Pharma offers good and bad news
Consumers, providers benefit from generics but face shortages
Two topics dominated pharmaceutical industry news in 2011: generic drug savings and drug shortages.
According to a report from the Generic Pharmaceutical Association (GPhA), use of generic prescription drugs in the United States has saved consumers and providers $931 billion over the last 10 years.
In its report “Savings: An Economic Analysis of Generic Drug Usage in the U.S.,” the GPhA claimed that in 2010 generic drug use generated nearly $158 billion in savings, an average of $3 billion every week. The report is based on independently conducted analysis, produced for GPhA by the IMS Institute for Healthcare Informatics and IMS Health.
“These findings could not have come at a more critical time,” said Ralph G. Neas, GPhA president and CEO in a statement accompanying the report. “The analysis shows beyond doubt that savings achieved through the use of safe and effective generics deliver a huge win to consumers looking to hold down their healthcare costs.”
The good news about generics kept coming as five of the bestselling prescription drugs lost their patents in 2011. Lipitor, Zyprexa, Levaquin, Concerta and Protonix, which collectively generated nearly $11 billion in U.S. sales in 2010, will now have generic competition.
Consumers will benefit even more in 2012, when Plavix, Seroquel, Singulair, Actos and Enbrel, which collectively generated nearly $20 billion in U.S. sales in 2010, will lose their patents.
According to IMS Health, a market research firm that monitors the healthcare industry, nationwide spending on medicines exceeded $307 billion in 2010, and more than $100 billion in annual brand-name drug sales are at risk when generic competition hits the market between 2011 and 2015.
“American consumers are extremely aware of generic options and are actively looking for them," said Michael Kleinrock, research director at the IMS Institute for Healthcare Informatics, a subsidiary of IMS Health. “Seventy-eight percent of all prescriptions in the U.S. are for generics.”
While generic drug savings offered good news for providers and consumers, U.S. drug shortages did not.
Shortages reached record numbers this year, which prompted President Obama to issue an executive order on Oct. 31, directing the FDA to take steps to reduce current shortages and prevent future disruptions.
In the order, President Obama stated that, “Shortages of pharmaceutical drugs pose a serious and growing threat to public health. While a very small number of drugs in the United States experience a shortage in any given year, the number of prescription drug shortages in the United States nearly tripled between 2005 and 2010, and shortages are becoming more severe as well as more frequent. The affected medicines include cancer treatments, anesthesia drugs, and other drugs that are critical to the treatment and prevention of serious diseases and life threatening conditions.”
The President ordered the FDA to require drug manufacturers to “provide adequate advance notice of manufacturing discontinuances that could lead to shortages of drugs that are life supporting or life sustaining, or that prevent debilitating disease.”
The order also calls on the FDA to expedite the review of new suppliers and manufacturing sites and to communicate any evidence of foul play by market participants to the Department of Justice.
“The executive order points out several things. It addresses expectations of the supplier community and also for the FDA itself,” said Steven Lucio, director, clinical solutions, pharmacy at Irving, Texas-based group purchasing organization Novation.
“Everyone has a role to play. There’s no single reason why drug shortages are taking place. The (pharmaceutical) supply chain is very complex,” said Lucio.
While much attention has been given to gray market drug vendors recently for their high price mark-ups on hard-to-find drugs, Lucio said, “The gray market is not a cause of the shortages, it’s a symptom. There are many points of access in the supply chain, and it’s easy for products to slip through the cracks.”
While Lucio does not think the gray market is at fault for the shortages, he also does not think they are the answer. “Gray market companies don’t have anywhere near the volume to meet the demand,” he said.
Despite the growing number of shortages and the problems they pose for providers and patients, Lucio sees a glimmer of hope.
“Drug manufacturers are investing money into production facilities and, at some point, they will come online,” added Lucio. “The hope is that these facilities will be more up-to-date and not as susceptible to breakdowns. Maybe this will also help alleviate some of the circumstances that we’ve seen the last few years.”
