Leaders seek new strategies to strengthen generic industry

Drug Store News, August 18, 1997 by Ken Rankin

Just a year ago, the generic drug industry appeared to be in the catbird's seat.

In the marketplace, it looked as though things couldn't go wrong. An unprecedented flow of top-selling proprietary drugs were about to come off patent, creating an instant, multi-billion dollar market surge for generic pharmaceutical manufacturers.

At the same time, public acceptance of generics was at an all-time high, and rising. A survey by Drug Store News Chain Pharmacy found that one-in-four prescription customers in chain pharmacies take the initiative to request that their scripts be filled with a lower-cost generic equivalent.

Pharmacists and physicians were warming up to generic drugs, as well. Barriers to generics prescribing had been falling for the past five years, to the point that earlier this year, Drug Store News researchers reported that 45 percent of the prescriptions dispensed by chain pharmacies are filled generically.

Even more encouraging for the U.S. generic drug industry was the prospect that the makers of these medicines had finally ended their internal dissension and were ready to work together under one roof to advance the interests of the industry at large. The industry's two rival organizations--the National Association of Pharmaceutical Manufacturers and the Generic Pharmaceutical Industry Association--reached an agreement to merge into a single, unified group. And, for leadership, the two associations turned to a chain drug industry veteran, former NACDS senior vice president Rob Waspe, who was recruited to head the newly unified group and build alliances with other segments of the healthcare field.

But the best laid plans of the generic pharmaceutical industry slowly began to unravel.

Serious problems surfaced with the merger, as the leaders of the GPIA and the NAPM, which had made unsuccessful attempts at consolidation in the past, deadlocked on key issues. By late summer, after more than six months of negotiations to iron out the differences, plans for the merger were formally abandoned and the generic drug industry's latest effort to achieve unity crashed.

With the collapse of the merger, the NAPM abandoned plans to relocate to Washington, and Waspe stayed on as president of the GPIA for another nine months. In May, GPIA chairman Marvin Samson issued an announcement declaring that Waspe had departed the association, and that a search was under way for a replacement.

Within a week, the board selected Alice Till, GPIA's vice president for scientific affairs, to take charge of the organization. Till, a former Merck executive before joining the generic association, pledged to focus on a series of critical legislative and regulatory issues facing the industry.

Today's generic agenda

Topping the list of concerns for both the GPIA and the NAPM are the repeated efforts by brand name pharmaceutical manufacturers to secure extended patent life for top-selling products on the brink of becoming open to generic competition.

Much of this activity stems from provisions of the two-year-old General Agreement on Tariffs and Trade, which, according to generic drug industry officials, created an inadvertent loophole in U.S. patent laws that enabled some branded pharmaceutical manufacturers to claim unwarranted extensions of their patents.

By delaying the introduction of lower-priced generic competitors, these GATT-related patent life extensions could increase the cost of medicine to American taxpayers and consumers by $6 billion, according to industry estimates.

Although generic industry leaders believed they had closed that GATT loophole over a year ago, the issue keeps resurfacing as branded manufacturers continue to press for federal legislation to delay generic competition for a variety of individual pharmaceuticals about to lose patent protection.

At the same time, generic drug industry officials found themselves battling efforts to extend effectively patent exclusivity periods in the courts.

According to Mylan president and chief executive officer Milan Puskar, "the litigation being perpetuated within the generic industry is unbelievable." Contending that these lawsuits are "designed to keep Mylan and other generic companies from going to market" with lower priced pharmaceuticals, Puskar told the company's stockholders that "today it is almost as expensive to litigate our rights to sell a generic as it is to develop that drug."

In addition to seeking to delay the marketing of generic drugs in Congress and the courts, branded manufacturers are increasingly turning to the federal regulatory machinery for help in extending the period of market exclusivity for their products.

One increasingly popular tactic employed by branded drug makers is to file citizens petitions with the FDA, challenging the therapeutic equivalency of the generics that may soon be brought to market when the patent on one of their proprietary drugs expires.

Even if the petition is ultimately denied, it can take the FDA years to resolve the scientific issues raised in these challenges--a delay that could mean tens of millions of dollars in extra profits for a branded pharmaceutical manufacturer. And, if the FDA buys into the arguments raised by the petition, it could postpone the advent of generic competition for an even longer period.