US Pharm. 2018;43(5):26-30.

ABSTRACT: The regulatory issues surrounding generic drug approval are increasingly challenging with the emergence of biosimilar drug products. Ensuring the quality and integrity of a generic formulation compared with the innovating agent is a more complex challenge in light of some of the patent and regulatory systems used to prolong the market exclusivity for brand-name products. This inhibits the FDA approval of generic alternatives and biosimilar medications.

 Acccording to the Association for Accessible Medicines (AAM), generic drugs have saved the U.S. healthcare system $1.67 trillion in the last decade, generating $253 billion in savings in 2016 alone, with Medicare and Medicaid savings amounting to $77 billion ($1,883 per patient enrolled) and $37.9 billion ($512 per patient enrolled), respectively. Generics account for 89% of prescriptions dispensed but only 26% of total drug costs in the United States.1 Most savings from generic drugs were realized in mental health ($44 billion), hypertension ($29 billion), and cholesterol ($28 billion) treatments, and the impact of these savings varies among states. The 2017 Generic Drug Access and Savings in the U.S. report shows that the use of generic drugs saved the U.S. health system $253 billion in 2016.1

Policy changes have been recommended by state governments, Congress, and the Trump Administration to address the continually escalating costs of prescription drugs. Advocates of generic-drug use have suggested supporting the acceleration of both the development of and access to more traditional generics. Currently, advocates are also supporting therapeutically acceptable biosimilar alternative agents. Another strategy in promoting safe and effective generic drug use is to maintain vigilance in identifying, and subsequently thwarting, efforts to  block or reduce access to such alternative agents.

The use of generic alternatives can save money and also improve access to necessary medications for those in need of care. Professional pharmacy organizations not only have been advocating for the advancing role of pharmacists in care delivery, but have also played a significant role in thwarting policy that could be harmful to patients. Both American Pharmacists Association (APhA) Executive Vice President and CEO Thomas E. Menighan, BSPharm, MBA, ScD (Hon) and National Community Pharmacists Association (NCPA) Past President Stephen L. Giroux, RPh, describe some concerns regarding barriers and suggestions for improved generic drug use that are discussed later in this article.

Tactics to Reduce and Block Access to Generics

Evergreening: Arguably the most challenging part of U.S. research and development is creating and gaining FDA approval for a novel, entirely unique pharmacologic agent. As with any patent-protected intellectual property, few would debate that the inventor is entitled to exclusive market protection for the new product. Government patent protection gives companies the exclusive right to sell their brand-name drug for 20 years. However, drug makers have found ways to extend those protections much longer. What has become debatable—even provocative—is whether the patent holder is entitled to similar exclusive patent protection for small changes to the preexisting approved novel agent, which enables continued market monopoly. This type of continued patent protection prompted by small changes to the original product is called evergreening.2

Although this tactic is nothing new, the practice is becoming increasingly common and is now interfering with the newer biosimilar agents. Chester “Chip” Davis, Jr., AAM president and CEO, recently testified to the U.S. House of Representatives Energy and Commerce Health Subcommittee, warning that the balance in the “thriving and constantly-changing marketplace” promoting innovation in drug development and accelerating the availability of lower cost generic alternatives is threatened. Noted in his testimony were the factors of changing and increasingly challenging market and reimbursement frameworks, the abuse of laws and regulations, and the failure of policy to account for the unique challenges facing generic and biosimilar medicines.3 Davis further highlighted the length to which some of these companies will go to extend market exclusivity. Brand-name drug companies have gone to great lengths to extend their patent or regulatory monopolies, most recently through a high-profile case involving renting the sovereign immunity of a Native American tribe to block competition.

These patent debates have provoked further scrutiny in countries outside the U.S. as well. In April 2013, the Supreme Court of India denied a patent application covering a modified crystalline version of Gleevec (imatinib). The patent application for the crystalline form of imatinib mesylate included manufacturing and storing advantages of the salt form; however, according to Indian patent law, the patent qualifies as a “new product” only when there is a feature that involves technical advance over existing knowledge and that makes the invention clearly unique. After evaluating the patent history of Gleevec, the court concluded that the superiority of the new crystalline form was insufficient to meet the required standards. This ruling had provoked debate on both sides of the generic/biosimilar issue,  with generic proponents celebrating improved accountability of industry and those in support of industry expressing concern over an “ethical” pharmaceutical industry losing rights to pharmaceutical interventions in this growing market.3-5

Additional Tactics

Patent Thickets: The main patent on the biological product Humira was due to expire at the end of 2016, but AbbVie, the manufacturer of Humira, developed more than 70 newer patents, a tactic known by many in the business as a product patent thicket, with most of these patents created within the few years prior to the scheduled patent expiration. These patents were reported to cover not only drug formulation, but also specific disease indications and manufacturing processes. In a recent New York Times interview, Richard A. Gonzalez, the company’s chief executive officer, stated, “Any company seeking to market a biosimilar version of Humira will have to contend with this extensive patent estate, which AbbVie intends to enforce vigorously.”6 According to the AAM, product thickets make it easy for the original brand company to claim infringement and to further protect its market exclusivity.7

Product Hopping

Although redesigns for protecting the innovative value of a new product occur in many industries, the Federal Trade Commission (FTC) has stated, “The potential for anticompetitive product redesign is particularly acute in the pharmaceutical industry.” Further, the FTC said that minor, nontherapeutic changes to a brand-name drug that hinder generic competition can constitute exclusionary conduct that violates U.S. antitrust laws.8 Strategies termed product-switching or product hopping are often accomplished by the brand-name company withdrawing the original product prior to the patent expiration, resulting in pressure on patients to switch to the new “reformulated” brand product.8  

Blocking Access to Necessary Brand-Name Samples

To bring a generic or biosimilar agent to market, generic product developers must purchase a sample of the brand medicine as a mandatory requirement to demonstrate to the FDA that the generic meets the same standards as the corresponding brand-name product. The prospective generic drug must demonstrate bioequivalence, and/or the biosimilar biological product must demonstrate biosimilarity or interchangeability with its reference biological product. Another essential element of these generic drug–approval pathways includes the ability to join the brand-drug manufacturer in a shared system for drugs and biological products that are subject to a Risk Evaluation and Mitigation Strategy (REMS).6

However, according to the AAM, some brand-name companies have placed restrictions on the purchase of such samples, even though the FDA does not sanction these restrictions. In recognition of evidence that certain license holders are preventing access to these necessary samples, thus causing delays and creating barriers in bringing generic products to the market, bipartisan leaders in Congress have introduced legislation that would close the loopholes and ensure more timely entry of more affordable versions of these high-cost branded medicines. The Creating and Restoring Equal Access To Equivalent Samples Act of 2017 (the CREATES Act of 2017) is intended to close the loopholes and ensure the timelier entry of more affordable versions of high-cost branded medicines. The AAM has provided advocacy tools for patients and healthcare providers to communicate support for the passage of this bill.9,10

Edith Ramirez, then chairwoman of the FTC, in her testimony at a Subcommittee hearing on March 9, 2016, mentioned that the FDA and the FTC have recognized this abuse of the system, which delays the availability of generics. The blocking of the ability of manufacturers to obtain the samples needed to make more affordable generic alternatives is an anticompetitive practice (“REMS and restricted access abuse”) and costs patients billions of dollars annually, preventing access to medication for millions of patients in need.11

How Do Biosimilar Agents Fit in?

The FDA began to receive marketing applications for biotechnology-derived protein products in the 1980s and established regulations to address these new innovations. Most of these products were recombinant DNA versions of the original natural product. As announced in the Federal Register (51 FR 23302) in June 26, 1986, submission of the Investigational New Drug application to the FDA for evaluation is required before any clinical investigation in human subjects is permitted. Even for products with active ingredients that are “identical” to those in a naturally occurring substance, a company must submit and gain approval of a New Drug Application or Biologics License Application before marketing recombinant DNA products. The FDA acknowledges that the production challenges of these protein products may significantly alter the structure and function of the resulting product. However, there have been notable improvements in manufacturing processes and product testing that have led to enhanced regulations concerning these protein products.

The FDA has approved manufacturing-process changes that have reduced the need for additional nonclinical data, which eases some of the overall burden to manufacturers. However, demonstrating biosimilarity of a new product to a preexisting FDA-approved and licensed reference product made by a different manufacturer remains highly complex, often requiring extensive and more comprehensive data than for manufacturing-process changes made by the original product sponsor. As part of the Affordable Care Act, the Biologics Price Competition and Innovation Act of 2009 (BPCI Act), launched on March 23, 2010, facilitates an abbreviated pathway to licensure for biological products shown to be interchangeable with or biosimilar to a currently licensed FDA biological product. This act is intended to allow patients improved access to more affordable medicines.12

What Is “Interchangeable”?

The FDA has provided guidance to assist healthcare providers in prescribing, dispensing, and administering biological products that are biosimilar and interchangeable. The Purple Book provides lists of licensed biological products with reference product exclusivity and evaluations that support the biosimilarity or interchangeability designations.13

The BPCI Act describes an interchangeable product as a product that may be substituted for the reference product. However, the FDA expects that a biosimilar product will be specifically prescribed by the healthcare provider and cannot be substituted for a reference product at the pharmacy level.11 The complexity in substitution, coupled with all the additional logistical requirements of handling the biologics, has created an unprecedented wave of new specialty pharmacies, which has not been considered a positive by everyone in the pharmacy community. According to independent pharmacy owner and NCPA Past President Steven Giroux, “Specialty pharmaceuticals have been taken away from community pharmacists—reducing the ability to have face-to-face interactions with our patients.” Giroux went on to note that artificial (inferior) systems have been put in place to provide these specialty drugs to patients, and local pharmacists cannot compete with specialty drug providers because the providers can obtain (purchase) specialty drugs at a lower rate (through rebates) for the volume they purchase.

When asked to comment on his opinion about the status of increased generic use, Giroux noted that the drug cost is only one small part of overall healthcare-cost expenditures. “Collaborative drug therapy management (CDTM) philosophy allows for correct use of more expensive drugs with the goal of improved outcomes with lower costs due to reduced hospitalization and improved medical health,” said Giroux, who added, “We can all agree that generic drugs are good to help patients reduce cost; however, there should be some mechanism in place to appropriately pay a professional fee to pharmacists to support the work they do to help patients use medications properly.” On Giroux’s “top list” of threats to promoting community pharmacy’s ongoing role in the medication-management system are pharmacy benefit managers (PBMs), which, according to Giroux, contribute to escalating medical costs “due to misaligned incentives and profit motives such as spread pricing and large rebates.”14

The role of PBMs in escalating medication costs is also widely recognized by the APhA. When contacted by U.S. Pharmacist, Thomas E. Menighan, executive vice president and CEO of the APhA, echoed concerns similar to those he expressed in a recent interview with the New York Times about PBMs. PBMs’ use of contractual binding clauses that prevent pharmacists from suggesting that a patient pay a less expensive cash price is not an uncommon practice. Menighan went on to say, “The pharmacist cannot volunteer the fact that a medicine is less expensive if you pay the cash price, and we don’t run it through your health plan.” Menighan did not offer further comment on improving generic utilization or reducing the barriers to accessing less expensive biosimilars in the community pharmacy; however, he reaffirms that the mission of his organization is to raise societal awareness about the role of pharmacists as essential in patient care for optimal medication use.15,16

Good News About Generic-Utilization Rates

The FDA Center for Drug Evaluation and Research celebrated several major accomplishments in 2017. Among these is the establishment of a reauthorization of the Generic Drug User Fee Amendment, which required congressional authorization to continue to collect user fees from manufacturers to help the FDA allocate additional resources to process and approve the ever-increasing requests for generic-drug applications. Additionally, the FDA has reported that another record was set in 2017 with over 1,000 generic-drug approvals, up almost 30% from the previous year.14 First-generation generic drugs are the first generic alternatives to a brand-name product and are thought to generate competitive interest in other companies to further lower prescription drug costs. In 2017, there were 80 of these first-generation generic-drug approvals. Because the FDA has deemed lowering drug costs to be a public-health concern and priority, the agency expedites the review of these first-generation generic-drug applications; however, to continue fostering a competitive market, the FDA also prioritizes the review of up to the third-generation generic-drug approval to maximize healthcare cost savings to all patients.17

Becoming a Specialty Pharmacy

As specialty drugs—classified as high-cost, high-complexity, and/or biologic agents—carve out a continually growing share of the healthcare market, the decision to pursue specialty pharmacy practice can be financially advantageous. Additionally, adopting such a practice can assure that patients receive high-quality medication management by the medication experts who deliver face-to-face care. Although  the specialty pharmacy operations can be implemented in an ambulatory-care setting, an institutional practice that has a supplemental existing in-house ambulatory pharmacy operation is reported to be among the most likely to succeed. The American Society of Health System Pharmacists conducted a survey of hospitals and found that almost half of all responding hospitals with a census of 600 or more available beds reported the presence of specialty pharmacy operations. The survey also revealed that for hospitals with fewer beds (less than 50), specialty operations became much less common (2% of these hospitals). However, it was noted that specialty practice is still attainable, but the data suggested that there be, at minimum, a significant pool of potential specialty patients and pharmacy capabilities (strict storage requirements, technology, dispensing processes), as well as leadership commitment to be successful in this business-model endeavor.18


1. 2017 Generic Drug Access and Savings in the U.S. report. Accessed February 18, 2018.
2. Evergreening. Accessed February 18, 2018.
3. Statement of Chester “Chip” Davis, Jr. U.S. House of Representatives Energy and Commerce Health Subcommittee Examining the Drug Supply Chain. December 13, 2017. Accessed February 18, 2018.
4. Indian Supreme Court Rejects Novartis’ Gleevec Patent Application. Accessed February 18, 2018.
5. Glivec. Accessed March 20, 2018.
6. Makers of Humira and Enbrel using new drug patents to delay generic versions. New York Times. Accessed February 28, 2018.
7. Ensuring the future of accessible medicines in the U.S. . Accessed March 6, 2018.
8. FTC files amicus brief explaining that pharmaceutical “product hopping” can be the basis for an antitrust lawsuit. Accessed March 6, 2018.
9. CREATES Act (S. 974/H.R. 2212), 2). Accessed March 20, 2018.
10. Help pass the CREATES Act. Accessed March 20, 2018.
11. Edith Ramirez, Chairwoman, FTC Testimony, Subcommittee Hearing,
March 9, 2016. Accessed February 19, 2018.
12. FDA quality considerations in demonstrating biosimilarity of a therapeutic protein product to a reference product. Accessed February 27, 2018.
13. Purple book. Accessed February 5, 2018.
14. Interview with Stephen L. Giroux. March 6, 2018.
15. Interview with Thomas E. Menighan. March 6, 2018.
16. APhA vision, mission, value statements.
17. Uhl K. 2017 was another record-setting year for generic drugs. FDA Accessed February 27, 2018.
18. Skiermont S. Indecision is not an option: understanding the range of business models for health-system specialty pharmacy. Pharmacy Times. January 29, 2018. Accessed February 5, 2018.

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