This article is more than 5 years old. Information may no longer be current.
Experts reveal ‘troubling’ industry-employed strategies to delay availability of generic cancer drugs
Click Here to Manage Email Alerts
Pharmaceutical companies have employed several strategies — including reverse payment, patent settlements and “product hopping” — to prevent affordable generic cancer drugs from entering the market, according to a forum article published in Blood.
These tactics also have led to an increase in drug prices so that, if available, generics can cost nearly as much as the branded product.
Hagop M. Kantarjian, MD
“These tactics are troubling for patients and oncologists because they prevent the access of much-needed drugs at reasonable prices,” Hagop M. Kantarjian, MD, professor and chair of the department of leukemia and associate vice president for global academic programs at The University of Texas MD Anderson Cancer Center, told HemOnc Today. “Because of strategies that are used to delay generic drugs and create longer monopolies, we have a situation in the U.S. where even the eventual availability of the generic has not helped us much.”
The high cost of pharmaceuticals — which, in some cases, can exceed $100,000 per year — can affect public health spending and patient well-being. One in five patients with cancer have admitted to not filling necessary prescriptions due to cost, according to Kantarjian and colleagues.
Generic drugs, however, are intended to offer an as effective, yet affordable, alternative. They produced a savings of nearly $1.5 trillion for the U.S. health system between 2004 and 2013.
Generic options may become available when the patent for the brand-name drug expires, which is usually 20 years from the date the patent application is filed with the U.S. Patent and Trademark Office.
In 1984, the U.S. Congress passed the Hatch-Waxman Act, which proffered a process by which generic manufacturers could file an Abbreviated New Drug Application for FDA approval of a generic drug.
However, generic cancer drugs remain inaccessible for a large subset of patients, leading to higher expenditures. In 2013, the U.S. spent nearly 40% more per capita on pharmaceuticals than Canada, the second highest spender.
In their article, Kantarjian and colleagues outlined the avenues that pharmaceutical companies pursue to impede the introduction of generic drugs and suggested solutions to support timely access to affordable generic alternatives.
Pay-for-delay
One tactic employed by pharmaceutical companies to stall the availability of generic drugs is reverse payment, or “pay-for-delay.” In these instances, patent holders have confidential agreements with manufacturers of potential generic competitors that challenge the brand company’s patent to delay market entry of the generic.
The delay of a generic form of the leukemia drug imatinib (Gleevec, Novartis) provides an example of pay-for-delay, Kantarjian told HemOnc Today in an interview.
“The patent for imatinib was supposed to expire in July of 2015,” Kantarjian said. “Novartis made a deal with Sun Pharmaceuticals — which was the first company that would introduce the generic to the U.S. market — thereby delaying the introduction of generic imatinib by another 6 months, until February 2016.”
A generic version of imatinib was introduced on Feb. 1, 2016, according to Kantarjian; however, the generic version has 180-day exclusivity in the U.S. This, therefore, results in an additional 6-month period where only two companies — Novartis and Sun Pharmaceuticals — decide on the prices of these drugs.
“Because of these arrangements and perceived ‘oligopolies’ that persist for another 6 months, the generic company was able to set the price of the generic at 70% of the patented price for an additional 6 months,” Kantarjian said. “The yearly cost of imatinib is around $130,000, so the generic cost will be about $90,000, which is what the patented drug cost us just 2 years ago. Moreover, the effective additional 1 year of high drug price extension will cost the U.S. health care system up to $3 billion for this one drug, and prevent thousands of patients from having access to an affordable drug.”
The Federal Trade Commission has estimated that pay-for-delay settlements cost taxpayers, consumers and insurance companies approximately $3.5 billion per year. The U.S. Supreme Court and state Supreme Courts have posited that these payments could violate antitrust statutes.
However, other courts have constricted antitrust liability by ruling that only payments in cash can be considered antitrust violations.
“Pay-for-delay strategies are increasing, which is one of the reasons that the Federal Trade Commission is looking into antitrust measures,” Kantarjian said. “This is an example of how good legislation like the Hatch-Waxman Act is subverted by drug companies to delay the availability and the affordability of generics. Even though generic imatinib is now available, it is not affordable.”
In a statement provided to HemOnc Today, Eric Althoff, head of global media relations at Novartis, said: “The Novartis Pharmaceuticals Corporation settlement with a subsidiary of Sun Pharmaceutical Industries Ltd. included several Novartis patents covering the use of certain polymorphic forms of Gleevec (imatinib mesylate), which expire in 2019.
“The settlement was pro-competitive as it allowed Sun Pharma’s subsidiary to enter the market on Feb. 1, 2016, several years prior to the expiration of these patents. Novartis recognizes the importance of generics in reducing health care costs and is the first health care company with a global leadership position in both patented prescription and generic pharmaceuticals.
“Novartis understands that the cost of medicines can be challenging to patients and we are committed to helping ensure that patients have access to their medicines through a combination of our own patient assistance programs, as well as contributions to independent copay foundations.”
Product hopping
In addition to pay-for-delay, the process of “product hopping” has also been used to delay the availability of generic drugs. In these situations, manufacturers change the market for a brand-name drug prior to its patent expiration to obtain a later-expiring patent.
However, these venue changes offer little or no therapeutic advantages, according to Kantarjian.
“When a drug’s patent is about to end, the company will ‘develop’ a new drug that is essentially the same, but they will modify minor elements that do not improve the efficacy or reduce the toxicity,” Kantarjian said. “These are usually dosages or schedule changes, or minor formulation modifications. It is then common for them to receive a patent of 20 years and to heavily introduce the drug to the market at an equivalent price, and they encourage doctors to switch their patients to the new drug. Then the company removes the old product from the market just before the patent is set to expire.”
Pharmacists are barred from substituting a generic drug if there is no patented equivalent available at the same dosage. The practice of product hopping and removing soon-to-expire drugs from the market makes generics inaccessible for many patients, Kantarjian said.
“Over more than a decade, Abbott Laboratories produced several bioequivalent formations of fenofibrate, already in generic form,” Kantarjian and colleagues wrote. “Through a complex switching approach involving the sequential launch of branded reformations not superior to the first generation product and patent litigations to delay the approval of the generics, the maneuvers were estimated to cost the U.S. health care system about $700 million a year.”
Further, historically only 10% to 20% of patients who are forced to switch from a drug with a near-to-expire patent to the new formulation will go back to the generic once it becomes available, they wrote.
A strategy combining product hopping and patent settlements also is frequently used. By using a settlement to delay market entry to a generic, the brand firm can switch markets, sometimes adding years to the initial delay. By the time the generic enters the market, it may be hindered by substitution laws.
Other delay tactics
Pharmaceutical industries also have made efforts to bar U.S. patients from seeking generic drugs available in other countries.
According to the authors, a yearlong course of imatinib costs $132,000 in the U.S. market in 2014. In Canada — where three generic versions of imatinib are available — a yearlong course cost of the patented identical imatinib drug produced by Novartis is only $38,000. In Ontario, generic imatinib costs $8,800 yearly.
However, Section 708 of the FDA Safety and Innovation Act prohibits the cross-border importation of generic drugs, forcing the destruction of legal, imported drugs for individual use.
“Drug companies lobby our elected representatives to block the importation of foreign drugs for personal use,” Kantarjian said. “They allege that it is dangerous for the health of the patients, which has been proven untrue. So instead of buying generic imatinib from Canada at $8,000 a year, we have to buy the available American generic at $90,000. Many patients cannot support this kind of out-of-pocket expense, and they decide not to take the treatment.”
Other times, drug companies simply buy out competing companies, allowing them to increase the prices of the company’s drugs immediately.
Kantarjian and colleagues cited the highly publicized example of when Turing Pharmaceutical acquired the manufacture of pyrimethamine (Daraprim) — a 60-year-old drug used in the treatment of toxoplasmosis — and raised the price per pill from $13.50 to $750 last year.
This is an issue that extends beyond Turing Pharmaceuticals, according to Kantarjian.
“The pharmaceutical industry has tried to make it look like this is just something that happened with a few rogue companies,” he said. “Turing is one of the most extreme cases, but this is happening more often than we realize. Companies are establishing generic monopolies and jacking up prices because they have no competitors.”
These price-gouging tactics are linked to the profit increases associated with drugs developed to treat so-called “orphan” diseases, conditions that affect fewer than 200,000 people in the U.S, Kantarjian said.
“In the past, the government gave support to develop drugs for these conditions,” he said. “The idea was that you were not going to make a lot of money on these conditions, so the investment would pay out in tax deductions. However, because of the high drug prices now, these drugs for orphan indications are becoming blockbusters.”
Turing Pharmaceuticals provided a statement to HemOnc Today that states: “Dr. Kantarjian’s assertion is misleading. Turing Pharmaceuticals has done nothing to delay entry of a medicine to market. Further, there is no single price for our medicine Daraprim. The medicine is used by about 3,000 patients per year in the United States. Two thirds of this total access their medicine through state or federal health programs that pay Turing 1¢ per tablet ($1 per 100-tablet bottle). Turing receives no other income from these sales.”
Reversing the reversals
The authors concluded their paper by offering strategies to combat the delay of generic drugs in the cancer treatment arena. These included:
- allowing Medicare to negotiate drug prices;
- developing mechanisms to propose fair prices for patented and generic drugs, dependent upon treatment value;
- monitoring and penalizing anticompetitive pay-for-delay strategies;
- allowing the importation of foreign generics for personal use;
- monitoring potential buyouts of generic drug manufacturers by companies attempting to establish monopolies; and
- asking drug companies to be more transparent about the cost of research development in justifying the prices charged for particular drugs.
“I would love for drug companies to be transparent about the costs of their research,” Kantarjian said. “There are a lot of ancillary measures that inflate the supposed ‘cost of research’ that drug companies use, that actually have nothing to do with research itself.”
Other than Novartis and Turing Pharmaceuticals, the pharmaceutical companies mentioned in this article have not replied to HemOnc Today’s request for comment. – by Cameron Kelsall
For more information:
Hagop M. Kantarjian, MD, can be reached at hkantarjian@mdanderson.org.
Disclosure: Kantarjian and colleagues report no relevant financial disclosures.
Perspective
Back to Top
Samuel M. Silver, MD, PhD
I thought that I was relatively sophisticated and up to date on the issues of drug expense in the United States. That was until I read a recent paper, “Strategies that delay or prevent the timely availability of affordable generic drugs in the United States”, by Jones, Carrier, Silver — no relationship, but he was one of my professors in medical school — and Kantarjian, released in prepublication in Blood’s first edition.In this paper, the authors discuss that high cancer drug prices are influenced by the availability — or nonavailability — of generic cancer drugs in a timely manner. At least in theory, the timely availability of generic cancer drugs increases affordability for many patients with cancer.
The authors go into detail on the Hatch-Waxman Act, which deals with the approval of generic drugs by the FDA. This bill was meant to encourage competition and lower prices by allowing the timely availability of generic drugs. However, there are many loopholes that pharmaceutical patent holders can legally — or, as it appears, maybe not so legally — employ. The authors detail pay-for-delay patent settlements, in which the brand company delays the generic drug entry in the market by paying the generic company to delay. They discuss authorized generics, a process by which the brand pharmaceutical companies market their own generics under a different label. Such generics can be used as a coercive tool in addition to pay-for-delay settlements, in which the brand company promises not to introduce these authorized generics that would compete with true generics.
In product hopping, the brand-name company produces a reformulated version that has a later-expiring patent, but has little or no therapeutic advantage, such as once-a-day vs. twice-a-day dosing. The authors also talk about lobbying against cross-border drug importation, or buying out the competition.
This is definitely a more legal-based paper than one normally sees in Blood. However, it is both well written and a bit scary. Most practitioners would recognize examples in their day-to-day practice in oncology.
Kasia Lipska wrote an opinion in The New York Times on Feb. 20 titled, “Break up the insulin racket.” Many of the points that Jones and colleagues make in their paper in Blood also are discussed in Lipska’s review, demonstrating that this is not just an issue in oncology, but that it is true throughout the pharmaceutical world — I say “world” because Jones and colleagues make it clear that this is not just a problem in the United States.
The paper by Jones and colleagues and the opinion by Lipska should make interesting reading by anyone who practices medicine. I have no problem with smart lawyers helping our industry colleagues appropriately maximize profits for industry. However, it is clear that we have now crossed over into harm for patients. The increasing prices of branded and generic drugs, along with the high copays and coinsurance issues, are making it difficult for our patients to get the drugs they need. Appropriate changes in the law and the ability for insurers, such as Medicare, to negotiate with the pharmaceutical industry have become important issues.
It is unusual for Blood to publish a paper like this, but I applaud the authors and the journal for educating the professional community on these important matters.
Reference:
Lipska K. Break up the insulin racket. The New York Times. 2016. Available at: www.nytimes.com/2016/02/21/opinion/sunday/break-up-the-insulin-racket.html?_r=0. Accessed Feb. 26, 2016.
Click Here to Manage Email Alerts