The truth about generic drugs… may not be quite so pretty

In The truth about generic drugs Fortune magazine reports on its interview with Jacqueline Kosecoff, who runs the pharmacy benefit management (PBM) unit of United Health, called Prescription Solutions. This PBM, like others, wants to drive generic utilization since it’s more profitable for the PBM and less costly for their employer and health plan customers. Prescription Solutions just released a survey, which is designed to push generics.

The findings reveal that Americans don’t really understand that there is a huge cost difference between brand and generic medications. That’s an interesting finding that I would not necessarily have expected.

But there’s another key finding that’s also interesting:

Nearly one-third of Americans do not know or believe that generics have the same active ingredients and effectiveness as brand name drugs.

I’m definitely a supporter of generics from a public policy standpoint. The price differential is so great that we really need to be using generics. And when I need a prescription I allow the pharmacist to substitute a generic.

However, in this case it’s possible that public’s hunch may be equally on target as the expert’s view. I’ve done consulting work for the manufacturing operations of big pharma companies. I’ve toured their facilities and have also toured those of generics manufacturers. I’ve seen that big pharma often struggles to meet its specs, even when it has plenty of resources to apply. If that means scrapping product that isn’t quite right they’ll do it.

Meanwhile there’s a reason Wal-Mart can sell generics for $4. And the reason is that generic manufacturers focus ruthlessly on cost, whereas big pharma is much more focused on security of supply and is less worried about manufacturing cost.

I’m not saying that all products made by big pharma are high quality and those made by generic companies are low quality, but I do worry about quality when there is such an imperative for generic companies to keep costs as low as possible. And while the public’s view may not be based on firsthand experience –and is counter to what the experts say00 it doesn’t mean it’s wrong.

June 25, 2009

One thought on “The truth about generic drugs… may not be quite so pretty”

  1. Often when one goes to seek medical attention from a health care provider, that provider usually writes a prescription for that patient for medication to either treat the symptoms of the disease that may be present.

    Or, the health care provider may actually cure the disease, as with the case regarding antibiotics.

    Also, the provider may prescribe medications to delay the progression of a disease that may exist with their patient.

    The actual cost of that medication the patient receives from a pharmacy can vary greatly, and here is why:

    More now than in the past, generic medications have been encouraged and selected by prescribers at a much higher rate.

    Health care providers are aware that generic drugs are less expensive than branded drugs that are equivalent to the generic drug prescribed as far as safety and efficacy are concerned.

    Nearly two thirds of all medications prescribed to patients in the United States are now for generic medications.

    Generic medications are bioequivelant copies of branded medications that previously existed, yet no longer have a patent on these medications, which allows generic drug companies to produce these formally expensive drugs and a much lower cost.

    Why aren’t generic medications prescribed all the time, then?

    The branded drugs have their company sales representatives who leave samples of these branded medications with the health care provider, with the intention and belief that this provider will select this branded drug as a result.

    Generic medications, while much less expensive than branded medications, do not have samples of these drugs to be left with health care providers.

    Around 4 billion prescriptions filled every year, so cost savings is rather important.

    Generic medications are about two thirds of this total pharmaceutical market with the drugs included in this market.

    However, while most prescriptions are for generic medications, this still is less than 15 percent of the total money spent on prescription drugs.

    With branded medications, about 75 percent of these newly approved drugs by the FDA are similar in efficacy as drugs that already exist in this market, so there is no benefit with many of these expensive branded drugs.

    Roughly half of all newly approved prescription drugs have had serious side effects soon after they have been approved, so newer is clearly not always better, of course, as it relates to safety for the patient taking the drug.

    Most recently, certain managed health and prescription providers have been actually paying doctors to initiate if not switch their patients from branded medications they may be taking to generic medications, if possible.

    This may be due to a reaction caused by branded pharmaceutical companies offering similar inducements to health care providers to select their promoted medications.

    Both financial inducements that occur are remarkably legal, overall. Yet I find financial inducements in health care inappropriate and unethical when a health care provider treats a patient with prescribing medications for them.

    Not long ago, generic drugs were not prescribed that often, or produced to a great degree, because of the cost of bringing such a med to the market, which at the time required the same clinical trial protocols as branded meds.

    Fast forward to 1984, as this is when the Hatch-Waxman Act was introduced.

    This Act only required generic meds to demonstrate bioequivalence to the branded med that they desire to reverse engineer.

    So nothing else was now required in the approval process that is mandated by branded medications to be completely developed and approved by the FDA.

    This reduced cost of generic manufacturing and approval allowed for more of these meds to saturate the pharmaceutical market, and doctors started prescribing more generic meds as a result.

    Branded pharmaceutical companies were not pleased in large part with this new act.

    So some drug companies devised schemes to extent the patents of their branded meds through such tactics as altering their existing branded medication by combining it with another generic drug from another class of medications.

    This tactic is referred to as evergreening, and the tactic extends the patent life of their branded drug of concern.

    Additional branded drug company tactics include frivolous patent infringement lawsuits, which delays generic availability for a longer period because of these lawsuits.

    Also, branded pharmaceutical companies have been known to actually pay generic manufacturers to not release the equivalent of a branded medication they wish to continue to promote.

    The pharmacies that fill the prescriptions for the patients written by the health care providers support generic use, as pharmacies make more money off of generic prescriptions they fill for others compared with branded drugs.

    Generics seem to remain a concern to branded companies in spite of their efforts of avoiding their access into a market they believe to own.

    Recently, branded pharmaceutical companies have either purchased smaller generic drug companies, or have started to produce generic medications on their own.

    This is due to the progressive impact generic drugs are having on the business of branded drug companies.

    Also, other reasons for increased generic prescribing may be due to the awareness and clinical experience of the previous branded med that has now been replicated by the generic medication.

    Again, newer drugs at times are not a desirable choice of treatment for patients because of understandable concerns by the prescriber.

    One particular concern is safety that has not fully established with a new medication.

    The familiarity of the generic drug accessible to them after the patent expiration of a branded medication the prescriber has utilized often in the past with treatment success for their patients allows the prescriber to utilize the generic equivalent not that it is available often.

    Many clinical studies have proven that generics are as effective compared with branded medications for particular disease states.

    The cardiovascular disease trial called the ALLHAT trial showed this. In this trial, with surprise to many, the old class of drugs called diuretics showed equivalence if not superiority over the branded medication utilized in this trial.

    This comparative effectiveness trial lasted over four years, and was funded mostly by the NIH.

    Most encouraging for even greater use of generic meds is that at least one company has created vending devices for doctor’s offices for dispensing both generic and over the counter drugs.

    This may discourage the use of branded equivalent drugs at a greater amount with generic samples available with this method.

    In addition, and in some cases, doctors can order generic samples from the manufacturers directly.

    Both mechanisms for obtaining samples of generic drugs by a health care provider remain quite rare, however.

    Then there are some health care providers who insist that you get what you pay for, so they are convinced that branded drugs are always more efficacious and tolerable than generic medications.

    This misconception is largely a fallacy, as both are determined to be bioequivalent, since the generic drug has to show this in order for the drug to be authorized for use by prescribers.

    Efficacy differences may exist, but are thought to be minimal.

    I’m sure it’s possible others have encouraged such doctors to take such a stance that is absent of evidence.

    In the U.S. Health Care System, cost is a rather large concern for members of the public health, and those who attempt to restore their health as it needs to be at times.

    Generic medications provide financial relief for patients in need of drugs to improve their health.

    And both the health care provider as well as the patient can be assured that a generic drug prescribed to, and taken by, a patient will provide the efficacy needed to address the medical problems of the patient.

    More importantly, the patient saves money, without compromising their safety,

    Dan Abshear

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