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2018: Record-setting year for new generics

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Meanwhile, biosimilars continue to lag

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Once again in 2018 the U.S. Food and Drug Administration (FDA) approved a record number of generic drugs. With the end of the 2018 fiscal year (at the end of September), there were a total of 971 drugs approved in 2018 (781 final approvals and 190 tentative approvals). This continues a string of record-setting trend approval rates, including 937 approvals in 2017 and 835 in 2016, both also the highest in their turn.1

Getting more generic drugs and biosimilar drugs to market is one of the FDA’s highest priorities.2 While progress in the generic arena is strong, there is a continuing problem with making less expensive biosimilar drugs available. We will address generics first, and then take a brief look at the biosimilars.

More generics, more savings

This graph shows the continued upswing in the number of FDA approvals for generic drugs:

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Source: Regulatory Focus. FDA Sets Record for Number of Generic Drug Approvals Again. Published on Oct. 11, 2018.

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Generics are widely seen as key to providing affordable access to many important medications. One way to measure that effect is to note that while generics account for about 90% of all prescriptions filled, they represent only 23% of total prescription spending.3

In a world of rapidly rising drug costs, generics continue to provide good value. The generic manufacturers estimate that generics save hundreds of billions of dollars each year – almost two trillion dollars over the last decade.3

Here we can see the impressive increase in savings due to generic drugs:

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Sources: IQVIA, National Sales Perspectives, Mar 2018

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Savings from generics are widely distributed among the major drug classes:

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Source: Association for Accessible Medicines. Generic Drug Access & Savings Report 2018. [PDF]

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According to the OptumRx drug pipeline monitoring team, here are some of the better-known drugs that turned generic in 2018:

  • Makena® (hydroxyprogesterone caproate): reduce the risk of pre-term birth.
  • Aloxi® (palonosetron): to prevent post-surgical and chemotherapy-induced nausea and vomiting.
  • Sustiva® (efavirenz): a non-nucleoside reverse transcriptase inhibitor for treating HIV-1 infections.
  • Welchol® (colesevelam): for treating high cholesterol and type 2 diabetes mellitus.
  • Invanz® (ertapenem): used to fight bacterial infections.
  • Namenda XR® (memantine): for treating moderate to severe Alzheimer’s disease.

Faster FDA

FDA Commissioner Scott Gottlieb receives a good deal of credit for improving competition in the generic space by making it easier for generics and biosimilars to come to market.4 And indeed, the FDA has announced several steps to further encourage generic competition. These include reducing the ability of brand-name manufacturers to delay generic drug entries, and simplifying the approval process for complex generics like asthma inhalers, in addition to improving the overall efficiency of the generic review process.2

However, these steps were only announced as plans in January 2018. While we can hope that they will eventually help improve the process, they cannot have affected the approval totals seen in recent years.

More likely, the flood of new generic approvals stems from a years-long effort to improve the generic drug review process. Perhaps the key moment came in 2012 with the approval of a new user fee program implemented called the Generic Drug User Fee Act (GDUFA).5

The purpose of the act was to tap the generic manufacturers themselves to create a new funding stream for the FDA. The new funds allowed them to hire additional review staff, and overall it appears to have worked as intended. GDUFA was revised and extended in 2017.5

Biologics/Biosimilars

One area of special emphasis for the current FDA administration is biologic drugs. Biologic medicines hold enormous promise, and in some cases may be the only effective treatments for serious illnesses like cancer. But they are also very expensive.6

Spending for biologics is growing fast, reaching over $11 billion in 2017.6 That total may not seem terribly significant when compared against the amount of overall drug spending last year – over $324 billion, but the important thing is that biologics are generally extremely expensive on a per-prescription basis: Only one or two percent of Americans use biologics, yet they represent almost 40% of all prescription drug spending.7

Biologic drugs are also expected to be the fastest growing segment of drug spending in the coming years. Already, biologics accounted for 70% of the growth in drug spending from 2010 to 2015.7

Accordingly, many stakeholders are holding out hope that biologic substitutes called biosimilars will provide much needed price relief. Biosimilars play a similar role to traditional generic drugs in that they are alternative versions of existing medicines that are intended to cost less. For example The RAND Corporation estimates that biosimilars could save the U.S. up to $54 billion over the coming decade.7

But the path to significant savings from biosimilars has not been a smooth one. One reason is that, unlike generic drugs, biosimilars are not identical to their “reference” biologics. This creates a host of problems, including whether they can be interchangeable (like true generics), and whether physicians will readily accept them in their clinical practice.8

One indicator of the slow progress toward biosimilar savings is that while the FDA has approved 11 biosimilars through 2018, only three are actually on the market in the U.S.9

There are many reasons for this, and they involve a wide range of regulatory and patent issues. Some of these concerns are undoubtedly legitimate, but in many cases they amount to what Commissioner Gottlieb describes as “… manufacturers’ tactics to delay and frustrate Congress’ legislative intent to promote competition.”9

This is an extremely complex topic, but in essence it amounts to drug makers deploying thick walls of defensive patents that are primarily designed to deter the entry of approved biosimilars. In other words, this is why only three of 11 approved biosimilars are for sale.9 [We have written previously about this here.]

Commissioner Gottlieb makes the very interesting observation that the kinds of tactics we’re seeing today with biosimilars actually are similar, if not identical, to tactics that were used 30 years ago by traditional brand name drug makers to resist the spread of generics. It took some time, but today virtually every major branded drug that is out of patent protection has at least one generic competitor, if not many of them.9

So in an attempt to apply the lessons learned from their experience with traditional generic drugs, the FDA has unveiled a new Biosimilars Action Plan to accelerate biosimilar competition. The plan includes taking on the problem of interchangeable products, and making the regulatory process as clear as possible for the biosimilar developers.9

The action plan also aims to reduce the ability of manufacturers to delay market competition to follow-on products. Time will tell if these steps are sufficient to accelerate the use of biosimilars.

OptumRx generic pipeline forecast

OptumRx closely monitors and evaluates the pipeline landscape for upcoming first-time generics and biosimilars. We issue quarterly reports for health professionals that provide a summary of upcoming first-time generic drugs and biosimilars that may be approved in the upcoming two years.

If you are interested in seeing these reports, they can be found here.

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Related resources

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References

  1. Regulatory Focus. FDA Sets Record for Number of Generic Drug Approvals Again. Oct. 11, 2018. At: https://www.raps.org/news-and-articles/news-articles/2018/10/fda-sets-record-number-of-generic-drug-approvals-a
  2. U.S. Food and Drug Administration. Statement from FDA Commissioner Scott Gottlieb, M.D. on new steps to facilitate efficient generic drug review to enhance competition, promote access and lower drug prices. Jan. 3, 2018. At: https://www.fda.gov/newsevents/newsroom/pressannouncements/ucm591184.htm.
  3. Association for Accessible Medicines. Generic Drug Access & Savings Report 2018. At: https://accessiblemeds.org/resources/blog/2018-generic-drug-access-and-savings-report.
  4. US Pharmacist. Generic Drugs in the Pipeline: 2018 Update. June 15, 2018. At: https://www.uspharmacist.com/article/generic-drugs-in-the-pipeline-2018-update.
  5. Markets Insider. Some Branded Drugs Going Generic In 2018. Jan. 22, 2018. At: https://markets.businessinsider.com/news/stocks/some-branded-drugs-going-generic-in-2018-1013567302
  6. Vox. Why Scott Gottlieb is the one Trump official everybody seems to like. April 11, 2018. At: https://www.vox.com/2018/4/11/17198584/scott-gottlieb-fda-commissioner
  7. PricewaterhouseCoopers LLP: PwC Health Research Institute. Continue to take as prescribed: Amid a steep slowdown in regulation, the FDA hit record highs for drug approvals while maintaining enforcement. Feb. 2018. At: https://www.pwc.com/us/en/health-industries/health-research-institute/publications/pdf/pwc-health-research-institute-fda-trends-2018.pdf
  8. Medicine Use and Spending in the U.S. A Review of 2017 and Outlook to 2022.April 2018. [PDF]
  9. RAND Corporation. Biosimilar Drugs May Reduce U.S. Health Spending by $54 Billion Over Next Decade. Oct. 23, 2017. At: https://www.rand.org/news/press/2017/10/23.html.
  10. Health Affairs, 33, no.6 (2014):1048-1057. Regulatory And Cost Barriers Are Likely To Limit Biosimilar Development And Expected Savings In The Near Future.
  11. U.S. Food and Drug Administration. Remarks from FDA Commissioner Scott Gottlieb, M.D., as prepared for delivery at the Brookings Institution on the release of the FDA’s Biosimilars Action Plan. July 18, 2018. At: https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm613881.htm.
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STATEMENT REGARDING FINANCIAL INFLUENCE:
This article is directed solely to its intended audience about important developments affecting the pharmacy benefits business. It is not intended to promote the use of any drug mentioned in the article and neither the author nor OptumRx has accepted any form of compensation for the preparation or distribution of this article.

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