• Here’s some waste we can cut

    UPDATE: I’ve talked more about this, and who’s to blame, in an additional post.

    There’s a paper out in Archives of Internal Medicine that’s going to keep me good and fired up all day:

    The ongoing debate concerning the efficacy of fenofibrate has overshadowed an important aspect of the drug’s history: Abbott Laboratories, the maker of branded fenofibrate, has produced several bioequivalent reformulations that dominate the market, although generic fenofibrate has been available for almost a decade. This continued use of branded formulations, which cost twice as much as generic versions of fenofibrate, imposes an annual cost of approximately $700 million on the US health care system. Abbott Laboratories maintained its dominance of the fenofibrate market in part through a complex switching strategy involving the sequential launch of branded reformulations that had not been shown to be superior to the first-generation product and patent litigation that delayed the approval of generic formulations. The small differences in dose of the newer branded formulations prevented their substitution with generics of older-generation products. As soon as direct generic competition seemed likely at the new dose level, where substitution would be allowed, Abbott would launch another reformulation, and the cycle would repeat. Based on the fenofibrate example, our objective is to describe how current policy can allow pharmaceutical companies to maintain market share using reformulations of branded medications, without demonstrating the superiority of next-generation products.

    Let me recap for you. Abbott Labs had a drug (fenofibrate, or Tricor-1) which they licensed from Fournier Labs in 1998. So please, don’t start with me about how much it cost Abbott to “discover” the drug. There was a problem, though. Much of its exclusivity time had been used up by the time Abbott acquired the license. So in early 2000, another company filed its intention to make a generic version of the drug. Abbott fought back by filing a patent infringement suit. When this happened, the FDA basically told the generic company that they couldn’t make the drug until the lawsuit was resolved, which usually took about 30 months. During that time, Abbott got to keep exclusivity.

    In the interim, Abbott sought and obtained FDA approval for Tricor-2. That drug was nothing more than a branded reformulation of Tricor-1. Tricor-1 came in 67-mg, 134-mg, and 200-mg capsules; Tricor-2 came in 54-mg and 160-mg tablets. No new trials involving Tricor-2 were submitted to the FDA. But Tricor-2 came out while the generic company was still waiting to make Tricor-1, and thus Tricor-2 began selling with no direct competition.

    Six months later, Tricor-2 evidently accounted for 97% of all fenofibrate prescriptions. By the time the generic copies of Tricor-1 came out, no one was taking it anymore, and they couldn’t penetrate the market.

    Wash, rinse, repeat. The generic companies petitioned to make generic Tricor-2. Abbott filed a patent infringement suit buying them a 30 month delay. They got to work on Tricor-3. That tablet came in 48-mg and 145-mg doses. No new studies. They got approval. Evidently, 70 days after Tricor-3 was introduced, 70% of users were switched to the new branded drug. By the time the other companies got generic Tricor-2 out, Tricor-3 had 96% of the market.

    I swear I’m not making this up. Wash, rinse repeat.

    As others once again tried to make generic Tricor-3, Abbott rolled out Trilipix. That drug switched back to capsules, changed the dose to 45-mg and 135-mg, and packaged a metabolite of fenofibrate (fenofibric acid). That, and a few simple studies got them three years of exclusivity.

    Needless to say, the generic companies have sued (emphasis mine):

    Abbott’s strategy did not go entirely unnoticed. In May 2005, the Louisiana Wholesale Drug Company filed a class action lawsuit against Abbott, on behalf of all pharmacies and wholesalers that purchased Tricor, alleging the company’s “unlawful exclusion of competition from the market for fenofibrate” (eAppendix 2). Abbott was the subject of a similar antitrust complaint brought by various patients taking Tricor. Both lawsuits cite the same sequence of events described herein as evidence that Abbott violated the Sherman Antitrust Act (15 USC 1-7 [1890]), which outlaws monopolies and any effort to establish such market position. Abbott was sued again in 2008 by 19 different states, which made allegations similar to those of the plaintiffs in the earlier lawsuits but also highlighted their view that Abbott had broken various state antitrust laws. Ultimately, Abbott settled each of these lawsuits at a combined cost to the company of more than $300 million, which amounts to less than 4% of total sales to date of Abbott’s fibrate franchise (eAppendix 2).

    Oh, and by the way, if we switched everyone in the US to the generic drug today, we could save something like $700 million a year. Still.

    The authors add this at the end:

    While we have used Abbott’s handling of fenofibrate as an illustrative example of a branded drugmaker’s maintaining a dominant market share years after generic competition was permitted, it is only one example. There are instances of similar strategies. AstraZeneca’s efforts to switch patients from omeprazole (Prilosec) to the active enantiomer of the old drug, esomeprazole magnesium (Nexium), in 2001 is well documented. Such strategies are particularly worrying given concerns about the unsustainable growth of health care costs. Fortunately, this is a solvable problem because small changes to the current regulations and structure of our health care system have the potential to foster appropriate generic competition and to ensure that drugmakers demonstrate the value of their next-generation products.

    I’ve written about some of this before here.

    The BMJ news quoted one of the authors with some strong words:

    Harlan Krumholz, a professor of cardiology, told the BMJ that it was not just the company that could be criticised. He thought that doctors were “complicit” in the problem. He asked, “Why didn’t we prescribe the bioequivalent generics for our patients? What was the advantage to our patients of the more expensive proprietary drug? Did we let down our patients and society? There are questions about the utility of fenofibrate; but if it was going to be used, why didn’t we think about whether the higher cost, brand drug was providing any additional benefit?”

    I think it’s gated, unfortunately, but the paper is well worth your time. “Avoidance of Generic Competition by Abbott Laboratories’ Fenofibrate Franchise“. I’ve only given you the high notes here. There’s much more. Go read if you can.


    • Three cheers for Kaiser Permanente, I suppose – the fenofibrate in my cabinet is made by Globa.

    • Let me only make a factual correction: under the Hatch – Waxman Act, when a generic files a paragraph IV certification and challenges a brand’s patents, a stay of up to 30 months or until the patent infringement litigation is completed is automatically granted. During this time the FDA may not provide marketing authorization (through granting an abbreviated new drug application) to the generic applicant.

      There have been various reforms and antitrust lawsuits for abusing this provision.

    • I don’t know enough about the particulars of this case beyond what you’re detailing. I do, however, have some knowledge of the battle between generic manufacturers and American pharmaceutical companies.

      Generic companies have no R&D, obviously. Their R&D has been to continually push the envelope against patent protection. In relative terms, it costs them little and it has the potential to reap enormous returns. So, why go after a drug when it’s only been on the shelves for 2-3 years and might have another 5 in patent protection (the rest having been eaten up by the FDA’s approval system)? Because courts have occasionally handed down rulings striking down a company’s patent protection. And that’s very troubling not only for drug companies but for anything protected by a patent or copyright. I’m not going to try to detail specific cases here, but it’s a relatively easy research project if you wish to take some time.

      Drug companies’ defense has been precisely what you detail: reformulation of a drug to get a new patent. To which the generic companies’ response is to go after the reformulation in court. And that’s your real rinse and repeat. This isn’t new; the first time I became aware of this was with Bristol-Meyers Squibb’s battle over Buspar a decade ago. Abbott may be the first you’re aware of,, but there’s a long history of this.

      This is not to defend the practice, but rather to say that the system of patent protection for drugs in this company is severely flawed. This, in my opinion, has also led to the explosion of “lifestyle drugs” as opposed to true life-saving and life-altering drugs. Let’s say you had a choice between putting Stage 2 R&D into a specific type of allergy medication or an AIDS drug. If you’re looking at bottom line dollars (and what Big Pharma company is not) it’s a no-brainer: go with the former. The latter will be scrutinized more as it winds it’s way through the FDA, shaving years of the patented-protected time that it can be sold, which will also likely be challenged early and often by generics’ legal departments, putting it even further at risk. The allergy medication, on the other hand, will receive less rigorous scrutiny, less time in clinical trials, and is less likely to be gone after by generics.

      My point is that Abbott is probably not the sole villain here. Like much else in health care, the system is so badly broken that it’s going to be very difficult to fix. My cure is relatively simple (but will face huge hurdles to implement): patent protection begins at market entry or 5 years after initial FDA approval (this prevents a company from sitting on a drug indefinitely), whichever comes first.

      I would like to see a federal law passed that would severely fine generics who challenge a patent and lose the case before its protection expires, but that would be beyond the ethics of the vast majority of Congress, who have law degrees and would see this as some sort of intrusion into their other livelihood.

      Randall Ryan

      • It’s not the first time I’m aware of it, as I noted in previous posts. It is, however, interesting to see it detailed so well in a reasonably high profile medical journal. It’s also disappointing to me to see that paper so poorly covered by the media.

        Moreover, I made the specific point (as did the article) that Abbott isn’t the only one at fault here. Other companies do it. And doctors are complicit as well.

    • Something things you many not be considering when you say “Switch everyone to generics.”

      -Most generic drug companies are outside the U.S. and therefore very difficult to go after in the case of a formulary error. And formulary errors happen a lot more than most people are aware. This has come to some public light recently with a few cases where people have had negative reactions to generic drugs, and were unable to sue or collect damages because it fell outside of U.S. jurisdiction. Again, this is an easy research project.

      -Large corporations and their focus on quarterly profits is an enormous problem in America; this goes well beyond Big Pharma. However, if you remove the profit motive for large-scale R&D, where will the incentive come from to develop life-saving drugs? You can say that this should be government funded, but that’s completely unrealistic to think that has any hope of being implemented.

      • Stop. Nowhere did I say that, and I’m not in any way advocating for a socialized pharmaceutical industry.

        1) Tons of drug companies are outside the US, period. We only seem concerned when it’s a “generic” company.

        2) Abbott Labs didn’t develop Ticor. They licensed it.

        • And so you did; my error.

          However, I still stand by the system being in serious error. As to major drug companies being outside the U.S. vs. generics, the issue is that the barrier to entry for generics is very low. Also, we’re not buying branded drugs in this country from a pharmaceutical manufacturer in a country that’s a legal outlier (by our standards), but we are doing that with generics. So it’s not a fair comparison.

          I wasn’t suggesting that you were advocating for a socialized pharmaceutical industry, but merely saying that would be an easy response and one I would expect from some people. (It does read like I’m suggesting you might be saying that, but that wasn’t the intent.)

    • If a company can really extend its patent by changing the dosage, I’m cutting my medication in half and going into the drug business. Okay, I realize I’d have to hold the patent, but that really is pathetic.

      • They can’t extend the patent just by doing that (at least without new research), but they can create other problems. If a doctor prescribes you a 45 mg drug and tells you that’s what you need, then if the generics only come in 50 mg tabs, pharmacies can’t just switch. As long as the branded companies keep switching up the doses and convincing you that’s what you need (with docs’ help), this continues.

    • Re: last comment: — First sentence should have read “Some things you may not be considering…” But you probably know that. 🙂

    • Minivet brings up an interesting idea. Staff model HMOs should (in theory) be particularly well equipped to diffuse the marketing advantage of a brand that’s reformulated. As noted above, it’s well known that generics don’t create demand, they take the demand for an existing branded drug. When brands have follow-on products and try to convert demand to it (before generic entry), this reduces the generic’s volumes.

      The VA has a very strict formulary and big savings, but I don’t know if private staff-model HMOs like Kaiser are able to deal with the challenges as effectively when dealing with paying beneficiaries. I’d love to see some papers or data. For example, does Kaiser (or other staff model HMOs) cover Nexxium (a top 5 drug and the left enantiomer of Prilosec, which has gone generic)? Was it able to get its doctors to keep writing scripts for generic Prozac (fluoxetine) and generic Paxil (paroxetine) instead of Paxil CR (paroxetine)?

      • There’s an issue, though. Pharmacists can only switch people to the same dose generics, By slightly changing the dose, Abbott prevented that from happening at the pharmacist level.

        We could allow pharmacists to switch people to “bioequivalent” doses, but that would require new regulations. The drug companies know what they’re doing.

        • Just to be clear, I agree with much of your argument. It stretches ethical boundaries to allow a drug companies to get a new patent for such minor changes as dosage. (There are exceptions, such as a truly break-through formulary that allows, for instance, patients to take a drug once a day instead of 4 tgimes a day, or a significant reduction in side effects.) I’m just suggesting that it’s not as simple as singling out branded drug companies. In many cases, they’re fighting a bad system with the tools they possess. And yes, those tools break the system further.

          I don’t believe that one can go after regulatory reform without addressing the serious problems that generics have also wreaked onto the system. There are multiple villains here.

        • Yes – auto-substitution at the pharmacy counter is only for A-rated generics (i.e. those that are bioequivalent and in the same dosage form/strength). I was more interested in modifying physician behavior in what medicines they prescribe. If a staff- model HMO employs the physicians, it may be able to limit some branded promotion affecting doctors (e.g. having good reviews of brand studies such as pointing out things like, for instance, that Nexxium at twice the effective dose only had 3% better outcomes than Prilosec) and it may be able to better encourage prescribing lower cost medicines.

      • Addendum – my dose is 160mg, implying that Kaiser did fall for the reformulation from Tricor-1 to Tricor-2.

    • I always wondered why fenofibrate came in so many doses.

      Now I know.

      That’s crazy.

    • I think most can agree that the companies are out to make money, that’s business and I am not trying to defend or complain about what they do. No matter what system is in place they will work towards this goal, that is their primary purpose.

      But one point that is missed in all these discussions seems to be how this is a perfect example of how excessive insurance coverage and not having enough “skin-in-the-game” causes people (doctors and patients) to price insensitive. If people were paying for their own medicines they would care and the market would adjust accordingly. People might even try to lower their cholesterol in healthy ways instead of just taking this “free pill”.

      Ask anyone how much their last doctor visit cost and they will likely only know their co-pay amount. Ask them how much their last car repair bill was and they will complain about rising costs or explain how they found a great deal by shopping around.

      Removing one side of the market will only cause the other side to exploit it and you can not blame them for that.

      But I am sure that expanding coverage to all and having more bureaucracy will fix these problems.

      • What I want to know is why insurance companies don’t push for cheaper drugs. That would seem to increase their profits. I suppose it’s because of lack of competition between health insurance companies, but I don’t know.

    • Along similar lines: Has anyone found it difficult lately to treat gout patients? I am incredibly frustrated at the blatant disservice URL pharma has done to doctors and patients in greedily pursuing marketing exclusively for their branded version of colchicine (Colcrys), a drug which had previously been widely available in an inexpensive form for decades (now no longer available, thanks to URL).  As they certainly are aware, their actions have rendered the medication much less affordable (and therefore less available) for a great number of patients, thus making the job of treating gout—a significant and often debilitating disease– more difficult for physicians. They claim to offer coupons for those in need, but Medicare policy forbids the use of drug coupons.