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"Branded" Generic Drugs

For additional information on this topic please see our article "Generic Drugs".
Please also see our article "Patents and the Possibility of Generic Biologic Drugs"- Part III of a III Part Series

(12/17/11)- J.P.Morgan estimated in a report that it issued on December 12 that the "branded" generic version of Lipitor from Pfizer captured about 14.6% of U.S. prescription volume for drugs containing Lipitor's active ingredient since it went off patent protection at the end of November..

Morgan's analyst based his prediction based on data from the prescription tracker IMS Health for the week ended December 2, 2011

It is interesting to note that even though Pfizer announced that it was increasing its quarterly dividend 10% from 20 cents to 22 cents, and that it expanded its share repurchase program by up to $10 billion, it was at the same time slashing its research and development spending.

Advertising experts are estimating that Pfizer will spend about $260 million in the upcoming 6 months advertising its "branded" generic version of Lipitor.

(11/28/11)- Pfizer's best selling drug in the world, Lipitor, the cholesterol lowering medication is due to come off patent on November 30. The company has begun a multi-pronged effort to extract additional sales from the drug once the patent expires.

Once a patent expires, the company that is the "first to file" for a generic drug version of the medication has 6 months of exclusivity to sell its generic version of the drug before other generic drug companies can sell their version of the product.

The price of the drug falls about 10% during this 6-month period of time, and by up to 80% afterwards, according to DRX Inc., a health-care data firm.

On the one front, Pfizer has begun an aggressive campaign to maintain sales of its "branded" generic version of the drug by offering deep discounts to individuals, pharmacies and prescription benefits managers for the first 180 days after Lipitor is no longer covered by its patents. That price undercuts the price that Watson Pharmaceuticals and Ranbaxy Laboratories of India will offer their generic versions of the drug from December through May of 2012, when their exclusivity expires.

The company is also offering $5 discount cards on its website for its generic version of the drug. Ranbaxy has not received final approval from the FDA to market its generic version of the drug because of concern over its manufacturing facility in India.

On another front, Pfizer is partnering with Diplomat Specialty Pharmacy in Flint, Mich., to mail branded generic Lipitor to patients who order the drug directly from Diplomat. Diplomat would bill the patients' health plans. Plans that have contracted with Pfizer would pay a lower generic price for the drug during this 6-month period of time than plans that have not contracted with Pfizer.

Pfizer has continued to spend heavily marketing Lipitor, having spent $659 million over the past 12 months, according to Cegedim Strategic Data.

Once the 180 day exclusivity period of time has elapsed it might not pay for Pfizer to continue to push branded generic version of Lipitor, since the generic companies that would enter the market at that point probably would undercut the price to less than what Pfizer is selling it for.

(11/5/11)- Teva Pharmaceutical Industries, the largest generic drug company in the world, which is headquartered in Israel, and Proctor & Gamble Co., the large U.S. consumer goods company unveiled some of the details of their new joint adventure to develop and sell branded generic drugs. The companies had announced in March the plan for the joint adventure, which will be called PGT Healthcare.

P&G's Vicks cough drops, its anti-acid medications Metamucil and Pepto-Bismo are but a few of the products to be marketed in the joint venture. P&G sold off its prescription drug business two years ago.

The joint venture is expected to start with about $1.3 billion in sales in 2012.

(8/9/11)- Pfizer hopes to be able to sell its best-selling cholesterol lowering drug Lipitor as an over-the-counter item when its patent expires in November. Before this can happen, the company would first have to prove to the Food and Drug Administration that consumers could safely take the statin drug safely without a doctor's prescription.

Recent attempts by Merck to gain over-the-counter status for its statin drug Mevacor, and Bristol-Myers Squibb for its statin drug Pravachol failed to achieve that objective.

In the event the company failed to gain FDA approval to sell Lipitor as an over-the-counter item, the company could also sell the drug as a branded generic medication.

Many medical experts oppose the thought of selling statin drugs without a doctor's prescription because correct dosage is an important factor in taking the drug, and many who have no need to take the drug might start taking it, without the ability to correctly measure cholesterol levels.

(2/4/11)- Pfizer Inc's Lipitor, its best selling cholesterol drug, is due to come off patent in November of this year. The drug accounted for 16% of Pfizer's revenue in the 3rd quarter of 2010. Watson Pharmaceutical owns the right to sell an authorized or branded version of the drug, and Ranbaxy Laboratories Ltd, the Indian generic drug company has the right to sell its generic version of Lipitor with 180 days of exclusivity at the same time under its 2008 settlement of a patent lawsuit with Pfizer.

Mylan Inc. announced a pair of settlements with Pfizer including one related to Lipitor that is subject to review by the U.S. Department of Justice and the Federal Trade Commission. The other settlement involved selling a generic version of Pfizer's Caduet blood-pressure and high-cholesterol pill starting November 30th.

Watson's branded Lipitor will be produced by Pfizer and sold by Watson.

Under federal Law, the first successful generic challenger is awarded the exclusivity period of 180 days from when it launches, but regulatory and manufacturing issues at Ranbaxy may delay an approval. It that occurred, other generic companies, including Mylan, may be blocked from selling their generic version of Lipitor until Ranbaxy's exclusivity period expired, leaving Watson as the sole generic version of the drug.

(5/24/10)- Abbott Laboratories, which is based in Abbott Park, Ill., announced that it would purchase the Indian pharmaceutical company Piramal Healthcare for $3.7 billion. Piramal, which is based in Mumbai, makes generic and branded drugs, in nine plants in India, England and Canada. It has the largest sales force in India with over 6,000k representatives.

Price Waterhouse estimates that emerging markets will account for between 30% to 40% of all world wide drug sales in the next 10 years. Drug sales in India are expected to hit $8 billion this year, and double that amount by 2015.

Daiichi Sankyo Co, of Japan bought a majority interest in Ranbaxy Laboratories Ltd of India for $4.6 billion in 2008, and GlaxoSmithKline has an alliance with the generic drug company Dr. Reddy.

Piramal does contract manufacturing and research for other drug companies in low-cost labs in Indiak, and also manufacturers over 350 "branded" generic drugs.

Last September, Abbott announced that it would buy Solvay Pharmaceuticals of Belgium, which has a large emerging markets presence, for $6.6 billion.

(3/5/10)- Daiichi Sankyo Co, of Japan said it would set up a subsidiary in April to produce and sell generic drugs in Japan.

Daiichi's subsidiary will co-develop along with Ranbaxy Laboratories Ltd of India generic drugs in Japan

It is quite evident that the major pharmaceutical companies see that they have been missing out on the profitable generic drug market, so it is full speed ahead for them into this area..

(2/24/10)- Generic drugs accounted for 70.4% of the 2.9 billion drug prescriptions written in the U.S. last year, according to IMS Health, the drug-data information firm On the other hand, the generic drugs accounted for only 15% of the total value of $300 billion spent on these drugs in 2009, according to IMS Health.

Dr. Margaret A. Hamburg, the new FDA commissioner, told an audience at the annual meeting of the Generic Pharmaceutical Association in Naples, Fla, that she would push to have changes made in speeding up the processing of generic drug application approvals, since the potential was there to save consumers billions of dollars.

Five years ago, the FDA approved a new generic drug application filing on average within 16.3 months. A recent report from the FDA showed that it was now taking 26.7 months on average before a generic drug filing application was approved.

As a result, the agency now has a backlog of nearly 2,000 pending generic applications, which is twice the backlog that existed in 2005.

In a separate interview, Gary J. Buehler, the director of the FDA's office of generic drugs said that the agency hoped to hire 50 more reviewers so that it could eliminate the backlog by 2012.

Dr. Hamburg stated that she hoped to have a user fee imposed on the generic drug industry, similar to the one now in existence for the branded drug industry, wherein the fee is utilized solely to speed up the processing of the new drug applications by the agency.

The generic drug office of the FDA has a budget of $51 million for fiscal year 2010, up from $41 million in fiscal 2009. President Obama included $38 million in user fees from generic makers in his proposed 2011 budget.

The Generic Pharmaceutical Association and executives at generic makers said they would approve and welcome a user-fee program if it could be used exclusively to speed up the approval process for generic drug applications.

This problem can only worsen with many of the brand name drug companies expanding into the "branded" generic drug industry, since consumers who do not have drug coverage or are without prescription drug insurance would be willing to pay a little more for a branded generic rather than a "no name" generic.

(1/13/08)- The patent on Merck & Co.'s blockbuster osteoporosis drug Fosamax is due to expire on February 6, 2008. Barr Pharmaceuticals plans to introduce a generic version of the basic 20-milligram form of the drug on that date. As is happening with regularity now is the fact that the brand name drug companies are signing deals for an authorized generic version shortly before or just as the patent is due to expire.

Fosamax (alendronate) had annual sales of about $3 billion in 2007. The drug was originally taken on a daily basis, but a once-a-week version has basically replaced the original version. It was the first member of a chemical group known as bisphosphonates that inhibit cells called osteoclasts, which break down bone tissue.

Thus Merck will go the route of having a "branded" generic version of the drug, so that even though the cost of the drug will go down greatly, the company can continue to benefit from sales of the drug even after the patent expires.

At the same time as the generic "branded" version of the drug helps Merck, this in turn will mean that it will harm sales for any "non-branded" version of the drug. According to drug analysts the introduction of a generic version of the drug will also be harmful to sales of Actonel, which is the once-weekly bisphosphonate sold by Proctor & Gamble and the French drug company Sanofi-Aventis.

(12/15/07)- The FDA panel that met to consider Merck & Co.'s application to sell its statin drug Mevacor rejected the application by a vote of 10 to 2 with one abstention. For more information on this item please see our article dated 12/3/07 below.

This is the third time that an FDA advisory panel has rejected an application by Merck to sell the drug over-the-counter, with the prior applications having been made in 2000 and again in 2005. The agency does not have to accept the recommendation of its panels of experts, but it usually does go along with the ruling.

The FDA advisors were struck by how many people, in a study of 1,500 group of potential customers, wanted to buy the drug, even though they were bad candidates for the medication. About one quarter of the potential users did not have a high enough risk of heart disease to qualify, meaning that they would be subjecting themselves to unnecessary negative side effects.

(12/3/07)- An FDA advisory panel is scheduled to meet December 13th to consider Merck's application to sell Mevacor, its statin cholesterol lowering drug, without a prescription. This will be the third time that Merck has attempted to have the FDA approve a change from prescription to nonprescription. It is interesting how the drug industry has gone this route of attempting to have prescription drugs removed from the requirement of being sold only through prescriptions. It usually is done because the drug will be coming off patent within a few months or years.

Previously the industry has fought consumer groups to try and prevent drugs from being switched from patent to non-patent status, even at times when it meant prolonging the patent life of a medication,

GlaxoSmithKline PLC of Brentwood, England has acquired the marketing rights to sell Mevacor, but it still will be Merck that makes the presentation before the FDA panel on the 13th. Glaxo will take over the marketing of the drug should the FDA grant the approval to sell it over-the-counter. The terms of the agreement between Merck and Glaxo have not been revealed.

Even if the application is denied, Glaxo will take over the marketing of the drug with Merck receiving royalties from Glaxo for the product.

Statin drugs, in total sold. about $21.6 billion last year in the U.S. according to statistics from IMS Health, a drug research data firm.

Glaxo has switched at least three prescription brand drugs to nonprescription status in the last few years. The drugs are Nicorette gum and patches for smoking cessation; Zantac for heartburn; and Alli for weight-loss.

(10/13/07)- The annual inflation rate in drug costs is at the lowest rate since the Labor Department began its current method of tracking prescription prices three decades ago. According to the latest figures the rate over the last 12 months is 1%. As recently as 2005, inflation in drug prices was running at an annual rate of 4.4%.

In the past year and a half generic equivalents have become available for the cholesterol lowering drug Zocor, the sleeping pill Ambien and the blood pressure medication. Another reason for the drop in the rate of inflation is the so-called Wal-Mart affect. For more on this please see our article "Drug Stores Low Cost Prescription Drug Plans".

Of course these figures do not give a full and accurate picture as to what is happening in the drug pricing area. The newest drugs and the biotech drugs that can not be made by the generic companies are costing more and more. The drug companies argue that it is costing them over $800,000 to develop a new drug, so that is why they must charge so much for their latest products.

(10/6/07)- According to the nonprofit Kaiser Family Foundation, in 2006 the average brand-name prescription drug cost more than three times the average generic: $111, compared with $32. Generics made up 63% of prescription dispensed in the U.S., up from 13% from 2005.

The country's biggest supplier of prescription drugs, as measured by prescriptions filled is Teva Pharmaceutical, a generic manufacturer based in Israel, according to IMS Health, a drug data tracking firm.

Spending for pharmaceuticals was up 8.3% in 2006 according to IMS. In the past year and a half, generic equivalents have become available for Merck's cholesterol lowering drug Zocor, the sleeping pill Ambien and the blood pressure drug Norvasc.

(8/15/07)- Last year generic drugs accounted for about $4 billion in sales in the U.S. They account for almost 60% of the total of overall drug prescriptions written in the U.S.

Next year, generic competition is expected to hit Fosamax, a $2 billion drug that slows bone loss and is often used by postmenopausal women. In 2009, the heartburn and ulcer medication Prevacid, a $3.5 billion drug in this country is expected to become available as a generic product.

In 2011 the largest selling drug in the world, Lipitor, which is sold by Pfizer will come off patent. It is a $14 billion worldwide selling drug, with about $5 billion of those sales occurring in the United States.

(6/30/06- We all have heard of the term generic drug, but we thought it might interest our viewers if we explained the process from start to finish for the approval of a generic drug. A generic drug must have the same active ingredients as the branded drug. It has to be in an identical strength and dosage form (tablet, liquid, etc.), and be administered in the same manner (oral, injection, etc.) as is the branded product. The generic also must supply the same amount of the active ingredient to the human body, at the same absorption rate as the branded drug.

This is called " bioequivalence" and all generics must prove (within a range of (20)%/+25%) as to the efficacy and safety of the chemical compound in question that was established by the original branded drug. The generic does not require the lengthy and expensive clinical trials, as do the branded drug trials. On average the development of a generic drug takes about 3 years versus the 6 years of expense and trial for the branded product. Once bioequivalence studies are complete, the generic company submits an Abbreviated New Drug Application (ANDA) to the FDA for approval to market the drug. The approval process for the ANDA at the FDA takes anywheres from 10-24 months. On average it takes the FDA about 12-months to review brand products, but one of the reasons this is true is because the brand drug companies have contributed financing to the FDA specifically for this purpose.

The generic drug company must also submit its proposed manufacturing process and quality control tests to the FDA. The FDA requires that the company's manufacturing process conforms to current good manufacturing practices (cGMP) as defined in the U.S. Code of Federal Regulations. The FDA will inspect and audit the manufacturing process for compliance before a drug is approved, as well as every two years following approval.

(6/30/06)- Pfizer Inc.'s third largest selling drug is the antidepressant Zoloft, which comes off patent this month. The drug racked up $2.57 billion in sales in the U.S. last year. The company announced that it would begin to sell a "branded" generic version of the drug shortly. Thus Pfizer is following in the footsteps of Merck & Co. and its cholesterol-lowering drug, as you can view in our item dated 6/25/06.

The pattern is thus becoming clearer and clearer that the brand name drug companies intend to sell generic versions of their drugs as soon as they come off patent. In the case of Pfizer, it will be the sole marketer of the generic version of the drug through its generic division, Greenstone Ltd. Johnson & Johnson will do the same through its generic division Patriot Pharmaceuticals, and Schering-Plough will follow suit with its generic division subsidiary Warwick.

Incidentally based on sales figures for 2005, Greenstone had sales of $722 million, making it the seventh largest generic company in the U.S. according to data from IMS Health.

In taking these actions the brand name drug companies will undercut the generic drug companies that gained the 6-month right to be the exclusive sellers of the generic version of a drug when it comes off patent. This 6-month period of time is when a generic drug company makes the most money. This action by the branded drug companies defeats the whole purpose of the law allowing the 6-month exclusivity period of time. In effect there will be no inducement for a generic company to apply for this right, or even bring a legal challenge against the patents of the big pharmaceutical companies.

The FTC is preparing to analyze the effects of "branded" generics on drug prices and competition in a study that could be completed next year.

Teva Pharmaceutical Industries Ltd of Israel gained the exclusive right to sell sertraline, or Zoloft under a settlement between Pfizer and the patent challenger Ivax Corp. in March of this year. Pfizer's Greenstone will start to sell the generic version of Zoloft as soon as Teva begins to sell it, but it will undercut Teva's product on pricing.

The consumer will benefit in the short run, since he/she will be able to buy generic Zoloft at a lower price than what the generic company would have charged during the 6-month period of exclusivity. In the long run, it will weaken the financial structure of the generic companies so will the consumer be hurt in the long run?

(6/25/06)- On June 20, 2006 the patent for Merck & Co.'s cholesterol-lowering drug Zocor expired. In a very interesting move, the company has sharply lowered the price of the drug, and is selling it as a branded generic version of simvastatin. By adopting this strategy of selling the generic version of the drug at a sharply lower price, Merck is hurting the generic drug companies Teva Pharmaceuticals USA, a unit of Teva Pharmaceutical Industries Ltd., of Israel and Dr. Reddy's Laboratories Ltd., an Indian generic drug maker.

These two generic drug companies are being hurt by this action since they expected to have the exclusive right to market the generic version of Zocor for the first 6 months after the patent expired. They were the two companies that were the first ones to apply to market the generic version of the drug after the patent expiration. The law dictates that the first applicants who receive the approval of the FDA to market the different dosages of the drug have the right of exclusivity of the 6-month period of time after the patent expires.

This article contains information about other instances of the pharmaceutical companies making "branded" generic versions of their drugs. In selling a branded version of a drug, whose patent has expired, a drug company can thus capture a portion of the sales after the patent's expiration. This in turn is harmful to the generic drug company that expected to have exclusive rights to sell the generic version of the drug for 6 months after the expiration.

It is reasonable to expect that many drug companies will adopt this strategy in the future when the patent expires on one of its drugs.

WellPoint Inc., an Indianopolis health insurer announced that it had entered into an arrangement with Merck to sell branded Zocor, and not competing generic versions, through its mail order pharmacy service. Members of WellPoint will pay $10 for a 30-day supply of branded generic Zocor.

UnitedHealth Group Inc. said that branded generic Zocor would move to the cheapest tier of its drug formulary, making the co-payment for customers cheaper than the generic alternatives.

Making a branded generic version of Zocor is going to have a huge impact on Pfizer's Lipitor, the biggest selling drug in the world, with revenues worldwide of $12 billion last year. On a personal basis, this author's pharmacy benefits manager ExpressScipts notified all members of its plan with the company I work for, that the co-pay for a 90-day supply of Lipitor would be increased from $70 to $140.

Lipitor is now faced with competition from two drugs that lower cholesterol even more than it does. One is Vytorin, which is made by Merck and Schering-Plough, which combines Zocor and Zetia. This combined pill has a different mechanism of action than statins. In addition to lowering the bad cholesterol level, the drug also increases the users good-cholesterol level. This drug had sales of $378 million in the first quarter, which indicates that it is on track to become a blockbuster over a billion dollar seller this year.


The other new challenger to Lipitor is Crestor, a drug from AstraZeneca that is generally considered the most potent of the statin drugs.

Up until now, Zocor has sold for about $3 per pill. Once it is sold as a generic drug, the price probably will go down between 75% to 90%. The falling price will save insurers and patients billions of dollars. It is unknown at this point if employers will benefit to any great amount by this action.

(3/1/06)- The FDA is considering imposing user fees on the generic drug companies to help fund reviews of their products. Up till now the generic drug companies do not have to pay user fees to the FDA to help pay for the cost of the agency which approves their drugs. In imposing the fees the agency stated that it could speed up the period of time needed before a generic drug is approved for sale. It is unclear if the generic drug companies will agree to the imposition of these fees.

Kathleen Jaeger, chief executive of the Generic Pharmaceutical Association stated that, "We're not sure that if we agreed to pay user fees that the FDA could guarantee that our products could get to consumers any faster."

The generic drug companies have complained for a long time that petitions filed by branded-pharmaceutical makers can delay approval of generic drugs for long periods of time. The FDA says much of its backlog is older drugs that already have generic competitors or generic drugs that can't go on the market yet because the brand drug's patent isn't close to expiring.

(1/15/05)-A FDA advisory panel voted 20-3 against allowing Merck's application for its cholesterol-lowering drug Mevacor to be sold without a prescription as an over-the-counter medication. A spokesman for Merck and Johnson & Johnson, who had joined Merck in the application, said that they would continue to try and gain approval to sell the drug as an over-the-counter medication. The FDA typically adheres to the recommendations of its advisory panels.

An advisory panel had previously denied similar applications in 2000 to sell statin drugs over-the-counter from Merck for Mevacor and Bristol-Myers for Pravachol. It is estimated that there are over 39 million Americans who are in the moderate risk category because of their cholesterol levels, who might benefit from taking statin medications.

The panel concluded that medical management is required for patients taking statin medications. The patent for Mevacor has already expired, but Merck's statin medication Zocor first goes off patent next year. If a brand name drug company produces a patented drug as an over-the-counter medication, it can gain at least 6 months of exclusivity for its product. Pfizer's Lipitor is the number one selling statin drug with over $9 billion in sales in 2004. Merck's Zocor is the number 2 seller in this market and Bristol's Pravachol is number 3.

One of the voting members of the panel, Dr. Bolsey Barnes, a Washington physician said, "A healthy lifestyle, low-fat diet and exercise may achieve the same result of O.T.C. statins,".

(1/1/05)-Faced with the prospect of losing patent protection for its cholesterol lowering drug Pravachol, Bristol-Myers has again applied to the FDA for approval to sell the drug as an over-the counter medication. Patent protection for the $2.8 billion in sales drug in 2003 is due to expire in April 2006. Pfizer's Lipitor is the leading statin selling drug, with world wide sales of over $9 billion expected this year.

Merck & Co. has also applied to the FDA for permission to sell its cholesterol-lowering drug Mevacor, but the hearing on that application will not be held until January 13-14. Britain recently permitted OTC sales of a Merck cholesterol-lowering drug. This is the second time that both of these companies have applied for OTC status for one of their statin drugs.

An FDA advisory panel had rejected both applications for OTC for the drugs in 2000. The panel felt at that time that consumers could not make the right decision without proper medical professional advice on such a serious medical question. The dosage level for the OTC drug is lower than the level that most patients are presently using the medication.

With an increased emphasis being given lately on the benefits of lowering cholesterol levels, it is expected that the panel will find it more difficult this time to reject the applications.

(7/10/04)-The FDA has refused to step into the latest battle between brand name and generic pharmaceutical companies over "branded" generic drugs. The agency rejected separate petitions filed by the generic-drug makers Mylan Laboratories Inc. and Teva Pharmaceutical Industries Ltd. to disallow agreements between a brand-name pharmaceutical company whose patent is about to expire, and a generic company that it authorizes to make the drug.

These agreements between the brand-name drug company and the generic drug company thus negatively impact the sales for a generic drug company that normally would have the exclusive right to sell the drug for 6 months. The generic drug company has that right under the law since that it was the first to apply for the right to sell the generic version of the drug. Johnson & Johnson and Pfizer Inc. opposed putting any limitations on the ability of a drug company to allow a generic drug company to make its product.

GlaxoSmithKline lost it bid to stop the generic drug manufacturer Apotex form selling a version of the antidepressant Paxil, when the U.S. Circuit Court of Appeals for the Federal Circuit ruled that the patent was invalid because the invention was publicly used more than a year before the patent application. After Apotex had started to sell its generic drug in September, Glaxo reached an agreement with Pharmaceutical Resources' subsidiary Par Pharmaceutical to sell an "authorized generic" version of the drug.

Paxil had over $1.9 billion in sales in the U.S. last year. Sales dropped off over 40% in the fourth quarter of 2003, when Apotex introduced its generic version of the drug. Glaxo is based in Brentford, England and Apotex is based in Toronto, Canada.

The Generic Pharmaceutical Association, the trade association for the generic drug industry, has backed Mylan Laboratiories, Inc. in its lawsuit filed in California to try and curtail the practice of "branded" generic drugs. The practice comes about when a brand-name drug company licenses one of its drugs for which the patent is about to expire to a generic drug company. The purpose of this license agreement is to circumvent the 6-months exclusivity period that a generic drug company after the patent expires. In many cases the brand-name drug company will continue to manufacture the drug which is being sold by the generic drug company to whom it issued the license. Those in favor of the practice say that the consumer benefits in these situations since there is now competition in selling a generic drug when the patent expires.

Authorized-generic deals have split the generic drug industry down the middle. Companies such as Watson Pharmaceuticals Inc., and Pharmaceutical Resources Inc.'s Par Pharmaceutical unit favor such partnering agreements. Other generic companies such as Barr Pharmaceutical Inc. and Mylan Labs say such deals undermine the benefit of the 6-month exclusivity law, and therefore would discourage a generic drug company from initiating a patent challenge.

The Mylan suit in question was filed in the U.S. District Court in San Francisco against Proctor & Gamble Co. and Watson who are selling a "branded" generic version of P&G's antibiotic drug Macrobid. Mylan has also petitioned the FDA to amend its regulations to force authorized generics to abide by the exclusive 6-month sales period.

A federal appeals court has reversed the decision of the lower court and thus Dr. Reddy's Laboratories Ltd. will be barred from selling its version of Pfizer's Inc. hypertension drug Novarsc. Novarsc had sales of over $4 billion in 2003. The lower court had ruled that Dr. Reddy's version of the drug violated Ptizer's patent that covered all aspects of the chemical amlodipine. Dr. Reddy had hoped that the patent did not cover all molecules of the chemical, and at the same time it argued that it could use the research data that Pfizer used to get the FDA to approve Novarsc.

The FDA has announced that it is re-evaluating its decision to allow Dr. Reddy's Laboratories Ltd. to market its version of Pfizer's blood pressure medication Novarsc. The agency has acted after Pfizer sued them to prevent the enforcement of their decision in November 2003 to allow the sale of the generic version of the drug. The question in the case revolves around the issue of the "source of data" that the agency relied on to approve the generic version of the drug.

Instead of applying for a true generic of the Pfizer drug, which must be biologically equivalent to the original, Dr. Reddy's version of the drug, relied on a slightly different molecule. This allowed Dr. Reddy's to skirt Pfizer's patents and submit different data than required for a true generic. Pfizer claimed, in its suit brought against the approval by the FDA, that the agency used Pfizer's own data to evaluate the Dr. Reddy's drug. This would be an improper use of Pfizer's intellectual property right.

The issue in the case seems to boil down to two issues. The first issue is whether or not the FDA can use data developed by the patent holding drug company to approve a generic drug that involves a slightly different molecule, and secondly whether or not the generic drug company has to develop its own data in this matter.

Much has been written about the fact that generic drugs can help reduce the cost of prescription drugs by as much as 80%. A new category of generic drug has arisen however that does not help the consumer as much as is the usual case. This new category of generic drug is called a "branded" generic drug.

A drug does not have to be a virtual copy of the branded original drug for it to be approved by the FDA. Under the law, which is known as the 505(b)(2) pathway, a generic drug's chemistry can be slightly different from that of the branded patented drug, and yet the FDA can approve the drug for consumption and sale to the public.

This route for approval from the FDA does not require the original proof of safety and effectiveness mandatory for approving new brand-name drugs. It also does not require the kinds of data necessary for the approval of regular generic drugs. The formulation of the generic drug is slightly different from that of the branded drug. It is intended to act in the same manner, as is the branded drug.

Because it differs slightly from the branded drug the pharmacist can't substitute the "generic branded drug" for the brand name drug. The FDA has interpreted the law over the years to mean that applicants using this rule can rely on research done by the original drug maker, even if it is confidential. In a controversial decision in connection with the 505(b)(2) approval process, the FDA approved Dr. Reddy's copycat version of Pfizer's best selling blood-pressure Novarsc, three years before the patent was due to expire. Pfizer announce that it would sue the FDA over the approval that it granted to Dr. Reddy for its medication, charging the agency overstepped its authority in allowing the drug onto the market before the expiration of the patent.


Dr. Reddy's copycat version of Norvarsc called AmVaz has not been launched yet, since the company has not decided whether or not to bring the drug before an the appellate court has ruled on the matter. Norvarsc had over $3.8 billion in sales last year.

The cost advantage of generic drugs over branded drugs is slipping. Last year the average price of generic drugs rose 8%, twice the increase of branded drugs. The average 2001 profit margin for the top generics companies was 16% versus the 20% that it was for the branded companies. Generic drugs now make up more than 50% of all prescriptions filled in the U.S. last year. According to IMS Health, a health-information company, total sales of "branded" generics was $16.9 billion in 2002, and therefore they exceeded those of traditional generics, which had $15.4 billion in sales in 2002.

In 2003 there was approximately 1.8 billion prescriptions for generic drugs versus about 1.6 billion for branded prescription drugs in the same period. It was the second year in a row that the total number of prescriptions for generic drugs led those of branded drugs.

There was an article written by Gardiner Harris and Joanna Slater in the Wall St. Journal entitled "Drug Makers See 'Branded Generics' Eating Into Profits". The authors wrote: "Traditional generics must contain the active ingredient of the branded drug, and tests must show that the generic acts in the body in a way identical to that of the branded drug. Pharmacists can substitute a traditional generic for a branded drug in most cases without getting permission from the patient, doctor or insurance company." The article went on to state: "Branded generics, however, still contain the same active ingredient as the original branded drug but often act somewhat differently in the body. Some are longer lasting; some contain slightly different sister compounds, or "salts".

 Up until recently the generic drug companies had to wait until a patent expired before bringing out its generic version of a drug. Back in 1997 the FDA granted the first company to file and win a patent suit against a brand drug company the exclusive right to sell the drug for a 6-month period of time. On the other hand this led to the brand name drug companies trying all sorts of new gimmicks to try and extend the life of a drug's patent protection long past the original patent's life.

According to analysts the average number of patents protecting a drug has increased from 2 to 12 in the last 6 years since the law was passed. Generic drug companies filed 83 patent challenges in 2002, which was up from just 7 in 1992. Lately the generic drug companies have gotten more and more aggressive so that they are now filing legal challenges to the patents that normally would have many more years of protection. Rule IV objections are becoming commonplace in actions before the FDA.

In the case of the branded generics, the generic drug companies argue that their products don't infringe on the patent protection "because it is made of a different formulation, even though it has the same effect as a branded drug." In a recent case that illuminates this point, the generic Indian drug company Dr. Reddy's Laboratories won a court decision in the federal court in Newark, N.J., against Pfizer Inc. a full three years before the expiration of the patent for its block-buster blood-pressure drug Norvasc. A federal circuit court is now reviewing the lower court's decision.

Norvasc accounted for $3.8 billion in sales for Pfizer last year. The original patent for Norvasc had been extended several years by a federal law that was passed because of the length of time that it had taken to be reviewed by the FDA before it was granted approval. Keep in mind that the life of a patent was 20 years at that time. Since it took the FDA a long time to pass on the safety of the drug before it was approved, in effect this cut down on the length of time that Pfizer could exclusively sell the drug. The law has now been changed so that the patent protection for a drug is now 17 years from the time that the FDA grants its approval.

In looking at the law that extended the patent life for Norvarsc, G.V. Prasad, chief executive for Dr. Reddy, the Indian generic drug company found that Congress hadn't actually extended the original patents. In fact the law merely granted an exclusive right to sell the drug for an extended period of time. Since the original patent for Norvasc protected both the chemical structure for Novarsc and a host of sister compounds as well. These sister compounds or "salts" are nearly identical to the original compound and work just as well. What Dr. Reddy's did at that point was realize that the patent extension did not protect the sister compounds on which they based their generic drug.

Thus we now have the generic drug companies taking advantage of the law to cut short the patent life of certain drugs. The brand name drug company which has spent the money for the R&D on the drug is being deprived of getting the full fruits of its labor and monetary investment. In effect this is the reverse of when the brand name drug companies try all sorts of devious means to extend the patent life of one of their drugs.

FOR AN INFORMATIVE AND PERSONAL ARTICLE ON PRACTICAL SUGGESTIONS WHEN SELECTING A NURSING HOME SEE OUR ARTICLE "How to Select a Nursing Home"

By Allan Rubin
updated December 17, 2011

http://www.therubins.com

To e-mail: hrubin12@nyc.rr.com or rubin@brainlink.com

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