With big drugmakers' love affair with America is expected to come to an end with the patent expiration of their profit reaping blockbuster drugs and failure to introduce new innovative pharmaceuticals to the market, the doors of this much proclaimed Food and Drug Administration (FDA) heartland seem to be wide opened to welcome an era of (intense competition of) low-cost generic drugs.
Though the United State of America (USA) is already the world's largest generics market with around 42 per cent of global sales, its pharma industry has so far been riding on the shoulders of expensive brand name drugs. As per the available figures, Americans spend around $275 billion a year on prescription medications, most of which is on costly branded pharmaceuticals.
Now, with several so called revenue earning blockbuster drugs going off patent and new healthcare policies that favour the use of more generic drugs to mitigate the expense of prescription drugs in place, the US generics drug market is learnt to grow by leaps and bounds in the next few years. According to industry players, the generic alternatives are on average 50 per cent cheaper than brand name drugs and in some cases 70 per cent cheaper than branded medicines.
"The imminent patent expiration of several major drugs, including that of Pfizer's Lipitor, Novartis' Diovan, Eli Lilly's Zyprexa and Bristol-Myers' Plavix and Avaparo during 2009-2013 in major markets like USA, will surely act as a major growth stimulus for the generics companies and help them capture a handsome market share from these multi-billion dollar drugs," said an industry player requesting anonymity.
"There will be tidal wave of generics drugs. And we are just in the beginning of that tidal wave. More now than in the past, generic medications have been encouraged and selected by prescribers at a much higher rate. Healthcare providers are aware that generic drugs are less expensive than branded drugs and are equivalent to them as far as safety and efficacy are concerned," said another industry player.
Once the US pharma market opens up more to generic competition, it would surely be another nail in the coffin of the cash-rich but innovation poor Big Pharma, who were so far enjoying the fruits of America's liberal policy on pricing of innovative drugs. In its attempt to encourage innovation, America through its liberal policy almost allowed the leading drug companies to price their products more or less as they please, helping them draw half of their profits from the USA alone. Now, the drug majors may have to substantially reduce the prices of their revenue earning products (after the expiration of patents) in order to beat the heat of generics competition or may have to rely on their tricky game of line extensions of patented drugs to sustain in the market.
To make things look too grim, the President Barack Obama has been, of late, too vocal about affordable drugs and care, thanks to the heat of the current downward dive of the global economy.
In another blow on the face of the patent holding pharma majors, the Obama administration is learnt to lower the drugs costs by allowing importation of safe medicines from other developed countries, increasing the use of generic drugs in public programmes and taking on drug companies that block cheaper generic medicines from the market. No doubt, these moves speak volumes for the US President's soft stand on generics.
"Some big drug manufacturers were tactfully making attractive payments to generic drug makers to not to enter the US pharma market to protect their monopolies and keep charging Americans exorbitant prices for brand name products. Obama's plan will work to increase the use of generic drugs in the country through new public plans like Medicare, Medicaid, Federal Employees Health Benefit Programme (FEHBP) etc and prohibit large drug companies from keeping generics out of markets," said an industry expert, who is familiar with the developments in the US healthcare front.
Also, the general feeling that the Congress will pass an approval pathway for follow-on biologicals or biogenerics this year is another indication that the US pharma market would now be a playing ground for generic version of drugs than for branded innovative pharmaceuticals.
If the Congress brings about a legislation in favour of biogenerics (also known as biosimilars), it would be like breathing a new life into the hearts of Big Pharma, who are now in a biotech acquisition spree to exploit this nascent front and make up for the revenue loss due to patent expiry. Hence, the move would not only facilitate an affordable drugs regime, but also revive the spirits of the pharma majors with bleak research and development (R&D) prospects, who are already facing patent expiry of their blockbuster drugs.
In yet another effort to bring in an affordable drugs regime in the country, the zealous US President is also learnt to increase the importation of generic drug and active pharmaceutical ingredients (APIs) from the emerging overseas markets. However, to fully realise Obama's goal of increasing the availability of safe generic drugs, the government and the FDA have to reportedly make a conscious effort to invest heavily in both personnel and monetary resources.
"Obama's plan to increase the supply and use of generics represents a great opportunity for generic drug manufacturers, especially those in the emerging markets such as India and China. This is a win-win situation for these countries and the US, as it would increase India's and China's market share of the generic drug market, while the US would have additional suppliers of low-cost, safe and high quality generic drugs," apprised the industry player, who requested secrecy.
GPhA 2009 MEET
At a time, when the US pharma market is all set for a smooth sailing of generics drugs, the Generic Pharmaceutical Association (GPhA) of USA is all set to host its annual meeting at The Ritz-Carlton, Naples, Florida from February 23 to 25, 2009 in an attempt to provide a dynamic forum for exploring the opportunities and challenges that will define the future of generic industry and American health care.
"GPhA 2009 would focus on the role of the generic pharmaceutical industry in defining the future of American healthcare," said the organisers.
The GPhA represents the manufacturers and distributors of finished generic pharmaceutical products, manufacturers and distributors of bulk active pharmaceutical chemicals and suppliers of other goods and services to the generic pharmaceutical industry. GPhA's core purpose is to improve the lives of consumers by providing timely access to affordable pharmaceuticals.
This year's event is expected to draw attention from both the industry and the administration as it celebrates the silver anniversary of the landmark Hatch-Waxman Act, which for 25 years has brought more affordable medicines to millions of Americans.
The Drug Price Competition and Patent Term Restoration Act (1984), usually referred to as the Hatch-Waxman Act, promoted generics, while leaving in tact a financial incentive for research and development. It allowed generics to win FDA marketing approval by submitting bioequivalence studies. The name Hatch-Waxman Act comes from the Act's two sponsors, representative Henry Waxman of California and senator Orrin Hatch of Utah.
GPhA annual meeting usually gathers thousands of attendees to learn how critically the economic, regulatory and legislative issues would impact the generic industry and the entire pharmaceutical sector and the ways to overcome those vexing issues. As usual, the event would feature Business Expo hall, offering the exhibitors more networking time with key industry decision makers.
"Each year we bring leading speakers from Wall Street, Washington DC and across the globe. We also offer unparalleled networking opportunities, making GPhA annual meeting the generic industry's event of the year," the organisers said.