Drugmakers Blamed For Blocking Generics Have Jacked Up Prices And Cost U.S. Billions

Makers of brand-name drugs called by the Trump administration for potentially stalling generic competition have hiked the prices by double-digit percentages since 2012 and cost Medicare and Medicaid nearly $12 billion in 2021, a Kaiser Health News analysis has found.

As part of President Donald Trump's promise to curb high drug prices, the meals and Drug Administration posted a list of pharmaceutical firms that makers of generics allege refused to allow them purchase the drug samples required to develop their products. For approval, the FDA requires so-called bioequivalence testing using samples to demonstrate that generics are the same as their branded counterparts.

The analysis shows that drug firms that might have involved in what FDA Commissioner Scott Gottlieb called “shenanigans” to obstruct the doorway of cheaper competitors onto the market have indeed raised prices and cost taxpayers more income over time.

The FDA listed a lot more than 50 drugs whose manufacturers have withheld or refused to market samples, and cited 164 inquiries for help obtaining them. Thirteen of these pleas from makers of generics pertained to Celgene's blockbuster cancer drug Revlimid, which taken into account 63 percent of Celgene's revenue in the first quarter of 2021, based on a company pr release.

The brand-name drug companies “wouldn't put so much effort into battling competition if these weren't [such] lucrative sources of revenue,” said Harvard School of medicine instructor Ameet Sarpatwari. “In the situation of the blockbuster drug, that may be hundreds of millions of dollars of revenue for the brand-name drugs and almost exactly the same cost towards the health care system.”

Indeed, a KHN analysis discovered that 47 of the drugs cost Medicare and Medicaid almost $12 billion in 2021. The spending totals don't include rebates, which drugmakers go back to the federal government after spending money on the drugs upfront but are not public. The rebates ranged from 9.Five percent to 26.3 percent for Medicare Part D in 2021, the newest year that data are available.

The remaining drugs do not come in the Medicare and Medicaid data.

By delaying growth and development of generics, drugmakers can maintain their monopolies and prices high. The majority of the drugs cost Medicare Part D more in 2021 compared to what they did in 2012, to have an average spending increase of about 60 % more per unit. This excludes drugs that do not appear in the 2012 Medicare Part D data.

Revlimid cost Medicare Part D $2.7 billion in 2021, trailing only Harvoni, which treats hepatitis C and isn't on the FDA's new list. The price of Revlimid, which faces no competition from generics, has jumped 40 % per unit in just 4 years, the Medicare data show, and cost $75,200 per beneficiary in 2021.

Some drugs on the FDA's list, including Celgene's, are members of a safety program that may require restricted distribution of brand-name drugs that have serious risks or addictive qualities. Drugmakers with products in the safety program sometimes say they can't provide samples unless the generics manufacturer jumps through a series of hoops “that generic companies find hard or impossible to adhere to,” Gottlieb said inside a statement.

The Department of Health insurance and Human Services Office of Inspector General issued a report in 2021 having said that the FDA couldn't prove the program actually improved safety, and Sarpatwari said there's evidence drugmakers are abusing it to stave off competition from generics.

Gottlieb said the FDA is going to be notifying the government Trade Commission about pleas for the aid of would-be generics manufacturers about obtaining samples, and he encouraged the manufacturers to complete exactly the same when they suspect they're being thwarted by anticompetitive practices.

Celgene spokesman Greg Geissman said the organization who has sold samples to generics manufacturers and can continue to do so. He stressed maintaining a balance of innovation, generic competition and safety.

“Even a single dose of thalidomide, the active ingredient in Thalomid, can cause irreversible, debilitating birth defects if not properly handled and dispensed. Revlimid and Pomalyst are viewed to have similar risks,” Geissman said.

The highest quantity of pleas for help related to Actelion Pharmaceuticals' pulmonary hypertension drug Tracleer. In 2021, that drug cost Medicare $90,700 per patient and more than $304 million overall. Meanwhile, spending per unit jumped 52 percent from 2012 through 2021.

Actelion was acquired by Johnson & Johnson's pharmaceutical arm, Janssen, in 2021.

Actelion spokeswoman Colleen Wilson said that the organization “cooperate[s]” with makers of generic drugs and “has responded to all requests it has received directly from generic manufacturers seeking use of its medications for bioequivalence testing.”

PhRMA, the trade group for makers of brand-name pharmaceuticals, said the FDA's list was somewhat unfair since it lacked context and responses from those it represents.

“While we must continue to foster a competitive marketplace, PhRMA is concerned that FDA's release of the 'inquiries' it's received lacks proper context and conflates numerous divergent scenarios,” said PhRMA spokesman Andrew Powaleny.

Congress is considering the CREATES Act, which stands for “Creating and Restoring Equal Use of Equivalent Samples” and would foster competition partly by allowing generics manufacturers to file a lawsuit brand-name drug manufacturers to compel these to provide samples.

The bill's sponsor, Sen. Patrick Leahy (D-Vt.), said more transparency in the FDA is helpful, but more work from the agency is needed to end the anticompetitive tactic. “With billions of dollars on the line, a database alone will not stop this behavior,” Leahy said.

Co-sponsor Sen. Chuck Grassley (R-Iowa), chairman of the Judiciary Committee, expressed similar sentiments, telling KHN: “The CREATES Act is necessary because it would serve as a strong deterrent to pharmaceutical companies that participate in anticompetitive practices to keep low-cost generic drugs off the market.”

The FDA hasn't come out in support of CREATES. “They ought to know that this is likely to require a legislative solution,” Sarpatwari said. “Why are they not entering into this arena and saying that?”