A number of traditional brand-name pharmaceuticals have lost, or will lose, patent protection this year. What does this mean over the longer-term for controlling costs?
Several noteworthy, brand-name drugs targeting various therapeutic categories are slated to lose their patent protection this year.
Among those drugs losing patent protection this year are some in the heart disease category including Crestor (AstraZeneca), Benicar (Daiichi Sankyo), and Zetia (Merck); Seroquel XR (AstraZeneca) for the acute treatment of depressive episodes associated with acute, manic, and mixed episodes of bipolar disorder; as well as four HIV drugs including GlaxoSmithKline’s and ViiV Healthcare’s Epzicom and Trizivir and Abbott Laboratories’ Norvir and Kaletra.
In addition, in December, FDA approved the first generic version of cancer drug Gleevec, from Novartis.
With a number of high-volume ‘traditional’ brands coming off-patent, there is some concern that it will now become much more challenging in coming years for plan sponsors to combat rising specialty drug costs.
Cannon
“This is an area of significant concern for our organization,” says Eric Cannon, PharmD, FAMCP, AVP, pharmacy benefit services at SelectHealth. “In 2015, we saw higher prescription drug costs and trends than we have seen previously. Pharmacy cost was the single biggest driver of healthcare expense in 2015.”
Currently, according to Cannon, SelectHealth has almost 90% generic use by our members. “However, 87% of the total increase in pharmacy spending in 2015 was due to specialty drugs. As a result, newly released generic medications will have little impact on our overall spend,” he says.
Next: More concerns
This is absolutely a concern for OmedaRx, a PBM that serves Regence BlueCross BlueShield of Oregon, especially as it proactively works to promote effective and affordable drugs for consumers in the face of rising costs, according to Jim Carlson, vice president of OmedaRx.
Carlson
“I am hopeful that we will experience some price relief through the introduction of biosimilars for select specialty drugs,” Carlson says. “However, most analysts predict that these will only result in a 15% to 20% price reduction compared to the innovator product, which is not nearly as impactful as the cost relief from more traditional generic drugs.”
Compared to previous years, Carlson doesn’t believe that the recent (Gleevec) and impending generic launches will be significantly impactful, with the exception of Crestor.
“By August 2016, we expect there will be numerous generic [Crestor]-approximately eight-on the market, which should help drop prices and bend the cost trend in the statin class,” Carlson says. “In the other instances, there aren’t a significant number of generics entering the market at this point, or enough patient use, to substantially bend the cost curve for consumers.”
Cannon agrees. “The availability of a generic alternative for Crestor will have a small positive impact on our pharmaceutical costs due to the large number of members currently using this product,” he says. “There will be marginal benefit from the generic versions of the other products, but these are not currently high-volume products for our plan.”
According to Cannon, SelectHealth typically moves the originator product to a non-preferred tier and notifies members and physicians that a lower-cost generic medication is available.
At OmedaRx, Carlson says that the PBM carefully examines new generics when they enter the market to ensure their safety and effectiveness for consumers. “When appropriate, we include these generics on our formulary as opposed to their branded, high-cost counterparts,” he says.
Over the past five years, plan sponsors have been able to significantly offset rising brand drug expenditures, particularly specialty expenditures, through the patent expiry on a number of high-volume, high cost traditional brand drugs. 2016 represents what could be one of the last mini-waves of patent expirations in the traditional drug market. As a result, in coming years, plan sponsors will be challenged to identify and deploy more creative and aggressive solutions to maintain trends at reasonable levels as the specialty market continues to expand, and inflation rates on remaining brands continue to escalate at a significant pace.
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