Behind the Curtains of Generic Drugs – Facts & Numbers

When you read this article, at this very moment someone’s buying some prescription pills. According to Mayo Clinic research, 70% of Americans take at least one prescription drug per year, and the amount of issued prescriptions equals roughly 5.2bn of units. The expenses on prescription drugs have reached a sky-high $250 billion mark in 2009, which meant 12% of total personal health care expenses, and the tendency is all about the increase.

In aspiration to decrease health&care expenses people resort to time-tested solutions, such as generic drugs, serving as an alternative to costly original brands. It is also admitted that taking generic medications can ensure an up to $10bn annual decrease as for total consumer expenses. So why don’t we simply switch to generics? Let’s have a closer look at the real state of affairs.

So what are generic drugs?

A generic drug represents a bioidentical copy of the original medication, so it must replicate the original in many ways. Therefore, a generic drug must have the identical characteristics as for:

– dosage form
– effect
– safety
– administration method
– quality
– the way the pill gets and behaves in the body

The production company submits the necessary research documents for approval prior to getting the green light from FDA, the most authoritative regulator in the US.

Why generic products are more affordable?

A branded medication needs to take a long path of 5 – 15 years of clinical researches and trials in controlled groups (as a rule, in animals and then in humans). During this lengthy process, the manufacturer must demonstrate that its product is safe and effective enough to get the approval for sales. The expenditures for this process are going through the roof, ranging from 500ml – 1bn. (or even more) in investments. Once the new medication is approved, the enterprise goes through through the thorns of patenting. This implies that no other manufacturer can produce the medication until the patent’s expiry date, which is generally 10-15 years.

Once the patent for a brand name medication expires, it automatically clears the road for pharmaceutical businesses that can duplicate the medication and offer it in nonexclusive forms. Launching sales for these companies is all about demonstrating that the products produced come with the same characteristics as the brand name drug. Thus, such businesses don’t need to put gigantic efforts into production in the light of the fact that they don’t need to design or test the medication’s formula to acquire the desired FDA approval. Fewer operational expenses means a lower price.

By the time the patent is about to terminate, a variety of manufacturers are in the state of full combat readiness. These guys are many, which gives birth to healthy competition and an inevitable impact on the end price.

Are generics really safe?

Overwhelmingly, yes. The business that focuses on generic medications must demonstrate that its product is up to 80%-125% bioequivalent to the first brand name drug. This is how it works: a brand name medication is considered; let’s say 100mg of its composition enters the bloodstream. Therefore, the generic analog must demonstrate 80 – 125% success coefficient, which means 80 – 125mg of the drug must enter the bloodstream. This gives some space for the drug variations – the manufacturing companies release plenty of modifications under its own titles.

In some cases medications demonstrate comprehensive, safe effect when the medication enters the bloodstream in tiny ranges. These ranges are also referred to as ‘narrow therapeutic windows’, indicating that even insignificant changes in the quantity may have a considerable impact on the action of the drug. Whether it is below or above therapeutic norm, in both cases the drug doesn’t work as it is intended to: the insufficient dose means weak or zero effect, while larger doses may even pose risk to your health.

There’s a widespread myth that branded medications are produced in the neoteric laboratories, while generics production facilities leave much to be desired. Although it has little to do with reality – FDA carries out around 5,000 inspections of laboratories and manufacturing centers. These inspections are just one of the many mechanisms for quality control FDA takes advantage of. The risk of counterfeit products rises significantly when people buy products from one-day internet companies and grey/black market dealers.

The numbers & facts

In accordance with Frost and Sullivan research, the United States holds the leadership as for generics market saturation; the country’s share equals around 53% of the global market as for the revenue in 2012, leaving European states far behind. Since 1984 the share of generic drugs has risen from 17% to that mark and as far as it goes there probably would be another 10% increase in the nearest decade.

Of course, the Big Pharma companies are not happy with how it goes on. Finding themselves comfortably with billions in revenue (e.g. a full year revenue of Pfizer alone has reached $49bn in 2014), these companies have a wide array of instruments to manipulate the pricing. Even the pricing of their competitors. In accordance with the report published at Senator Bernie Sanders official website, the prices are rocketing for those drugs that have been accessible for a long period of time. Thus, e.g. doxycycline, a powerful antibiotic drug with a wide scope of action experienced a price surge from $20 to $1,849 average market price in as little as one year.

Zero Hedge, famous for its exploding articles, is convinced that the scope of revenue opportunities is getting thinner, connecting the abrupt increase in generic pills pricing with the unquenchable hunger for more in ‘Big Pharma cartel’ and the result of a thoroughly planned campaign against the rising competition.

Well, indeed the total 8,000% increase (calculated all the positions in the from the B.Sanders’ report) leaves plenty of food for thought and virtually nothing as for grounded motivation behind it. Lobbying the interests seems something that Big Pharma players can afford. Thus, Sunlight Foundation research conducted in 2014 reveals that the industry reps are the most active lobbyists as for the Trans-Pacific Partnership adjustments.

With so many powers behind the giants, is this the war generic companies can win… or even compete on a fair basis?