FDA is approving a record number of generic drugs to treat cancer, heart conditions, and other diseases, but many patients do not have access to the lower-cost treatments and are forced to rely on higher-priced brand-name drugs or to forgo their preferred medication altogether, according to a review by the Wall Street Journal.
According to the Journal, the Trump administration has touted FDA's record-breaking numbers of generic drug approvals over the past three fiscal years, saying that these brand-name alternatives will help increase competition in the market and bring down overall drug costs. However, patient advocates and other observers have said consumers are having trouble accessing the lower-cost treatments—difficulties driven, according to recent research, by various trends.
Generic drugs, biosimiliars enter market slowly, Wall Street Journal review finds
Overall, according to the health-data firm Iqvia, FDA has approved 2,492 generic versions of 617 brand-name drugs since 2016, but less than 33% of the generic drugs approved between 2016 and 2018—or 1,249—have entered the market. Of the 689 generic drugs approved in 2018 alone, about 40% are still not available on the U.S. market. The data show just 134, or 30%, of the generic drugs FDA approved between January and June of this year have launched.
For instance, FDA in January granted five drugmakers permission to sell generic versions of the antipsychotic drug Latuda, which has a list of price of nearly $1,223. However, to date none of those drugmakers are selling generic versions of Latuda, the Journal reports. Under the terms of an agreement between generic drugmakers and Latuda's manufacturer, generic versions of the drug will not become available until 2023, according to the Journal.
The problem is worse with biosimilars, the Journal's review found. Biosimilars are less-costly versions of biologic drugs, which are developed from living cells. The Journal found FDA has approved more than two dozen biosimilars since 2015, but there are currently only 11 biosimilars available on the market.
An FDA spokesperson said the agency's efforts to speed up the approval process for generic drugs has led to a better generic drug program and the agency plans to continue to work to create a more competitive market, but he noted that FDA does not decide whether a drugmaker launches a product.
Delays driven by multiple issues, research shows
Recent research suggests the generic drug launch delays are being fueled by multiple issues.
The Journal reports that some generic drug launches are delayed because of a change in business strategy. For instance, pharmacists, generic drug industry officials, and researchers have said some drugmakers delay the launch of generic drugs because they determine the potential return on investment is not lucrative.
Other generic drug launches can be held up in legal battles over patents for a drug's active ingredient or over "secondary patents" pertaining to a given drug's formulation or delivery, the Journal reports. For instance, several generic-drug experts have said brand-name drugmakers keep generics from entering the market by filing additional patents or suing generic drugmakers for alleged patent infringement, according to the Journal.
And according to a Federal Trade Commission (FTC) report released in May, few of those legal challenges are likely to be anticompetitive, even if the number of settlements resulting from those cases have increased overall. The settlements typically involve generic drugmakers agreeing to delay the launch of their lower-cost drugs, according to the Journal. The FTC declined to comment on the issue, the Journal reports.
Insurers are slow to cover generic drugs, research shows
Another reason why patients are not able to access generic drugs is because Medicare prescription drug plans do not cover generic drugs as quickly as private health plans do, according to a recent study from the Association for Accessible Medicines (AAM).
In the report, AAM found Medicare prescription drug plans cover 22% of generic drugs in their first year on the market, while private health plans cover 46% of generic drugs in their first year on the market. After three years, Medicare prescription drug plans cover on average about half of new generics, the report found. Overall, according to a separate AAM study, this delay in generic drug coverage could result in seniors paying up to $4 billion a year out of pocket.
According to patient advocates, insurers' slow uptake of generic drugs may reflect how the pharmaceutical supply chain's rebate system creates incentives for payers to cover costlier brand-name drugs instead of generic drugs, Bloomberg reports. Leigh Purvis, director of health-services research at AARP's Public Policy Institute, said, "We want people to be paying the lowest cost possible," but with "the lack of data and the murkiness of the prescription-drug system, it's really hard to say how money is moving and to whose benefit."
For instance, in Medicare, brand-name and generic drugs often compete directly for a place on a health plan's formulary as a result of the structure of formularies and a 2017 policy, which made the distinction between brand-name and generic drugs less clear. This means brand-name drugs could cost pharmacy benefit managers (PBMs) less, but in some cases may cost seniors more in co-payments, according to Bloomberg.
And while lawmakers have urged CMS to change the formulary policy for 2020—and some have recently proposed legislation that would eliminate the shared tier approach that pits brand-name and generic drugs against each other in Medicare—CMS in April said it would maintain the current formulary approach for 2020. According to CMS, barring generic and brand-name drugs from sharing tiers in the formulary could increase Medicare drug premiums, as well as out-of-pocket costs for beneficiaries, because it might limit flexibility in plan design and cut Medicare's leverage when negotiating with drug manufacturers.
Separately, Cathryn Donaldson, a spokesperson for America's Health Insurance Plans, said the initial generic alternatives to brand-name drugs often aren't priced low enough to make a substantial difference. Donaldson also voiced concern about eliminating the shared tier approach in favor of a specific tier reserved for generic drugs, saying the shift could raise prices for all consumers (Anderson, Becker's Hospital Review, 11/22; Hopkins, Wall Street Journal, 11/19; Koons/Griffin, Bloomberg, 11/21).