The WSJ Health blog published on a report yesterday recently released by the Generic Pharma Association (GPhA) touting the savings the US healthcare system is deriving from using generic drugs in the stead of their branded counterpart.
According to the report, every 2% uptake in generic utlization results in $1 B in Medicaid annual savings. A billion here and a billion there and pretty soon you'e talking about real money. What's more? Utilization of generics within the Medicaid program is about 10% below that of the general population -- meaning there is much more savings to be had. In total, the GPhA claims that IMS figures support a realized savings of more than $139.6 B due to generics usage in 2009 -- a 15% increase from prior year.
What does this mean? It means that economica favor the substitution of generics whereever possible - certainly from the 3rd part payer persepective. Even though the savings are not be projected as high with biosimilars compared to their branded counterparts, there are still ample savings to be realized. One can hardly expect Medicaid adminsitrators to ignore this.
This week the FDA approved a generic biologic from Momenta Pharmaceuticals that will compete with Sanofi's Lovenox branded drug. The drums are already beating that this signals a more assertive stance by the agency toward approving additional biologics and biosimilars. Teva's Copaxone has been identified by several analysts as perhaps the next branded biologic to be challenged.
Novartis' Jeffrey George, global head of Sandoz generic drug unit, says that starting in 2015 and 2016 many biotech product will begin to come off patent. "Biologic medicine is a $100 B industry. There is a lot of savings to be had." Epogen and Neupogen might be the first targets on this list.
Bottom line: the FDA has let the genie out of the bottle with its approval of Momenta's generic and there's no going back.
Posted by Bruce Lehr July 27th 2010.