Perhaps the most significant sign of this continuing shift to generic drug utilization shows up in the market share data for actual prescriptions dispensed, brands compared with generics and dollar-share of the prescription market.
A recent IMS Health report on the U.S. pharmaceutical market shows that generic drugs had increased their share of the prescription drug market to 82.1% in the 12-month period ended November 30. In 2010, generic drugs accounted for 69.9% of the 4 billion prescriptions dispensed that year.
On a dollar basis, the shift toward generic utilization also is readily apparent. Generic drugs accounted for 17.6% of the nation’s $369 billion prescription drug market in the 12-month period ended November 30, a sharp increase from generics’ 12.7% share in 2010.
A portion of the increase in dollar share of the prescription market is due to the reported price inflation of some generic drugs in 2013. But across the full generic drug universe, price inflation has been more moderate than many news reports have indicated, according to IMS Health vice president of industry relations Doug Long.
“The vast majority of [generic drug price inflation] is fairly conservative, but there have been some opportunistic things that people are aware of,” Long said. A few generic drugs did increase in price by triple-digit percentages in 2014, a factor attributed to shortages of some generics.
“Shortages have allowed generic drug companies to increase prices on a particular molecule,” Long explained. “But much of the growth in the [generics] market is due to more brands coming off patent.”
The growth rate for generic drugs could have been higher last year if generic versions of two drugs that have reached their patent limit — AstraZeneca’s proton pump inhibitor Nexium and Teva’s drug Copaxone for patients with relapsing forms of multiple sclerosis — had been able to come to market.
“Last year, 2014, was a pretty good year,” Long said, “but the caveat is that it would have been a lot better if generic Nexium or Copaxone had hit the market. “Neither of those happened.”
The battle over generic Copaxone has been tied up in court. A federal appeals court had invalidated Teva’s patent on the drug in 2013, but a recent decision on Teva’s appeal appears to have extended Teva’s patent control.
Nexium went off patent in mid-2014, but Ranbaxy, which had the rights to the first generic version, has run into problems with the Food and Drug Administration and hasn’t been able to bring its generic version to market.
In late January, however, FDA granted approval to Teva Pharmaceutical Industries Ltd. for its generic equivalent to Nexium (esomeprazole magnesium). Teva said it is preparing to launch the product in “the near future.” Nexium had U.S. sales of roughly $6 billion in the United States last year.
Among the top five generic drug companies ranked by sales, leader Teva Pharmaceutical Industries achieved 14.5% growth in dollar sales in the year ended November 30 and held a 17.4% share of the U.S. generics market, according to IMS. Second-ranked generics company Mylan Inc. had 21.9% sales growth in this same period, and held 12.9% market share.
Actavis, Sandoz (a unit of Novartis) and Sun Pharma ranked as the next three generic companies in the U.S. market, according to IMS, and Sun recorded the highest growth rate among these three firms, with a 19.8% increase in dollar sales in the year ended November 30.
Among the key issues on the horizon for the generic drug industry, according to Long, are the impact of the recently formed generic drug global purchasing groups (such as Red Oak Sourcing, the joint venture between CVS Health and Cardinal Health), and the likelihood of further consolidation among companies specializing in generic drug development.
IMS Health also noted that there could be implications for the generic drug sector from movement in the prescription-to-O-T-C switch market (for example, an over-the-counter version of Nexium hit the market in 2014) and the progress made at FDA on further guidance on the biosimilar drug market (including the issue of “naming” biosimilars).
“The generic opportunities are abundant in the near term for oral drugs,” Long said. “But the small-molecule opportunities start to dry up at the end of the decade.” This is where the market likely will shift toward follow-on biologic products.
In its report, IMS also noted that pharmacists can “play a critical role” in areas with potential to improve health care delivery and to address the issue of “avoidable costs.” For example, pharmacists can be more active in increasing generic substitution rates, where permitted. IMS estimated “suboptimal generics use” led to $11.9 billion in “avoidable costs” in 2012.