The introduction of modified versions of original products, is used as a strategy by pharmaceutical companies to switch patients from an original product to a follow-on product that benefits from further patent protection or new product exclusivity and may help circumvent Medicaid rebates on established products.
The Innovator pharmaceutical companies take advantage of their market power to shift pharmacists, doctors, and consumers to new modified versions of drugs before a generic for the original product can reach the market. This may include the complete removal from the market of the original product, forcing clinicians to prescribe the modified product. Or focusing all marketing and promotional spend on to the modified product, leaving the original product to die a natural death.
These tactics of innovator companies diminish the opportunity for the generic aspirant of the original product by making generic substitution impossible or limited, & in turn create burden on patients and the healthcare system. Innovator drug companies have increasingly been accused of violating the Sherman Act by using new drug formulations as a tactic to blunt competition from generic rivals.
There are several examples wherein innovator companies have abused their dominant position to maintain the monopoly.
- Shifting the market from Fosamax® to Fosavance®, which is the same medicine as Fosamax® with the addition of a small amount of vitamin D. Even though patients who were prescribed Fosamax® in the past were instructed to consume this medicine in combination with vitamin D.
- The launch of a tablet form of Losec combined with the deregistration of the marketing authorisations for the capsule form of Losec in national markets where the patent or SPC was due to expire, and withdrawal of those capsules
- Withdrawal and delisting of Gaviscon Original Liquid from the NHS prescription channel after the expiry of the patent, but prior to the publication of a generic name. Forcing the doctors to prescribe Gaviscon Advance Liquid, which was another version of the product still under patent protection. The withdrawal of the Gaviscon Original Liquid was at the pretext that Gaviscon Advance Liquid has lower sodium content.
- Switching patients from original perindopril product to modified perindopril product, which had obtained patent protection until 2023. The original product was withdrawn before generic launch, although the modified product had no therapeutic advantages over the original product.
- Discontinuation of the supply of Priadel, a lithium carbonate medication, for the treatment of bipolar disorder. And forcing customers to switch to Camcolit, a more expensive lithium carbonate treatment.
- Pushing doctors to prescribe Nexium, which was only slightly chemically different from Prilosec but had 13 years of patent protection left.
- Several product hops were executed for TriCor, by slightly reformulating the drug — for example, moving from capsules to tablets with slight differences in dose. Not only the supply of older versions were stopped, even active steps were taken to change the code in the National Drug Data File for the older versions to obsolete, in effect preventing pharmacists from filling prescriptions with a generic versions of the older versions.
- Doryx was reformulated three times to dodge generic competition. In its first product hop, stopped selling the original capsule versions, removed capsules from the company’s website, and bought back and destroyed capsules while introducing a reformulated version in tablet form.
- Switch of Namenda IR (twice a day) to Namenda XR, in anticipation of generic competition. The Namenda XR was once a day with a patent expiring fourteen years later.
- Switching the market from Suboxone tablets to sublingual film and misrepresenting that the film version of Suboxone was safer than Suboxone tablets because children are less likely to be accidentally exposed to the film product.
Such issues have been framed in antitrust class action lawsuits and in private suits brought by generic competitors. The product-hopping issue has also surfaced several times in statements by various FTC commissioners and there is growing concern that the practice of releasing new and improved versions of pre-existing drugs—“product hopping” or “product switching”—can, in certain circumstances, harm competition by complicating or delaying generic entry.
A new proposed rule from the Centers for Medicare & Medicaid Services (CMS), if made final may address the attempts to avoid paying Medicaid rebates on modified versions. Saving patients and the healthcare system billions of dollars.
This proposed rule would advance CMS’ efforts to support state flexibility to enter into innovative value -based purchasing arrangements (VBPs) with manufacturers, and to provide manufacturers with regulatory support to enter into VBPs with payers, including Medicaid.
This proposed rule also proposes revisions to regulations regarding: Authorized generic sales when manufacturers calculate average manufacturer price (AMP); pharmacy benefit managers (PBM) accumulator programs and their impact on AMP and best price; state and manufacturer reporting requirements to the MDRP; new Medicaid Drug Utilization Review (DUR) provisions designed to reduce opioid related fraud, misuse and abuse; the definitions of CMS-authorized supplemental rebate agreement, line extension, new formulation, oral solid dosage form, single source drug, multiple source drug, innovator multiple source drug for purposes of the MDRP; payments for prescription drugs under the Medicaid program; and coordination of benefits (COB) and third party liability (TPL) rules related to the special treatment of certain types of care and payment in Medicaid and Children’s Health Insurance Program (CHIP).
https://www.govinfo.gov/content/pkg/FR-2020-06-19/pdf/2020-12970.pdf
Hope the proposed rule sees light of the day.
