Is It Time For Branded Biopharmaceuticals To Get Into The Business Of Generics?

By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL

Back when I worked for a branded pharmaceutical company, I remember the perils faced when a branded product was soon to go off patent, and companies took a variety of steps to stave off the inevitable. For example, when my former employer Organon was soon to lose patent exclusivity for its antidepressant Remeron (mirtazapine), the company was able to get a short patent extension by bringing to market a new form of delivery — a dissolvable tablet. This was not an ingenious innovation. Nonetheless, it provided the company with an additional six months of patent protection, and the U.S. sales force proceeded to sell clinicians on the benefit of prescribing Remeron Soltab versus Remeron. One of the benefits for the product’s targeted market (i.e., depressed patients 60 years and older) was that it dissolved in the mouth, making it “supposedly easier” for an older patient to take. I say “supposedly easier,” because anyone who had ever tried to open Remeron Soltab’s blister packaging, which was necessary to keep each individual dissolvable tablet in the form of a tablet, knows how difficult it was to open. I imagine the blister pack was even more difficult to open for the target market, as they were more likely to suffer from varying degrees of arthritis. That being said, there was another benefit the sales team could easily sell physicians on — branded Remeron Soltab actually cost less than the branded Remeron. But eventually, the product lost its patent protection, sales declined, and a whole bunch of people got laid off.

Why Do We Play The Patent-Extension Dance?

There are a variety of valid business reasons behind why biopharmaceutical companies have employed such patent-extension practices, such as maintaining profits or retaining employees until the next branded drug receives an approval (which, unfortunately, at Organon did not happen soon enough), just to name two. But what isn’t often discussed is the role played by The Hatch-Waxman Act of 1984. While its intent was aimed almost entirely on making low-priced generics available more quickly (which it did), it also provided pharmaceutical manufacturers an incentive to introduce reformulations of existing products about to lose patent protection in order to extend marketing exclusivity and maintain high prices (which it also did). The greatest management principle of the world states, what gets rewarded gets done, and no place is this more evident than in the biopharmaceutical industry. This is why during the days of “me-too” drug development we saw a number of reformulated antidepressants, including (but not limited to): Paxil CR, Wellbutrin SR, and Wellbutrin XL, all manufactured by GSK; Lexapro, manufactured by Forest Laboratories; Effexor XR, manufactured by Wyeth Pharmaceuticals; and Prozac Weekly, manufactured by Lilly.

In the mid-2000s, when much of this reformulation was taking place, the price difference between a branded versus a generic product was still significant. For example, in 2009, online drugstore.com shoppers paid $106.99 for a 30-day supply of the minimally-therapeutic dose of Paxil CR versus $13.99 for a similar dose of generic paroxetine. But perhaps “high-priced drugs” wasn’t quite the hot-button issue it has since become. For example, during the January 30, 2018, State of the Union address, President Trump stated, “One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States and it’s very, very unfair. That is why I’ve directed my administration to make fixing the injustice of high drug prices one of my top priorities for the year.” And while previous Presidents may have made similar pronouncements, Trump’s somehow feels much more believable, and I hope the biopharmaceutical industry is taking notice.

Something I’ve Never Understood

If a company is the inventor of a drug (which Organon was), and that company manufactured it exclusively throughout the life of the product’s patent (which we did, though some may have been outsourced), how then was Organon unable to compete against generic manufacturers, which should have had zero years of experience in manufacturing the product we invented? I mean, you’d think the company that had exclusively manufactured a product for a number of years should know how to do it in the most cost-effective manner and be able to do so profitably, albeit not as profitably as they could when it was as a brand without any competition. So why then did branded companies seem willing to simply walk away from a product it had created that had brought so much value? After all, wasn’t it developed and launched to meet an unmet medical need? And just because a product has gone generic doesn’t mean the medical need has gone away.

Again, it goes back to the greatest management principle in the world — what gets rewarded gets done. Because today we are seeing branded companies previously unwilling to compete against generics, tripping over one another to compete on biosimilars (i.e., generic biologics). And let’s be honest, the biosimilar “me-too” movement of today isn’t being done for the benefit of patients (though patients will benefit) or to meet an unmet medical need (for hasn’t the need already been met). These companies are willing to compete on biosimilars because they have the resources, and are going to make enough money/profit to make it well worth their while. But what these companies seem to be failing to realize is the impact such money-motivated moves have on the industry’s brand equity with consumers. In a 2016 Gallup poll of the public’s perception of 25 industries, the pharmaceutical industry achieved a net score of -23! The only industry that ranked below biopharma was the federal government, which tallied a -27. In Gallup’s 2017 poll, pharma once again ranked second from the bottom. Perhaps it is time for branded companies to think about competing in the manufacture, sale, and distribution of generic (i.e., small molecule) drugs, and to consider doing so, if for nothing else, altruistic reasons that they will actually benefit patients. And in doing so, maybe, just maybe, they might help slow biopharma’s negative-reputation tailspin. For falling drug prices on older generics has resulted in drug shortages, which has certainly created a medical need that is not being met! Unfortunately, biopharma has consistently demonstrated an inability at self-regulation (e.g., unethical marketing practices resulting in the Sunshine Act).

If we want more generics and lower prescription drug prices, we either need to create incentive programs that encourage the behaviors we desire, or create burdensome disincentives that discourage the behavior we have.