The way the media reports pharma’s relationship with generics has become one of the key factors damaging the industry’s reputation. Meanwhile, generic drugs themselves have some troubles with public perception. Although medical research overwhelmingly shows that generics not only save money but also are just as effective as the original brand drugs, levels of public confidence have been shaking.
The notoriously high prices of medicines in the US have sparked off fierce debates among a wide range of stakeholders, including patients, providers, payers, academics and
For instance, the average US prices for the world’s 20 top-selling medicines are three times higher than in the UK. Prices for drugs of all types and from all classes have been rising faster than inflation from 2008 to 2016, according to a new research by the University of Pittsburgh.
In the ever-heated discussions around drug pricing, generic drugs – copies of brand-name drugs with expired patent protection – have often taken centre stage as they are perceived by many as a viable solution to the problem.
Alongside biosimilars, generics are seen by most media outlets as a financial salvation, with the media’s sentiment being predominantly positive. A commonly held view is that generic competition can help keep the pharma market in check because the entry of generic competitors pushes down prices gradually – by 6% with the first entrant, 48% with a second entrant, and up to 95% by the time a 19th generic manufacturer enters the market.
Many articles point out that-branded generic drugs account for more than 80% of all pharmaceutical consumption by volume (and roughly 30% by value) in the United States and the United Kingdom, and that without them, every major government health program, such as the US’ Affordable Care Act, Medicare Part D or the Veterans Health Administration — would be unaffordable.
Financial outlets also present a generally positive investment outlook: the generics market is expected to expand and reach approximately $380.60 billion by 2021, boosted by government initiatives to produce generic drugs and to encourage the use of generics against chronic diseases. The main force behind the expansion is the patent expiration of branded drugs, while new emerging markets would ensure fresh revenue streams.
Pricing and order
However, some pricing issues and the recent legal exposure have made the generics market a less attractive area for investment, and a number of media outlets have described the generics industry as struggling, with generic drug manufacturers such as Mylan and Teva taking the hit.
In fact, ‘Drug pricing‘ and ‘Legal issues/Lawsuits‘ were the main topics in the recent media conversation around generics in the top-tier English-language publications:
The main reason behind the media’s interest in the pricing topic is that the pharma industry has seen unprecedented increases in the prices of generic drugs, leading to unexpected cost increases for consumers and payers.
Many commentators have accused brand name drug companies of gaming the Food and Drug Administration (FDA) system that limits the distribution of some medicines so that they can avoid giving samples to generic drug manufacturers, which as a result cannot prove their products are as safe and effective as the more expensive brand name predecessors.
The allegations of exploiting the FDA system in the context of generics are similar to the suggestions that Big Pharma has a tendency to play the patent game to ward off competitors in the context of
The media discussion has been largely political in nature, with journalists noting that drug pricing is one of the few issues on which Republicans and Democrats may have some common ground – criticisms towards pricing practices have come from the likes of Republican Donald Trump and progressive Democrat Elizabeth Warren, who is running for president in the 2020 elections.
Advancing generics to boost price competition was one of the key steps in Trump’s blueprint for lowering drug prices. A number of media reports point out that experts hope
Some trade association representatives believe that Democrats would be better equipped to deal with this: for instance, Erik Komendant of the Association for Accessible Medicines, which represents the generic pharmaceutical industry, said that “prospects for the CREATES Act improve if the Democrats take over the House.”
But the Pharmaceutical Research & Manufacturers of America (PhRMA), a trade group representing some of the biggest pharma companies, said that they do not support the bill in its current form, but take seriously the worry that the FDA system can be exploited to delay generic drugs entering the market.
A media hype?
There were some publications noting that in the last 10 years, the price of generic medications in the US has actually fallen, citing a study conducted by health policy researchers at the University of Southern California. Peter Ubel, a physician and behavioural scientist at Duke University, even questioned whether the generic price hikes are a creation of media hype, but concluded that bad media attention is necessary as a way of exercising public pressure and reducing the number of companies willing to raise their prices so substantially.
Although the media has made many believe that the price of generics is rising faster than it really is, the coverage might explain why price hikes haven’t been more radical: “I hope the media continues to raise a ruckus whenever generic manufacturers raise their prices too high,” Ubel wrote in Forbes.
The “media hype” around generics is an essential part of the bigger media conversation: a recent communications study by Harvard Medical School and Harvard Pilgrim Health Care Institute found that drug price levels have been one of the hottest topics discussed in the US media in the last 30 years. The debate has been intensified by the launch of a number of breakthrough high-cost
The issue has been on the agenda of presidents, senators and of the Congress. States and federal government agencies have usually taken an active part in the debate, with some mandating tighter drug price control and launching legal challenges against pharma companies.
Some states like Connecticut, Maine, New Hampshire, Oregon and Vermont introduced transparency bills compelling drug makers to justify their pricing practices. Meanwhile, payers have introduced various co-payment strategies and have sometimes limited access through prior authorisation as a response to new costly drugs.
Patient voices play an increasingly important role in shaping healthcare debates and public policies. There is a growing number of patient advocacy groups, many of which are funded by pharma companies. A database with 12,000 donations from big pharma companies revealed that they gave at least $116 million to patient advocacy groups in a single year.
Such practices have attracted much criticism in the media, with many commentators saying that such funding can shift the health policy approaches from the interests of patients to the interests of the
industry. As a result, independent patient groups are likely to become more influential.
For instance, Patients for Affordable Drugs, created by cancer patient David Mitchell, works without support from the pharmaceutical industry, aiming to exert influence on pricing policies and raise awareness about drug costs among politicians, the public and the media.
Some new stakeholder voices have joined the discussion in recent years. There have been instances of clinicians declining to use new cancer therapies due to their costs, and pharmacy benefit managers excluding some expensive drugs from their formularies after deciding that their prices were not justified.
Non-traditional players disrupting the industry, such as Amazon, are increasingly being mentioned in the media discussion around pharma and drug pricing.
Many critics from across these stakeholder groups have pointed out that the value of medicines is not established in a reliable manner since US
Some commentators refer to examples from Europe and Canada where drug prices are determined via value-based (health technology assessments, pharmacoeconomic analyses), reference-based (international and therapeutic price referencing) and risk-based (managed entry agreements) approaches.
Corporate spokespeople from pharma companies have usually tried to justify high prices with innovation. Indeed, the media coverage of medical breakthroughs (such as orphan medicines) has been increasing since the 2000s. The FDA has also tried to facilitate the access to novel medicines by introducing regulations such as priority review, accelerated approval, fast track review and breakthrough designations.
However, the innovation argument has often been challenged. For example, the aforementioned study suggested that costs have gone up not because of innovation efforts but because companies are raising the price of drugs that are already on the market, with the researchers saying that a lack of competition and the US regulatory landscape allow “for price increases much higher than in other countries.”
The authors of the study suggested new regulations on the degree to which pharma companies can increase list prices. Gerard Anderson, professor of health policy and management at Johns Hopkins University, told NPR that research and development is only about 17% of total spending in most big pharma companies: “Once a drug has been approved by the FDA, there are minimal additional research and development costs so drug companies cannot justify price increases by claiming research and development costs.”
Many of the latest debates have been around the cost of gene and cell therapies.
Allegations and litigations
The top-trending news story in the recent media discussion fell under both ‘Drug pricing’ and ‘Legal issues/Lawsuits‘ topics, and referred to a lawsuit filed by 44 states alleging that 20 major pharma companies, including Teva, Mylan, Pfizer and Novartis’ generics unit Sandoz, conspired to artificially inflate and manipulate the prices of more than 100 generic drugs accounting for billions of dollars in the United States.
The 500-page complaint, issued in the U.S. District Court in Connecticut, claimed that pharma companies have secretly engaged with each other on price-fixing and that prices have risen without explanation, sparking outrage from politicians, payers and consumers across the country. According to a statement by the office of Connecticut Attorney General William Tong, the drugs include treatments for cancer, HIV, diabetes, epilepsy and depression.
Many media outlets noted that one report found that there were instances when the prices of more than 1,200 generic medications increased an average of 448%. “Apparently unsatisfied with the status quo of ‘fair share’ and the mere avoidance of price erosion, Teva and its co-conspirators embarked on one of the most egregious and damaging price-fixing conspiracies in the history of the U.S.,” the legal claim said.
Teva, the largest generic manufacturer in the world, has been named as the ringleader of the price-fixing scheme and has become the most often mentioned company in the recent media conversation around generics, followed by Mylan, Pfizer and Novartis, which were also the focus of the media’s reports of the lawsuit:
The court document alleged that Teva significantly raised prices on approximately 112 different generic drugs from 2013 to 2015, sometimes well over 1000%, which were especially troubling since generics were “one of the few ‘bargains’ in the United States healthcare system”.
The media reports cited many commentators who also focused on the fact that generics were supposed to present
The US-traded shares of Teva dropped more than 16% after the accusations. The company’s communication strategy has been centring around its willingness to fight the lawsuit. In a statement, the
Teva dominated the media conversation around generics like AbbVie dominated the discussion around biosimilars – both companies have been embroiled in legal battles. In AbbVie‘s case, the company sued each of its rivals which requested regulatory approvals for their own biosimilars of its best-selling drug Humira. In most publications, AbbVie was seen as trying to sustain its market monopoly of Humira, which accounts for 60% of its sales.
Meanwhile, Novartis also said that the allegations are without merit and that it takes its obligations under the antitrust laws seriously. Mylan claimed the complaint contains “unproven allegations” and that it plans to defend itself. Pfizer denied the allegations, saying that it has been a reliable and trusted supplier of affordable generic medicines.
In other legal news, the US Patent and Trademark Office rejected Sanofi’s infringement claims against generics drugmaker Mylan relating to insulin drug Lantus, Sanofi’s leading product with sales of $5.26 billion in 2017.
Eli Lilly, which, alongside Sanofi and Novo Nordisk, controls a major stake of the $27-billion global insulin market was the most often mentioned company in the ‘Approvals/Launches‘ topic because it announced plans to sell an “authorized generic” version of its most popular insulin, Humalog, for $137.35 per vial, a 50% discount off the list price. Some journalists suggested that the move was an effort to head off criticism about rising costs since Lilly is often in the centre of insulin debates: it has raised the price of Humalog more than 30 times since 1996, reaching more than a 1,000% increase.
Eli Lilly’s launch of Humalog’s cheaper version, which was well-documented by a wide variety of outlets, was met with mixed reactions. “This announcement is a great step forward to make insulin more affordable,” said Derek Rapp, the chief executive of diabetes advocacy group JDRF, but Laura Marston, an independent advocate for lower insulin prices, said: “I think it’s a PR stunt to deflect from rising list prices. I’d
A political discourse
The ‘Regulation/Policy‘ topic included the communication efforts of the generic drugs industry to warn of Brexit threat to low prices. UK’s Pharmaceutical Services Negotiating Committee (PSNC) claimed that Brexit is somewhat to blame for pharmacies in England reporting a ‘significant’ shortage in some generic medicines.
Within the ‘Regulation/Policy‘ topic, the US media focused on the FDA making it easier for pharmaceutical companies to bring more complex – and more profitable – generic drugs to market. This was seen as especially important since regulations have prevented pharma companies from manufacturing harder to copy drugs and thereby limiting generic competition.
The former head of the FDA, Scott Gottlieb, who recently joined Pfizer’s board of directors, was the most often quoted spokesperson in the media discussion: he has been perceived as a champion of the generics industry.
Many publications pointed out that one of Gottlieb’s main contributions as an FDA head was to ensure a large increase in the approvals of generic drugs. He was often quoted for his stand against drug makers who delay development of generic drugs by using tactics like refusing to release drug samples needed to develop generics.
Even after he stepped down from his role, Gottlieb has continued his public engagement with generics. For instance, he has been tweeting to that generic drugs are safe, a move that should boost the image of several manufacturers.
As the US media generally presents the drug pricing discussion from a political angle, policy stakeholders still had a significant presence. The Trump administration’s top health official, Health and Human Services Secretary Alex Azar, has noted that the fiscal year 2018 saw the highest number of generic drugs approvals in history.
Elizabeth Warren, whose 2020 presidential campaign has largely focused on inequality, proposed legislation calling on the U.S. government to manufacture generic drugs to reduce their cost. Senator Bernie Sanders of Vermont and Representative Elijah Cummings of Maryland just sent the Justice Department a letter calling for
The most prominent corporate spokesperson in the media discussion was Novartis CEO
While still calling the generics unit “an integral part” of the company, he also said he will be ready to discuss the future of Sandoz following a revamp due to take 18 months, which fuelled the media speculation about an eventual spin-off or sale. The speculations were also boosted since Richard Francis, Sandoz’s boss since 2014, stepped down from his role, which Narasimhan attributed to personal reasons.
Eli Lilly CEO David Ricks was quoted by publications such as Reuters and Bloomberg mainly in relation to his company’s launch of the generic version of Humalog: “While this change is a step in the right direction, all of us in the healthcare community must do more to fix the problem of high out-of-pocket costs for Americans living with chronic conditions. We hope our announcement is a catalyst for positive change across the U.S. healthcare system.”
He also wrote a blog post, which he said that his company agrees with patients, doctors and policymakers who are demanding lower list prices for medicines and lower patient costs at the pharmacy counter.
A matter of trust
The way the media reports pharma’s relationship with generics competition has become one of the key factors damaging the industry’s reputation.
The allegations of price rigging have contributed to the common public perception that pharma companies manipulate the system to keep drugs expensive. This notion has played one of the central roles in the pharma industry’s ongoing reputation problems.
In the US, the country most articles refer to, the pharma industry experienced a reputational decline since last year, which has had a negative impact on consumer confidence. The Reputational Institute has calculated that the decline amounts to -3.7 points and pointed out that consumers are less likely to give pharma companies the benefit of the doubt or to trust them to do the right thing.
Some publications have noted that the FDA,
And while the pharma industry faces those reputational challenges, generic drugs themselves have some troubles with public perception. Although medical research overwhelmingly
These reputational issues date back as far as the 1980s when there were a series of scandals involving fraudulent bioequivalence data and corruption. Today, most concerns revolve around the quality of generic drugs produced outside the United States: almost 40% of generic drugs sold in the country are made in India, and 80% of active ingredients are mainly from India and China. Critics worry that the FDA faces a vast challenge in safeguarding these medications.
The media discussion around generics
The media’s interest in the topic was fueled by the 2019 book “Bottle of Lies: The Inside Story of the Generic Drug Boom” by Katherine Eban, who wrote about a quality crisis that has been largely invisible to American consumers and has been caused by manufacturing shortcuts and fraud among Indian and Chinese drug producers.
Similarly to the situation with biosimilars, there has been a lack of systematic efforts at educating physicians and patients who are concerned about the drugs’ safety and efficacy, and healthcare communicators have been highlighting the increasing need for educating the public, physicians, and patients.
As a result, consumers, lawmakers, and healthcare professionals may be confused or uncertain about the quality and potential benefits of these products. Although 84% of all prescriptions are dispensed in their generic form, there is still a great deal of scepticism about their quality as they are often perceived as inferior.