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Using Multiple Authorized Generics to Maintain High Prices: The Example of Entacapone

  • Benjamin N. Rome
    Correspondence
    Correspondence: Benjamin N. Rome, MD, MPH, Department of Medicine, Brigham and Women’s Hospital, 1620 Tremont St, Ste 3030, Boston, MA 02120, USA
    Affiliations
    Program On Regulation, Therapeutics, And Law (PORTAL), Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital, Boston, MA, USA

    Harvard Medical School, Boston, MA, USA
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  • Alexander C. Egilman
    Affiliations
    Program On Regulation, Therapeutics, And Law (PORTAL), Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital, Boston, MA, USA
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  • Neeraj G. Patel
    Affiliations
    Program On Regulation, Therapeutics, And Law (PORTAL), Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital, Boston, MA, USA

    Yale School of Medicine, New Haven, CT, USA
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  • Aaron S. Kesselheim
    Affiliations
    Program On Regulation, Therapeutics, And Law (PORTAL), Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital, Boston, MA, USA

    Harvard Medical School, Boston, MA, USA
    Search for articles by this author
Published:October 17, 2022DOI:https://doi.org/10.1016/j.jval.2022.08.013

      Highlights

      • Authorized generics (AGs) are exact copies of a brand-name drug sold under the generic name by the brand-name manufacturer or its licensee.
      • In the case of entacapone, introduction of 4 AGs delayed independent generic competition, leading to an estimated $137 to $449 million in excess Medicare spending from 2011 to 2020.
      • Introduction of AGs in place of independent generics can reduce expected savings from generic competition.

      Objectives

      Brand-name drug manufacturers can market or license authorized generics (AGs), which are the same product sold under a generic name. By contrast, independent generics (IGs) are made by other manufacturers. The brand-name manufacturer of entacapone, a treatment for Parkinson’s disease, established 4 AGs before IGs emerged. We used this case study to understand how AGs can affect the length of brand-name exclusivity and robustness of generic competition.

      Methods

      Using public Food and Drug Administration and court records, we identified the regulatory and legal history for generic entacapone products marketed through 2021. We used Medicare Part D data to estimate trends in use, prices, and spending on entacapone products from 2011 to 2020, comparing actual spending with projected spending if IG competition had begun after expiration of the key patent protecting entacapone (October 2013) and prices had fallen consistent with levels observed for other generic drugs.

      Results

      From 2012 to 2014, 3 potential entacapone IG manufacturers instead launched AG versions after settlement agreements with the brand-name manufacturer; the brand-name manufacturer additionally introduced its own AG. Four different IG versions were marketed beginning in 2015. From 2011 to 2020, average Medicare prices declined by 62%, less than the projected 74% to 92% price decline expected for a drug with 8 generics. Over this period, Medicare spent $1.1 billion on entacapone products, which could have been reduced by an estimated $137 to $449 million through typical IG competition.

      Conclusions

      The case of entacapone demonstrates how licensing multiple AGs in place of IG competition can increase spending. Government regulators should more rigorously monitor AGs to prevent such strategies.

      Keywords

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