For the makers of brand-name prescription drugs, generic competition is about as welcome as a virus.
In the first year that a generic competitor goes on the market, a brand-name drug loses on average more than half of its market share, and its price drops with each new generic company that produces a copycat, May 2005 study said.
So companies that are about to face that competition have big incentives to delay the entry of new generics to the market -- and to erect obstacles to switching to the cheaper upstarts. Even a few months' delay in a generic's entry can salvage billions in revenue for the makers of a blockbuster pioneer drug.
The makers of brand-name pharmaceuticals also have powerful levers to maintain their exclusive hold on the market for their drug, or to staunch the loss of customers. They can slow FDA approval of a generic by filing "citizens' petitions." And they can lobby for state laws that would forbid switching patients from a brand-name drug to a generic without, say, the express approval of the prescribing doctor.
Citizens' petitions were designed to allow the public -- including consumers and watchdog groups -- to question the bioequivalence of a proposed generic or dispute a generic firm's capacity or legal right to produce a copycat drug. When filed, a citizens' petition triggers an obligatory FDA review of the issues raised -- a process that can delay a generic's approval by months or even years.
Citizens' petitions are now overwhelmingly filed by or on behalf of brand-name companies, and the FDA dismisses about three-quarters of them as without merit, says Kathleen Jaeger of the Generic Pharmaceutical Assn.
In addition to causing delay, these petitions often aim to cast suspicion among the public about a generic's effectiveness. "If you have a major blockbuster drug, why aren't you going to file one?" Jaeger said. "It means a substantial amount of money."
When facing the prospect of a new generic competitor, brand-name drug companies also work to get state legislatures to adopt "carve-out" laws, which specify that for certain classes of medication -- say, epilepsy drugs or immunosuppressants used on transplant patients -- brand-names can be substituted with generics only in limited circumstances. Generally, legislators cite patient-safety concerns for limiting generic substitution.
Last year, some 30 state legislatures considered about 60 such carve-out bills, and three passed. An additional 26 bills, including a California proposal that would limit generic substitution of epilepsy drugs, remain under consideration. Such laws "have a major freezing effect on physicians and patients and pharmacists, and that's what [the brand-name drug companies] are hoping for," Jaeger said.
But physicians and medical societies that have filed citizens' petitions and lobbied for laws limiting generic substitution reject the charge that they are doing the bidding of brand-name drug companies.
"We're advocates for the patient. We have no conflict of interest with the drug companies, and we're not against generics," said Dr. Flavio Vincenti, president of the American Society of Transplantation. Last September, Vincenti's medical specialist group filed a citizens' petition calling for more stringent FDA review of generic immunosuppressant drugs for transplant patients. And it has backed a wide range of state laws that would constrain generic substitution.
"We just want to make sure that when they're approved and dispensed, these drugs are in the best interests of the patient, and to make sure that the patient and physician know when there has been a switch," Vincenti said. "The question is, what comes first -- the patient's best interests or the interests of bureaucrats and pharmacies who are going to make decisions that may not always be in the patient's best interests?"