By Alex Nixon
Some of the world’s best-selling prescription drugs are coming off patent in the next 14 months, creating a boon for generic drug makers such as Mylan Inc. and lowering costs for millions of patients.
Of the top 20 drugs sold in the United States last year, eight will lose patent protection by end of 2012, representing at least $25 billion in sales for their makers, according to IBISWorld, a Los Angeles-based industry research firm.
It is the biggest wave of patented pharmaceuticals to go generic and will cut drug prices on many of the most commonly prescribed medicines by 40 percent to 80 percent, experts say.
“I’ve been a pharmacist for 13 years, and there has never been a precedent like this,” said Dr. Eric Culley, director of clinical pharmacy services for Highmark Inc., Pennsylvania’s largest insurer. “2012 is a banner year for the generic industry.”
Cholesterol drug Lipitor is the best-selling drug in America, bringing more than $7 billion for its maker, Pfizer Inc. Lipitor, which goes off patent at the end of next month, retails for between $115 and $160 a month, depending on dosage, according to Drugstore.com. The No. 3 drug, blood thinner Plavix, retails for $750 a month at its highest dose. Type 2 diabetes drug Actos sells for about $250 a month. Both go generic in 2012.
Canonsburg-based generic drug maker Mylan will have generic versions of Plavix and Actos on the market next year and it will sell a Lipitor copy in Europe. Those are the big name drugs that are part of a 500-product debut in 2012 that’s expected to boost Mylan’s sales by $800 million.
The flood of new generics is good news for patients, especially older ones who often take Lipitor, Plavix and Actos plus other medications and often are on tight budgets.
Dr. LaDonna Fuge has seen many elderly patients who stop refilling prescriptions because of cost.
“Many are paying $50 a month (co-pay) for each one,” she said. “They’re trying to figure out how to manage their health expenses.”
The Monroeville family practice physician with Premier Medical Associates predicts overall health costs will be decreased not only by the lower cost of prescription medicine but by lowering the number of heart attacks, strokes and other complications when people who need these drugs go off them.
“A hospital stay could cost more than that over an entire year,” Fuge said of medication costs.
Margaret Campbell was glad to hear that the cost of Plavix would be coming down next year. The North Versailles 79-year-old has a generous prescription drug plan through her husband’s former employer, which requires only a $30 co-pay for a 90-day supply of Plavix.
But she doesn’t expect the benefit to last forever.
“I’ve seen too many companies drop their retirees,” she said.
And with their retirement savings getting smaller by the year, Campbell said she and her husband are increasingly worried about paying medical care that will seems to only get more expensive each year.
Companies such as Mylan are eager to convert the loss of patent protection into new sales. Mylan, the third largest generic drug maker in the world, has approval to make copies of five of the eight top-sellers going generic over the next 14 months. Combined, the five drugs — Plavix, Actos, asthma drug Singulair and antidepressants Lexapro and Zyprexa — had U.S. sales of $15.1 billion last year, according to IBISWorld.
“Those are extremely large branded products. But what they mean to us varies greatly,” Heather Bresch, president of Mylan, said in an interview with the Tribune-Review last week after the company’s third-quarter earnings report. It was the same day that Bresch, 42, was promoted to CEO of Mylan starting Jan. 1.
The company employs about 275 workers in the Pittsburgh area. It has about 2,900 workers in Morgantown, W.Va.
Bresch said that while a lot of attention is paid to the “blockbuster” drugs such as Lipitor and Plavix, there will be many other manufacturers competing with Mylan to sell generic versions that push prices down even more. Generic drug makers can get exclusive rights to sell a new generic drug for six months if it is the first to file an application to the Food and Drug Administration, which greatly increases initial profitability. Bresch said.
Cully, the Highmark pharmacy director, said when one generic maker has exclusivity, the price generally only drops about 10 percent to 20 percent.
“And sometimes it’s not even that much,” he said. “What happens after that (exclusivity period ends) is you usually see a flood of new entrants into the market, and prices will drop precipitously.”
Mylan doesn’t have exclusivity on the five top drugs for which it has versions.
“Depending on the competition, a branded product can go from $1 billion (in sales) to $50 million overnight,” Bresch said. “The best case scenario is … keeping 60 percent of the value of a brand.”
Bresch said Mylan’s strategy is to pursue a wide range of generic pharmaceuticals from top sellers to niche medicines.
“We’ve diversified away from being reliant on any one product or geography. … So we’re not a one-hit wonder of a company.”
It’s a strategy that’s working well for Mylan, said David Risinger, a Morgan Stanley analyst. The company is in “a very strong position” to grow its sales next year from new generic medicines, he said.
Mylan is recognized in the industry for quality, Risinger said.
“The company has had much more consistent quality manufacturing than its peers and that has certainly driven a lot of success for them,” he said. “What I’ve heard from the customer base is the customer can count on Mylan.”
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