Generics market update: Business as usual
Pharmacy Magazine,
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Generics market update: Business as usual
Pharmacy Magazine,
3 Min
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A hectic decade of mergers and acquisitions in the global generics sector has culminated in the recent purchase of Actavis by Teva.
After months of being involved in a hostile takeover bid for Dutch rival Mylan, Teva switched tack in July to acquire the Actavis generics business from Allergan for $40.5bn, reinforcing its position as the world's biggest generics manufacturer.
The acquisition followed a busy few months of mergers and acquisitions in global pharmaceuticals that will ultimately take one of the biggest players in UK generics out of the market.
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A hectic period of buying, selling and rebranding began just four months previously in March, when Actavis acquired Botox manufacturer Allergan in a $70bn deal. Actavis began trading under the Allergan name in June but, only a month later, the company sold its global generics business to Teva.
Under the agreement, Teva acquired Allergan's legacy Actavis generics business, including the US and international generics commercial units, third-party supplier Medis, global generics manufacturing operations, the global generics R&D unit, the international OTC commercial unit (excluding eye care products), and some established international brands.
Allergan retained its global branded pharmaceutical and medical aesthetic business, as well as its biosimilars development programmes and US Anda distribution business, while Teva gained a portfolio of over 1,000 products and forecast a double-digit boost to adjusted earnings per share in 2016. Neither Teva nor Actavis want to comment further until the deal is finalised (expected to be in the first quarter of 2016) but both insist that, in the meantime, it is business as usual for UK community pharmacy. €We appreciate that customers will have many questions; however it is still too early to comment,€ says a spokesperson for Teva UK.
Biosimilars breakthrough
While wafer thin margins on traditional generics are sustained by the economies of scale achieved by a constant stream of mergers and acquisitions, the more profitable and much more complex biosimilar products bring a different business model to the generics market.
The launch of two biosimilar products based on infliximab (Inflectra and Remsima) represents the start of a €sea change€ in their use, with 2015 set to be a €breakthrough year€ for biosimilars, according to the British Generic Manufacturers Association. Although it is still too soon for solid data to confirm significant sales, €all of the building blocks we hoped to see in place are there,€ says BGMA director general Warwick Smith.
NICE contributed two of these building blocks by updating its guidance on biosimilars and issuing guidance supporting infliximab use in rheumatoid arthritis. Previously issued NICE guidance around originator products now automatically applies to the relevant biosimilars, so separate appraisals are no longer needed, while the August publication of a NICE resource to support the introduction of biosimilar versions of infliximab was another €critical step€ in publicising the benefits of biosimilars.
The resource explains how NHS organisations can safely and effectively transition from infliximab to Inflectra or Remsima, providing insights from clinicians who have already switched to the new technology. Then in September, new NICE guidance endorsed biosimilar infliximab as an option for the treatment of severe rheumatoid arthritis.
€This opens the way for significant savings for the NHS and an increase in the number of patients who can be treated within existing budgets,€ says Smith. Although biosimilar use looks to be on the increase, take-up varies around the country and UK adoption rates lag behind some other EU countries. Clinicians who are used to writing a particular brand name will have to make a conscious effort to write a different brand name, says Smith, while hospitals are used to encouraging prescribing by INN.
A change in mindset will therefore be required to increase adoption. As biologics are currently only prescribed in secondary care, the role of community pharmacists is limited, although this is likely to increase alongside more widespread use.
If clinicians switch patients from an originator product to its biosimilar, or between biosimilars, they are supposed to consider the switch in consultation with the patient alongside initially enhanced supervision. As patients are likely to see their pharmacist more frequently than their consultant, pharmacists could play a role in this supervision.
Table 1: A decade of mergers and acquisitions
Branded generics: undermine funding or clinically justified?
PSNC has seen an increase in reports from LPCs and contractors about clinical commissioning groups encouraging the prescribing of branded generics, which may appear to them to make local savings. Such apparent savings are often unsustainable, drive up overall costs to the NHS and undermine the principles behind community pharmacy funding, says Mike Dent, PSNC's director of pharmacy funding.
PSNC is in regular contact with both the Department of Health and NHS England regarding this issue, he says. Warwick Smith, director general of the British Generic Manufacturers Association, says he is strongly against the practice of applying a brand name to an existing generic purely for commercial reasons but says other categories of branded generic can be clinically justified. One such category, he says, is products with a narrow therapeutic index (e.g. medicines for epilepsy or transdermal patches).
The Medicines and Healthcare products Regulatory Agency will only issue a marketing authorisation against a brand name for these products and they should be supported financially. The BGMA welcomed the Department of Health's announcement in January that it would not introduce an additional price cut for branded generic medicines but says that new, more nuanced thinking is required if patients are to benefit from the more complex medicines that generic manufacturers are increasingly producing.
A third reimbursement mechanism that applies to brands that experience competition could solve the problem, says Smith. This could be a development of the PPRS or of scheme M, or even a discrete third reimbursement mechanism. An ideal solution remains to be agreed.
Sorting out shortages
Problems for contractors obtaining stock of generic medicines have increased over recent years due to a number of factors, including:
- Shortages of active ingredients
- Pressure on manufacturers/suppliers to meet category M prices
- Consolidation in the market resulting in less competition
- Time taken for a MHRA licence variation to take place
- The growth in use of generic medicines.
Table 2 shows the average number of drugs 'on concession' each year since 2008 (up to and including August 2015), illustrating the steadily increasing number of problem lines and the increasing burden on pharmacies trying to obtain these medicines. It is difficult to assess shortages because situations vary by region and change continually €“ it is only ever possible to get a snapshot of what is happening, says Mike Dent, PSNC's director of pharmacy funding.
€However, our evidence shows that generic shortages pose an ongoing and significant problem for pharmacies in England who are spending a lot of time trying to source medicines for patients. This ultimately impacts on the care of patients, who may be unable to access their medicines in a timely manner.€ PSNC is working with other organisations, including the British Association of Pharmaceutical Wholesalers (BAPW), to highlight the problem to policy-makers and initiate improvements in the supply chain.
In the meantime, PSNC is encouraging any pharmacy teams experiencing problems obtaining a generic medicine to continue to report them using its online feedback form at psnc.org.uk/feedback. €The reports we receive are vital in helping build our evidence base, which is used during our discussions of this key issue with the department,€ says Dent.
In May, Sigma Pharmaceuticals estimated that generic drug shortages were costing independent pharmacists in England £10m a year. The situation hasn't changed significantly since, says Sigma director Rajiv Shah, who claims that Sigma is the only wholesaler to ration stock when lines go short in order to try and maintain supply.
Although he highlights market consolidation as one of many causes of shortages, Shah believes problems are in fact less likely as a result of the Teva/Actavis merger than following smaller mergers, because both companies have huge manufacturing capabilities. Ongoing consolidation reflects confidence in the UK generics market, he says, adding that the stock situation for independents should improve slightly because of improved IT and ordering systems.
This opens the way for significant savings for the NHS and an increase in the number of patients who can be treated within existing budgets
Key facts
- Teva has purchased the Actavis generics business for $40.5bn
- Generics shortages pose an ongoing and significant problem for pharmacies in the UK
- There have been calls for a third reimbursement mechanism
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