Here's some follow-up to my two most recent posts on pedigree and generic competition.
H.B. 371 signed by Gov. Bush (posted June 27)
As predicted, the Florida press is spinning Gov. Bush’s move as a blow to supply chain security. (Readers of this blog know that I disagree.) I'm actually a bit surprised by the muted responses given the hyperventilating editorials that were written after HB 371 was modified. Anyway, here are two articles:
“Tough drug law may lack teeth,” Orlando Sentinel
“Gov. Bush signs bill weakening safeguards against fake drugs,” Sun Sentinel
Winners and Losers in the Zocor Wars (posted June 25)
As reported in the Wall Street Journal, Pfizer plans to zocor its generic competitors by lowering the price of branded Zoloft upon patent expiration. Pfizer also announced that they will pursue a similar strategy in Switzerland.
To me, these actions suggest a new era of brand/generic competition. A 1998 CBO study found that the average market share of 21 generic drugs launched from 1991 to 1993 was 44% after one year.
Tempus fugit. Blockbuster generics now get 80%+ substitution within one month. Consider this example from Medco’s latest drug trend report:
“Allegra is a widely used nonsedating antihistamine with market sales of $1.3 billion in 2004. By October 2005 (the first full month following generic availability), the brand-name product lost 84% of its overall market share to the new generics—81% at retail
and 95% at mail.”
In other words, PBMs are shortening the life cycle for branded drugs, thereby lowering total drug costs for payers and generating higher incremental profits for themselves (see my previous post).
Here's the irony – brand manufacturers paid rebates to PBMs of more than $6 per prescription in 2003 (per the FTC report). Sure, a majority of those payments get passed back to payers. Manufacturers' newfound aggressiveness on generic pricing is a clear signal that PBMs remain the true power players of the drug channel.
Now, if only I could figure out how to get these (censored) snakes off my (censored) blog...
I've long wondered why Big Pharma didn't start doing this earlier. Steps in that general direction -- like making drugs available OTC (Claritin) -- have happened, but I'm curious why more direct competition hasn't happened until Zocor.
Any ideas? It would seem only natural (to me) to protect my investments by pricing my brand-name stuff more competitively, especially given the mind-boggling 95% generic conversion rate. Why hasn't this happened sooner?
How will anti-trust laws play into this equation with Zocor and now Zoloft? Will Big Pharma's undercutting of generics in terms of pricing be enough to bring out the anti-trust lawyers? Are anti-trust laws even a concern? Are they only a concern during the 180-day exclusivity window granted by the Hatch-Waxman act?
How will developments like these play into anti-trust law and brand-generic competition in the future?
Thanks for your time,