First generic MS drug could have big impact

FDA’s approval of the first generic version of Copaxone (glatiramer acetate injection) for treating patients with relapsing forms of multiple sclerosis (MS) has industry insiders contemplating the impact on the generics market as well as payer coverage strategies.

GilmoreManufacturer Sandoz with Momenta will market generic glatiramer acetate injection, or Glatopa, in a 20-mg/1-mL daily injection. Currently 45% of Copaxone users are on the same daily dose, while 65% opt for the long-acting 40-mg/mL three times a week injection.  There is no long-lasting generic version.

MS is a chronic disease that has no cure. According to the National Multiple Sclerosis Society, more than 2.3 million people worldwide are affected and it is estimated only about half receive treatment, in part because of the high costs of drugs necessary to manage the disease.  

“The price of Copaxone has increased...since its launch in 1996 when the cost for a year of treatment was $9,000,” according to Barbara Gilmore, Life Sciences Senior Industry Analyst, Frost & Sullivan. “In 2014, a year of treatment cost $60,000.”

GoldbeckThe approval increases the competition in this already competitive space, according to analysts. Generic Glatopa will reduce the annual cost of daily treatment of MS for some patients and may draw back some of the patients who recently switched to the long-acting version of the branded product. Patients have out-of-pocket copays with many drugs, depending on the tier the drug is placed. If the long-acting branded product has a higher out-of-pocket annual cost than the generic, some patients may choose to switch to the generic.

“The expectation is that it will drive down costs for MS treatments, but by how much is yet to be determined,” says Anna Goldbeck, a principal in the National Pharmacy Practice at Buck Consultants at Xerox. “Teva [the manufacturer] was successful [at] converting 65% or more of prescriptions for Copaxone…to the 40-mg/mL version when it became available in January 2014.  However, plan sponsors may decide to employ rules that encourage, via financial incentives, or require, participants [to] move utilization back to the 20 mg/mL for coverage to be provided.”

OpdyckeIf the two products demonstrate similar comparative effectiveness, the adoption of formulary and utilization management controls for three times per week 40-mg form of Copaxone and the generic version of the daily 20-mg form of Copaxone will boil down to net unit costs for the products, according to Ruth Ann C. Opdycke, PharmD, MS, president, TPG Healthcare Consulting LLC.  

NEXT: Bending the cost curve

But the real impact can only be felt if the generic Copaxone is significantly cheaper, says Aish Vivekanandan, Advanced Medical Technologies Industry Analyst, Frost & Sullivan.  “If it is, then the first-line treatment for MS is going to change to favor the generic drug,” Vivekanandan says.

“The price of these drugs, despite the competition, has been skyrocketing over the years, so it is possible that the approval of a generic by the FDA will keep these prices down to be more competitive. Overall, the approval of a generic is going to force players in this market to rethink pricing for their drugs, which bodes well for patients.”

Gilmore calls Glatopa “the first substitutable generic drug approved in the United States. That is, a pharmacist can substitute the drug if a drug formulary requires it. “In the European Union, several generic biologics have been approved, which cost 20% to 30% less than the branded drug,” Gilmore explains. “Though generic ‘small-molecule’ drug prices drop substantially when compared to a branded equivalent, the same has not been seen with generic biologics.”

GinestroMark Ginestro, a principal who focuses on life sciences companies at KPMG Strategy, says generic Copaxone could significantly reduce the price of a very costly product by 20% and that can fall significantly as more manufacturers make generics.

“As far as bending the cost curve in treating this condition, however, there are newer oral drugs available on the market--Tecfidera, Gilenya and Aubagio--that are in the same price range as injectable, brand-name MS treatments. While the oral drugs are newer, they may be more comfortable for patients to use. Prescription plan designers have to balance cost, efficacy and convenience, which does have a part in keeping patients on a treatment program. After all, an MS patient who doesn’t take medication faces a debilitating prognosis,” Ginestro says.

According to Gilmore, “Copaxone has done well on the market because it has a less-severe side-effect profile than other MS drugs, does not carry the warnings for suicide and depression, and does not require the same degree of monitoring as other MS drugs.”

NEXT: How will payers respond?

How will payers respond to coverage?

Unless the generic is a lot cheaper than the 40-mg dose by Teva, Vivekanandan doesn’t believe there is going to be a significant change in payer strategy.

But pharmaceutical benefit managers (PBMs) may require that new patients start on the generic product, according to Gilmore. “It is very common for copays to increase significantly for a branded product once a generic becomes available,” she says. “If a formulary moves the Teva products to a higher tier on the formulary, the patients will experience a higher out-of-pocket cost for their treatment.”

Other payers will negotiate rebates from Teva that will make the brand less expensive than the generic, explains Goldbeck. In those cases, the brand Copaxone will be dispensed as the generic at PBM-owned/mail-order pharmacies--“meaning they will dispense brand Copaxone prescriptions at the generic copay tier but will dispense the branded product.”

ShehataPayers will try to save the difference with patients by offering lower copayments/co-insurance, said Ash Shehata, the U.S. advisory leader for health plans at KPMG.  

“We’re talking about a category where a treatment costs roughly $60,000 a year and up, every year,” he said.  “So there will be an effort to encourage patients to opt for the generic, especially since Copaxone is used by so many MS patients who haven’t moved toward the oral treatments yet.”

Options about using the generic as a first-line therapy will largely depend upon employers and the philosophy they take about managing costs of prescription care, according to KPMG’s Shehata.  “Many health plans do encourage step therapy before moving patients to more expensive treatments,” he says.

“If a patient responds to a lower cost drug, it makes sense to encourage that sort of program. Many plans already have prior authorization programs for these types of specialty drugs, serving as gate keepers for the most costly treatments or they will try to steer patients to preferred brands. Historic claims data and analytic tools could help shape the payers’ approach to drive patients to the generic version of Copaxone.”

It is not outside the realm of possibility for step-therapy to be on the table, given that drug costs are skyrocketing and using a less-expensive equivalent drug first may make more economic sense,  according to Frost & Sullivan’s Gilmore. “This does not mean patients will not be able to take the more expensive version,” she says. “The patient may just cover higher copays to do so. A lot of the step-therapy programs have to be administered on a state-by-state basis. Insurance companies set the formularies at the national level, benchmarking what CMS set. We need to watch the decision-making process at the national level in the near future.”

NEXT: Teva's next move

Teva’s next move

The Teva Copaxone patent expires in September and the drug maker has followed the lifecycle management planning strategies that many branded drug companies have done when it comes to preparing for patent expiration of a branded product, according to Gilmore.  

“In the last couple of years, Teva increased the price of the daily 20 mg/ml product,” Gilmore says. “They also launched a longer-acting version of the same drug in 2015.  The price decrease for the longer acting drug is only $1,000 a year less than the daily version. That is not much when the annual cost for treatment is $60,000.”

In addition to their own product activities, Teva has also reached out to the Supreme Court of the United States (SCOTUS) with a request to block the sale of the recently approved substitutable [Sandoz] Copaxone.  SCOTUS in turn contacted the Novartis and Mylan, two challenging generic manufacturers to solicit their opinions on how they think SCOTUS should handle this.  

“This legal process will give Teva time to keep trying to transfer patients to their longer acting version of Copaxone,” Gilmore says. “[Sandoz] has not indicted when they will launch Glatopa, nor have they alluded to the price that will be charged. [Sandoz] in all likelihood will either wait until Teva’s patent expires in September or a favorable SCOTUS decision, whichever comes first to start selling Glatopa.  Teva in turn, will try to get as many patients as possible on the long-acting drug so substitution will be harder. Unless Teva discounts their price, the long-acting patients may be the ones left with larger copays even though the dosing frequencies differ between [Sandoz] Glatopa and Teva's Copaxone.”

There are a few ways that Teva could look at this, says KPMG’s Ginestro.  “Although this generic version of Copaxone is not a biosimilar, it may make sense for Teva to approach this like a biosimilar and work with specialty pharmacies to keep the drug foremost on formularies,” he says. “Another approach is to take a play from the Prilosec/Nexium playbook by engaging patients about the benefits of the new drug to get them to switch to the version of the drug that is injected every other day rather than the once-daily version. That would take a great deal of promotional effort to capitalize on the strong brand position of Copaxone in the patient community.”

However, Ginestro and Buck Consultant’s Goldbeck believe that Teva likely will lower the relative price and offer aggressive rebates for preferred treatment of their product.

NEXT: Teva's strategy

“Given Teva’s history in generics will be an aggressive contracting strategy with rebates and discounts to maximize coverage, utilization, and, where possible, exclusivity,” Ginestro says. “Each approach would require Teva to continuously take a pulse check on the market to see how it should adjust pricing on the drugs.”

Teva has already converted approximately 67% of patients to the 40-mg form of Copaxone and will continue the aggressive conversion campaign, according to Opdycke.

Gilmore cited Teva’s Shared Solutions patient support center that has been scaled to support current patients as they transition to the three-times-a-week 40mg/mL formulation. Shared Solutions^® provides 24/7 nurse support, financial and benefits investigation as well as identification of pharmacy distribution options to enable financial and physical access to Copaxone.

“Teva has recently reported that over two-thirds of the patients in its Shared Solutions program have transferred to the longer acting product,” Gilmore says. “Payers will continue to cover both Teva versions-daily and long acting-but there will be shifts within the formulary tiers requiring higher co-pays by patients since a generic equivalent is available for the daily.”