Generic Drug Report 2016

Transcription

February 2016
The Business of Retail Pharmacy
A DSN Special Report
Generic Drug
Report 2016
001_GenericReport_2016.indd 1
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T:9”
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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
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Copyright ©2015, Roxane Laboratories, Inc. All rights reserved.
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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
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
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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
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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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Your lifeline for quality,
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From discovery to delivery, Camber is
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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
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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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
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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.”
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
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
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
DR-3109.2015 CORP AD FINAL (DSN) 18.25 x 4.75.indd 1
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
©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
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
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.
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
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
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.”
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
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
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
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-
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
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“Frank’s daughter was so sick
last year. I know our whole
team never forgets that our
products help people just like
her... Doing our job well makes
a difference!”
Amneal Sales Coordinator
Amneal applies the “Family Business” model across the full span
of its operations. Every department is driven by the belief that
each patient is a family member, and every business partner
should be treated like a guest in our home.
At Amneal we understand that to do good things we must first ensure we are
good people. We are led by visionary scientists and entrepreneurs focused
on a grander purpose that is more important than simply making money. We
believe that doing the right thing is its own reward, far more valuable than a
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We take enormous pride in working hard and in truly collaborating in order
to succeed together. We are empowered from front line to founder. We ALL
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Generic Drug Report 2016

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