypertension ($27.9 billion), or help manage or lower cholesterol levels ($26.8 billion). Rounding out the top 10, therapy area savings are accrued in pain medicines ($22.8 billion), anti-ulcerants ($19.2 billion), nervous system disorders ($15.6 billion), anti-nauseants for cancer ($11.6 billion), anti-bacterials ($11.3 billion), other central nervous system disorders ($9.4 billion) and attention deficit hyperactivity therapies ($8.2 billion).” The crucial role that these cost savings play in areas like improving patient medication adherhence can hardly be overstated. “Patients’ rising exposure to costs, when not using generics, puts them at risk for worse adherence,” said Long of IMS Health. According to CVS Health, 91% of patients surveyed by the pharmacy and PBM giant “said having cost-effective alternatives to more expensive therapies improves medication adherence.” For drug retailers, the rise in generic dispensing remains a double-edged sword, bestowing both benefits and challenges. All pharmacy operators and pharmacy benefit managers are constantly adjusting the delicate balance between the higher margins offered by me-too meds and the lower topline sales they bring. The dramatic price hikes put through by some generic manufacturers in recent years added another layer of complexity to that balancing act. In a recent report on its financial performance, CVS Health underscored the tug of war between profit margins and sales volumes. On the one hand, CVS reported, “the increase in our generic dispensing rates in both of our operating segments continued to have an adverse effect on net revenue in 2014 as compared to 2013, as well as in 2013 as compared to 2012.” However, the company added, “our gross profit continued to Continued on page 12 FEBRUARY 2016 • 11 2/11/16 2:31 PM Top molecules by dispensed prescriptions 2014, offsetting the negative impacts [of the net revenue decline].” MAT JUNE 2015 TRx* U.S. PRESCRIPTIONS 4,382,482 % MARKET SHARE % GROWTH 100.0% 2.2% Levothyroxine 120,297 2.7 1.4 Acetaminopohen/Hydrocodone 105,748 2.4 -19.9 Lisinopril 104,405 2.4 1.2 87,133 2.0 15.1 Atorvastatin Metoprolol 85,772 2.0 1.6 Amlodipine 79,912 1.8 4.3 Metformin 78,732 1.8 4.7 Omeprazole 75,696 1.7 3.0 Albuterol 69,421 1.6 6.9 Simvastatin 69,199 1.6 -10.2 876,314 20.0% TOP 10 0.4% * In thousands Source: IMS Health, National Prescription Audit, June 2015 Continued from page 11 benefit from the increased utilization of generic drugs (which normally yield a higher gross profit rate than equivalent brand name drugs) in both the Pharmacy Services and Retail Pharmacy segments for 2012 through Sticker shock eases One factor that squeezed retailers’ profit margins was the generic price inflation that roiled the pharmacy market, beginning in 2013 and extending through 2014 into 2015. The sharp price hikes — particularly for single-source generics — increased pressure on pharmacy retailers, who were caught between rising acquisition costs and limits on how much they could raise their own prices at the pharmacy counter. Compounding the squeeze: the frequent failure of MAC (maximum allowable cost)and AMP (average manufacturer price)based drug pricing models — and the payers that base their pharmacy reimbursements on them — to keep pace with the inflationary price spiral for some generics in their reimContinued on page 14 More than 85% of U.S. prescriptions are filled with generic drugs, saving Americans more than $200 billion in healthcare costs annually. SOURCE: 2014 GPhA 12 • FEBRUARY 2016 DR-3109.2015 CORP AD FINAL (DSN) 18.25 x 4.75.indd 1 010-014_GenericReport_2016.indd 12 DRUGSTORENEWS.COM 2/12/16 11:13 AM Generics Report GENERICS CONTRIBUTION TO U.S. PRESCRIPTION GROWTH 2011 MAT June 2015 Generics 10% Generics 42% Brands 58% Brands 90% Absolute change = +$13 billion Absolute change = +$45 billion Source: IMS Health, National Sales Perspectives, Branded generics disaggregated, June 2015 At Dr. Reddy’s We’re Proud To Be Doing Our Part As one of the top ten generic pharmaceutical providers in the United States*, we’ve made it our business to make medicines more affordable for millions of Americans. It’s something we take very seriously. Over the next few years, we commit to investing 11% of our revenue directly into R&D as we look to continue to build our pipeline of innovative, and sometimes lifesaving, medicines — addressing the urgency and need for more affordable, high quality pharmaceuticals now and into the future. *Based on September 2014 IMS Sales. Source: IMS Health, National Prescription Audit, September 2014. Dr. Reddy’s Laboratories, Inc. 107 College Road East Princeton, NJ 08540 Tel: 866-733-3952 www.drreddys.com DRUGSTORENEWS.COM 010-014_GenericReport_2016.indd 13 ©2015 Dr. Reddy’s Laboratories, Inc. RDY-0215-096 All right reserved. February 2015 FEBRUARY 2016 • 137/27/15 4:52 PM 2/11/16 2:32 PM Generics Report Continued from page 12 bursements to pharmacies for the medicines dispensed to their members. IMS’ Long attributed the price hikes of recent years to several factors. Among them: • “Increased scrutiny from the FDA,” which means “manufacturers need to invest more into their quality systems, and when a quality/supply issue arises … it creates the opportunity to increase prices to recoup part of their investment,” said Long. Generic manufacturers have complained bitterly about a backlog of some 4,000 abbreviated new drug applications that had piled up at the FDA by 2015, despite the additional resources available to the agency under the Generic Drug User Fee Amendments of 2012, and Kathleen Uhl, director of the FDA’s Office of Generic Drugs, has promised that the agency will speed up its review and approval cycles as it hires additional staff to accommodate a flood of ANDAs. • A consolidation among the retail pharmacy chains and wholesalers that depend on manufacturers’ drug product supply. The frenzied merger activity among drug makers’ customers gives them “increased purchasing power,” he noted, and “manufacturers need to make up value on products where they can.” • A falloff in the launch of new but traditionally manufactured pioneer drug products on the branded side of the industry. “Generic manufacturers make money by launching new products … and raising prices,” Long reported. “With fewer launches, it puts more pressure on the ‘in-line’ product portfolio, which again is a driver to increase prices.” Nevertheless, “generic substitution remains one of the best ways to save patients and payers money,” CVS noted in a report. And the dramatic and controversial price hikes on some me-too meds — which drew withering criticism from some consumer groups and scrutiny from Congress in 2014 and 2015 — have abated somewhat, industry experts said. “Generic price increases are slowing down,” noted health industry consultant Adam Fein, president of Pembroke Consulting and CEO of Drug Channels Institute. Although “about half of the generic drugs increased in cost” during the second quarter of calendar 2015, “the increases were much lower than those in our 2014 examinations,” Fein reported. “The average increase … was 2.6%, compared with an average increase of 25.7% in the second quarter of 2014. Almost half of the generic drugs declined in cost.” George Barrett, chairman and CEO of Cardinal Health, also sees a pullback in generic pricing. “We are seeing moderation in generic pricing,” he said in a Feb. 1, 2016, conference call with analysts. Indeed, said Barrett, that moderation in prices “is somewhat steeper than we had originally modeled.” The price hikes were, in some cases, swift and sharp, with some product prices rising exponentially almost overnight, generating sticker shock among patients and payers. But they were far from universal; many multisourced drugs actually saw price decreases in recent years from manufacturers. Indeed, “a May 2015 report from AARP noted that retail prices for generic drugs fell an average of 4% in 2013, marking nearly a decade of consecutive years of decreasing drug costs,” Express Scripts noted in its most recently published Drug Trend Report. That report also notes that 73% of generic drugs in the study experienced price decreases. U.S. PATENT EXPIRY EXPOSURE $32.8 $27.7 $17.8 $15.4 2009 $20.7 $18.9 2010 $16.6 2011 2012 $10.3 $11.0 2013 2014 $11.1 2015 2016 2017 2018 Note: Sales from year prior to expiry for years 2009-14; sales in MAT Sep. 2014 used for years 2015-18 Source: IMS Health, December 2014 14 • FEBRUARY 2016 010-014_GenericReport_2016.indd 14 DRUGSTORENEWS.COM 2/11/16 2:33 PM HEALTH AND CARE REDEFINED At Upsher-Smith Laboratories, Inc., we strive to deliver affordable, quality medications that measurably improve people’s lives. But our work doesn’t end there. We also strongly believe in advocacy—which is why Upsher-Smith actively participates in and financially supports many healthcare-focused charitable activities throughout the year, across the country. Our goal is to promote awareness of challenging medical conditions, especially epilepsy and other seizure disorders, while also making a personal connection with the individuals and families who live with them. The chance to help people live healthier and more productive lives—beyond what we can accomplish solely with medicine—is what inspires us to approach health and care differently. Learn more about our advocacy work at healthandcareredefined.com. Upsher-Smith Laboratories, Inc., 6701 Evenstad Drive, Maple Grove, MN 55369 | 1-800-654-2299 © 2016 Upsher-Smith Laboratories, Inc. 110217.03 Big cholesterol, HIV drug patents to expire By David Salazar The value of expiring patents on drugs hit $23 billion in 2015, according to IMS Health — due in large part to the expiration of three blockbuster patents over the course of last year. One of the biggest drugs to lose its patent in 2015 was Teva’s Copaxone, a multiple sclerosis drug that saw $4.8 billion in annual sales as of September 2015. Sandoz introduced its generic, Glatopa, in July. Additionally, Otsuka Pharmaceuticals’ atypical antipsychotic Abilify, which saw $5.9 billion in sales as of September 2015, lost its patent and saw generics introduced last April. Rounding out some of the biggest generics launches of 2015 was Nexium, the anti-ulcerant drug that had $4.1 billion in annual sales through the end of September. Nexium’s generic launch had such an impact that IMS Health said anti-ulcerant sales dropped more than 13% in the aftermath. But to say that 2015 was a big year for generics launches is not to downplay the potential that 2016 and the years that follow have, as this year’s expiring patents are estimated by IMS Health to be worth about $22.2 billion based on annual sales as of September 2015 — with similar amounts set to ex- 35 pire in 2017 and 2018. This year, the industry will see 26 drugs’ patents expire, and the largest categories with expiring patents this year are medications for treating high cholesterol, and those meant to treat HIV. Cholesterol drugs, lipid regulators in particular, made up the second-largest number of dispensed prescriptions, according to IMS Health’s 2015 National Prescription Audit, which counted 258 million total prescriptions. And the cholesterol drug in the pole position when it comes to patent expiries this year is AstraZeneca’s statin Crestor (rosuvastatin), which is set to expire in May. The statin, one of the company’s best sellers, brought in $6.09 billion in moving annual total sales as of June 2015, according to IMS Health. Two other cholesterol blockbusters — Benicar (olmesartan medoxomil) and Zetia (ezetimibe) — will lose their patents in April. Though it is still unclear what impact the new class of cholesterol drugs, PCSK-9 inhibitors, will have on the market share of statins in the future — especially given that as of June 2015, the category had seen a slight decrease in growth — it is possible that the potential for generic versions of top-selling medications will make prescribers more apt to take a more cost-effective route, rather than recommend the injectable drugs that can cost more than $14,000. Besides cholesterol medication, another category poised for generics growth in the coming years is HIV medications. Among the products slated for patent expiry is Epzicom (abacavir sulfate and lamivudine), an oral medication meant to treat the autoimmune disorder, set to expire in March. In addition, Trizvir (abacavir sulfate, lamivudine and zidovudine) and Norvir (ritonavir) will lose its patent in June, and Kaletra (lopinavir/ 30 VALUE OF EXPIRING PATENTS THROUGH 2019 $25 20 20 15 15 10 Price reduction 25 $22.2 ritonavir) will see a patent expiry in December. Sales growth among HIV antiviral combination drugs as a class saw 21.8% growth as of June 2015, which meant a moving annual total of $9.8 billion in sales. Serqoquel XR (qutipaine fumarate) — the extended-release tablet versions of bipolar disorder, major depressive disorder and schizophrenia treatment Seroquel — doesn’t lose its patent until May 2017, but because of settlements in patent infringement lawsuits, at least one company can launch a generic in November. The atypical antipsychotic is part of a class of drugs that, as of June 2015, had seen a 12.1% growth in sales, totaling $14.9 billion in moving annual total sales. Another blockbuster set to lose its patent in March is a treatment for pediatric acid reflux, AcipHex Sprinkle, which is meant to be sprinkled onto food for patients ages 1 year to 11 years old. $23.4 $21.4 10 $9.0 5 5 0 $0 The patent for AstraZeneca’s best-selling statin Crestor is set to expire in May. 16 • FEBRUARY 2016 016_GenericReport_2016.indd 16 2016 2017 2018 2019 Sales in billions in MAT September 2015 used for years 2016 to 2019 Source: IMS Health, National Sales Perspectives, March 2015 DRUGSTORENEWS.COM 2/11/16 4:29 PM Generics Report Expiring patents set stage for biosimilars Last year’s launch of Sandoz’s Zarxio (filgrastim-sndz), the first biosimilar drug in the United States, was just the opening salvo of a burgeoning market that is only expected to grow over the next five years. The Biosimilars Council of the Generic Pharmaceutical Association pointed out that by 2020 the patents for eight biologics will have expired, with expiries happening in 2016 for several blockbuster medications. The biggest name among 2016 patent expiries is AbbVie’s injectable treatment for rheumatoid arthritis, plaque psoriasis and other autoimmune conditions, Humira (adalimumab). Humira is not just a blockbuster drug, but is in fact one of the top-selling drugs of all time — it saw $2.2 billion in sales growth just in the first six months of 2015, according to IMS Health. Currently, Amgen believes it is the first company to file an application for a biosimilar of Humira, called ABP 501, which has shown comparable safety and clinical equivalence to Humira. But according to recent reports, Amgen, which had hoped to be able to market its biosimilar by 2017, might be delayed in launching ABP 501 as it is currently in a patent dispute with AbbVie. Beyond Humira, blockbuster drug Rituxan (rituximab) — with moving annual total sales of $3.6 billion as of June 2015, up 21% — will expire in 2016. One bit of news to watch for this year will be which pharmaceutical company of the several currently developing a biosimilar version or who have biosimilars of the rheumatoid arthritis and oncolytic drug in other countries will be able to submit its application first. Other biologics whose patents DRUGSTORENEWS.COM 017_GenericReport_2016.indd 17 Sales of biologic drugs losing patents in the next several years MAT JUNE 2015 BIOLOGIC DRUGS U.S. DOLLARS* PATENT EXPIRATION Humira $8.5 2016 Rituxan 3.6 2016 Remicade 4.7 2018 Enbrel 6.1 2028 * In billions Source: IMS Health, National Sales Perspectives, June 2015 will expire in the next five years include Avastin, whose patent will expire in 2017. The treatment for metastatic renal cell carcinoma, metastatic colorectal cancer and non-squamous non-small cell lung cancer saw moving annual total sales of $3.06 billion as of June 2015, when it had also seen more than 10% growth. Remicade — an infusion treatment for various autoimmune disorders including rheumatoid arthritis — is slated to have its patent expire in 2018. The specialty medication had seen $4.7 billion in moving annual total sales as of June 2015. Then in 2019, in- fusion oncolytic Herceptin’s patent will expire. After Herceptin, the next date to watch for a blockbuster drug’s patent expiry will be 2028, when Enbrel, a medication for plaque psoriasis and rheumatoid arthritis, will lose its patent. Enbrel was the fourth-largest selling drug in 2015 with annual moving total sales of $6.1 billion as of June. By the time its patent expires, the results of the FDA’s recently abbreviated approval pathway for biosimilars will be known, and it is possible that biosimilars will see wider implementation as the result of various educational and outreach efforts on behalf of industry stakeholders. Biopharmaceutical production at Sandoz, a Novartis company that launched Zarxio — the first biosimilar drug in the United States — last year. FEBRUARY 2016 • 17 2/11/16 4:20 PM Q&A better way forward that strengthens the communication of drug safety information without putting patients at risk. Current law requires brands and generics to carry the same label to assure healthcare practitioners have consistent information to inform their decisions and patient conversations. The proposed rule would change this by requiring generic manufacturers to update labels based on incomplete information without first receiving FDA approval. However, no single manufacturer has access to the full range of available data — the proprietary data from clinical studies or the data held by each individual applicant holder. The state of generics Chip Davis, Generic Pharmaceutical Association As Congress continues to look into the question of drug prices with hearings in early February featuring industry experts, one of the organizations being turned to is the Generic Pharmaceutical Association, whose president and CEO Chip Davis recently responded to the Senate Health, Education, Labor and Pensions Committee about the state of the generic drug industry. Drug Store News spoke to Davis about the year ahead for GPhA and what some of the biggest battles for the generic drug industry will be. DSN: You started the year calling for the passage of the FAST Generics Act — what are some of the biggest benefits the industry and patients will see if that bill makes it to the president’s desk and he signs it into law? Chip Davis: Misuse of FDA REMS patient safety programs is one way that certain brand drug companies delay generic competition. Failure to address the loophole that makes these abuses possible is a missed opportunity to encourage more competition in generic drugs and to generate billions of dollars in additional savings for patients and the health system. DSN: One of the items GPhA is wary of is compounding alternatives to certain drugs. What are some of the potential pitfalls of allowing compounding to take the place of approved generics and how do you hope to find a different solution? Davis: Rising health costs are unsustainable for patients and our health system. However, encouraging mass compounding via “outsourcing facilities” or drugs that are unapproved by the FDA, such as the compounded alternative to Turing’s Daraprim, creates avoidable patient safety risk. Circumventing the FDA approval process is not the answer. Generics are currently 88% of prescriptions 18 • FEBRUARY 2016 018_GenericReport_2016.indd 18 delivered at less than a third of total U.S. drug costs. Competition from FDA-approved affordable generic alternatives remains the best way to drive down health costs. There are ways to boost access working through, not around, FDA safety and approval processes. The backlog of 3,800 generic applications pending approval must be addressed. Misuse of FDA REMS safety programs by some brand drug companies continues to impede generic access and must be stopped. GPhA will continue leading a constructive dialogue that prioritizes patient safety and savings to ensure generic competition can keep drug costs low. DSN: Another safety issue GPhA raised recently concerns labeling and adjustments that manufacturers would have to make without FDA approval — what are the issues with this proposed change and what’s a way to avoid them? Davis: GPhA is pleased that the Food and Drug Administration will continue to evaluate the wide range of concerns expressed over the currently proposed changes to generic drug labeling requirements. GPhA continues to support the Expedited Agency Review, a “GENERICS ARE CURRENTLY 88% OF PRESCRIPTIONS DELIVERED AT LESS THAN A THIRD OF TOTAL U.S. DRUG COSTS. COMPETITION FROM FDAAPPROVED AFFORDABLE GENERIC ALTERNATIVES REMAINS THE BEST WAY TO DRIVE DOWN HEALTH COSTS. THERE ARE WAYS TO BOOST ACCESS WORKING THROUGH, NOT AROUND, FDA SAFETY AND APPROVAL PROCESSES. THE BACKLOG OF 3,800 GENERIC APPLICATIONS PENDING APPROVAL MUST BE ADDRESSED. MISUSE OF FDA REMS SAFETY PROGRAMS BY SOME BRAND DRUG COMPANIES CONTINUES TO IMPEDE GENERIC ACCESS AND MUST BE STOPPED.” — Chip Davis, president and CEO, GPhA The FDA is the only entity with all of the data needed to recommend a safety information change. Instead, the EAR suggests time parameters for the FDA to take action and encourages the adoption of e-labeling for realtime information sharing rather than continuing the reliance on paper label changes that take months or years to adopt. The EAR also takes important steps to make sure that multiple different labels do not exist for products with the same active ingredients, safety and efficacy. GPhA will continue to work with the agency and other stakeholders committed to advancing and protecting patient health to ensure that any changes to labeling regulations do not put patient safety at risk and avoid causing provider confusion. DRUGSTORENEWS.COM 2/11/16 2:27 PM Generics Report Manufacturers await FDA quality metrics By David Salazar Last year saw a big shake-up for the pharmaceutical industry with a regulatory focus on quality. In 2016, it’s likely that the Food and Drug Administration’s interest in quality will continue as drug manufacturers await the final version of its Quality Metrics Guideline. The agency released a draft guidance of the much-hinted-at guideline in July. Under the draft guidance, OTC and prescription drug manufacturers, among others, would be required to submit to the FDA various quality-related data about finished drug products or active pharmaceutical ingredients used to make them. Among the data manufacturers would be required to report, according to the draft guidance, are lot acceptance rate (calculated from number of attempted lots less the ones pending disposition and those rejected because of specification issues); invalidated out-of-specification rate (the number of invalidated results over the total number of tests performed); and annual product review, or APR, or product quality review, or PQR, on-time rates. Additionally, manufacturers can submit optional metrics, including the effectiveness of corrective and preventive actions and whether an APR or PQR was reviewed by the quality unit head or the operations unit head. Manufacturers would submit data collected during a one-year period that begins after the FDA issues its final guidelines, with reports coming due within 60 days of the end of that year, to be submitted through its FDA Electronic Submissions Gateway. Manufacturers who don’t report their data would have their predicted risk raised by the DRUGSTORENEWS.COM 019_GenericReport_2016.indd 19 FDA, which could lead to earlier inspections and their products being deemed adulterated and thus subject to enforcement action. Using the data, the FDA said it plans to develop measures for a manufacturing site’s and a drug’s quality, as well as the effectiveness of the system surrounding a product’s manufacturing. The hope for the metrics, the FDA said, is to give the agency insights into the state of quality control, while giving it a quantitative method of evaluating quality of products, facilities and systems. It also hopes to use the metrics to improve the effectiveness of inspections, and highlight the factors that contribute to disruptions in supply. This is all, according to the agency, also going to make drugs more reliably available for patients by reducing the number of recalls and quality-related shortages. But for some in the industry, the proposed reporting requirements might mean more work for manufacturers, and might even cause some of the issues that the reporting process is aimed at combatting. Speaking at the FDA’s public meeting on the draft guidance in August, the Generic Pharmaceutical Association’s VP sciences and regulatory affairs, David Gaugh, outlined several issues that the organization and its members — which he said collectively manufacture more than 90% of generics in the United States — saw with the draft guidance. One of the largest potential pitfalls that Gaugh identified is that the items many companies are inspected for are not necessarily the same as the data the FDA is requesting. Moreover, Gaugh said at the meeting, the data the FDA is requesting are not kept the way that the regulator is prescribing, and there isn’t a standard approach to WHAT WOULD BE REPORTED? Reporting establishments would report data; these data should already be available per CGMPs • • • • • • • • Number of lots attempted Number of specification-related rejected lots Number of attempt lots pending disposition >30 days Number of OOS results Number of lot release and stability tests Number of OOS results invalidated due to lab error Number of product quality complaints for the product Number of lots attempted which are released for distribution or for the next stage of manufacturing • Whether the associated APRs or PQRs were completed within 30 days of annual due date for the product • The number of APRs or PQRs required for the product OOS: out-of-specification; APR: annual product review; PQR: product quality overview Source: Food and Drug Administration collecting this data across the industry — an issue that the FDA itself has identified as a potential hurdle. Gaugh noted that the penalties for noncompliance are the equivalent of refusing an inspection, though refusing to submit data isn’t necessarily the same thing. He also said that the FDA should not penalize companies for not supplying voluntary data, though the draft guidance suggests de facto penalties for those who do not comply. Gaugh suggested that the FDA’s risk-based inspection system should “prioritize the FDA’s focus to those suppliers that the FDA has never inspected, not inspecting within the last four years, and those with a history of serious compliance problems.” He added that the “FDA’s risk-based model should not … affect the cost of generic drugs by virtue of an undue metrics burden.” One of the factors that IMS Health has cited as contributing to rising generics prices has been increased scrutiny on manufacturers that are now dedicating more resources to insuring quality in the supply chain. Some of the unintended consequences that Gaugh pointed out include the potential for drug shortages as a result of the imposed reporting, perhaps causing companies to stop making difficult-toproduce products at certain sites. He also pointed out the potential for manufacturers to manipulate their data by holding products rather than rejecting them, as well as the potential for increased inspections for companies based on their launches, production volume and narrow therapeutic range. What Gaugh proposed is that the final guidance be “reasonable and realistic,” reducing the burden on companies by directly requesting metrics from contractors. Manufacturers also would need time to prepare to report their data, Gaugh said. He recommended a safe-harbor period to allow companies to develop good reporting practices, as well as an incremental approach to requiring data and using pilots to better understand the effectiveness and potential impact of the guideline. “We share the agency’s goal of improved product quality and mitigation of drug shortages,” Gaugh said. “As the FDA moves forward with its quality initiatives, we look forward to an ongoing dialogue with the agency. FEBRUARY 2016 • 19 2/11/16 4:52 PM Taming the generic supply chain By Jim Frederick For pharmacy retailers, two principles now rule in the purchase and distribution of generic drugs: Bigger is better, and partnering with a big supplier is better than going it alone. It’s a quest for efficiency, profitability and predictability in a product category — in this case, generic medicines — that offers massive sales volumes and potentially high profit margins, but also unpredictability in terms of pricing and occasional supply disruptions. And this “deepening [of] relationships between wholesalers and the dispensing channels,” in the words of health industry expert Adam Fein, president of Pembroke Consulting and CEO of Drug Channels Institute, is taking place in an unforgiving retail climate that demands combined purchasing power and supply-chain efficiency. “Over the past three years, the big three wholesalers — AmerisourceBergen, Cardinal Health and McKesson — have established novel generic purchasing relationships with their largest customers,” Fein noted. The result, he said, has been “a revolution in how wholesalers interact with their biggest retail customers.” Joining this revolution among the big three wholesalers are the nation’s three largest drug store retailers: CVS, Walgreens and Rite Aid. “These three buyers accounted for more than three-quarters of total U.S. generic drug purchases from manufacturers,” Fein reported. As part of the trend, Fein said, “Walgreens and Rite Aid have eliminated self-distribution capabilities for pharmaceuticals. Consequently, full-line wholesalers have become virtually impossible to displace for primary care products dispensed by retail pharmacies.” In addition, said Fein, “wholesalers are also coordinating more closely with smaller, pharmacist-owned independent drug stores.” The following is a look at the deals driving this new alignment between retailers and generic suppliers. CVS Health and Cardinal Health CVS Health’s joint supply venture with Cardinal Health, called Red Oak Sourcing, is yielding improved efficiencies, purchasing clout 20 • FEBRUARY 2016 020_GenericReport_2016.indd 20 and profitability in its generic business, while creating “the largest generic sourcing entity in the United States,” said president and CEO Larry Merlo. Under terms of the agreement, CVS and Cardinal “contributed their sourcing and supply chain expertise to Red Oak and agreed to source and negotiate generic pharmaceutical supply contracts for both companies,” according to CVS. Addressing analysts Feb. 1, Cardinal CFO Michael Kaufmann said the Red Oak partnership with CVS sprang from a reevaluation by both companies of the “overall way we buy generics … and the way we managed inventory with generics.” “We made a conscious decision that we would cut back on our [speculative] buying … “OVER THE PAST THREE YEARS, THE BIG THREE WHOLESALERS — AMERISOURCEBERGEN, CARDINAL HEALTH AND MCKESSON — HAVE ESTABLISHED NOVEL GENERIC PURCHASING RELATIONSHIPS WITH THEIR LARGEST CUSTOMERS.” — Adam Fein, president, Pembroke Consulting and ceo, Drug Channels Institute and we really want to focus on how can we be the best possible partner for our generic partners and … manage inventory more from a supply standpoint vs. a pricing standpoint,” said Kaufmann, as reported by the Web media outlet Seeking Alpha. Rite Aid and McKesson Rite Aid said its expanded, five-year generic supply agreement with McKesson, which extends through March 2019, “creates efficiencies for both companies.” Under its terms, McKesson took charge of sourcing and distribution of generics for Rite Aid under its One Stop Generics program. Rite Aid had several goals in expanding its partnership with McKesson, said chairman and CEO John Standley when the deal was consummated. Among them: leveraging the two companies’ “generic purchasing scale and sourcing expertise, in conjunction with McKesson’s industry-leading drug distribution capabilities.” Rite Aid also was in search of “supply chain efficiencies,” improved customer service and “additional cash flow to fuel our company’s growth,” Standley said. The “drug purchasing and distribution process with McKesson … provides our pharmacies with direct-to-store delivery, five days a week,” Standley told investment analysts recently. “We have now completed the conversion of all stores and our four pharmacy distribution centers to this new distribution process. We expect that this new process will provide the company with working capital benefits and improved customer service through better in-stock position. The agreement is also generating purchasing savings that are in line with our expectations.” Walgreens and AmerisourceBergen Under terms of its unique supply and equity deal with AmerisourceBergen, Walgreens Boots Alliance now owns 5.2% of the big wholesaler, and both companies have combined their massive generic purchasing power. The agreement “provides AmerisourceBergen the ability to access generics and related pharmaceutical products through Walgreens Boots Alliance Development GmbH, a global sourcing enterprise formed by Walgreens and Alliance Boots,” noted Walgreens in a recent report. The deal also gave Walgreens “the right, but not the obligation, to purchase a minority equity position in AmerisourceBergen,” while shifting Walgreens’ formerly in-house distribution of branded and generic drugs to ABC. Distribution deals beyond big three More recently, McKesson won a bid to supply pharmaceuticals to Albertson’s Safeway division, while Cardinal inked a pact to distribute generic and branded drugs to the nation’s third-largest pharmacy benefit manager, UnitedHealth Group’s OptumRx. All these deals mark a frenzied big-to-build scale and purchasing power in the retailing and wholesaling of generics. “For generic drugs, formulary power lies with the distribution channel, not with the payer channel,” said Fein. “If we consider Express Scripts and Walmart, then five entities will purchase about 90% of generic drugs for the U.S. market.” DRUGSTORENEWS.COM 2/11/16 2:24 PM Generics Report Amid hike fear, most generic prices drop By David Salazar One of the big issues getting the attention of government officials, industry professionals and consumers in 2015 was the price of generic drugs, particularly the question of what was driving an increase in prices among the group of medications meant to be the least expensive choice for payers and patients alike. Though a recent report by IMS Health and an issue brief from the Department of Health and Human Services underscore the savings that accompany generics prices, and their overall affordability, there are still challenges facing manufacturers that have an impact on their bottom line and, ultimately, the cost of their generics. First, the good news. On Jan. 27, IMS Health issued its latest report, “Price Declines after Branded Medicines Lose Exclusivity in the U.S.,” which highlights just how much of an impact generics have in making medication more affordable for patients. Using data on generics that entered the market between 2002 and 2014, IMS Health’s analysis showed that the price of a medicine dropped 51% in the first year following loss of exclusivity and 57% in the second year. For oral medications, that number is 66% in the first year and 74% in the second year after generic versions hit the market. The HHS issue brief, published on Jan. 27, looked at pricing trends among generic drugs. Using data up to the end of 2014, the brief “strongly supports the conclusion that generic drug prices are not an important part of the drug cost problem facing the nation,” and noted that data suggested generic prices are lowering as branded prices increase significantly. The brief also pointed out that many generics saw their prices drop in 2014. But there is another side to the generic pricing coin, namely the more recent trend of price increases for generic drugs. HHS, whose issue brief was partly the result of increased scrutiny on generics prices, noted that between July 1, 2013, and June 30, 2014, about 64.8% of Medicaid generics spending went to drugs that had decreased in price, but that more than a quarter of spending went to drugs that had risen in price, some as as high as 1,000%. In fact, drugs whose prices had increased between 100% and 1,000% accounted for 8.6% of Medicaid generics spend, and these medications only make up about 1.8% of the total overall prescriptions. So pronounced has the issue of generics prices become that the Senate Special Committee on Aging convened on Dec. 9 to investigate why the prices of some generics were increasing. And congressional action has not stopped on the issue of generics. On Jan. 28, lawmakers held a hearing to address the speed at which the Food and Drug Administration is approving generics. Currently, the agency has a backlog of more than 3,800 generic medications awaiting approval — something for which the HELP committee chairman, Sen. Lamar Alexander, R-Tenn., asked Janet Woodcock, the FDA’s Center for Drug Evaluation and Research director, to talk about at the oversight hearing for the Generic Drug User Fee Amendments, which seeks to expedite the approval of generic drug applications. “Despite the FDA receiving nearly $1 billion in user fees since 2012 as a result of these user fee agreements, performance is not living up to Congress’ or patients’ expectations, as the number of generic drugs approved DRUGSTORENEWS.COM 021_GenericReport_2016.indd 21 per year remains about the same,” Alexander said at the hearing. “The troubling news is that it is taking longer for the FDA to get drugs through the approval process, and according to a survey of generic drug makers, the median approval times have slowed from 30 to 48 months.” Alexander noted that when there are various generic versions of a given drug, the price of a medication is about 10% the price of a branded version. And when there is a backlog in applications, manufacturers have to rely on their existing portfolio to continue to produce a profit. As the HHS issue brief noted, though, the FDA is working as fast as it can. “It should also be noted that the FDA is fulfilling, and in many cases substantially exceeding, its negotiated GDUFA commitments,” the issue brief said. “The FDA’s productivity is consistent, and it is currently sustaining record or near record levels of generic drug approvals.” Woodcock acknowledged the issue and has pledged to have the backlog more or less dealt with by the time GDUFA faces renewal in 2017. But besides Woodcock’s and CDER’s delays in dealing with the application backlog, their proposed Request for Quality Metrics Guideline, a draft guidance of which was released in July 2015, has the industry concerned. GPhA’s VP sciences and regulatory affairs attended the FDA’s public meeting about the draft guidance, where he expressed concern that the draft guidance as written has the potential to “affect the cost of generic drugs by virtue of undue metrics burden.” What Gaugh told the FDA was essentially that manufacturers are as invested in quality as regulators, but when more resources go into proving that they are ensuring a product’s quality, that adds onto the cost of producing it, and thus selling it. PERCENT OF GENERIC PRESCRIPTION EXPENDITURES BY PRICE INCREASE GENERIC RX W/ NO-CHANGE GENERIC RX W/ NO COMPARISON GENERIC RX W/ INCREASES <1% 2.5% 7.4% GENERIC RX W/ INCREASES 1% TO 20% 11.0% 64.8% GENERIC RX W/ DECREASES 5.7% 5.6% 3.0% GENERIC RX W/ INCREASES 20% TO 100% GENERIC RX W/ INCREASES 100% TO 500% GENERIC RX W/ INCREASES 500% TO 1,000% GENERIC RX W/ INCREASES >1000% Note: Percent of total Medicaid FFS generic prescription expenditures by percent of acquisition cost change between July 1, 2013 and June 30, 2014 Source: IMS Health, Dec. 2014 FEBRUARY 2016 • 21 2/11/16 2:26 PM Generics Report Researchers tout generic savings By David Salazar The American College of Physicians recently published a clinical guideline in the Annals of Internal Medicine that encouraged providers to more widely prescribe generic medications. The paper’s authors made a case that many in the industry know well: If physicians prescribe more generics, not only will patients and payers save money, but it might also have an impact on adherence. In order to illustrate their case, researchers looked at several past studies concerning generic-drug use and the potential benefit, looking to examine how commonly generics are prescribed, how that use influences adherence, evidence of similar clinical effects between branded and generic drugs, barriers to access and strategies to promote generics usage. According to their findings, in 2001 more than 40% of Medicare beneficiaries with heart disease were taking brand-name medication. More recently, in 2008, medications for which a generic drug exists made up between 23% and 45% of dispensed prescriptions, depending on the class — a number lower than that seen among patients in the Veterans Affairs system, whose centralized formulary emphasizes generics use. Beyond that, many doctors prescribe new, brand-name medication in situations where accepted guidelines find generic drugs sufficient. What the authors call “guidelineconsistent prescribing” has the potential to save more than a billion dollars annually, they said. The guideline also cited a paper that suggested Medicare alone could save $1.4 billion every year just among diabetes patients if it used both a generic-favoring formulary and therapeutic interchange — substituting less expensive but more or less equally effective medication in place of a branded drug. “A 2005 analysis of commercially insured persons in the United States produced by a large pharmacy benefits manager estimated the potential cost savings of therapeutic interchange … to be more than $20 billion annually,” the guideline said. “To put this into context, $20 billion could provide Medicaid coverage to more than 3.6 million presently uninsured per- 22 • FEBRUARY 2016 022_GenericReport_2016.indd 22 ANNUAL GENERIC DRUG SAVINGS* IN THE UNITED STATES $246 $254 2013 2014 $213 $197 $161 $177 $135 $87 2005 $98 2006 $116 2007 2008 2009 2010 2011 2012 * In billions Source: “Generic Drugs Savings in the U.S. - Seventh Annual Edition: 2015,” Generic Pharmaceutical Association Note: Historic savings have been revised to include standard data restatements. “GIVEN THE LARGE COST DIFFERENCES BETWEEN GENERIC AND BRANDNAME MEDICATIONS, EVEN SMALL INCREMENTAL INCREASES IN THE RATE OF GENERIC DISPENSING ARE ESTIMATED TO HAVE IMPORTANT ECONOMIC IMPLICATIONS FOR BOTH PATIENTS AND PAYERS.” — Annals of Internal Medicine clinical guideline sons, under the assumption that Medicaid expansion under [the Affordable Care Act] costs an average of $5,440 per person per year.” In addition to emphasizing the potential savings of wider generics use, the guideline paper also outlines the effect that generics can have on nonadherence — which the New England Healthcare Institute estimated in 2009 costs some $260 million every year. One of the biggest points the guideline makes is that patients who are prescribed brand-name medications are twice as likely to never pick it up after it’s been filled as patients who are prescribed a generic. Authors cited one study that compared adherence among 90,000 Medicare beneficiaries taking a statin, some of whom began the regimen with a branded drug, with others starting with a generic statin. Those who started with the generic had a 6% higher adherence rate. But, the guideline also highlighted elements that might stand in the way of making generic drugs more widely used. In particular, it points to differences among state laws surrounding generic substitutions — some have mandatory substitution of branded drugs with their generic counterparts, whereas others require pharmacists to consult with patients before substituting generics and still others leave it up to the pharmacist’s discretion. Besides that, the authors noted perceptions of a lack of efficacy in generics, as well as skepticism about generics that don’t closely resemble the original product. But the guideline urged wider prescription, noting that even meager changes in prescriber behavior can have a big impact on the bottom line. “Given the large cost differences between generic and brand-name medications, even small incremental increases in the rate of generic dispensing are estimated to have important economic implications for both patients and payers,” the guideline said. DRUGSTORENEWS.COM 2/11/16 4:34 PM The most important topics aren’t always in the headlines. They’re in the conversation. We want to hear from the leading influencers of the trade. Share your views and connect with colleagues across the industry for valuable networking opportunities. 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