US Generic Drug Spending Declines In A New Development – IQVIA Report
Executive Summary
Generic drug spending declined in the US by $5.5bn in 2017 after growing in 2013-2016, pointing to the challenging generic drug dynamics in the US. Volume share data on marketed biosimilars shows impact of insurer control.
US generic drug spending declined by $5.5bn in 2017 driven by pricing pressure, according to a new US drug spending report released by the IQVIA Institute for Human Data Science April 19.
"Generic growth had been a positive driver of growth from 2013-2015 as the combination of fewer expiries and price increases lifted spending," the IQVIA report says. "Growth slowed in 2016 and declined by $5.5bn in 2017 as greater competition in a number of markets drove down prices."
Getting more generic drugs to market has been a top priority of US FDA Commissioner Scott Gottlieb, as a way to help lower drug costs. But the pricing pressure fueled by record FDA ANDA approvals and wholesaler consolidation has also created a challenging environment for the US generic drug market. Generic drug manufacturers across the board, including top players like Teva Pharmaceutical Industries Ltd., Mylan NV and Sandoz International GMBH, have felt the impact. (Also see "Generic Manufacturers Try To Up Their Game As US Pressure Persists" - Scrip, 16 Jun, 2017.)
"Overall generic growth slowed from $5.9bn in 2015 to a decline of $5.5bn in 2017," IQVIA noted. Growth from 2013 to 2015 was fueled by price growth, often driven by older generic drugs that did not face competition, so that pricing was not influenced by competition. But FDA's efforts to work through the agency's ANDA backlog have resulted in more competition, impacting price. Growth began to moderate in 2016.
The impact of patent expirations added about $1bn in spending growth in 2017, down slightly from $1.1bn in 2016, IQVIA said.
Despite challenges for generic drug manufacturers, generic drugs make up the bulk of prescription drugs dispensed in the US – by far. Generic dispensing of prescription drugs has risen from 72% in 2008 to 90% in 2017, according to IQVIA. The market accessible to generics, measured as the part of the market where generics have launched, has risen from 79% to 92% over 10 years. Over 89% of new therapy starts in chronic diseases are with generic medicines.
Biosimilar Uptake Stronger For Some Than Others
Biosimilars are expected to provide a new growth opportunity for some of the generic players – and some brand manufacturers – that are looking to compete in the space, though the initial launches in the US have been mixed.
Only a handful of biosimilars have launched in the US, including two drug copies that were approved through different pathways. Among them are two versions of Amgen Inc.'s Neupogen (filgrastim): Teva's Granix, approved under the pathway for brand biologics in December 2012, and Sandoz's Zarxio, the first official approved biosimilar to launch in the US under the biosimilar pathway. Together, the two drugs have reached 49% of volume of the filgrastim market as of December 2017, a strong showing. A survey run by Avalere Health last year showed payers are generally comfortable reimbursing the biosimilar on par with Neupogen. (Also see "Zarxio Coverage On Par With Innovators Even Without Interchangeable Designation" - Pink Sheet, 18 Jul, 2017.)
Eli Lilly & Co.'s insulin glargine copy Basaglar, approved under the 505b(2) regulatory pathway because insulins are not classified as biologics in the US, reached a volume share of the insulin glargine market of about 17% by the end of December 2017, according to IQVIA. Uptake in parts of the market where insurers have preferred Basaglar over Lantus has been substantially higher, more than 50% higher, the report says.
Those cases reflect a more positive outlook for biosimilars than has been seen with the two biosimilar versions of Johnson & Johnson's Remicade (infliximab), which have struggled to gain traction in the market because of J&J's tough rebating tactics. (Also see "Payers Like Biosimilars, But Rebates Remain The Bottom Line (For Now)" - Scrip, 29 Nov, 2017.) J&J reported during its first quarter sales and earnings call that Remicade was able to maintain 95% share by volume of the infliximab market versus Pfizer Inc.'s Inflectra and Merck & Co. Inc.'s Renflexis, although it took a hit on revenues because of price concessions.