Pharmaceutical industry stakeholders call for reform, investment in generic drugs

Pharmaceutical industry stakeholders are calling for reform and investment in the generic drug market to combat rising prescription drug costs.

“The reason why you want to invest in the generic drug sector is because there is the opportunity to substantially lower the cost of manufacturing and at the same time increase quality,” said Fernando Muzzio, a Rutgers University chemical and biochemical engineering professor who participated Wednesday in a panel discussion on generic drugs on Capitol Hill.

“Not only do you potentially decrease the potential costs to the consumer and increase the quality to the consumer, which is a substantial benefit to the consumer, you are also potentially growing the economy in a significant sector of the U.S. economy,” Mr. Muzzio added.

But Ajaz Hussain, president of the National Institute for Pharmaceutical Technology and Education, said the competitive drug market is not working efficiently to lower costs.

Citing data from the Food and Drug Administration, Mr. Hussain noted that 50% of generic drugs either are not marketed or are marketed only intermittently after a long delay in the approval process. Applications are not submitted for generic versions of about 10% of approved brand-name drugs.

A recent analysis of one-month treatment costs of generic drugs over the last 14 years found that consumers will pay an average price of $796 each month this year, compared to $98 in 2006. The 46brooklyn Research study, released Tuesday, also shows that the top 25% of the 2019 generic “class” drugs have a sticker price of more than $1,800 a month.

From 1960 to 2017, inflation-adjusted retail prescription drug spending increased from $90 to $1,025 on a per capita basis, according to a Kaiser Family Foundation analysis cited by the Peterson Kaiser Health System Tracker.

“We are not benefitting from competition for reducing prices, and, therefore, we ought to strengthen the way the system works to be more reliable,” said Mr. Hussain. “We are at the verge of not being able to afford our medicines.”

The National Institute for Pharmaceutical Technology and Education is a nonprofit that seeks to improve how medicines are made. It cites outdated manufacturing control technologies and brand-name drugmakers’ guard over knowledge that could be used to produce generic drugs as major factors souring the competitive drug market.

Brand-name firms keep their production knowledge as proprietary trade secrets, the nonprofit group says. Often times, generic drugmakers do not have the knowledge to make an off-patent version.

Mr. Hussain said that companies producing generics have to start from scratch with limited resources, a shorter timeline and smaller profit margins. About five to six companies that make the same drug are needed in order to reduce costs, he said.

While prices for common generics decreased by 37% since 2014, brand-name drugs have increased by more than 60%, an Express Scripts overall prescription price index shows.

The National Institute for Pharmaceutical Technology and Education, which is comprised of 18 universities, is aiming to develop public domain information on what can improve manufacturing processes of generics and reduce the risks of market withdrawals, recalls and import alerts.

By developing a central database of public information, Mr. Hussain said, there is also an opportunity to create domestic manufacturing jobs, noting how the U.S. largely relies on other countries to manufacture drugs.

About 40% of generic drug products are imported from India, and China manufactures more than 90% of the active pharmaceutical ingredients in drug products sold in the U.S. market.