Going Generic: Insiders Discuss Generic Drug Legislation

Pharmacy Times, Volume 0, 0

As the interest in generic drugsincreases, both manufacturersand pharmacists face a numberof issues related to government legislationand consumer education. Thisfall, at the 7th Annual Generic DrugsSummit, a panel of experts convened todiscuss a number of matters concerningthe generic drugs industry today. Thepanel was moderated by PharmacyTimes Editor-in-Chief Fred M. Eckel, RPh,MS, professor and director of the Officeof Practice Development and Educationat the School of Pharmacy, University ofNorth Carolina at Chapel Hill.

At present, generics represent 56% ofthe total prescriptions dispensed in theUnited States. In an effort to decreasehealth care costs, pharmaceutical professionalsare striving to augment genericdrug usage into the 60% to 70% range.Ted Lingerfeldt, director of pharmacyprocurement at Kerr Drug Inc, noted thathis organization has succeeded inachieving 60% utilization.

The education of pharmacists and, ultimately,patients, is crucial in promotingthe use of generic drugs, according toLingerfeldt. "You have to have a verystrong education and effort within yourstores so that pharmacists can educatethe consumer and the other health professionalsinvolved in patient care as tothe value of generics and as to exactlytheir safety and their efficacy so thephysician can feel totally comfortable inprescribing or allowing the substitution."

"Once our educational plan wasimplemented, we reinforced generic utilizationthrough the technology incorporatedin our pharmacy dispensing system,"said Lingerfeldt. "These effortsenabled Kerr to be well-positioned tomaximize generic utilization with theimplementation of Part D under MMA[Medicare Modernization Act]. Theresulting increase in utilization and efficiencybenefits all our patients."

Technological advances, such as messagingbefore and after dispensation,serve to facilitate the sale of genericdrugs. "[There are] incentives for pharmaciststo dispense generics and make iteasier for them to dispense genericsthrough technology," said Edith Rosato,RPh, senior vice president of pharmacyaffairs for the National Association ofChain Drug Stores (NACDS). Over thenext several years, $60 billion worth ofdrugs will be coming off patent—pavingthe way for generic drugs to play an evenlarger role.

Rosato added that, with the incorporationof 3-, 4-, 5-, and 6-tier copays,patients are growing less reluctant topurchase generic drugs over brandedones. "It is a lot easier for a pharmacist tohave a discussion with the patient when[he or she] can say, ‘We can use a genericand just pay $2, versus 20% of the costof the drug if you are on tier 5 or 6.'"

Pricing Problems

A primary issue, however, is the effectthat maximum allowable cost pricingand potential average manufacturerprice initiatives may have on the dispensingof generic drugs in the near future.For many pharmacists, it could makemore sense to promote brand nameproducts.

"I think it is something we should bevery concerned about," said Phil Burgess,RPh, national director of pharmacy affairsat Walgreens. "Certainly all of us knowthe value that generics bring to providingcost-effective health care. We at Walgreensdo everything possible to promotegenerics and have partnered verywell with the generic industry in order topromote generics."

At the same time, it is dollars you taketo the bank—not percentages, Burgesspointed out. "Sometimes people look atgeneric pharmaceuticals, and they lookat it purely based upon a percent profit,as compared with dollars of profit. Andas we look to these models that arebeing put forth with regards to the variouscost controls that are being recommended,if in fact the dollars of profit aredrained out of the ability to dispensegenerics, then it becomes more profitableto dispense a branded productthan a generic. Then that's going to causesome significant negative impacts on thedispensing of generic pharmaceuticals."

Authorized Generics?Friend or Foe?

Authorized generics—drugs approvedunder a new drug application (NDA) forthe innovator marketed and distributedunder a generic label by a generic company—allow branded companies tomaintain some revenue stream thatwould otherwise be lost as a result ofcompetition from the generic sector."Branded pharmaceutical companiescontinue to look at authorized genericopportunities as part of life-cycle management,"said Steve Goodman, RPh,vice president of marketing for genericsat Watson Pharma Inc.

"Because of the recent decline in bringingnew innovative products to market,branded pharmaceutical companies lookfor ways to hold onto revenue streamsfor their NDA products as generic competitiongets closer," Goodman explained."Authorized generic agreements haveproven successful and as such are likelyto continue into the future."

This trend has caused some controversy.William Kennally, president ofGreenstone Ltd, a wholly owned subsidiaryof Pfizer Inc, played it down,arguing that increased competition inthe generic arena will result in lowercosts. "There is a lot of credible evidencethat demonstrates the valueauthorized generics bring to the marketplace,"he said. "Authorized genericsincrease generic access for patients. Inaddition, authorized generics increasecompetition, which results in lowerpricing, so patients, customers, andpayers are all paying less as a result ofour market entry."

Kennally agreed that research-basedpharmaceutical companies like Pfizershould be interested in ensuring a stronggeneric market. While Pfizer hasGreenstone to market authorized generics,"most brand companies have keyproducts that are represented by anauthorized generic once competitionoccurs in the marketplace. There's a lotof value for the brand company," he said."The dynamics of how the generic marketworks provides strategic value thathelps brand companies understand theimpact of the generic market on brandproducts," he added.

Kennally continued, "There's a lot ofevidence out there right now that mostbrand companies are very interested inthe strength of the generic marketplace."As an authorized generic company, headded, Greenstone believes in workingtogether with retail pharmacy in order tohelp educate pharmacists in terms ofgeneric availability to increase the genericprescription rate.

"I think one of the values that companieslike Greenstone provide is that youknow our product is the same size,shape, and color as the branded product,"said Kennally. Therefore, "Greenstoneand other authorized generics inthe marketplace allow the pharmacist toconfer with patients, consult with them,and make the transition from the brandedproduct to the generic easier."

Playing a New Role

Under the MMA, medication therapymanagement has pharmacists enthusiasticabout the evolution of their trade.Theyare no longer mere dispensers of drugs,but an increasing source of informationfor their clients. "[It increases] the rolepharmacists can play in helping patientsmanage their therapy," Burgess said.

"As pharmacists?we are moving awayfrom the whole concept of being dispensersof drugs—putting pills in bottles—to being a dispenser of information,"he added. "What that is going to lead towill be in fact these interactions, communicationswith physicians. This has hugeimplications for the generic industry."

Pills via Post

Mandatory mailing of refill medicationsalso is reshaping how drugs are administeredand is producing mixed feelingswithin the industry. "Anytime you havenontraditional folks making health caredecisions, there is reason to be concerned[about] that," said Kennally.

"Mandatory mail is one potential strategythat is intended to try to lowerhealth care costs," he continued."However, there is conflict on whetherthat is cost-effective. IMS [Health] hasstated that the mail growth has slowedover previous growth levels, and theNCPA [National Community PharmacistsAssociation] recently commented thatthe overall value that patients get fromgoing to the community pharmacist maybe enhanced over mail.You've got differentsets of opinions on whether mandatorymail is going to be a successfullong-term strategy."

Retailers are devising their own tacticsto address this problem. Walgreens, forexample, offers a program wherebypatients can obtain a 90-day refill at theretail level—similar to what can be procuredvia mail order—enabling patientsto enjoy face-to-face contact with theirpharmacist if they so desire.

"We believe that mail service shouldbe an option," Burgess said, noting thatWalgreens currently operates 3 mailorderhouses.

"There are people that do view mailservice as increased convenience," hesaid. "We think it should be an optionthat is available to people to be able toget their prescriptions through the mail ifin fact they want to. We, however, areopposed to mandatory mail programswhere people are forced into mandatorymail or that they have no offer to be ableto get their prescriptions in the retailcommunity pharmacy."

Ms. Heinze is a freelance writerbased in Vancouver, British Columbia.