Generic medicines are touted as a cost-saving tool, but formulary tactics stand in their way. A new report from the Association for Accessible Medicines says years can pass between FDA approval of a “first generic” and its inclusion on a majority of Part D plan formularies.
If generic drugs are supposed to be a smart cost-saving alternative for patients and health plans, why aren’t they made available more quickly on Medicare Part D formularies?
That’s the key question raised in a September report by the Association for Accessible Medicines, a trade group for manufacturers of generics. It found an average lag of almost three years between FDA approval of the first generic copy of a brand-name medicine and its inclusion on half of all Part D formulas.Some lag in coverage of first generics is to be expected, according to Joseph Ross, MD, a Yale University professor of medicine and public health. “For instance,” says Ross, “it could take a year if the branded product manufacturer offers the PBM a rebate to keep the drug in Tier 2, precluding adding the generic to the formulary at any time during the rest of the negotiated year.” Then, says Ross, the generic gets on the formulary the year afterward.
“I’m not saying it’s right,” he continues. “I’m just saying that PBMs are likely weighing the financial value of the rebate for X number of months before the generic is available versus the cost savings that comes with generic use.”
Despite generics’ poor showing on formularies, Dusetzina offers a word of caution about drawing too many conclusions, as the report offered bottom-line numbers, but no specifics on which medicines failed to get placed on formularies or how the data were examined.
“It doesn’t look good for generics, but we also can’t tell the scope of the problem,” she notes. “We should be concerned about the findings, but we do need more transparency about which drugs are getting on formularies and which ones aren’t. More details would help us make smarter decisions about where the problems are and how to address them.”
FDA wanted more competition; study finds competition wanting.
Two years ago, the FDA published a long list of branded drugs that are off-patent but have no generic competition. That’s a formula for price hikes in a monopoly situation, so to jumpstart generic competition, the FDA also announced that it was setting up a system for hastening the review of generics that would take on those branded drugs.
The press release quoted Scott Gottlieb, MD, then the FDA commissioner, as saying that getting “safe and effective generic products to market” and removing FDA obstacles in the way would help “make sure that patients have access to more lower-cost options.”
A study of generic approvals published in JAMA Network Open last month suggests that the FDA policy has had a limited effect.
Between July 2016 and December 2018, the number of generic drug applications approved by the FDA increased only slightly, according to the study, which was published as a research letter.
On a quarterly basis, the number of approvals started at 133 during the third quarter of 2016, increased and then dipped to 102 in the first quarter of 2018 before climbing to 262 in the fourth quarter of last year. Overall, their numbers shows a rising trend line.
But If stirring up competition was the goal, then this research suggests there is more work to do. Of the 1,832 approvals identified by the researchers, only about a fifth (20.4%) were for generics that would be entering a “limited competition” market, which the researchers and the FDA defined as three or fewer approved generic competitors.
The lead author, Kuo Jiao, who was at the Yale School of Public Health but is now at Fosun Pharmaceuticals in Princeton, N.J., and her colleagues acknowledge that one limitation of this research is the focus on FDA approvals. It makes sense from a practical point of view because the data about approvals is readily available and easily tabulated. But many drugs approved by the FDA never get on the market. Looking just at approvals may suggest that there is more competition than there really is.
About a week after Jiao’s research was published, the FDA countered with an announcement that the agency had approved a record number of generics during the 2019 fiscal year. The announcement said the agency had approved 1,171 generic drug approvals—236 of them are tentative, however.
Ed Silverman founded the Pharmalot blog and has covered the pharmaceutical industry for 20 years.
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