Generic drugs are making a name for themselves.
As a result of a new law designed to speed up and simplify the government certification process for copies of widely used drugs, several generic drug companies are racing to duplicate and market pills previously protected by patents that have recently expired -- including the best-selling tranquilizer Valium.
The prospect of a larger and larger share of the prescription drug market going to generic drugs has produced two different types of reaction among brand-name prescription drug manufacturers. While some companies have reacted with advertising touting the virtues of brand-name drugs over generics, others -- including some of those same companies -- are moving into the generic market themselves.
To fight off the generics, which have captured about 6 percent of the $17.5 billion-a-year prescription drug market, brand-name drug companies have launched a massive advertising campaign to physicians.
American Home Products Corp.'s Ayerst Laboratories, for example, advertises to doctors suggesting that its cardiovascular drug, Inderal, worth about $360 million a year to the company, is more reliable than potential generic copies -- although generics have to be approved by the FDA as therapeutically equivalent to the brand-name drug. The patent on Inderal has expired, but no generic versions have been approved yet.
"All we're saying is that when it comes to a serious or life-threatening disease, you should use a product that you've relied on in the past," said Jack Wood, spokesman for American Home Products.
But Rep. Henry A. Waxman (D-Calif.), sponsor of the new generic law, disagrees. "Once the law was signed, the companies broke their commitments and launched an aggressive anti-generic campaign," he said. "They are spending millions of dollars on false and misleading advertising to raise doubts in the minds of physicians, pharmacists and consumers about the safety and effectiveness of generic drugs."
At the same time, however, some of the major brand-name companies themselves are rushing to get a piece of the action in the $4 billion-a-year industry by producing their own generics and using their well-known names and reputations to compete.
"It is an example of gross hypocrisy," Waxman said. "Brand-name companies make 80 percent of the generic drugs on the market today."
For consumers, the price of a generic drug is considerably lower than the cost of the brand-name drug. Aristocort, an anti-inflammatory drug made by Lederle Laboratories, costs $69.95 for 100 tablets. The FDA-approved generic, Triamcinolone, is sold for $7 for 100 tablets at the American Association of Retired Persons Pharmacy Service, a primarily mail-order pharmaceutical service AARP operates for its members.
Another brand-name drug, Aldactone, manufactured by G. D. Searle & Co. for high blood pressure, costs $20.05 for 100 tablets, while a generic version, Spironolactone, sells for $9, according to John McHugh at the AARP pharmacy.
About 40 percent of the top-selling prescription drugs have generic copies. Industry experts expect generic-drug sales to rise to 7 percent of the prescription-drug market this year and to capture 25 percent of the market by 1990. By the end of the decade, nearly all of the current 50 top-selling drugs will be free from patent restrictions and possibly available in generic form, according to the New York-based Generic Pharmaceutical Manufacturers Association.
Since 1981, drug prices have been rising more rapidly than consumer prices in general, according to the government's Consumer Price Index.
"Price increases for prescription drugs in the past four years are startling," said Waxman. "Medicare and private insurance don't cover the purchase of most prescription drugs. As a result, these increases have caused severe hardship for the poor, elderly and others with chronic illnesses."
Since November, when the Drug Price Competition & Patent Term Restoration Act took effect, the Food and Drug Administration has been swamped with 491 applications for generic drugs that could not have been approved under the old law. Only two generic drugs have been approved so far.
Critics point to the number of petitions that have been filed by brand-name companies as the reason for the slowdown in FDA approval of generics. Hoffman-LaRoche submitted a petition to the FDA two days before its patent on Valium expired, objecting to the FDA's guidelines for determining whether the generic drugs are the therapeutic equivalent of Valium.
Hoffman-LaRoche said it was asking the FDA for additional testing of the drugs because a study by the company that compared generic diazepams with Valium found that the other drugs didn't work as effectively as Valium. But critics said that the Hoffman-LaRoche petition and other similar actions are aimed at slowing down generic-drug approval by requiring the same FDA staffers who would be approving generic-drug applications to examine and answer the petitions.
Several factors are expected to increase the market for generic drugs. The government's new flat-rate Medicare reimbursement program is pushing hospitals into greater use of generics. Health maintenance organizations, unions and Blue Cross are beginning to demand them, too.
The Connecticut state legislature passed a law last year that gave pharmacists 25 cents for every prescription filled generically when the physician does not prescribe the generic. The program produced estimated savings of $300,000 to $600,000 in the first year, prompting the state to increase the savings incentive to 50 cents.
As a result of the boom in generics, a handful of small companies specializing in generics are beginning to record substantial growth. The earnings of Mylan Laboratories Inc., a Pittsburgh firm that hopes to market a generic form of Valium, jumped 166 percent last year, to $12.5 million.
Consumers, in general, are confused about generics, according to AARP. In a national survey of about 1,000 consumers over age 45, 60 percent said they knew what a generic drug was. Of that group, 19 percent said they thought that brand-name drugs were required by the FDA to meet higher standards than generics, while 7 percent said they didn't know. Twenty-five percent thought that only a few generics had been found by the FDA to be equivalent to brand-name drugs, while 12 percent said they didn't know.
"Older people, who can easily find themselves paying up to $100 a month on fixed incomes for prescription drugs, are obviously under great financial pressure to buy the least expensive drugs available," said Judith Brown of AARP. "We would hope that as competition among doctors accelerates, improved patient information will be a notable selling point and strategy for retaining patients."