How Can Generic Pharma Get its Groove Back?

Generic pharmaceutical companies are looking to Congress to help get the industry out of its recent funk.

Total revenue for the generic drug industry went down 12 percent from June 2016 to June 2017 even though the number of generic prescriptions went up slightly, by 1 percent, the head of a generic industry group told me. And two major generic drugmakers—Mylan NV and Teva Pharmaceutical Industries Ltd.—recently reported disappointing quarterly results. While Mylan and Teva also make branded drug products, they both said in recent financial reports they were experiencing generic drug price erosion.

If the revenue declines continue, “you’re going to see consolidation of the generic companies” and “you’re going to see shortages of products,” Dan Mendelson, chief executive officer of the consulting firm Avalere Health, told me. He also said he is worried about product quality.

Mendelson said “it’s ironic that the generic industry is facing such commercial difficulty just at the time the health-care system needs these product to be widely available.” Generics account for 89 percent of prescriptions dispensed but only 26 percent of total drug costs in the U.S., according to a recent report from the Association for Accessible Medicines (AAM), the generic industry group.

Reasons for the revenue decline include consolidation on the demand side, practices of branded corporations that stifle competition, and more competition among generic products due to more product approvals, Chip Davis, chief executive officer of the AAM, told me.

Davis said there a number of things Congress could do to help, including prohibiting anticompetitive practices by branded drug companies, repealing a penalty in the Medicaid program that unfairly targets generic drugs, and increasing the use of generics in Medicare Part D.

Read my full article here.

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