In the world of prescription drugs, brand-name manufacturers have employed various strategies to maintain revenue streams in the face of generic competition. One such strategy is the use of “authorized generics” (AGs) – essentially the same drug sold under a generic name, often at a slightly discounted price. This tactic came into the spotlight in a recent case study on the drug Entacapone, used to treat Parkinson’s disease.
The researchers explored how the introduction of AGs can affect the length of brand-name exclusivity and the competition from independent generics (IGs). They examined the regulatory and legal history of generic Entacapone products in the market up until 2021.
During the study period from 2012 to 2014, the brand-name manufacturer of Entacapone launched four AG versions, and three potential independent generic manufacturers opted for AG versions after settling patent litigation with the brand-name manufacturer. Additionally, four different independent generic versions of the drug were marketed beginning in 2015.
However, the results showed that AGs might have had an impact on pricing dynamics. The average prices for Entacapone products covered by Medicare only dropped by 62% during the study period, which was less than the expected decline of 74% to 92% that could have occurred with typical independent generic competition.
The consequences of this phenomenon resulted in higher Medicare spending on Entacapone products from 2011 to 2020. The researchers estimated that if there had been more robust independent generic competition, this spending could have been reduced by a substantial amount.
The study’s authors have suggested that government regulators should keep a closer eye on authorized generics to ensure fair competition and timely price reductions for the benefit of patients.
While the study sheds light on potential pricing impacts, it’s important to note that authorized generics can also play a role in providing alternatives to brand-name medications, ensuring continued access for patients and encouraging further research and development in the pharmaceutical industry. As the landscape of drug pricing continues to evolve, it will be crucial to strike a balance that benefits both patients and industry stakeholders alike.
