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Pharma Trends: Generic Drugs in Race to the Bottom, Biosimilars Fail to Launch

April 27, 2018

During his presentation at the AMCP 2018 Annual Meeting, “2017-2018 Pharmaceutical Marketplace Trends,” Douglas Long, BS, MBA, Vice President, Industry Relations at IQVIA, outlined the market trends impacting 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, and Glatopa.

“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 3rd 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 9th, 10th…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 do 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 4 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.

“Peaople 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 to 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 3 of the 9 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.”

David Costill

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