Use Of Generic Prescription Drugs Increasing

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Generic Prescription Drugs

As patents expire over the next five years for brand-name prescriptiondrugs with more than $60 billion in combined annual sales, some healthcare experts predict that new generic equivalents will maintainsingle-digit drug price inflation for U.S. consumers, the New York Timesreports. Generic drugs typically are 30% to 80% less expensive thanbrand-name versions, contain the same active ingredients and areapproved by FDA under the same standards as brand-name drugs.

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Expiring patent protection for some drugs, such as Sanofi-Aventis'sleeping pill Ambien, has been cutting into brand-name manufacturers'revenue, and several blockbuster drugs are set to face genericcompetition over the next five years, including Fosamax, a drug thatslows bone loss, and the cholesterol-lowering drug Lipitor, the Times reports. Some companies, such as pharmacy benefit manager Express Scripts,and Medicare prescription drug plans are encouraging use of generics bylowering copayments for the drugs versus their brand-name equivalent.

Ronny Gal, an analyst for Sanford C. Bernstein,says that by 2010, profits for generic drug manufacturers are expectedto grow by 10% to 13% annually. The generic movement is "good foreverybody but the branded pharmaceutical companies," Gal says.

Brand-namedrug makers are addressing the loss of patent protection by developingnew drugs, creating generic subsidiaries and contracting for theproduction of company-authorized generics. The Pharmaceutical Research and Manufacturers of America says that despite declining profits, the drug makers are increasing research and development budgets each year. However, the Timesreports that "there are fewer potential blockbuster drugs" inmanufacturers' pipelines that could take the place of drugs that go offpatent.

Richard Evans -- a consultant with Avos Life Sciences,which does research and consulting for the pharmaceutical industry --said, "At the end of the day, it's basically a failure of innovation."Caroline Loew, PhRMA's senior vice president of scientific andregulatory affairs, said, "I don't think we would support thecontention that there's a lull," adding that the industry is trying todevelop treatments for more complex conditions that take longer toresearch. However, brand-name drug makers face challenges. "There's atidal wave of generic drugs, and we are just in the beginning of thetidal wave," Laizer Kornwasser, an executive for drug plan provider Medco Health Solutions, said (Saul, New York Times, 8/8).
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