Pharmaceutical Commerce - November/December 2016 - 8


Top News
GPhA: generics saved $227 billion in drug costs in 2015
Price growth is less than branded growth, but higher than inflation
As it has done annually for the past eight years, the
Generic Pharmaceuticals Assn. (GPhA) has commissioned
IMS Health (now QuintilesIMS) to run the numbers on
scrip volume and pharma sales to determine the cost
savings from generics. The 2015 total: $227 billion, up
from $207 billion in 2014, and continuing a trend that has
persisted since at least 2005. Generics made up 89% of
prescriptions dispensed in 2015, but only 27% of medicine
spending; the rest is consumed by branded products.
"Generic drugs are the foundation of any successful
effort to lower health spending and increase patient access
to affordable medicine," said Chip Davis, president of
GPhA, in a statement. And, anticipating the impact of
biosimilars which are now trickling into US distribution,
he adds, "This report underscores the importance of
policies that build on the generic drug industry's record
of significant savings and promote generic and biosimilar
competition."  
There's no question that generics have dampened the
growth of pharmaceutical spending, but there are nuances
that the GPhA report leaves out, overstating the "lower"
health spending claim. The QuintilesIMS analysis is based
on the prices of branded products just as expiry occurs,
then projected forward as generics replace them. But,
as the controversies surrounding Valeant Pharma and
Turing Pharma last year demonstrated, it is an industry
practice to jack up branded prices just prior to expiry-so
there's some overstatement of the dollar savings from that.
Mylan's recent troubles over EpiPen pricing involve not
only the eyepopping price increases it imposed, but also
its improper use of a generic categorization to sidestep
mandated rebates in Medicaid and elsewhere. Moreover,
the branded drug prices of QuintilesIMS' analysis are
based on the ex-manufacturer price, and don't factor in
discounts and rebates, which can affect the retail price of a
branded drug by as much as 50% or more.

Price per scrip
In addition, data from QuintilesIMS' Use of Medicines
report (Pharmaceutical Commerce, May/June, p. 7) show
that while 2015 generic prescribing moved slightly from
2014 to 2015 (up 2.1%), spending on generics rose by
7.4%. (Several other factors affect this, including the
changing proportion of generic vs. branded prescribing,
the pace of patent expiries, and whatever discounting goes
on in generic price contracts.) A back-of-the-envelope
calculation of generic price inflation would be 7.4% minus
2.1%, or 5.3%-and that's higher not only in absolute
terms, but also when the nearly nonexistent inflation
rate is factored in. There were a flurry of reports at the
beginning of this year trying to account for generic price
inflation.
A counterargument to generic price inflation is that for
some drugs, prices are too low-so low that they become
sole-source products (or that products become shortsupply, or that production ceases altogether). "Over time
[payers] may be glad that prices went up, assuming the
laws of supply and demand kick in to increase competition
in the generic market," was one of the conclusions of an
Elsevier white paper* published in 2015 on the topic.
And as biosimilars enter the scene, the discounting that
occurs as multiple manufacturers attack the same branded
biotech product could drive "better" biosimilars out of the
market.
All of which points to an intensive battle over prices,
rebates and patent policies come the new year and a new
Presidential administration. Hold onto your hats!
* https://www.elsevier.com/clinical-solutions/insights/resources/insightsarticles/drug-information/whitepapers/whitepaperrising-generic-drugprices/wpgeneric-drug-prices-form?

Total U.S. Healthcare Spending
Prescription medicines today account for
just 10% of healthcare spending

Annual Generic Drug Savings ($ Billions)

GPhA highlights the relatively minor part drug costs play in
healthcare (top), and the ongoing annual cost savings from
generics. Credit: GPhA

Commemorating a vaccine success in rotavirus
Tenth-year anniversary marks a milestone in saving lives globally
Celebrating the 10th anniversary of
the commercialization of a successful

preventive for gastroenteritis and
life-threatening diarrhea is more than a

Vaccine celebrants at Wistar ceremony. Credit: Wistar
8 Visit our website at www.PharmaceuticalCommerce.com November | December 2016

feel-good story for the pharma industry.
Distribution of the vaccine still needs to
occur more broadly around the globe, but
significant progress has been made to date.
The rotavirus vaccine was
commercialized, as RotaTeq, by Merck
in 2006; another version, Rotarix, was
commercialized by GSK in 2008. (The
first vaccine, RotaShield, from Wyeth, was
introduced in 1998 but withdrawn a year
later; the debate over the thousands of lives
lost during the eight-year delay until a new,
safer vaccine could be introduced rages
on today). RotaTeq originated in work at
the Children's Hospital of Philadelphia
(CHOP) and the Wistar Institute, led by
Drs. Stanley Plotkin, Paul Offit, and a
veterinary researcher, H Fred Clark (since
deceased). Merck picked up the CHOP/
Wistar research and spent some 16 years in
development leading up to the 2006 FDA
approval.
"Before rotavirus vaccination, roughly

half a million children would go to US
emergency rooms every year from this
infection," said Offit, now director of the
Vaccine Education Center at CHOP. "Of
that number, 75,000 children would be
hospitalized with severe dehydration,
and 20 to 60 would die. Today, child
hospitalizations from rotavirus have
dropped by 85% in this country." Offit
spoke at the ceremony held at the Wistar
Institute recently.
Rotavirus vaccines quickly became a
part of standard childhood vaccination
programs in the industrialized world; the
story then goes to efforts by philanthropies
and public health organizations that have
been spreading the vaccine distribution
to the rest of the world, including Gavi,
the Vaccines Alliance, and the Bill &
Melinda Gates Foundation. Rotavirus still
kills more than 200,000 infants globally,
according to World Health Organization
estimates.


https://www.elsevier.com/clinical-solutions/insights/resources/insights-articles/drug-information/whitepapers/whitepaperrising-generic-drug-prices/wpgeneric-drug-prices-form? http://pharmaceuticalcommerce.com/

Table of Contents for the Digital Edition of Pharmaceutical Commerce - November/December 2016

Table of Contents
Pharmaceutical Commerce - November/December 2016 - Cover1
Pharmaceutical Commerce - November/December 2016 - Cover2
Pharmaceutical Commerce - November/December 2016 - Table of Contents
Pharmaceutical Commerce - November/December 2016 - 4
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Pharmaceutical Commerce - November/December 2016 - Cover4
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