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Big-Name Drugs Are Falling Off The 'Patent Cliff'

Oct 24, 2011
Originally published on October 24, 2011 7:03 pm

Some of the most popular and expensive brand-name drugs are about to go generic.

Take Lipitor, for example. In November, the heart drug comes off-patent — and by next June, there are likely to be multiple generic versions.

With almost $11 billion in sales last year, it's the largest blockbuster to fall off what analysts call the "patent cliff." And it's just one of dozens of popular high-end pharmaceuticals whose prices are expected to plummet in the coming years, including drugs like Plavix (for heart disease), Seroquel (used to treat depression) and Nexium (for digestive problems.)

Patients often pay more for name-brand drugs, even when they're covered by insurance. Sometimes they have no choice because — unlike Lipitor — many drugs don't yet have generic competition.

Howard Weintraub, a cardiologist at New York University, says many patients on those drugs come in and beg for free samples. Others simply don't fill their prescriptions — or they do, but then try to stretch their resources by taking the pricey pills less often than they're supposed to.

"People come in with their blood pressure not as well controlled, or they come in and their cholesterol's all of a sudden mysteriously higher. And you realize, OK, the medicine hasn't stopped working, but you also realize the medicine doesn't work when it's still in the bottle," he says.

Generics already represent 70 to 80 percent of drug sales — a dominance expected to grow in the future. Michael Kleinrock, of marketing research firm IMS Health, says patent expirations over the last half-decade are one of the main reasons why Medicare spent $50 billion less than federal officials projected five years earlier. Kleinrock says the average daily cost of drugs dropped one-third from 2005 to 2010, and should drop another third between now and 2015.

"We're already at reasonably low cost relative to 10 years ago or so," he adds. "That said, there's still actually more to go, which is excellent for consumers."

The drop in drug costs because of generics is one of the few bright spots in all of American health care. But it isn't exactly a big bright spot.

"For sure it will be felt, but because the other things are on such a heavy rise, it will only temper where rates are currently," says Dr. Dennis Liotta, the head of pharmaceutical benefits for Emblem Health, one of New York's largest insurers.

Liotta says the generic drug savings is significant and especially visible to people with limited means and limited health coverage. But drugs are a relatively small factor in insurance premiums. And while blockbuster drugs like Lipitor are sunsetting, University of Michigan business school professor Erik Gordon says pharmaceutical companies are trying to replace them with new, more targeted drugs — like Pfizer's recently approved lung-cancer medication.

"The interesting thing is it will work in only 5 percent of lung cancer patients. The other interesting thing is it's going to cost $115,000 per year, per patient," Gordon says.

Some analysts say the growing field of costly specialty drugs could undermine the growing savings from generics. But Gordon says drug companies will still have their work cut out for them. It's getting tougher not only to come up with new drugs, he says, but also to convince insurers and the government to pay for them — unless they make meaningful improvements in health, at a reasonable cost.

Fred Mogul is a reporter for WNYC.

Copyright 2018 Kaiser Health News. To see more, visit Kaiser Health News.

RENEE MONTAGNE, HOST:

And here's some good news for anyone taking prescription medication. Some of the most popular and expensive brand-name drugs are about to go generic. Fred Mogul of member station WNYC reports on one area of health where costs are plummeting.

RITCHIE LASPISA: What I take is Ecotrin - 325 milligrams of that.

FRED MOGUL, BYLINE: Ritchie Laspisa takes five different drugs for his heart conditions.

LASPISA: And another pill I take is simvastatin, which I cut in half because I'm supposed to take Lipitor.

MOGUL: Laspisa's a retired city highway worker with pretty good drug coverage. But his union health plan this year stopped automatically covering Lipitor because it was too expensive, something many insurers have done in recent years. Instead, he takes simvastatin, an earlier-generation statin, to lower his cholesterol. It's a generic.

Laspisa's cardiologist says he was doing much better on Lipitor, but the union insurance plan rejected the doctor's appeal, giving Laspisa a choice: simvastatin, the generic, for a $10 monthly co-pay, or Lipitor for $180. But during a recent trip to the pharmacy, Laspisa learned help is on the way for Lipitor users.

LASPISA: The lady pharmacist mentioned the patent was going to expire, and they're going to turn it into a generic drug.

MOGUL: Lipitor comes off-patent in November, and by next June, there's likely to be multiple generic versions.

LASPISA: So that means if I can stick it out between now and then, then maybe I can get back on it without all this confusion.

MOGUL: With almost $11 billion in sales last year, Lipitor is the largest blockbuster to fall off what analysts call the patent cliff. And it's just one of dozens of popular, high-end pharmaceuticals whose prices are expected to plummet in the coming years, including drugs for everything from heart disease...

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MOGUL: ...and depression.

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MOGUL: ...and digestive problems.

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MOGUL: Currently, patients often pay more for name-brand drugs, even when they're covered by insurance. Sometimes they have no choice, because unlike Lipitor, many drugs don't yet have generic competition. NYU cardiologist Dr. Howard Weintraub says many patients on those drugs come in and beg for free samples. Others simply don't fill their prescriptions - or they do, but then try to stretch their resources by taking the pricey pills less often than they're supposed to.

HOWARD WEINTRAUB: Because people come in with their blood pressure not as well-controlled, or they come in and their cholesterol's all of a sudden mysteriously higher. And you realize, okay, the medicine hasn't stopped working. But you also realize the medicine doesn't work when it's still in the bottle.

MOGUL: Generics already represent 70 to 80 percent of drug sales, a dominance expected to grow in the future. The drop in drug costs due to generics is one of the few bright spots in all of American healthcare. But it isn't exactly a big bright spot.

DENNIS LIOTTA: For sure it will be felt, but because the other things are on such a heavy rise, it will only temper where rates are currently.

MOGUL: Dr. Dennis Liotta is the head of pharmaceutical benefits for Emblem Health, one of New York's largest insurers. He says the generic drug savings is significant, and especially visible to people with limited means and limited health coverage. But drugs are a relatively small factor in insurance premiums. And while blockbuster drugs like Lipitor are sunsetting, University of Michigan Business School professor Erik Gordon says pharmaceutical companies are trying to replace them with new, more targeted drugs, like Pfizer's recently approved lung cancer medication.

ERIK GORDON: The interesting thing is it'll work in only five percent of lung cancer patients. The other interesting thing is it's going to cost $115,000 per year, per patient.

MOGUL: Some analysts say the growing field of costly specialty drugs could undermine the growing savings from generics. But Professor Gordon says drug companies will still have their work cut out for them. He says it's getting tougher not only to come up with new drugs, but also to convince insurers and the government to pay for them - unless they make meaningful improvements in health at a reasonable cost. For NPR News in New York, I'm Fred Mogul.

MONTAGNE: And our story was produced as part of a reporting partnership on health care between NPR, Kaiser Health News and NPR member stations.

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MONTAGNE: You're listening to MORNING EDITION, from NPR News. Transcript provided by NPR, Copyright NPR.