GPhA's Jaeger envisions strong 2006 for generic market

August 8, 2005

The generic pharmaceutical industry is poised for tremendous growth over the next several years. Industry observers expect several factors to drive the market, including: the Medicare Part D prescription drug plan, generic versions of innovator drugs that are coming off patent, industry consolidation, and growth in the biogeneric field. Kathleen Jaeger, president and CEO of the Generic Pharmaceutical Association (GPhA), spoke with Drug Topics recently about some of the hot issues impacting the generic pharmaceutical industry.

The generic pharmaceutical industry is poised for tremendous growth over the next several years. Industry observers expect several factors to drive the market, including: the Medicare Part D prescription drug plan, generic versions of innovator drugs that are coming off patent, industry consolidation, and growth in the biogeneric field. Kathleen Jaeger, president and CEO of the Generic Pharmaceutical Association (GPhA), spoke with Drug Topics recently about some of the hot issues impacting the generic pharmaceutical industry.

DT: How significant was the Novartis acquisition of Eon/Hexal? Does it mark the beginning of a consolidation trend?

KJ: Most generic industry CEOs are on record as acknowledging that there will be further industry consolidation. I'll defer to the individual CEOs on that issue.

KJ: GPhA opposes authorized generics, which are a blatant effort by the brand industry to undermine the incentive to challenge questionable patents under the Hatch-Waxman Act. That's because they compete with the true generic during the 180-day exclusivity period. And authorized generics are really just brand products masquerading as generics. In essence, they are products that go through the same brand manufacturing line, yet on the other end they just have a different label.

DT: What kind of reaction is GPhA getting in regard to its position on authorized generics?

KJ: Mark McClellan [administrator, Centers for Medicare & Medicaid Services] said with respect to this issue that it is CMS' position that a multiple-source drug marketed under a new drug application approved by the FDA should be classified as an innovator multiple-source drug. And CMS is reviewing its policy on the calculation of prices for these drugs.

CMS has heard our concerns and it is currently looking into its policy on authorized generics. At the same time, we're also pleased to learn that the Federal Trade Commission is considering conducting a study on the competitive effects of the use of authorized generics. And hopefully the study will shine some light on the problem and put some fairness back into the pharmaceutical industry.

DT: What's the latest in the biogenerics field?

KJ: There are more than 600 biotech drugs now in various phases of clinical trials. The current market for biopharmaceuticals is approximately $30 billion in U.S. sales. That accounts for about 12% of the total pharmaceuticals. Most experts on Wall Street believe that this market will grow to about $60 billion by 2020. A lot of good work is being done in this area, but the issue is, How do you allow consumers to have affordable generic biopharmaceuticals? What's interesting is that at our annual meeting in February, acting FDA commissioner [Lester] Crawford addressed the generic biologic issue when he stated that the science is there, we now have the science to fashion a generic biopharmaceutical program, and that we have to put a program in place.

DT: What's GPhA's position on BioShield II?

KJ: GPhA supports BioShield I [signed into law last summer], and we certainly support some very promising incentives to expand on BioShield I, such as product liability limitations, expanded tax credits, FDA fast-track review, additional funding for biotech companies, and guaranteed purchasing.

DT: Can you comment on the Bush Administration's prescription drug plan initiative, Medicare Part D?

KJ: They're moving in the right direction. Certainly they're implementing a pro-consumer drug access concept. We know now that 53.3% of all prescriptions dispensed in the United States are generic. And they account for only about 12% of the total spending on prescriptions. Dr. McClellan, who is in charge of implementing Medicare Part D, has been a strong promoter of using generics to reduce prescription drug costs. We believe that the way the Medicare reforms are structured, we should definitely expect to see an increase in generic utilization.

DT: What's on the horizon in 2006?