Big-name drug makers are using “authorized generics” to keep drug prices high and out-compete, according to a report by Kaiser Health News.
Generics are prescribed are defined by the US Food and Drug Administration as brand-name drugs that are simply reproduced and sold without the brand name. They are made by the same company that makes the brand-name drug and are often sold at a discount relative to the brand-name version.
Traditional generic drugs, on the other hand, are versions of a drug that are identical to a brand-name drug in active ingredients and effects but may have some differences, such as in inactive ingredients like fillers. and flavors. Generics are made by different companies from those who make the brand-name versions.
High-profile examples of prescribed generics include Mylan’s cheaper form of its EpiPen, a life-saving epinephrine autoinjector that prevents fatal allergic reactions. In 2016, under political and public pressure to lower drug prices, Mylan introduced an authorized generic of EpiPen priced at $300 for a two-pack. That’s half the price of a two-pack of the name-brand version, which has a list price of about $600. But it’s still a dramatic increase from the original price of EpiPen of about $50 per injector in 2007. That year, Mylan bought the rights to EpiPen and then raised the price more than 400% in the following years. The prescribed generic is essentially three times the price of what the two injectors used to cost.
Drug companies argue that because generics are priced lower than brand-name drugs, faux generics lower overall prices and increase competition. But critics note that prices can also be inflated, as in the case of the EpiPen. Moreover, because brand-name drugs’ price list is often subject to rebates and discounts by intermediaries, generic filters’ low price sometimes has no impact on the net home drug price for their drugs.
Tricks and games
Another example is Eli Lilly’s prescribed generic form of Humalog insulin, as Kaiser Health News points out. In March, Eli Lilly announced that it will sell a licensed generic for $137 a vial, about half the price of the brand-name version’s $275 price. The president of the company said that it seems to be moved compassionately to deal with “many patients (who) are struggling to give their insulin.”
But the price cut won’t affect Lilly’s bottom line, according to a senior pharma benefits executive who spoke to KHN on condition of anonymity. After adjustments, $137 is about what Eli Lilly gets for Humalog now, the executive said.
“It’s a bedroom trick,” the leader added. “They’re bowing to political pressure, but are they getting any money out of the program? They’re not.”
We had, as others have noted, the price is still wildly inflated. A vial of the brand name Humalog has a list price of $55 in Germany, for example. In 2001—before Lilly started the price hike—the list price for a vial of Humalog in the US was $35.
While authorized generics help maintain high prices and profits for drugmakers, they also draw competition away from actual generics, critics say.
When Congress established the modern generic drug market in 1984 — with “Drug Price Competition and Patent Reinstatement Act of 1984″ (aka the Hatch-Waxman Amendment) — lawmakers decided to give the first generic manufacturer a lucrative incentive of a 180-day period of product exclusivity. That is, the FDA held off on accepting additional generic versions of the drug for that time.
But with authorized generics, brand-name drug makers can time the release of their faux generics to match the release of generic competition. That’s exactly what PDL BioPharma did with the release of an authorized generic version of its blood pressure drug, Tekturna (generic name aliskiren).
In 2017, PDL got word that Anchen Pharmaceuticals was planning to come out with a generic version of the blood pressure drug. PDL then cut an agreement with Anchen that, in part, Anchen agreed to delay the release of its generic until at least March 1, 2019. On March 4, 2019, PDL announced the release of an authorized generic.
In the announcement, PDL President and CEO, Dominique Monnet, noted that “We believe that being first-to-market with a generic version of aliskiren provides (PDL Division) Noden with a distinct competitive advantage.”
Robin Feldman, a pharmaceutical policy expert at the University of California Hastings School of Law, echoed the point to KHN, saying that such moves could “disrupt generic competition and see sure that generics can’t have much space when they do. go to the market.”
“This is the game,” he added. “And drug companies have become masters at this.”
In July 2019, it came nearly 1,200 generics are licensed on the market in the US.