March 9, 2011 -- There could soon be some good news for consumers weary of soaring health care costs: The patents for several best-selling medications will expire this year, clearing the path for lower-cost generics to take their place.
According to IBIS World, an industry research firm, some of the blockbuster drugs whose patents expire this year are the cholesterol buster Lipitor; the antipsychotic Zyprexa; the antibiotic Levaquin; Concerta, a drug used to treat attention deficit disorder and attention deficit-hyperactivity disorder; and Protonix, an antacid. Together, these drugs brought in more than $10 billion in sales in 2010.
Pfizer, the manufacturer of Lipitor, managed to hold off competition until later this year. Ranbaxy, an India-based pharmaceutical company, agreed to delay release of its generic version of Lipitor until Nov. 30. According to its website, Ranbaxy will have the exclusive right to sell its drug in the U.S. for six months.
Experts say when generic versions of these drugs make it to market, pharmaceutical companies could face billions in potential losses, while consumers could save tens of billions of dollars a year.
"Studies suggest that the average cost of generics is 71 percent less than the cost of brand-name drugs," said James Zhang, associate professor and director of the Pharmaceutical Economics and Policy Research Program at Virginia Commonwealth University's School of Pharmacy in Richmond, Va. "Studies also suggest that generic drug use accounts for 63 percent of drug use."
Felicia D'Ambrosio says she hopes there will someday be a generic alternative for her medication, NuvaRing, the monthly contraceptive ring. She'll be waiting for a while, since the drug's patent doesn't expire until 2018.
In the meantime, as a freelance writer with no insurance coverage, she's struggling to pay $100 a month for NuvaRing. She suffered adverse side effects from oral contraceptives, which is why she uses this medication.
"Based on the experience I've had with other generic drugs, it would be significantly cheaper and would make a world of difference," she said. "I'm trying to figure out how to afford the medication now."
Until additional lower-cost alternatives become available, D'Ambrosio said people should do research and try to find assistance programs that might help them get certain medications at lower cost. She applied to a program through Pennsylvania's Maternal and Family Health Services, which provides free or low-cost birth control and some women's care to those who qualify.
"Use any resources you can," she said.
Generics vs. Brand Name Drugs
"A generic is about 30 percent cheaper at first and then when lots of copies are made, they will be about 80 percent cheaper or even less expensive than that," said Julie Donohue, assistant professor of health policy and management at the University of Pittsburgh's Graduate School of Public Health.
According to the U.S. Food and Drug Administration, generic drugs must contain the same active ingredients as its counterpart brand name drug. The difference, Donohue said, often lies in the size, shape or color of the pill or tablet.
Despite the similarities between branded drugs and generics, many consumers and physicians are reluctant to trust them.
"A survey of physicians came out recently that showed that doctors believe generics are somehow inferior," said Donohue.
But Donohue pointed out that several studies have shown that the two types of medications are similarly effective when studied in people with cardiovascular disease.
Consumers, she said, should talk to their doctors about the possibility of using generic medications. Generics are often directly substituted for a branded drug, or can be used in place of a brand-name drug that doesn't have a generic counterpart but is in the same class of medications. As an example, people taking Lipitor often opt for the les-expensive simvastatin, the generic form of Zocor. Both Lipitor and Zocor lower cholesterol.
Many generic drugs are available through retail chains like Target and Walmart at a cost of $4 for a 30-day supply. The advantage to using these stores, experts say, is that insurance companies don't have to get involved.
But Mike Wokasch, a pharmacist, author and consultant who spent more than 30 years working in the pharmaceutical industry, said while the $4 price tag is great for consumers, it seems unlikely that generic drug companies will be able to stay afloat by charging so little.
"In the long run, if the marketplace puts so much pressure on generic drugs to reduce cost, it's hard to imagine that companies can actually deliver drugs for $4 a month and remain profitable," he said.
He also said that the increased demand for generic drugs has created drug shortages.
"Of the 150 drugs on the FDA's shortage list, some of them are generic," he said.
Despite the trends, he said he hopes generic drugs remain a strong market presence because of his own medical needs.
"In one month, the price of my branded prescription drug for high cholesterol went from $130 per month to $145 per month at the same pharmacy. Yesterday I changed to a generic drug alternative, which was not the same as the brand I was taking, which will cost me $4 per month."
Costs Vary by Company
For people who have insurance, costs vary by company. The price of the very popular antidepressant Prozac, for example, depends on the insurer. Blue Cross Blue Shield of Michigan, which published an online list of prices for some of the top-prescribed drugs, charges its patients about $140 for a month's worth of the brand name, 20 mg dose from a retail pharmacy. The generic costs only $3. The online pharmacy Medco, the vendor used by many insurance companies for prescription drugs, charges about $65 a month for the brand name at the same dosage from a retail pharmacy. The generic costs $5.
Zhang said cholesterol-lowering statins and drugs like Fosamax, used to treat osteoporosis, have some of the biggest price differentials between brand names and generics.
Because of the big price difference, insurance companies emcpirage consumers to use generics by charging higher co-payments for branded drugs.
"Insurance companies are experimenting more and more with shifting the costs of more expensive drugs onto consumers," said Donohue.
When patents are about to expire, pharmaceutical companies often brace themselves for a huge hit in profits.
"The brand name manufacturer could lose billions in profits," said Zhang.
Companies often reformulate certain drugs shortly before a patent is set to expire. In many cases, that means they will make the same drug but change it to an extended-release formulation, which can guaranty market exclusivity for an extended period of time.
Companies also try to keep up with the competition by investing in more research and development to come up with an even better medication.
The winners of all this competition, it seems, are consumers.
"The net effect of all this is that it's great for society, that's for sure," said Zhang.