Posts filed under ‘Generic Drugs’

Here’s a MedSpan Research tip!

Clinical pharmacists are a good deal for drug companies’ market research. Consider clinical pharmacists as respondents when needing clinical insights regarding a new drug. Remember that health plan and some hospital-based clinical pharmacists specialize by drug class. Other hospital-based clinical pharmacists specialize by patient care unit (e.g., emergency department, ICU).

Continue Reading July 2, 2015 at 2:13 PM Leave a comment

Current and Future Situation for Brand Name Drugs

As discussed in my previous post, healthcare costs and spending are a concern right now for many Americans, and will continue to be a prominent issue in the near future. Some propose that the use of brand name drugs, as opposed to generics, contribute to these high costs.  An article on Medical Marketing & Media’s website discusses a projected downturn in branded drug spending by drug manufacturers throughout 2012 and 2013.

Although 34 new products were launched in 2011 by drug companies and spending on branded drugs grew 2.2%, the same kind of growth is not likely in upcoming years, and contractions in spending are even a possibility. The MM&M article states generic drugs now account for 80% of prescriptions.  So why would a rational consumer not go with a generic option?  Generic prescriptions have essentially the same active ingredients as brand name drugs, but can be a fraction of the cost.1

Well, consumers are sometimes concerned a generic drug may not produce the same effects as a brand name prescription.  Among other factors, this definitely plays a role in loyalty to some branded drugs.  However, many consumers have no other option because they simply cannot afford to pay a price premium.

Manufacturers of brand name drugs need to prepare for decreased sales, not only because of expiring patents and increased costs, but also because of the trend of consumers utilizing less health care. If patients do not visit their doctors as often, they cannot renew their prescriptions or receive new prescriptions from their physicians. Gaining new customers and holding on to current ones will be more challenging than ever to these companies in the near future, but they will need to find a way to do so.

Written by: Jamie Notaro

Edited by: Ken Chiang


April 18, 2012 at 11:55 AM Leave a comment

FDA Oversight Abroad

Like many products consumed in the United States, many drugs are developed and manufactured outside of our country’s borders. A New York Times article from August of last year reports that more than 80% of active ingredients for drugs sold here are made elsewhere1. In a recent House hearing, FDA Commissioner Dr. Margaret Hamburg stated that the FDA needs more resources in order to properly oversee the development and manufacturing of these types of products abroad. Modern Healthcare published an article describing these concerns the FDA has in regards to oversight of foreign-made drugs. Other issues such as drug shortages and pedigree are also mentioned.

FDA Deputy Commissioner for Global Regulatory Operations and Policy Deborah Autor is also mentioned in the article and states that action from Congress may be required to implement a national pedigree for drugs, which would track products from the manufacturer to the final buyer to ensure the integrity of the supply chain. Many states already have pedigree laws in effect, so the interaction of a federal clause and existing state statutes is something to be considered.  This type of action from the Food and Drug Administration and Congress could also have great effects on those companies that do produce drugs overseas. It may or may not cause them to need to make some changes to their supply chains, which could in turn raise the cost to produce a given drug.

These problems discussed in the article and at the hearing bring up an interesting dilemma. It seems a fairly universally agreed upon concept that the FDA should have the capacity to oversee the manufacturing of the drugs that are sold here in the United States, regardless of where they are made. However, would actions to give the FDA the resources it needs to increase supervision abroad make it more difficult for drug companies to produce their products at the same rate and for the same price? Which is more important: allocating resources to ensure drugs are being produced at the proper quality, or making sure there is enough of a given drug to provide for the need that is present? Drug shortages have been an ongoing issue of late, which could continue to worsen if certain drug manufacturing supply chains are interfered with.

The safety of both prescription and non-prescription drugs is key, that is unquestionable. But will the FDA really ever be able to keep track of the quality of every drug produced outside of the United States? Before taking any action, both the FDA and Congress should consider the potential benefits of higher levels of oversight versus what complications may arise from it.

Written by: Jamie Notaro

Edited by: Ken Chiang


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March 6, 2012 at 10:38 AM Leave a comment

Pharmaceutical Advertising

As consumers, we are by no means strangers to pharmaceutical advertisements. They are constantly in front of us, whether it is via TV commercials, magazine ads, or billboards along the highway. An article published on the New York Times ( website takes a look at how these direct to consumer advertisements have impacted Americans’ use of prescription drugs. It also discusses how doctors and patients now use checklists that can be found often times online to diagnose ailments and indicate the proper treatment.

The goal of pharmaceutical companies in regards to advertisements to consumers is clear; they want to raise awareness of their branded drug and want consumers to choose their prescription medication to take over others. It has been difficult to prove, however, that advertisements lead to any increase in direct sales as mentioned in the article. Are patients really any more likely to take a particular drug simply because they know of the brand, or do they simply listen to what their healthcare providers tell them to do? And is the information provided in these ads helping the consumer become more well-informed and knowledgeable with respect to what drugs they should be taking?

Many people, me included, seem to find drug advertisements to be a bit of a nuisance. Although I may be wrong, when the time comes for me to begin taking various prescription medications, I think I will let my doctor make the diagnosis and prescribe me whatever drug he or she thinks will work best—regardless of whether I’ve seen a commercial for it or not. Obviously this is not the case with every consumer; there are some that question their doctors on certain brand name drugs. My question is: is it really worth the time and money of pharmaceutical companies to heavily advertise their drugs to consumers? If there is no way to prove that they help sales and many consumers are annoyed by the ads, is the main reason to continue this heavy advertising to consumers simply to keep up with others in the industry?

I assume pharmaceutical companies could save a significant amount of money if they cut back on their advertising, and with little research to support that advertisements help sales, doing so may not have a negative impact. I know I would not be upset with the absence of prescription drug ads in my day to day life and I am sure I am not alone.

Author: Jamie Notaro

Edited by: Ken Chiang

February 28, 2012 at 3:07 PM Leave a comment

Medicare-Democratic Side

As discussed in last week’s blog entry, Medicare is a central issue right now for our country. I went into more detail in that previous post about many Republicans’ desires to increase the privatization of payment for Medicare services, but what do the Democrats want? After Representative Paul Ryan’s (R-Wis.) proposal was released, President Obama shared with the nation what his agenda for Medicare included.  Many members of the Democratic Party believe Ryan’s subsidy plan would be a colossal error. Obama, also not wanting to move to a Medicare voucher system, said in a speech given in April of 20111 that his plan for Medicare would protect the fundamental commitment our country has to the elderly, disabled, and poor, which he and other Democrats feel Ryan’s plan fails to do. The President has outlined several ways in which he will create savings within the Medicare program.

Obama plans to make certain changes that directly affect Medicare beneficiaries. For example, increasing deductibles by $25 in 2017, 2019, and 2021, increasing premiums for higher-income beneficiaries, and increasing the percentage of beneficiaries paying higher premiums from 5%-25%. He also calls for new beneficiaries to pay co-payments of $100 for home healthcare visits starting in 20172. Finally, new beneficiaries who buy private insurance to help fill gaps in Medicare would see an increase in Medicare premiums by 30%. These are all actions to increase the revenue received by Medicare through its beneficiaries. Another target source of revenue in Obama’s proposal is pharmaceutical companies. There would be a requirement for drug companies to lower their rates and pay out additional rebates to low-income beneficiaries. Those producing brand name drugs would pay a rebate of 23% and generic drug makers would pay a 13% rebate3.

These actions to increase revenues could affect the decisions made by both Medicare beneficiaries and many pharmaceutical companies. Those about to enroll in Medicare may choose to take advantage of the program much differently than before changes were made. Also, the drug companies might change what proportions of what drugs they produce depending on how the rebates affect them.

Cutting expenses is another way President Obama plans to reform Medicare. Slowly lowering Medicare payments to nursing homes, home health agencies, and rehabilitation hospitals, cutting payments from nursing homes where large numbers of patients were hospitalized because they did not receive proper care at the home, and reducing payments to hospitals and other providers for bad debts that result when beneficiaries fail to pay deductibles and co-payments are all ways to save money for Medicare4. Implementing these changes will not only save Medicare money, but it will help to change the incentive system and encourage providers to execute higher quality care.

I believe Obama’s plan has positive underlying ideas. Changing the incentive system to provide higher quality products and services for those enrolled in Medicare is a difficult task to accomplish. Making healthcare more accessible and affordable is also a key to the President’s suggested changes. Whether the Democratic Party and President Obama are given the chance to implement their changes, or Paul Ryan and the Republicans are given the opportunity, all who are somehow active in the healthcare system should be ready to make some adjustments of their own.

Author: Jamie Notaro

Edited by: Ken Chiang


1Remarks by the President on Fiscal Policy:

2,4New York Times:

3Kaiser Health News:

February 21, 2012 at 6:01 PM Leave a comment

Woes of a Disjointed Healthcare System

As we all know, the cost of healthcare in the United States is high and growing.  Expenditures surpassed $2.3 trillion in 2008, more than three times the $714 billion spent in 1990, and over eight times the $253 billion spent in 1980. Stemming this growth has become a major policy priority, as the government, employers, and consumers increasingly struggle to keep up with health care costs. (Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, National Health Care Expenditures Data, January 2010.)

The healthcare industry, patient advocates and governmental bodies are pursuing many solutions.  These include, but are not limited to:

  • Investment in information technology
  • Improving quality and efficiency (e.g., encouraging evidence-based medicine, reducing unnecessary variations in care) – Some experts estimate that up to 30% of health care is unnecessary, emphasizing the need to streamline the health care system and eliminate this needless spending.
  • Adjusting provider compensation (e.g., sharing cost savings)
  • Government regulation (e.g., recent Medicare initiatives to control costs)
  • Encouraging prevention
  • Increasing consumer involvement in purchasing
  • Altering the tax preference for employer-sponsored insurance

One of the strengths of our current healthcare system, as well as one of its weaknesses, is that it is a market-based system.  We have multiple providers competing against each other.  The strength is that competition leads to innovation if not the low cost we might expect.  However, a market-based, competitive system also leads to a system that can make it difficult for providers to work together.  The resulting lack of coordination can have a negative impact on patient care and lost opportunities for reducing costs.

For example, MedSpan has a client that provides patient care in all 50 states.  They considered developing a unique program that could extend the reach of physicians’ care between visits, enhance patient-physician relationships, encourage therapy compliance and afford the opportunity for earlier identification of disease progression.  However, one of the challenges the program faces is that without coverage of the program by all health plans in a geographic region, physicians do not easily know which patients they can refer to the program.

Assume that only a few health plans provided coverage for our client’s program.  A physician would need to 1) determine that a patient would benefit from the program, 2) determine if the patient’s health plan provides coverage for the program and 3) refer the patient to the provider (my client), 4) develop a relationship with the provider and 5) exchange information to monitor progress, thereby ensuring a benefit for the patient and physician.

That’s a lot of work for physicians who, typically, do not have the time available.  This is especially true if only 5 or 10 patients might benefit from the program and only a few might have coverage.  As a result, a potentially beneficial program falls through the cracks due to a disjointed healthcare system.

A system integrated through better information systems would address some of the challenges the above program faces, but not all.  An extreme solution would be a single-payer system.  While facilitating coordination of care, a single payer system would engender a host of other issues.  For example, the innovation that competition generates may diminish.  Therefore, the question to address is how close should we move to a single payer system while maintaining the competitive, free market that is the foundation of the American economy?

That’s an issue we’ll address in a future entry into our blog.

November 14, 2011 at 8:27 AM Leave a comment

Biosimilars and Healthcare Reform

As the next chapter in our series on the implications of healthcare reform for healthcare manufacturers, we will look at biosimilars and bioequivalent drugs. 

As an approach for reducing the cost of care, healthcare reform defined an approval pathway for biosimilars.  Biotechnology drugs will have market exclusivity for 12 years after the branded biotech drug is approved by the Food and Drug Administration.  The subject product would be biosimilar to the reference product if it “is highly similar to the reference product notwithstanding minor differences in clinically inactive components” and if “there are no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency of the product.” Such a determination by the FDA would substitute for a demonstration of the subject product’s efficacy, which would have been established by the reference product.

Biosimilar is different from bioequivalent.  The biosimilar drug’s sponsor can submit information that the FDA would evaluate to determine whether the subject product is “interchangeable” with the reference product (i.e., that the subject product “can be expected to produce the same clinical result as the reference product” and that, “for a biological product that is administered more than once to an individual, the risk in terms of safety or diminished efficacy of alternating or switching between use of the biological product and the reference product is not greater than the risk of using the reference product without such alternation or switch”).  Because current analytical technology is insufficient to establish that two biologics are molecularly identical, interchangeability would have to be established through clinical trials; accordingly.

The biosimilar product also will enjoy a period of market exclusivity that ranges from 12 to 42 months depending on the nature of any patent infringement litigation against the first biosimilar.  That is, the FDA would be prohibited from determining that a second product is interchangeable with the same reference product until the earlier of:

(a) one year after the date on which the first interchangeable biologic was commercially marketed;

(b) 18 months after the date on which any patent infringement litigation against the first interchangeable biologic’s sponsor is dismissed or resolved by final court decision;

(c) 42 months after the date on which the first interchangeable biologic’s application was approved, if the applicant was sued for patent infringement; or

(d) 18 months after the date on which the first interchangeable biologic’s application was approved, if the applicant was not sued for patent infringement.

The reimbursement amount for any biosimilar product would equal the weighted Average Sales Price (“ASP”) of all package sizes of the biosimilar within the applicable billing code, plus 6 percent of the weighted ASP of all package sizes of the reference product within the applicable billing code. Assuming that the weighted ASP for the reference product is higher than that of the biosimilar, the 6% of this relatively higher value provides physicians with an incentive to administer biosimilars instead of reference products.

It is not currently clear how interchangeable and non-interchangeable biosimilars would be treated under “generic substitution” requirements imposed by health plans and governed by state pharmacy laws. For example, would health plans utilize their formularies or implement other utilization management techniques to encourage the dispensing of all biosimilars, or only of interchangeable biosimilars (to the extent otherwise permitted by law)? Generally, when the first generic version of a prescription drug enters the market, the innovator drug may be excluded from coverage under a pharmaceutical benefit entirely. This may not be the case, however, for reference biologics or, at least, for reference biologics with no interchangeable alternative.

Implications for Drug Manufacturers

Defining a pathway to approve biosimilar drugs has a number of implications for the manufacturers of reference products.  On the positive side, a 12-year period of marketing protection defines the outer reaches of the reference product’s lifecycle.  It provides time for drug companies to plan for and address the launch of biosimilars.  It also leads to barriers to entry for biosimilars.

Defining the lifecycle of a branded biotechnology drug could exert upward pricing pressure compared to the current market.  The manufacturer of the branded biotech drugs will need to generate a sufficient return on investment in a shorter timeframe than available today during first 12 years.

Once the branded biotechnology drug’s exclusivity has eclipsed, a single biosimilar will be on the market for 12 to 42 months.  This could lead to downward pricing pressure for branded biotech drugs after 12 years due to generic competition.  As with generic small-molecule drugs, the first biosimilar drug will exert limited downward pricing pressure.  The more significant pricing pressure will occur once multiple biosimilars are on the market.

The question arises as to whether physicians will support a biosimilar drug that has not demonstrated bioequivalency via clinical studies.  Also, how much use of the biosimilar out of clinical studies will be required to convince prescribers that the biosimilar delivers the same outcomes as the reference product?  These questions could extended the lifecycle of the reference biotechnology drug and protect it against downward pricing pressure.

On the flip side of the coin, will the manufacturer of the branded biotechnology drug need to demonstrate clinical and economic superiority to biosimilars to support marketing after the 12-year period of marketing protection lapses?  If yes, there will be a need for the manufacturer of the branded biotechnology drug to conduct comparative outcomes research compared to the biosimilar or bioequivalent drug.

Of course, there is one overriding question about biosimilars and bioequivalents, above and beyond the definition of an approval pathway.  Will the difficulty with developing biosimilars limit the impact of these aspects of PPACA?

 If you don’t have a crystal ball, be patient.  Time will yield the answers to these questions.

September 27, 2010 at 1:27 PM Leave a comment

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