Generic Drugs and Drug Economics

M.T. Piascik

OBJECTIVES

1) Review generic drug law.

2) Know the difference between “breakthrough” and “me too” drugs.

3) Have an understanding of the economics of prescription drugs.

A REVIEW OF GENERIC DRUG LAW

FORMULARY SUBSTITUTION This is NEW.

A pharmacist is presented a prescription, which is Rejected upon adjudication to the patient’sthird party insuranceNOW the pharmacist may substitute with another drug

--if the prescription has “Formulary Substitution” written on it—if the phrase is stamped on it the prescriber must still make an affirmative notation that FS is OK -- in the same class

--the substitution must be OK with the third part insurance

--the prescriber must be informed in writing within 24 h

FACTORS DETERMINING DRUG PRICING

A BREAKTHROUGH drug is a unique therapeutic entity that opens a new approach to the treatment ofa given pathophysiology. The discovery of breakthrough drugspresents the greatest financial risk.

A ME TOO drug is a structuralanalogue, an existing therapeuticentity. Because me toodrugs are derived from establisheddrugs the risk associated with theirdevelopment is not as great as forbreakthrough drugs.

WHY ARE PRESCRIPTION DRUGS SO EXPENSIVE?

OR

“There is gold in them thar pills”

The Cost of Direct to Consumer (DTC) Advertising

•PepsiCo spent $125 million advertising its premier product, Pepsi – less than the top promoted drug Vioxx with DTC ad spending of $160 million.

•Vioxx also beat out Budweiser beer, with an ad spending of $146 million in 2000,and was close to the most heavily advertised car – GM’s Saturn – with ad spending of $169 million in 2000.

•Each of the top seven most heavily advertised drugs beat out Nike’s ad budget of $78.2 million for its top shoes.

OBJECTIVES

1) Review generic drug law.

2) Know the difference between “breakthrough” and “me too” drugs.

3) Have an understanding of the economics of prescription drugs.

What has been the effect of DRC marketing?

A BREAKTHROUGH drug is a unique therapeutic entity that opens a new approach to the treatment ofa given pathophysiology. The discovery of breakthrough drugspresents the greatest financial risk

A ME TOO drug is a structural analogue, an existing therapeutic entity. Because me too drugs are derived from established drugs the risk associated with their development is not as great as forBreakthrough drugs.