April 2006 »

Boom looms for generic drugs

30 April, 2006

Once a bit player but now an indispensable part of the U.S. health care market, the generic drug industry is about to hit an unprecedented growth spurt.

Over the next two years, patents are set to expire on 75 brand-name drugs launched during the 1990s drug innovation boom, according to Bain & Co., an international consulting firm.

That means cheaper, generic versions of blockbuster medications such as Zocor, Ambien, Zoloft and Pravachol will begin hitting U.S. pharmacy shelves in the near future.

Consumers, government health programs and private insurers will reap billions of dollars in savings that will help hold down monthly insurance premiums, out-of-pocket drug costs and drug spending for Medicare and Medicaid.

The sales boost should help the overall generic market grow 10 percent to 12 percent each year for the next five years, said Tim van Biesen, a New York-based partner in Bain's global health practice.

What about a loophole?

Generic drug makers should be giddy. But some experts say the rush to produce cheaper copycat drugs is being threatened by a loophole that allows mainstream drug companies to market low-cost copies of their own brand-name medications when generic competition is imminent.

These so-called authorized generics help consumers and health plans in the short run because the increased competition from two alternative medications makes for even lower drug prices. A new analysis by the U.S. Food and Drug Administration found that, on average, the appearance of a second generic product reduces the average price of both versions to about half the cost of the brand-name drug.

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