Q&A: AAM’s Davis discusses new opportunities, old challenges in generics industry

Press enter to search
Close search
Open Menu

Q&A: AAM’s Davis discusses new opportunities, old challenges in generics industry

It’s been an interesting year for the generics industry. While the volume of dispensed prescriptions rose, the Food and Drug Administration, under a new commissioner, has taken several steps that certainly will impact the industry in the short and long terms. Drug Store News sat down with Chester “Chip” Davis, president and CEO of the Association for Accessible Medicines, to discuss how the generics industry is adapting to a changing market, and new opportunities manufacturers may be looking to pursue.

Drug Store News: As you know better than just about anyone, the generics industry has had a busy year. What key efforts have you seen from the Trump Administration and FDA to spur competition, and how does it differ from past FDA policy?
Chip Davis: President Trump has repeatedly talked about the need to lower overall drug costs. For generics, which now make up 89% of all prescriptions in the United States, but do so for only 26% of the cost, we think that we are defining the value proposition in terms of serving a significant lever or constraint against increasing brand and specialty drug costs. And as a result of that, for those who think a market-based system is the best way to ensure competition and access, there needed to be more attention and focus paid to the generics side of the pharmaceutical ecosystem.

Enter new FDA commissioner Dr. Scott Gottlieb, who immediately upon confirmation was highlighting such things as his drug competition action plan to make sure both the application and approval processes for generics become more effective and efficient. The agency’s prioritization is not just for first-generic applications. It is prioritizing first, second and third generic applications in order to accelerate the time to commoditize the market for any branded drug that has gone off patent. Gottlieb’s recent commitment to an enhanced pathway for complex products are all, I think, evidence of his commitment and the administration’s commitment to try and use market forces to lower overall drug costs.

DSN: In addition to complex generics, biosimilars continue to be an opportunity for manufacturers. What are some of the challenges for generics makers moving into biosimilars in particular?
Davis: What you see in a word is litigation. Less than half the number of biosimilars that have been approved in the United States by the FDA are currently on the market, and the reason for that is that the other ones are still tied up in litigation.

Our members are seeing extraordinarily high levels of effort by branded and biologic companies to increase the level of anti-competitive behavior to keep biosimilars off the market. Whether it’s through litigation or the filing of suspect late-stage patents, where as the main ingredient patent is coming up on the date of expiry, a branded company will file tens of additional patents. And even if they’re ultimately struck down as invalid, it still takes several years to go through that process. All the while patients and payers are not getting the benefit of that competition in the marketplace.

What ultimately happens is that officials at biosimilar manufacturers, who were originally anticipating a two- or two-and-a-half year launch based on estimates of the regulatory process, are seeing a four-year launch period due to litigation delays. Ultimately, officials at biosimilar companies will question whether it is a viable business to continue to engage in.

Everybody understands why an individual manufacturer is taking the actions that they’re taking to try and protect their franchise, relative to fiduciary responsibility. The question is whether we want a public policy environment that favors that protectionism over the competition that was originally anticipated by Hatch-Waxman and/or the [Biologics Price Competition and Innovation Act, which established the current biosimilar approval pathway].

DSN: What would you say are the AAM’s, as well as the generics industry’s, biggest priorities moving forward?
In an environment where drug costs are one of the primary concerns of the American public right now — Democrats, Independents and Republicans alike — it’s making sure that policymakers understand that generics are actually driving the savings in the system and not the cost. It also is important to understand that, for several reasons, the incredible value propositions that generics provide to patients, providers and payers are increasingly at risk because of market distortions. There are other factors too, including policy miscues at the federal and state level. Another factor is the anti-competitive behavior that we are seeing from branded companies, which while publicly may be saying they support generic competition, through their actions are increasingly making efforts to deny or delay generic competition from ever getting to the market.

We have enormous consolidation in the buyer community, where these three purchasing consortiums are basically covering 90% of generic retail. Then you have policymakers who are trying to say that generics and brands should be treated alike, or that generics should be treated more harshly than brands. If these things are not addressed and rectified, then our concern is that over time we have fewer generic manufacturers. We will have smaller portfolios, not larger, and that means for the overall system less competition. And economically we know that translates into overall higher costs. All of which we want to avoid.