Sandoz Sees Room For Improvements To US Market

While the US generics market is a healthy one, there is still room for improvement – both in terms of removing lingering negative perceptions that persist around generics, as well as by pursuing reforms in areas where market barriers persist – according to Carol Lynch, president of Sandoz US and Head of North America.

In an exclusive interview with Generics Bulletin, Lynch highlighted Sandoz’ recent “Ask For Generics” awareness campaign, which is seeking to educate healthcare stakeholders on the benefits of generic medicines, as well emphasizing their proven quality, safety and effectiveness. (Also see "Sandoz Launches US Awareness Campaign" - Generics Bulletin, 1 Dec, 2020.)

Asked what motivated the campaign, Lynch suggested that the COVID-19 pandemic was a factor, having “heightened focus on the need to improve patient access and care, coupled with demand for reliable supply of high-quality, affordable medicines.” Sandoz’ campaign, she said, was seeking to “enhance public education and awareness of the benefits of generics and of how these affordable, high-quality drugs improve access to critical medicines and provide significant savings for patients and the US healthcare system.”

While the US is often seen as a successful generics market in terms of uptake and penetration, Lynch insisted there were still hurdles to overcome. “Even though independent research consistently demonstrates the clinical equivalence of generic medicines compared to their brand-name medicines, negative perceptions of generics may remain among some prescribers,” she said.

“This can create bias favoring brand-name products and demonstrates a need to increase patient and prescriber confidence in the safety and effectiveness of generic medicines.” Through the Ask for Generics campaign, she said, Sandoz was aiming to “remind key stakeholders that generic medicines are subject to the US Food and Drug Administration’s rigorous standards” and are “as safe and effective as their brand-name counterparts, but available at a more affordable price.”

“While utilization of generic drugs saved the US health care system $313bn last year alone,” she said – referring to the findings of a recent Association for Accessible Medicines study  (Also see "US Saves $313bn From Generics And $2.2bn From Biosimilars" - Generics Bulletin, 6 Oct, 2020.) – there was still “more to be done to ensure generic manufacturers can bring new therapies to market in a timely manner, saving patients, job creators and taxpayers additional billions of dollars.”

Moreover, she said, these benefits were “not unique to the US,” meaning there was the potential for the campaign to expand into other markets in future.

Medicaid Generics Penalty Unfairly Penalizes Industry

Asked what key market access barriers remained in the US, Lynch identified the Medicaid “Generics Penalty” as a major problem. This is paid by suppliers when the Average Manufacturer Price of a generic drug sold to Medicaid rises faster than the Consumer Price Index over a three-month period.

“Since its start in 2017, the Medicaid Generics Penalty has unfairly penalized manufacturers for price fluctuations outside of their control,” Lynch emphasized, warning that this “threatens the continued availability of low-cost generics to patients.”

“This measure could force generic manufacturers out of the marketplace if they are required to sell their products to Medicaid at a loss,” she suggested, “which could then lead to shortages of the critical medications patients rely on.”

It was “imperative that Congress repeal the Medicaid Generics Penalty to alleviate the harmful and unintended consequences of this policy on patients,” Lynch insisted. The AAM has also recently highlighted legislative remedies to the penalty as a priority for the association. (Also see "AAM Urges Congress To Pursue Key Legislation" - Generics Bulletin, 7 Dec, 2020.)

Lynch also pointed to problems with Medicare Part D. “Due to the way some formularies are structured,” she observed, “low-income Medicare Part D beneficiaries typically utilize more expensive brand-name drugs even when lower-cost generic versions are available. Eliminating cost sharing for generic drugs for Part D low-income subsidy enrollees could save up to $23bn over 10 years.”

Encouraging policymakers to “update Medicare Part D to ensure first generics are covered at launch with lower cost-sharing, including through a dedicated tier for specialty generic and biosimilar medicines,” Lynch said this alone “could save taxpayers more than $7bn over 10 years and reduce premiums for seniors by more than $2.5bn over 10 years, while also lowering their out-of-pocket costs.”

Pricing Pressures Are Abating In US

Turning to US pricing pressures – which have for many years pushed down the prices paid for US generics as buying groups consolidated  (Also see "US Generics Market Continues To Seek Stability" - Generics Bulletin, 14 Nov, 2019.) – Lynch noted that “the heavy price pressures of the past have subsided in the US – although there is still pricing pressure on the overall generic market.”

Citing IQVIA data from July 2020, she noted that “brand price growth has been slowing for most of the past four years while generics have stabilized. Qualitatively, we see that there is still price erosion across some therapeutic areas, but we believe the US market has started to value supply reliability more than in the past.”

However, demand patterns were still fluctuating to some extend against the backdrop of the COVID-19 pandemic, she acknowledged. While “at a high level, yes, demand has stabilized,” it was still the case that “compared to pre-pandemic levels, doctor office visits are down,” she said, “particularly for patients seeking eye or skin care, as well as elective surgeries and diagnostics such as cancer screenings.”

“Collectively, this has had a downward impact on diagnosis and treatment, and therefore prescriptions,” she summarized.

“The US cannot, nor should it, produce all the medicines for America’s patients.”

With the coronavirus pandemic having also prompted global conversations around localization and bolstering domestic production – including in the US  (Also see "Purchasing Commitments Must Underpin US Expansion" - Generics Bulletin, 7 May, 2020.) – Lynch said there was a balance to be struck.

“With nine out of every 10 US prescriptions filled as a generic, a strong and geographically diverse pharmaceutical supply chain is essential to ensure patients can access critical medicines,” she outlined. “If an entire supply chain is dependent upon one geographic area, a regional disaster could lead to significant infrastructure and supply disruptions, with global implications.”

“The US cannot, nor should it, produce all the medicines for America’s patients,” she insisted. “Our healthcare system is most secure when we rely on a globally diverse supply chain.”

Moreover, “modern pharmaceutical manufacturing facilities can take five to seven years and cost up to $1bn to build, meaning any significant change to make the supply chain more ‘domestic’ would take years to implement and could have considerable cost implications.”

Instead, she suggested, “we should explore opportunities to increase strategic partnerships across industry, patient groups, government and all stakeholders capable of re-examining the status quo of delivering medicines to patients.”

“Collaborations with non-traditional partners, like the one between Sandoz and Civica Rx, where we have long-term contracts with committed demand, allow us to better predict supply requirements for critical medicines,” she pointed out, “and sustainably deliver them to our customers and patients.” (Also see "Sandoz And Civica Rx Strike Five-Year Deal" - Generics Bulletin, 9 Jul, 2020.)

Skinny-Label Generics Must Continue

Asked about a recent US ruling involving GlaxoSmithKline and Teva – in which it was ruled that a generic manufacturer’s marketing of a product under a “skinny label” with carved-out indications does not prevent a finding of induced infringement for those uses  (Also see "Sandoz Keeps Tabs On Teva Skinny Label Ruling" - Generics Bulletin, 28 Oct, 2020.) – Lynch was clear that the system of carving out indications from generic labels should not be upended.

“Skinny labeling reflects a balance allowing generic companies like Sandoz to bring medicines to patients for off-patent therapeutic uses, while continuing to respect any patents still in place for other therapeutic uses,” she pointed out. “Longstanding law says that if a generic uses a ‘skinny label,’ there is no liability for inducing infringement unless there are active steps taken outside of the label to encourage others to prescribe or administer the drug for the patented use.”

But she cautioned that “the GSK case may create ambiguity for certain generic products as to carving-out a patented therapeutic use.”

“It is important to maintain the status quo,” she insisted. “Generics should be able to continue to use skinny labels as Congress intended, carving out patented therapeutic uses and marketing generic versions of medicines for all but those patented uses.”

Sandoz ‘Re-Invigorated’ After Aurobindo Sale Called Off

Turning to Sandoz’ US business – which had been expected to be significantly reshaped in 2020, through a deal to sell its dermatology and oral solids units to Aurobindo that was ultimately abandoned  (Also see "Sandoz And Aurobindo Cancel US Deal" - Generics Bulletin, 2 Apr, 2020.) – Lynch said that cancelling the divestment had enabled the company to take a fresh look at its business in the US.

“Following termination of the agreement with Aurobindo, Sandoz US is re-invigorated to create innovative healthcare solutions that benefit patients, our customers and our business, in line with the global strategic direction and ambition,” she insisted. “We are taking advantage of this opportunity to look at our organization with a completely new perspective.”

“We have assessed the oral solids and dermatology businesses within the Sandoz US business and have begun the work to optimize this portfolio through divestment, pruning, and investing in additional molecules to complement our current portfolio.”

“In fact,” she noted, “we are on track to submit 40 first-to-file submissions in the US by 2024.”

“We are taking advantage of this opportunity to look at our organization with a completely new perspective.”

Complex generics and injectables were also an important part of Sandoz’ strategy, she outlined, pointing to the firm’s focus on “growing segments with lower competitive intensity, including injectables, ophthalmic generics and inhalants.”

The firm has in the last few days announced the launch of its latest injectable, acetaminophen 10mg/ml, which Lynch said offered “a high-quality, affordable alternative to opioids, helping to mitigate our country’s opioid addiction crisis.”

Earlier in 2020, Sandoz had acquired US distribution rights for two key hospital injection medicines in the form of daptomycin 500mg injection and fosaprepitant 150mg for injection from BE Pharmaceuticals, Lynch noted. (Also see "Sandoz Gains Rights To Two US Injectables" - Generics Bulletin, 24 Mar, 2020.)

And in October 2020, the Novartis subsidiary collaborated with Kit Check to launch four Radio Frequency Identification tagged injectables for US hospitals. (Also see "Sandoz US Rolls Out RFID-Tagged Injectables" - Generics Bulletin, 6 Oct, 2020.) “Several more are anticipated for 2021,” she indicated.

“We will also continue to build on our success in biosimilars for the future,” Lynch emphasized. “With four FDA-approved biosimilars and a strong global pipeline, Sandoz is well-positioned to lead the US biosimilars industry in development, manufacturing and commercialization.” (Also see "Sandoz Sees Revolution In US Biosimilars Market" - Generics Bulletin, 25 Sep, 2020.)

The evolution to develop biosimilars was “a natural output of Sandoz’ expertise and commitment to pioneer access to high-quality, lower-cost medicines for patients worldwide,” she insisted. “Both generics and biosimilars are important tools to realizing this purpose.”

“Over the last 10 years, generics have saved the US nearly $2.2trn,” Lynch summarized, “with Sandoz medicines contributing $12.1bn in 2019 alone. Generics also provide significant savings directly to patients: the average copay for a generic prescription is only $6.97.”

But “those healthcare system savings could be even greater by increasing Americans’ access to low-cost generics,” she observed. “Constructive policies, like ending Medicare policies that reward the use of higher-cost brand drugs, could enhance this future in both the short- and long-term timelines.”

“Sandoz is committed to doing our part for patients, healthcare professionals and communities to overcome access challenges,” she concluded, “and deliver increased value across the US healthcare system.”