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Strategize Now:
Patents Expiring for Budget-Busting Drugs
While some economists have declared the
recession over, that announcement may
not soothe the fiscal predicaments of those
affected by state budgets. States often
experience ongoing financial difficulties
for up to two years after a recession has
technically ended.
State Medicaid and pharmacy directors,
as well as Medicaid managed care
organizations, continue the struggle to
balance budgets while maintaining high-
quality care. Now, they face an event that
can be viewed as both a boon and an
added complication — the unprecedented
number of brand name drugs with patents
expiring during the next five years.
As the pharmaceutical companies lose
their exclusive rights to manufacture and
distribute these medications, we expect
the widespread availability of lower-cost
generic formulations to generate changes
in providers’ prescribing habits and payers’
approaches to formulary management.
Understanding the benefits
The growing use of generic medications has already helped slow the rate by which American spending on prescription
medication is increasing. U.S. pharmacists dispensed 18 percent more generic drugs between 2005 and 2007; and
generics made up 69 percent of prescriptions filled in 2008. We expect that the use of generics will surge even higher
as large numbers of patents expire during the next few years.
The availability of generic formulations of the most popular and effective drugs can be advantageous to patients,
providers, and payers alike. We anticipate that lower-cost versions of these medications will reduce the cost of
treatment for many conditions and diseases. As these drugs become more accessible to larger numbers of patients,
they will also result in increasingly positive health outcomes.
Choosing the best option
As a drug’s patent approaches its expiration date, the pharmaceutical company that developed it will often launch a
renewed marketing effort. These campaigns — which may include advertisements and supplemental rebates, as well
as drug samples and provider visits from sales representatives — are designed to encourage current and potential
patients, along with their providers, to keep using the branded medication. Some pharmaceutical companies may also
reformulate a drug to regain patent exclusivity, without offering substantive advantages over the generic formulation
of the original.
State Medicaid directors, pharmacy directors, and Medicaid managed care organizations need unbiased information
to accurately compare the short-term savings offered by the drug companies’ supplemental rebate programs with the
long-term savings generated by using the alternative generic formulations. UMass Medical School’s Clinical Pharmacy
Services, offers independent evaluation of each medication within the context of your organization’s individual
circumstances and goals.
Since manufacturing rights are often held by a single manufacturer during the first six months of generic availability,
the generic price may initially be higher than the cost of the brand name with supplemental rebates. But when other
companies can join in the production of the generic drug, the prices fall precipitously.
A supplemental rebate agreement for a brand name drug is more expensive in the long run. These agreements are
binding and seek to lock in a long-term price for the brand-name drug — a price that will seem high once the generic
formulation has been available for six months.
Developing a strategy
With so many brand name drugs entering the generic realm at once, strategic preparation is essential. State Medicaid
and pharmacy directors, along with Medicaid managed care organizations, must determine how to incorporate these
new generic drugs into their formularies, preferably well in advance of their widespread availability. UMass Medical
School’s Clinical Pharmacy Services can help you to analyze your formularies and recommend whether — and how
— to incorporate any or all of the newest generics. We also anticipate how new generics will affect the utilization of
other medications on your formulary or prior authorization list.
Some of the most notable medications going off-patent in the next five years are listed in the table on the following
page. We anticipate that they will have a great impact on states’ pharmacy benefit management practices, including
their formularies. Clinical Pharmacy Services’ innovative, yet practical, solutions can help you make the best
preparations possible for the impending changes.
Brand Names
Current Use Benefit of Generic
with Patent Expiration Dates
Cozaar Cozaar is prescribed across all populations This is one of the most widely used and accepted
(losartan potassium) and disease states for patients with medications for hypertension.
hypertension. It lowers high blood pressure, The arrival of a generic version of Cozaar — the
April 2010 reduces the chances of stroke, and slows first in its class to make the switch — will affect
the advance of kidney disease. the utilization of all other drugs in this class.
Lipitor Lipitor reduces blood cholesterol by Although most of the statin drugs already have
(atorvastatin) blocking an enzyme involved in the generic versions, Lipitor is still widely used,
production of cholesterol. It can reduce the especially in patients who don’t respond to
November 2010 risk of heart attack, stroke, certain kinds generic formulations or require a higher dose
of heart surgeries, and heart-related chest than Lipitor’s generic competitors offer.
Cardiovascular
pain.
Plavix An oral antiplatelet agent used to prevent The availability of generic clopidogrel will make
(clopidogrel) blood clots, Plavix is one of the top brands yet another tool available for patients who are at
in its class, with sales reaching $3.9 billion highest risk for clot-related heart events.
May 2012 in 2008.
Lovenox This injected anticoagulant reduces the risk Lovenox is considered safer than the currently
(enoxaparin) of deep vein thrombosis (blood clot) and available generic medications in its class. With
can help avoid pulmonary embolism. generic availability, this medication’s reduced
August 2012 expense will make it accessible to a wider range
of patients. Although it requires training patients
to self-inject the drug, Lovenox doesn’t require
as many tests as the widely used Coumadin
(warfarin); this will lead to shorter, less expensive
hospital stays.
Accolate Accolate, a long-term treatment, is With generic formulations of Accolate and
(zafirlukast) indicated for the prevention of asthma Singulair available, more patients will have
attacks. the advantage of high-quality results with less
Respiratory
April 2011 expense. Accolate will be the first in its class to
Singulair, also prescribed for long-term be offered as a generic.
Singulair asthma management, may be used for the
(montelukast) prevention of exercise-induced asthma and
control of allergy symptoms as well.
September 2012
Copaxone Copaxone is one of the few multiple Although patients who need this drug are a
Multiple Sclerosis
(glatiramer sclerosis medications outside the biological small percentage of the general population, they
injection) class, which is currently subject to are a significant part of the Medicaid population.
regulatory restrictions that do not allow The annual cost of brand name Copaxone can
November 2014 generic manufacture. reach $20,000 per patient. A generic version
would make this treatment available to more
patients and offer additional treatment options
for this medically fragile, high-cost group.
Brand Names
Current Use Benefit of Generic
with Patent Expiration Dates
Effexor ER This extended-release medication has A generic formulation of Effexor XR would
(venlafaxine hydrochloride) become popular for treating depression allow more providers to offer this medication
and both generalized and social anxiety to patients. While the once-daily extended
July 2010 disorders. In 2008, Effexor reached sales release formulation has the same benefits as
of $2.7 billion. the multiple dose generics already available, it
offers a simplified dosing schedule, which helps
increase adherence rates.
Zyprexa Zyprexa and Seroquel are effective for At generic price points, Zyprexa and Seroquel
(olanzapine) schizophrenia and bipolar disorder. will be available for more patients to try as a first
The Clinical Antipsychotic Trials of course of action to control schizophrenia and
Mental Health
October 2011 Intervention Effectiveness study (CATIE) bipolar disorder. Patients who do not respond or
showed that there are not substantial have intolerable side effects may then proceed to
Seroquel differences between these drugs and more costly medications as necessary.
(quetiapine) the others in their class, but patients
may experience different side effects or
April 2012 varying results.
Cymbalta This medication is approved for This is the first FDA-approved medication for the
(duloxetine) the treatment of depression and treatment of fibromyalgia to go generic.
general anxiety disorders, as well
January 2015 as for managing diabetic peripheral
neuropathic pain and fibromyalgia.
Sales of Cymbalta reached $2.2 billion
in 2008.
Levaquin Levaquin is a fluoroquinolone antibiotic Upper respiratory infections, such as pneumonia,
Infection
(levofloxacin) medicine used in adults for certain types affect a large proportion of patients across all
of bacterial infections, especially upper populations. Sales of Levaquin reached $1.7
July 2011 respiratory. billion in 2008. A generic formulation will reduce
costs and increase accessibility of this agent.
The chart on the next page illustrates the cost pattern that typically occurs when a brand name drug’s patent
expires and a generic alternative becomes available. The manufacturer in this example offered supplemental
rebates for Zocor, a single-source branded product. On top of the standard Medicaid rebate from the Centers
for Medicare & Medicaid Services, this manufacturer’s rebate lowered the cost of Zocor by 50 percent for a
state’s Medicaid program. When the generic alternative simvastatin became available, it cost less than full-price
Zocor but more than Zocor with the rebates. The price plummeted when the generic manufacturer’s six-month
exclusivity agreement expired and multiple companies began producing simvastatin.
Brand Names
Current Use Benefit of Generic
with Patent Expiration Dates
Flomax A selective alpha blocker, Flomax helps Prostate gland enlargement is a common
(tamsulosin) improve urine flow, reducing bladder condition among aging men across all
outlet obstruction due to an enlarged populations. This makes it essential for
April 2010 prostate (benign prostatic hyperplasia). formularies to have an adequate arsenal of
Unlike other generically available agents to treat it with both cost and patient
nonselective alpha blockers, Flowmax outcomes in mind.
does not cause a drop in blood pressure.
Aricept Aricept may improve cognition and The availability of a generic version of Aricept
(donepezil delay the loss of function among would provide more patients with the potential
Aging
hydrochloride) patients with Alzheimer’s disease. As to improve memory, attention, reason, and
the only treatment currently available language. It may also allow patients to live at
November 2010 for all stages of the disease, Aricept home longer.
is the most-prescribed medication for
Alzheimer’s.
Xalatan Xalatan reduces the risk of glaucoma- As the population continues to age, and rates of
(latanoprost) related vision loss by decreasing diabetes rise, more patients will be affected by
pressure in the eyes. glaucoma. The generic formulation of Xalatan
September 2011 will be accessible to more patients who are at
highest risk of losing their vision.
Brand Name vs. Generic
Average cost per claim for Zocor and its generic formulation
$180.00
$160.00
$140.00 Zocor
a brand-name cholesterol-
lowering drug, at full price
$120.00
$100.00
Zocor
with 50 percent discount
$80.00 a combination of supplemental
rebates from the drug
manufacturer and the Centers for
$60.00 Medicare & Medicaid Services
$40.00
Simvastatin
a generic formulation of Zocor
$20.00
$0.00
Aug-07
Sep-07
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University of Massachusetts Medical School
Clinical Pharmacy Services
333 South Street
Shrewsbury, MA 01545
Contact: Tim Cummins, M.B.A., RPh
Tel.: 774-455-3440
Email: Timothy.Cummins@umassmed.edu
Website: www.umassmed.edu/cps
