Drug shortages & patent expiration: Authorized generics as more than a lifecycle strategy
On October 1, Sanofi announced its introduction of an authorized generic (AG) version of leflunomide, a disease-modifying anti-rheumatic drug (DMARD), which is used first-line to treat moderate-to-severe rheumatoid arthritis (RA). In 1998, Sanofi had launched Arava, the branded version of leflunomide.
Arava was approved based on solid efficacy data and a good safety profile, though physicians are instructed to monitor for hepatotoxicity. In clinical trials, Arava reduced the signs and symptoms of RA, including swelling, pain, and joint deformity. It also demonstrated the ability to inhibit structural damage and improve physical function—giving it a disease-modifying quality.
Arava's early lifecycle
Subsequent to FDA approval, Arava was approved in the E.U. in 1999 and in Japan in 2003, so although the patent expired in the U.S. in 2004, allowing generic competitors to come into the market, Sanofi maintained exclusivity in some markets through 2009. At its height, Arava was grossing close to $300 million per year.
Seventeen year later, the arrival of Sanofi-manufactured generic leflunomide was good news for the RA community, which had recently been hit with higher prices at some pharmacies due to shortages of generic leflunomide manufactured by Teva, Apotex, and Sandoz.
In a press release, Dr. Cary Yonce, Vice President of General Therapeutics and Life Cycle Management at Sanofi, said, "The Arava authorized generic assures patients that they receive the same quality treatment of the original drug."
Are authorized generics good or bad?
Arava is part of a class of generics known as authorized generics, meaning they are already approved as NDAs, and are manufactured using the same active ingredients and formulation strategy. In essence, the brand company provides generic versions of the same drug, and sells them through a distributor or under a private label.
One positive feature of authorized generics is the intrinsic promise of quality—it’s the same drug at a different price. However, some companies, which are solely focused on generic manufacturing, have groused about how large companies with strong brands create authorized generics as another way to dominate the market. And at a time when companies are being scrutinized more closely by the FDA and the Federal Trade Commission (FTC) for pay-to-delay actions, also known as reverse-settlement deals, no company wants to be seen as unfairly manipulating the market.
But it’s been 17 years since Arava was first approved by the FDA—so why now?
"Our customers reached out to us in the second quarter of this year asking for assistance in accessing generic Arava, due to a drug shortage with several of the companies selling generic leflunomide," explained Yonce. "We rapidly responded, and now we are supplying Arava AG, which provides customers the same quality and dependability they have relied on since 1998 when the FDA first approved Arava—and at a lower generic price."
In fact, shortages of leflunomide and other generic drugs have been a problem for many years. The issue has gotten more attention within the last year, especially in light of quality concerns about certain manufacturers in India and a spate of do-not-import laws imposed by the FDA.
Underlying problems that lead to drug shortages
Serious concerns about a shortage of generic leflunomide peaked in 2011 and then again this year. In 2011, Jeff Gelles reported about the shortage on Philly.com, highlighting the fact that the price of a three-month supply of generic leflunomide had jumped from $70 to $942, effectively pricing many patients out of the market.
Reporting around the leflunomide shortage coincided with widespread concern about generic drug shortages, prompting a closer look at what causes them. In November 2011, an article in Pharmacy & Therapeutics delved into some of the underlying reasons that generic drugs suddenly become unavailable including, manufacturing facility problems, regulatory issues, business decisions, difficulties in acquiring raw materials and other disturbances in the global supply chain.
The leflunomide shortage problem cropped up again this year, with a series of inquiries leading to official responses from various pharmacy organizations and patient advocacy groups. In September, the American Society of Health-System Pharmacists (ASHP) announced that Apotex had temporarily discontinued leflunomide because of a delay in obtaining active ingredient. Anticipating the barrage of questions about when it would be back, the ASHP wrote on its web site that (Apotex) “cannot state if they will bring it back to the market.”
Aligning lifescycle strategy with larger trends
Enter authorized Arava less than a month after the ASHP’s warning. In addition to being a response to patients’ demand for generic leflunomide, Sanofi’s decision is part of a larger lifecycle management strategy that parallels the prescribing trends in the U.S. As Dr. Yonce explained, “In the U.S., the prescribing of generic medicines has increased significantly in the last two decades. In 1996, about 40% of all prescriptions were generic. Today, the IMS estimates that approximately 85% of all prescriptions in the U.S. are filled with generics.”
In fact, Arava AG is Sanofi’s fifth authorized generic. All of its authorized generics, which also include AG versions of Lovenox, Taxotere, Eloxatin and Ambien CR, are handled by Winthrop, which is Sanofi’s generic distributor. Dr. Yonce explained, “At Winthrop, we have the ability to manage the whole process—from manufacturing and supply chain of API and drug product, to delivery of finished product to our key customers. By controlling distribution, we can leverage our Sanofi infrastructure and expertise to more effectively manage the process and be more agile in responding to our customers’ needs.”
Many AG drugs, many lifecycle strategies
Most of the large biopharma companies, and even some of the mid-sized companies, are in the AG market. When the FDA updated the roster of available AG drugs on September 30, there were a total of 906 drugs. The list of manufacturers includes Pfizer, AstraZeneca, Cephalon, Takdea, Shire, Allergan, Valeant, Abbott Labs, Bristol-Myers Squibb (BMS), Bayer, Janssen, GlaxoSmithKline, and other companies.
Sanofi responded to a shortage that prompted a patient demand. Certainly not all AGs are the result of patient demand or shortage. There are many business reasons that a company might want to move into the AG market. What’s clear is that generic drugs are a more significant part of the market than they have been in the past—and that is most likely not going to change. In the final analysis, it comes down to one thing, according to Dr. Yonce: “In the generic market, the primary focus is on providing affordable, high quality products and ensuring continuity of supply.”