Growth in Generics and Specialty Drugs

Minneapolis—Although growth in the US pharmaceutical market slowed from a 5.2% sales increase in 2009 to a 2.3% sales increase in 2010, the market was “pretty resilient,” according to Doug Long, MBA, vice president of industry relations at IMS Health, Inc. However Mr. Long wonders if that resilience will only be in the short-term, as trends in the pharmaceutical market foretell a difficult future for branded drugs and low contribution of new products. Mr. Long spoke at the AMCP meeting during a contemporary issues session titled Emerging Issues and Trends in Healthcare and Managed Care Pharmacy. Rapidly replacing branded drugs are generics, which are growing 4 times faster than total growth, and increased by 21.7% in 2010, whereas branded drugs declined by 0.7%. And this growth is expected to explode after $33 billion worth of branded drugs lose their patent exclusivity in 2012, with generics potentially making up 86% of pharmaceuticals in 2015. Although Mr. Long said that the growth in generics will result in cost-savings and be good for the consumer in terms of lower copayments, he also emphasized this highlights a noninnovative market that has been going on since the growth in new products that occurred from 2002 through 2007. Along with a growth in generics, going forward there will be an increased focus on specialty drugs that have grown twice as fast as overall growth, increasing by 5% in 2010 while primary care drugs increased only 0.5%. Globally, antipsychotics grew by 9.2%, autoimmune agents by 15.3%, antidiabetics by 12.7%, and HIV antivirals by 14.4%. Although oncologics grew by 7.4%, Mr. Long emphasized that since 2006 the volume of oncology drugs has slowed because of the slowdown in the economy as well as several agents maxing out on their indications. One area of new innovation for specialty drugs, he said, will be product launches for new delivery systems. Mr. Long cautioned that more innovation will be lost than gained in the next few years if the approvals by the US Food and Drug Administration (FDA) remain at the current level. New product submissions to the FDA fell to 24 in 2008 from 34 in 2007, and the 26 new chemical entities’ approvals in 2008 occurred in a challenging environment. Contributing to this challenge was the increasing number of drugs with restricted market access due to FDA-required risk evaluation and mitigation strategy (REMS) programs. Currently, 71 traditional drugs and 68 specialty drugs have REMS programs. Further restricting market access is the requirement for some drugs to meet Elements to Ensure Safe Usage, particularly affecting those in the specialty market. Contributing to REMS going forward will be data from comparative effectiveness research and data that will be increasingly available in the marketplace and influence regulation and reimbursement. Finally, Mr. Long emphasized the primary role that government will play going forward to, among other things, implement healthcare reform, set generic user fees, deal with generic approval backlogs, and manage Medicare Part D. The big unknown for 2014, he said, will be whether there are sufficient funds for Medicaid.