Access to and Costs of Generic Medications in the United States: A Perspective

Between 2004 and 2013, the broader availability of generic drugs saved the U.S. health-care system nearly $1.5 trillion. However, a number of issues, including certain industry tactics, have made it difficult for some generic drugs to reach the market, or to the patients who need these treatments.

With a limited number of generic drugs available, approximately one in five Americans admit to not filling prescriptions due to costs, according to Gregory H. Jones, BS, and colleagues from MD Anderson Cancer Center in Houston, Texas. In a recent perspective article published in Blood, Mr. Jones and co-authors discussed the rising costs, as well as the strategies pharmaceutical companies use to delay or prevent the timely availability of these medications.

“Drug companies – both patented and generic manufacturers – are collaborating to subvert legislations that were well-meant to help make generics available and affordable earlier to patients with cancer,” corresponding author Hagop Kantarjian, MD, told ASH Clinical News. “Unfortunately, these sorely needed generics are increasingly out of reach.” For more from Dr. Kantarjian about the factors that keep these affordable drugs from the market, see the SIDEBAR

How do pharmaceutical companies delay patient access to affordable generic drugs? The authors identified several strategies.

Patent Settlements

Patent rights are one of the biggest obstacles to generic availability, according to the authors. Over the years, the makers of brand-name drugs have developed strategies to extend patents and delay the availability of generic formulations to extend brand-name exclusivity. One tactic is “reverse payment” or “pay-for-delay,” in which the patent company agrees to pay the potential generic company to delay entry of the drug to the market. The Federal Trade Commission (FTC) estimates that these settlements cost taxpayers, insurance companies, and consumers approximately $3.5 billion per year. However, according to a recent report from the FTC, the number of pay-for-delay settlements has been declining.

“The danger [of these arrangements] derives from the mutual financial benefit to both brand and generic producers at the expense of patients and our health-care system,” wrote Mr. Jones and colleagues.

Product Hopping

Product hopping (also called “forced switching” or “evergreening”) involves brand-name companies switching the market for a drug, prior to its patent expiration date, to a reformulated version whose patent expires later. Though the drug now has an expanded patent, it offers little to no therapeutic advantages. Dr. Jones and co-authors offer the following example: The new version of a drug could have a different tablet or capsule dose, prompting doctors or pharmacists to switch patients to the new drug formulation; if a generic version of the drug becomes available, pharmacists cannot substitute the reformulated version for this generic because state laws only allow for substitutions when the dosage strength or other characteristics remain the same. According to the authors, when patients are forced to switch from a drug with a near-expired patent to the new formulation, only 10 to 20 percent go back to a generic version once it is made available.

Banning of Cross-Border Drug Importation

Though drug prices are high in the United States, a brand-name drug overseas can cost just 20 to 50 percent of the price U.S. patients pay. In addition, some generic formulations are available earlier in other countries. Unfortunately, the authors explained, the U.S. Food and Drug Administration Safety and Innovation Act does not allow patients to import drugs for individual use that are valued at $2,500 or less due to public safety concerns. “Allowing cross-border importation of drugs would improve market forces and increase pressure for more affordable drug prices,” they noted.

Advertising and Marketing

The United States and New Zealand are the only countries that allow prescription drugs to be advertised to consumers on television, and the amount of money invested into pharmaceutical marketing each year is “staggering,” Mr. Jones and colleagues wrote. Nine of 10 large pharmaceutical companies spend more money annually on marketing than they do on research and development and, in 2012, nearly $3.5 billion was invested in the United States in pharmaceutical marketing.

“Patients, physicians, and health-care experts should be vigilant and cognizant of these prevailing strategies that delay the availability of affordable generic drugs and should advocate for measures to lower drug prices,” Mr. Jones and co-authors concluded.

But are there any solutions in sight? Mr. Jones and authors proposed several strategies the U.S. government and pharmaceutical companies could enact to tackle the generic availability issue:

  • Allow Medicare to negotiate drug pricing
  • Develop mechanisms to propose fair pricing for brand-name and generic drugs based on the value of treatment
  • Monitor and penalize pay-for-delay strategies
  • Encourage the presence of multiple generic drug companies
  • Require that drug companies be more transparent about the costs of research and development in order to justify drug prices
  • Challenge weak patents through government entities

Reference

Jones GH, Carrier MA, Silver RT, Kantarjian H. Strategies that delay or prevent the timely availability of affordable generic drugs in the United States. Blood. 2016 January 27. [Epub ahead of print]


SIDEBAR

ASH Clinical News spoke with Hagop Kantarjian, MD, about access and cost of generic medications.

ASH Clinical News: How does the problem of expensive or unavailable generic medication specifically affect patients with hematologic disorders?

Hagop Kantarjian, MD: We are paying a lot for drugs, but, more importantly, because of the shift of the burden to patients by the insurance companies, patients are having to pay sometimes 20 to 25 percent in out-of-pocket costs. So, for a patented drug whose generic version is delayed or high-priced, this could effectively mean patients are going to pay $20,000 or $30,000 a year. Patients cannot afford them.

Also, the introduction of reasonably priced generics could save our health-care system close to $1.5 trillion over a period of 10 to 15 years, according to one study estimate. The timely availability of affordable generics is very important for the U.S. health-care system and for individual patients with cancer who cannot afford to pay for these drugs out-of-pocket.

Will we reach a point where drug prices are just too high?

They are already too high – way too high. Some cancer drugs cost in excess of $100,000 per year; that means paying more than $100,000 for one year lived. In the past, we assumed that $50,000 was a reasonable price for a year lived. In my opinion, we have exceeded the point of “exorbitant” pricing and have entered the realm of profiteering off high cancer drug prices.

How do you think the pharmaceutical industry would respond to the arguments you and co-authors present in the article?

The industry has to decide: Are they going to continue with high prices (with the mission of maximizing profit at the expense of harming patients), or will they redirect their course to a dual mission of helping patients and making a reasonable profit? Today, the pharmaceutical industry resembles a Wall Street corporation where they seek to maximize profit even if they are harming the U.S. health-care system and patients. This has to change. Drug companies have legislation and laws to their benefit, and now the patients are not able to have early access to affordable generics. We have to reverse this.

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