AARP report offers window into generic drugmaker pain
- Retail prices for nearly 400 of the most widely used generic drugs in the U.S. fell by an average of 9.3% in 2017, according to a new report released Thursday by the AARP Public Policy Institute.
- That drop followed sharp declines in 2015 and 2016, a trend which has exacerbated the growing divergence in the U.S. between retail prices for branded drugs and their copycat counterparts. In its report, AARP noted the average annual cost of therapy for generic drugs in its basket totaled $365, compared to an average cost of nearly $7,000 for commonly used brand name medicines.
- While good news for patients, the continued price erosion for generics in the U.S. has made business tough for many of the top manufacturers in the space. Over the past several years, companies like Teva, Mylan and Novartis' Sandoz unit have reported tumbling generic drug sales, putting pressure on all three to expand into other, more lucrative business areas like complex generics, specialty drugs and biosimilars.
Generic drugs account for nine out of every 10 prescriptions in the U.S., but represent less than a quarter of total non-discounted spending on prescription drugs, according to the latest figures from Iqvia.
Those numbers have trended in opposite directions over the past five years, with the copycat medicines making up a shrinking portion of U.S. spending even as usage grows.
Since 2004, AARP has documented changes in generic drug prices across a basket of medicines most frequently used by older Americans. This year's iteration of the report, which covers 2017, details how retail prices have shifted for a group of 390 medicines.
For 297 of those products, the average retail price declined in 2017, compared to the 90 which saw a price increase. Prices did not change for three drugs, AARP said.
Across the 25 top-selling drugs in AARP's basket, prices fell for 21, including copycats of Lipitor (atorvastatin), Plavix (clopidrogel) and Prilosec (omeprazole).
AARP uses the report to highlight the widening gap between retail prices for branded and generic drugs, emphasizing the importance of generics as more biologic therapies — which typically command higher prices — enter the market.
But the data also offers a window into the difficulties faced by generic drugmakers, which have been hurt by the steadily declining prices.
The 9.3% drop in 2017 followed declines of 17.7% in 2016 and 19.3% in 2015, AARP said. In the two years before that period, generic prices had risen.
That three-year span corresponds with the increasing financial pressure felt by manufacturers like Teva, Mylan and Sandoz.
Mylan, for example, reported North American net sales declined 12% in 2017, a slide that deepened last year with a further 16% drop. Last summer, the company convened a strategic review committee to assess its options, a move made in part to respond to U.S. pricing pressures.
Teva, which bought Allergan's generic business for $41 billion in 2015, has faced similar difficulties. In 2017, the Israeli drugmaker recorded an impairment charge of $17 billion, mostly due to "further deterioration in the U.S. generics market."
Sales are expected to decline again this year, as the company works to restructure its business toward specialty drugs like its newly approved migraine medicine Ajovy (fremanezumab) and Huntington's disease drug Austedo (deutetrabenazine).
AARP's report found retail prices for widely used drug products produced by Mylan and Teva fell in 2017, while retail prices for Sandoz were flat.
All told, AARP documented price declines for 32 manufacturers in 2017, compared to the seven companies which recorded retail price increases.
There are some signs that pricing dynamics in the U.S. are shifting. Data recently cited by Raymond James showed prices across a basket of generic drugs have risen nearly 8% since May 2018, noting that sales declines have been less severe in recent months.
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