Pharma Trends in 2018: Generic Drugs in “Race to the Bottom,” Biosimilars Fail to Launch, Market Access Faces Challenges

During his presentation at the AMCP 2018 Annual Meeting, “2017-2018 Pharmaceutical Marketplace Trends,” Douglas Long, BS, MBA, vice president of Industry Relations at IQVIA, outlined the market trends impacting the pharmaceutical industry—notably trends in generics and trends in market access.

Generic Uptake and Biosimilar Adoption 

According to Mr Long, a key recent happening in the managed care pharmacy space is the recent increase in generic launches. In 2017, there were a record number of abbreviated new drug application (ANDA) launches and they increased in pace as well. Among these generic drugs there were applications for versions of major branded products, including Cialis (tadalafil; Lilly), and Glatopa (glatiramer acetate injection; Sandoz). 

“If you look at the headlines, generics had a great 2017,” Mr Long said during his presentation. “Well, that depends what side of this equation you are on, to determine whether this was a great year. And I would say it was only a great year in one thing and that was actually approvals. For everybody else, it was a lousy year.”

Mr Long noted that there were a few key events in 2017 that impacted the generic space negatively. He cited data showing that the dollar share for unbranded generic products decreased for the third year in a row to 13.3%—with dollar sales down for 19 consecutive months. 

According to Mr Long, in 2017 there were 767 ANDA approvals; however, only 73 of these drugs were unique approvals.

“That meant most of the remaining 90% were mostly in already crowded marketplaces,” he said. “So if you’re the ninth, tenth…25th player in a generic molecule—all that does is drive down prices.”

This means that while generics dominate the marketplace in terms of prescriptions dispensed, the market share remains extremely low due to the pricing discrepancies between these drugs and branded products. Generics make up 86% of the prescriptions dispensed, according to Mr Long, however, they only make up 13% of the market share.

Mr Long referred to the situation facing the generic drug market as a “race to the bottom.” 

“The idea when you have a race to the bottom is that only four of the top 20 generic companies had dollar growth in the marketplace,” he said. This combined with a concentrated buying power of three generic purchasers controlling 90% of the market share result in significant price deflation in this space.

As a result, Dr Long noted that the market is in a bit of a panic trying to sell off their solid oral generics businesses. He further explained that in the fourth quarter of 2017, 206 generic drugs received final approval but only 28 were launched. 

“People are refusing to launch,” he said. “Think about it this way, it probably cost them $10 million to get to this point, and over 5 years, and they decide not to launch. That just shows you what the dynamics of the marketplace are.”

In the biosimilar space, Mr Long noted that the potential for these products to curtail the high spending in the specialty market space is not being realized as the expensive specialty products come off patent. Drugs that are likely to significantly impact spending, such as Humira, will not see a biosimilar product launched until 2023.

Mr Long said that only three of the nine FDA-approved biosimilars have come to the market so far in the United States. He showed that uptake, represented by spending, has been very slow compared to the overall biologic spending market. Biologic spending is around $120 billion, with biosimilars making up only $1 billion. 

He noted that payers are opting to take the PBM rebates on biologics instead of purchasing cheaper biosimilar products, which will discourage future biosimilar development and uptake.

“I think that is short-sighted,” he said. “Because long term, if people don’t invest in [biosimilars] then there wont be that opportunity to take advantage of, because it costs 10 times more to bring a biosimilar to market than it does a small molecule.”

Market Access

Six issues are currently impacting market access within the pharmaceutical industry, according to Mr Long.

First, Mr Long said that stricter and more consolidated formulary management among payers is hindering access. 

Second, he explained that higher patient out-of-pocket costs due to the growing popularity of high deductible health plans is making it difficult for new drugs to get market access. This results in costs shifting from payer to the patients, with the average commercial copay increasing by 14% between 2016 and 2017. According to Mr Long, this leads more patients to abandon more prescriptions, with a 27% abandonment rate among specialty brand products with deductible. 

The third trend highlighted by Mr Long was the recent wave of pressure from the public and Congress regarding high drug prices. He explained that this makes it difficult for higher prices products to penetrate the market.

Fourth, Mr Long said that because a number of products are covered under the medical benefit, stricter management in this area is creating challenges for market access. He explained that this would involve changes to site-of-care management reimbursements, which payers will reimburse a flat rate regardless of the site of care. 

Mr Long said that the fifth key issue impacting market access is the increase in value-based plan design. He explained that outcomes-based pricing models, based in ICER value frameworks, have already impacted pricing.

Finally, market access is also being challenged by the evolving provider landscape. Mr Long pointed to the increased popularity of integrated delivery networks and accountable care organizations. He said that these organizations have gained more influence over prescribing decisions.

—David Costill