Off-Patent Drugs That Lack Generic Competition Can Be Costly
Solutions could save federal government more than $1 billion annually for these single-source drugs.
The FDA has been working since 2017 to encourage generic competition for off-patent, older drugs that do not have considerable existing competition.
Referred to as single-source drugs, they also have caught the attention of policy makers and politicians, who have offered many solutions including allowances for importation from manufacturers in other countries and instructing the federal government itself to manufacture these drugs.
These drugs account for more than $1 billion in federal spending. Reducing their cost could benefit the patients who depend on them, according to the results of a study published in the Journal of General Internal Medicine.1
Pricing and Availability
Using data from the FDA’s 2019 List of Off-Patent, Off-Exclusivity Drugs Without an Approved Generic and 2018 annual drug spending from the Medicaid and Medicare Parts B and D Spending Dashboards, investigators calculated median and total spending for all drugs on the FDA’s list except for duplicates, drugs not listed in the Medicare or Medicaid Drug Spending Dashboards, and drugs with direct generic competition or competition from near-identical products. The final study cohort consisted of 137 single-source drugs with available Medicaid or Medicare spending data in 2018, of which approximately 42% were administered orally, 26% were injected, and 33% had another route of administration.1
On a per-drug basis, the median federal spending was $600,000 post rebate, with the total spending for all drugs in the study cohort reaching $1.6 billion. The top 20 drugs accounted for 89% of total spending, with varying estimates of rebate totals leading to a total spending range of $1 billion to $2.2 billion. Estimating that policies that increase competition or otherwise reduce the prices of these drugs would cut spending by 20% to 80%, the investigators concluded that the potential federal savings in 2018 ranged from $328 million to $1.3 billion. However, spending on these drugs represents just a fraction of the total annual drug spending by Medicaid and Medicare, which is more than $100 billion.1
There are potential strong public health incentives for the reduction of cost for these medications, according to the investigators.
Many of the single-source drugs on the FDA list are essential medicines, meaning that price hikes result in significant financial burdens for patients who depend on them, according to the study. These include brinzolamide (Azopt), conjugated estrogens (Premarin), and octreotide acetate (Sandostatin LAR).2
Although policies that lower the costs of these drugs are unlikely to make a substantial impact on the overall federal prescription drug spending, there is still a potential benefit cost benefit for patients.1
A prior study established the potential for importing off-patent drugs from independent manufacturers outside the United States as a cost-saving solution. In a 2018 study evaluating whether off-patent prescription medications were available from independent manufacturers approved in other well-regulated settings across the globe, investigators reviewed novel tablet or capsule prescription drugs approved by the FDA since 1939 that were no longer protected by patents or other market exclusivity with 3 or fewer generic versions available.
The study results showed that 64% of the 170 eligible study drugs had at least 1 manufacturer approved by a regulator outside the United States and 19% had 4 or more. There were 44 drugs without any FDA- approved generic version in the study cohort, 21 of which were available from at least 1 manufacturer approved by 1 of the 7 non-US regulators and 2 of which were available from 4 or more manufacturers.3
Facilitating access to these manufacturers in the United States could help sustain access to off-patent drugs, especially those that are essential, according to the study authors.3
However, although the drugs evaluated for the study were all capsule or tablet medications, some of the drugs on the FDA list may have little competition because of technical challenges in producing a generic, such as products delivered through inhalers and topical formulations. Generic drug manufacturers must ensure that the drugs they produce contain the same active pharmaceutical ingredients as the brand-name medications. For these medications, reducing prices may require enhanced government negotiating power.1
1. Rome BN, Kesselheim AS. Federal spending on off-patent drugs that lack generic competition. J Gen Intern Med. 2021;36(3):821-823 (2021). doi:10.1007/s11606-020-05752-y
2. Table 2 Top 20 off-patent drugs lacking generic competition with highest federal spending. SpringerLink. Accessed October 13, 2021. https://link.springer.com/article/10.1007/s11606-020-05752-y/tables/2
3. Gupta R, Bollyky TJ, Cohen M, Ross JS, Kesselheim AS. Affordability and availability of off-patent drugs in the United States—the case for importing from abroad: observational study. BMJ. 2018;360:k831. doi:10.1136/bmj.k831