If there is one thing patients typically complain about it is the price of medication. The complaint is justified because drug costs make up an increasingly large amount of total health care expenditures. According to the 2012 CIHI report, medications are the second most important source of health care expenditure, surpassed only by hospital costs. Interestingly, physician salaries ranked third. Therefore, cheaper alternatives to current medications could go a long way to easing the burden of rising health care expenditures in both Canada and the US.
There are many reasons why drug prices are high, but one aspect that is not often talked about is what is called “pay for delay.” The issue is so important that the Federal Trade Commission in the US made opposing pay for delay one of its top priorities.
The practice of pay for delay involves brand name drug companies paying generic manufacturers to keep their low cost alternative medications off the market. A patent on a new medication typically lasts 20 years in both Canada and the US, however having a patent does not necessarily imply that the company has exclusive rights to the manufacture of the product. Frequently, generic manufacturers will challenge patent claims and often do succeed in gaining approval to produce their cheaper generic equivalents. Often though, the cost of the potential litigation will motivate both companies to come to a settlement where the generic manufacturer is paid to keep their product off the market for a set number of years; hence the term pay-for-delay. The practice is apparently quite common and is allowed according to a loophole in the 1984 Drug Price Competition and Patent Term Restoration Act. The Federal Trade Commission in the US has challenged this practice on the grounds that it violates anti-competition laws.
The FTC sued the company Actavis for the payment it received from Solvay Pharmaceuticals, the makers of a testosterone gel for men called Androgel, in exchange for agreeing not to sell their generic version of the testosterone gel. The case ultimately made it to the Supreme Court and finally reached a settlement earlier this year. This is not the only case the FTC had on its radar in 2019 and the issue is an increasingly important one. Pay for delay keeps drug prices high by keeping cheaper generics medication of the market. A recent research letter suggested that switching from brand name blood pressure medications called ACE inhibitors to their genetic equivalent could have saved the US Medicare program several hundred million dollars.In order to be approved by Health Canada, a generic medication must contain the same medical ingredients as the brand name medication (although it can differ in the non-medical ingredients). Its efficacy is tested using a bioequivalence study. This involves giving the generic and brand name medications to a small number of healthy volunteers and measuring drug concentrations in the blood. The generic must attain drug concentrations that are 80%-125% of the brand name medication, meaning no more than 20% lower or 25% higher. Most medications are approved in this manner, however this method only assesses the biochemical properties of the medication, not its clinical efficacy.
In fact, there are very few studies that have compared generics to brand name medications in a clinical setting. One Canadian study that has just been released online by the Canadian Journal of Cardiology provides new evidence on this issue. A group from Western University in London, Ontario looked at generic and brand name atorvastatin, which was marketed in Canada and the US as Lipitor. The study looked at patients who were switched from brand name Lipitor to generic atorvastatin when it became available and compared them to those who remained on Lipitor. They found that there were no significant differences in their cholesterol levels after 1 month of follow-up. Although it would have been ideal if the study had followed patients for a longer period of time and looked at more significant clinical endpoints like the incidence of heart attacks, it is still an important study in that it provides one of the few head to head comparisons between a brand name drug and its generic equivalent.
It may take some time for the public to accept generic medications and recent stories about manufacturing problems overseas has not helped bolster public confidence. Clearly, lack of FDA oversight for overseas manufacturing is a problem, but this is a legal problem not a scientific one. Also worth pointing out that brand name medications can also be manufactured overseas, so the issue is not strictly one of generic medications. Also, generic medications can be manufactured in Canada and many are.
But regardless of these manufacturing issues, generics do represent a major cost savings for the health care system. With the aging population that will likely be a significant consideration in the coming years.
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