BIG PHARMA at work
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Big PHARMA pays generic manufacturers to not ...
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Pharma Lobby and Democrats
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Cancer Generic Drug Shortage increases sales of patented drugs

Big PHARMA pays generic manufacturers to not ...

generic-drug-picture.jpg

Drug companies spend billions of dollars to pay makers of generic drugs not to make their off-patent block-busters

Are quid pro quo deals between brand-name drug makers and generics firms in real danger? Euro watchdogs are scrutinizing them, the FTC is suing over them, and the U.S. Congress is considering an outright ban on them.

Perhaps that's because Big Pharma has been cutting deals with generics makers right and left. There's the big Cephalon arrangement that's attracted the FTC's ire: That company paid Teva, Barr, Ranbaxy, and Mylan a total of $200 million to say out of the Provigil market until 2012. The FTC counts 100 deals like this since 2004.

The FTC hasn't had much success in the courts so far, but it's hoping for a grand slam in the Cephalon case. The agency would like the issue to go to the Supreme Court so it can be resolved "once and for all." There's no guarantee, though, that the newly conservative court would rule against these deals. The government's best shot may be in Congress. A Senate committee last week approved a bipartisan bill that would prohibit these arrangements; similar legislation is pending in the House.

Meanwhile, the generics market isn't growing at quite the pace it once was. According to preliminary figures from IMS Health, sales increased by 3.8 percent last year--the same rate as the overall drug market. The market research firm was surprised by those results: "I checked this number and checked it twice," an IMS rep told In Vivo. "We have seen generics growing over the last couple of years somewhere between 10 percent and 20 percent. So to come in...at 3.8 percent is quite dramatic."

 

At the In Vivio Blog, on biopharmaceutical and medical devices.

 

 http://invivoblog.blogspot.com/2008/02/generic-drugs-still-growth-market.html

 

Generic Drugs: Still a Growth Market?

 

Generic Drugs Still a Growth Market?

Tuesday, February 19, 2008

 

Is there enough money in generic drugs? 

 

That’s the question generic manufacturers might start asking themselves once IMS Health releases its official market growth numbers for 2007. A glimpse at the preliminary figures suggests there is, but the money may be getting harder to find.

Growth in the generic drug market slowed considerably last year, to 3.8%—the same rate as the overall prescription drug market, according to IMS Health corporate director of market insights Diana Conmy. She gave a preview of the 2007 data at the
Health Industry Group Purchasing Organization’s National Pharmacy Forum last week. You can find her analysis of the branded industry in our earlier post.

Conmy found the low-single digit growth rate for generics “surprising” given
the segment’s past performance. “I checked this number and checked it twice, because historically, we have seen generics growing over the last couple of years somewhere between 10% and 20%,” she said. “So to come in at the end of the year at 3.8%...is quite dramatic.”

Not surprisingly, the cause behind that slowdown is an increased level of price competition in the generic drugs market, Conmy said: “It has become an extremely competitive place to earn a profit and keep profitable within this segment."

“The generic erosion curves are much steeper. There is more of a willingness by generic manufacturers to enter the market 'at risk.' And there are just more players getting into the very large and meaty primary care markets that are going off patent,” she said. Indeed, one such product, Merck’s osteoporosis drug alendronate (Fosamax), saw
competition from three generics (including a Merck-authorized product) last week.

Given that level of competition, is there a point at which the price for a generic is too low? IMS Health's 2007 numbers indicate the generic drug market may have already reached that threshold. The second half of the year was essentially the antithesis of the economic rule of supply and demand, Conmy said: a “tremendous reduction” in the price of generics in the marketplace without a corresponding increase in volume levels.

Instead, growth within the generic market is solely coming from new approvals, and any exclusivity that manufacturers can scrape together. That, in turn, is why generic manufacturers are becoming more aggressive in terms of
“at risk” launches--launches like generic clopidogrel (Bristol-Myers Squibb's Plavix). The end result, Conmy said, is that while generic utilization continues to increase, the brands are still holding onto the dollar share.

But there are some bright spots: branded generics (like in the pain and ADHD markets) are still doing quite well: branded generics rose 11.1% last year, according to IMS Health. And there's still room for growth under Medicare Part D: despite the Center for Medicare & Medicaid Services' interest in increasing generic use under the drug benefit, generic utilization was no higher than in the general population in 2007, Conmy said.

And last year could turn out to be a one-year blip on the growth chart--especially given tough comparisons over the high-flying year of 2006. But for generic manufacturers looking at the 2007 data, it's still not a comfortable place to be. How the generic industry responds will determine who comes out on top in an increasingly competitive market.

 

 

 

The deals behind the FTC crackdown have become increasingly common ever since Congress opened the door for generic drug competition in 1984. That's when a new federal law allowed generic drugmakers to challenge patents held by brand-name pharmaceutical companies in court. As these lawsuits grew in number, Big Pharma started to broker settlements whereby the generic companies agreed not to develop a competing drug in exchange for a onetime payment, often totaling millions of dollars. The FTC says there have been 100 deals like this since 2004.

Big Pharma and generic makers love them. Brand name developers get to protect their cash cows (it's estimated that sales of a brand name drug shrink by 80 percent in the first year after a generic version is released), while generic companies pocket a tidy sum without having to take on the high costs and risks of promoting a drug.

But regulators think these deals are illegal and have tried for years to get courts to agree - without much success. The way they see it, these patent settlements harm consumers because they prevent less expensive drugs from coming to market quickly. Americans spend more than $286 billion dollars on prescription drugs each year, according to the IMS Health market research group. Generics make up 65 percent of all prescriptions, but are roughly 20 percent of the costs. On average, generics cost nearly two-thirds less than their brand-name rivals.

So far regulators haven't had much success reining in these patent settlements. Only two of the nation's 11 federal circuits have declared these patent settlements unlawful. Last year, the U.S. Supreme Court refused to weigh in when it sided with AstraZeneca (AZN) in a government lawsuit challenging a $21 million deal it struck with Barr over the cancer treatment tamoxifen. Meanwhile, a Senate committee last week approved a bipartisan bill that would prohibit brand-name drug manufacturers from using settlement agreements to keep generic equivalents off the market. The full Senate has not scheduled a vote on the measure. Similar legislation is pending in the House of Representatives.

Given that the Congress hasn’t passed any major regulations that have significantly effected the bottom line of Big Pharma, I can only expect this to be another do-nothing move—like the bills on election funding reform.  Moreover, Big Pharma will fatten, thorough lobbying, the coffers of our politicians--jk. 

 

On CNNMONEY.com at http://money.cnn.com/2008/02/19/news/companies/generics_patent_settlements.fortune/index.htm?postversion=2008022005

February 20, 2008

Crackdown on Big Pharma

Regulators are striking back against a common strategy used by giant drug makers to block competition from generic companies.

By John Simons, writer

NEW YORK (Fortune) -- For years, Big Pharma has kept competition from generic drug makers at bay by essentially paying its would-be rivals to stay out of its business. Now government watchdogs have declared war on these financial deals - a move that could bring cheaper drugs to market faster while costing giant drug developers billions in lost revenue.

Just last week the Federal Trade Commission launched a high-profile battle against Cephalon (CEPH), the maker of the blockbuster narcolepsy medication Provigil, over a $200 million payout it gave to four generic companies in exchange for an agreement not to develop a competing medication. In a lawsuit filed in federal court in Washington, D.C., the FTC claims that the deal violates antitrust law.

The deals behind the FTC crackdown have become increasingly common ever since Congress opened the door for generic drug competition in 1984. That's when a new federal law allowed generic drug-makers to challenge patents held by brand-name pharmaceutical companies in court. As these lawsuits grew in number, Big Pharma started to broker settlements whereby the generic companies agreed not to develop a competing drug in exchange for a onetime payment, often totaling millions of dollars. The FTC says there have been 100 deals like this since 2004.

Big Pharma and generic makers love them. Brand name developers get to protect their cash cows (it's estimated that sales of a brand name drug shrink by 80 percent in the first year after a generic version is released), while generic companies pocket a tidy sum without having to take on the high costs and risks of promoting a drug.

But regulators think these deals are illegal and have tried for years to get courts to agree - without much success. The way they see it, these patent settlements harm consumers because they prevent less expensive drugs from coming to market quickly. Americans spend more than $286 billion dollars on prescription drugs each year, according to the IMS Health market research group. Generics make up 65 percent of all prescriptions, but are roughly 20 percent of the costs. On average, generics cost nearly two-thirds less than their brand-name rivals.

So far regulators haven't had much success reining in these patent settlements. Only two of the nation's 11 federal circuits have declared these patent settlements unlawful. Last year, the U.S. Supreme Court refused to weigh in when it sided with AstraZeneca (AZN) in a government lawsuit challenging a $21 million deal it struck with Barr over the cancer treatment tamoxifen. Meanwhile, a Senate committee last week approved a bipartisan bill that would prohibit brand-name drug manufacturers from using settlement agreements to keep generic equivalents off the market. The full Senate has not scheduled a vote on the measure. Similar legislation is pending in the House of Representatives.

The practice is also under scrutiny overseas. The European Commission recently began investigating AstraZeneca, GlaxoSmithKline, Johnson & Johnson (JNJ, Fortune 500), Merck (PFE, Fortune 500), Pfizer, and Sanofi-Aventis (SNY) for similar payments to generic makers.

Big Pharma argues that a sweeping ban on these patent settlements would stifle innovation in the drug industry. Ken Johnson, senior vice president of Big Pharma's powerful lobbying apparatus, PHRMA, insists too that a prohibition is unnecessary given that the FTC and others have the authority to challenge individual deals. "The courts and enforcement agencies like the FTC are in the best position to review these settlements on a case-by-case basis to ensure that they are not harmful to competition," said Johnson.

But the FTC's goal behind last week's Cephalon lawsuit isn't a narrow victory. The agency is hoping the Supreme Court will eventually take up the case and issue a precedent-setting decision in its favor. "We're trying to reverse the course of the law and get another circuit to find these deals illegal in the hopes that the Supreme Court will resolve [the issue] once and for all," said an FTC staff member.*

The government's case against Cephalon centers on a 2006 deal to keep a generic version of Provigil, which treats sleepiness in patients with narcolepsy and other disorders, off the market. Four generic drug makers - Teva (TEVA) Pharmaceutical Industries, Barr Pharmaceuticals, Ranbaxy, and Mylan - had agreed to drop lawsuits challenging the validity of Cephalon's Provigil patent until 2012 in exchange for a total of $200 million. Wall Street applauded the deal, which protected a drug that was responsible for 44 percent of Cephalon's $1.7 billion in 2006 revenues.

In its legal filing, the FTC claims that the settlement violates antitrust law and asks the court the issue a permanent injunction that would effectively allow generic versions of Provigil to come to market much earlier than 2012. Cephalon denies any wrongdoing. 

 

*  I can only be cynical of the FTC motives, given the pro-business background and past actions of the top bureaucrats at the FTC.   I think they want to loose the law suit before the conservative Supreme Court, and thereby block future suits of Pharma. 

 

Business with Reuters

18 states sue Abbott Laboratories for blocking generic versions of cholesterol drug—The Associated Press, 3/18/8

Eighteen states have filed suit in federal court against Abbott Laboratories, alleging the drug maker blocked generic competition for a popular cholesterol medication.

The antitrust lawsuit charges that Abbott and a French drug company tried to block competition for a cheaper, generic version of the prescription drug TriCor, a cholesterol drug. The medicine accounted for more than $1 billion (€0.63 billion) of Abbott's sales last year.  The states allege that the companies continuously made minor changes in the formulations of TriCor to prevent generic versions from entering the market

 

 

 

 

Lawsuit Claims Cephalon
Delayed
Sale of Generics

By AVERY JOHNSON and JOHN R. WILKE
February 14, 2008

Wall Street Journal online at http://online.wsj.com/article/SB120293758594766249.html?mod=health_home_stories

Antitrust enforcers filed a lawsuit against Cephlalon Inc., alleging the company illegally delayed generic competition to its best-selling drug, narcolepsy medicine Provigil.

In a civil complaint filed in U.S. District Court in Washington, the Federal Trade Commission alleged that the Frazer, Pa., drug maker "bought off" four rivals to protect the sales of its $800 million-a-year drug.

The agency says Cephalon gave a combined $200 million in payments and other inducements to Teva Pharmaceutical Industries Ltd.'s, Teva Pharmaceuticals USA unit, Ranbaxy Pharmaceuticals Inc.,  Barr Pharmaceuticals Inc.,. and Mylan Pharmaceuticals Inc. to push off their market entry until 2012.

Representatives for Teva, Ranbaxy and Mylan couldn't be reached for comment. A Barr spokeswoman said the company believes that it is legal to negotiate such settlements and that doing so serves the best interests of consumers.

The FTC suit comes after a $425 million settlement Cephalon reached last year with the Justice Department over its marketing practices. The maker of pain, sleep and neurology drugs has come under scrutiny for its large off-label sales of two powerful narcotic drugs, Actiq and Fentora. Provigil, which the FTC's complaint says accounts for 46% of Cephalon's sales, is also sold largely outside its approved indication, for uses such as calming hyperactive children. Doctors are allowed to prescribe drugs as they see fit, including for conditions that are not on the drug's label. However, off-label marketing by drug companies is illegal.

Provigil faced threats from four generic makers on an orphan-drug exclusivity valid through the end of 2006, but another patent protects the medicine until 2015, a Cephalon spokeswoman said. The company settled lawsuits with the generics makers by agreeing to let them come to market in 2012; in some cases, Cephalon purchased their supplies of generic Provigil.

"We think the settlement was proconsumer and procompetition because generic drugs will get onto the market three years earlier," said Sheryl Williams, the spokeswoman.

The FTC's complaint details an "anticompetitive scheme" that forced patients and other purchasers of the drug "to pay hundreds of millions of dollars more per year for Provigil." The complaint quotes Cephalon Chief Executive Frank Baldino, as saying on a conference call with analysts: "We were able to get six more years of patent protection. That's $4 billion in sales that no one expected." Mr. Baldino also said Provigil had "created the category of wakefulness products" and faced "no competition," the complaint says.

Reached by telephone yesterday, Mr. Baldino said: "The transactions we reached met the letter and spirit of the law in every way, and we will litigate this matter, and we will prevail."

The stakes were high for Cephalon. One internal company estimate projected that generic Provigil would be priced at up to a 90% discount to the branded drug and would cut $400 million a year off Provigil's sales in the first year on the market, according to the complaint. Teva estimated that generics would take over 90% of the market in a month, the complaint says.

Jeffrey Schmidt, the FTC's competition chief, said that Cephalon derailed competition "by agreeing to share its future monopoly profits with generic-drug makers poised to enter the market." A bipartisan majority of the five-member commission has fought such agreements since 2003, but lost two major cases on appeal in 2005. It has even stood against the Bush administration on the issue, when the Justice Department took a position before the Supreme Court that favored the branded drug makers and opposed the FTC position.

In a statement, Commissioner Jon Leibowitz said such "pay-for-delay settlements, if not stopped, will continue to grow exponentially -- costing consumers and the federal government ... literally billions of dollars in excess charges. In this instance, they will cost patients taking Provigil -- a crucial drug for those who suffer from narcolepsy and for members of the armed services in Iraq -- more than a billion dollars through years of delayed competition." Mr. Leibowitz said he favored filing antitrust claims against the generic companies as well.