Leading America into a Healthy Future

Top officials from the generic pharmaceuticalindustry, government, and WallStreet gathered in February at theGeneric Pharmaceutical Association's(GPhA) Annual Meeting to discuss thestate of the generic industry, focusing onkey regulatory and business issues.Although some brand companies continueto seek to delay generic market entrythrough a variety of tactics, the genericsector is poised for substantial growthand is well-positioned to continue "leadingAmerica into a healthy future."

Today, ~56% of all prescriptions dispensedare generics, yet they account foronly 13% of all prescription drug expenditures,according to IMS Health. And, as thefederal government looks at ways toreduce health care expenditures while stillproviding quality care through programssuch as Medicare and Medicaid, affordablegenerics will be a key part of those efforts.

"Generic drug manufacturers producemedications that are just as safe andeffective as their brand counterparts. Partof the FDA's mission is to make surethat's the case. Yet, the prices of genericsare much lower: the price of a genericdrug can be as low as 20% of the price ofthe brand name product," said FDADeputy Commissioner Scott Gottlieb,who spoke at the meeting.

Representative Henry Waxman (D, Calif)reiterated those cost savings: "Genericdrugs have played a critical role in reducingdrug prices in the United States. Overthe years, the generics' share of the markethas grown steadily, lowering drugprices by up to two thirds for those drugswith generic competition."

IMS Health data bear this out. Accordingto IMS Vice President Doug Long, thegeneric industry grew by 21% in 2005,more than 4 times the rate of the overallpharmaceutical industry, which grew at5.4%. Generics are expected to continueto grow due to the large number ofblockbuster brand products slated tocome off patent in the next few years,along with the enactment of the Medicareprescription drug benefit, increasingcopays, and a rising number of healthcare programs promoting the use ofaffordable generics.

Long explained that the new Medicarebenefit, in combination with Medicaid andother public health care programs, willmake the federal government the nation'slargest health care provider in 2006.

Increasing copays is another factorfavoring generic utilization, remarkedLong. And there are benefits to ensuringthat medicines remain affordable:according to a recent Rand study, whena copay doubled, the use of pharmaceuticalsdecreased by 17% to 20%, buthospital visits increased, particularly forpeople with chronic diseases such asdiabetes and asthma.

Continued growth, however, could beaffected by the success of efforts tobring generics to market in a timelymanner, a point echoed by several meetingspeakers. "The best way for all of usto preserve our [health care] system,which rewards new innovations whilebalancing the need to pursue affordableoptions for patients who have limitedmeans, is to continue to encourage rapidand fair access to generic medicationsafter the expiration of appropriatepatent protection and periods of marketexclusivity," said Gottlieb.

Although the FDA has made a commitmentto bringing these medicines to market,analysts at the meeting noted thatfunding for the Office of Generic Drugs(OGD), which reviews and approvesgeneric medicines, as well as citizen petitionsand legal challenges, could hamperthe ability to bring generics to market in atimely manner.

Congress is beginning to look into theissues of citizen petitions. Recently,Senators Debbie Stabenow (D, Mich) andTrent Lott (R, Miss) introduced the "LowerPriced Drugs Act," which would take stepsto tighten legal loopholes and reduceabuse of the citizen petition process.According to Merrill Lynch Vice PresidentGregg Gilbert, brands are becoming moreaggressive in using citizen petitions as adelay tactic. Gilbert also noted that >75%of all citizen petitions analyzed by his companyduring a 5-year period were dismissedas having no merit.

Additionally, Rep.Waxman, Rep. JoAnnEmerson (R, Mo), and other members ofCongress have pledged to look into theneed to provide OGD with moreresources. "We all know that the brandname companies have spent significantamounts of time and money on strategiesto delay access to generic drugs,"said Waxman. "We must ensure that theFDA itself does not become yet anotherroadblock in Americans' access to genericdrugs."

Given the FDA's and Congress' statedsupport for generics, these challenges arenot insurmountable. With the genericpharmaceutical industry on the cusp of agrowth period, 2006 should mean moreopportunities for Americans to savemoney through increased access toaffordable medicines.