Mylan to Market EpiPen Authorized Generic at Half-Off Brand Name Price

Like an army giving up ground in hopes of winning the war, Mylan today announced that it will soon be marketing a generic EpiPen. Unlike offering deeper discounts through the copay assistance program, this step may actually create some short term savings for the healthcare system. Mylan and CEO Heather Bresch should be recognized for not simply thumbing their nose at Congress and the press and maintaining their profit maximization strategy for EpiPen. Perhaps they learned a lesson from Martin Shkreli.

Called authorized generics, generic products marketed by brand name companies are surprisingly common. Oftentimes, these products are released alongside a competitor’s generic product as a way to reduce incentives for competitors to enter the market and for brand name manufacturers to make additional profit as product margins fall. Mylan’s strategy is unique in that there isn’t a generic equivalent available. Other very similar epinephrine autoinjectors are approved by the FDA, but they are not generically substitutable in most states.


Thanks, but…

There are several aspects of this news that give me reason to be critical about Mylan’s move. First, this is a blatant admission of profiteering. Selling the product for $600 when they could have sold it at a profit for $300 admits that Mylan was wringing as many dollars out of patients with severe allergies as possible.

Second, Mylan was probably going to do this anyways. Authorized generics are a common strategy for brand name product manufacturers, and the scrutiny over the price of EpiPen likely just resulted in Mylan releasing the authorized generic earlier than previously planned. As such, long term savings are likely minimal.

Third, the copay assistance program will not include the authorized generic. Therefore, it will still be cheaper for many patients to buy the brand name EpiPen, even though the total cost to the system will be larger. For an explanation, see my previous post on copay cards. Insurers and pharmacy benefits managers wishing to stop patients from using copay cards would have to eliminate EpiPen from their list of approved drugs, called a formulary. Formulary exclusions have become more common recently and are effective tools for reducing drug costs, but given Mylan’s success in marketing EpiPen, patients may be upset that they can’t get the brand name.

Finally, although the half-off, $300 price tag sounds like a relative bargain, it’s still 3 times more than what EpiPen used to cost. Additionally, a 50% discount isn’t nearly as deep as the 80% discount that one usually sees when generic competition enters the market. This discounted price also may discourage other generic manufacturers from bringing alternatives to market, thus maintaining a higher generic cost for longer.


Mylan will Remain Dominant

Mylan does deserve some acknowledgement for taking this interesting step to reduce the cost of EpiPen. Although my inner cynic wonders if the move is more in response to investor worries than patient needs, this will reduce the some of the short term cost of EpiPen. Expect to see patient confusion and frustration, however, as formularies tighten to eliminate coverage of brand name EpiPen.

In the long term, this move may also serve to lengthen the amount of time Mylan remains dominant in the epinephrine autoinjector market by discouraging generic competition. Until there is robust competition, don’t expect the price of Mylan’s EpiPen generic to fall further. There’s also Mylan’s direct selling strategy, and it is yet to be seen how much volume may flow through that alternative channel.

In the battle over EpiPen prices, Mylan is far from defeated.


Don’t be Fooled by Mylan’s False Charity

Yesterday Mylan announced enhancements to its copay assistance program for EpiPens in response to Congressional and media scrutiny. These programs reduce the copay amount patients pay for EpiPen, but do they really reduce the price?

No. Despite what has been reported by the press, copay assistance programs don’t actually lower the price the healthcare system pays for drugs. If anything, copay assistance programs actually end up increasing drug prices.


Why Drug Companies Offer Copay Assistance Programs

Mylan’s announcement creates the illusion that it cares about patients using EpiPen. However, the expansion of their copay assistance program is false charity. Copay assistance programs reduce the headline grabbing copay amounts, but they do nothing to change that actual cost of the product to society. Copay assistance programs are also banned from use in all federal and some commercial insurance plans. All Mylan is really doing is taking steps to preserve its market share, or in words of Mylan’s CEO Heather Bresch, “ensuring that every patient that needs an EpiPen has an EpiPen.”

Patients may pay less but insurers end up paying more when discounted products are used more often and manufacturers raise the price to offset the losses from the assistance programs. Patients pay in the end via higher premiums. Mylan has yet to pledge that they won’t continue to raise the price of EpiPens. It is doubtless true that a more robust assistance program today will mean a more expensive product in the future.


How Copay Assistance Programs are like Eating Out on the Company Dime

The best analogy for how copay assistance programs increase spending this:  Let’s say your boss takes you out to eat and offers to pay for the meal with the company credit card, but you have to pay for your own drinks. Knowing this, you choose the restaurant with the cheapest happy hour drink prices, even though the meals there are really expensive. If you were picking up the whole bill, you wouldn’t mind paying a bit more for beer if you can get the same meal at a cheaper price, but hey—the company’s paying, it doesn’t matter how much the food costs.

Your boss proceeds takes everyone in your department out for dinner and drinks with the same deal and they all go to the same restaurant because the drinks are cheapest. At the end of the year, your boss looks at the food budget and is shocked at how much has been spent. He/she decides to offset the meal cost by eliminating everyone’s year-end bonus. In the end, the cheap drinks lured you into over-spending on food and you eventually bore that cost through lower income.

In that way, copay cards give patients a false sense of affordability, but the increased cost to the insurer is eventually passed on to the patient in the form of higher premiums and deductibles. Mylan’s offering of discount cards does nothing to address the real problem—price gouging by drug companies with virtual monopolies.


What Can be Done to Decrease the Price of EpiPen?

Within the constraints of the current healthcare system, the only way to effectively reduce the price of EpiPen is to compete against it with alternative products. Fortunately, there are two products similar to EpiPen:  Adrenaclick and its unbranded generic. Until more patients start talking to their doctors about alternatives, Mylan can continue to charge whatever it wants.

Perhaps because of Mylan’s effective marketing scheme, these alternatives have only a tiny share of the epinephrine auto-injector market. Absent competition, the next best option to push Mylan to lower the list price of EpiPen is scrutiny by Congress, media and consumers. Mylan’s stock price has fallen in response to this criticism—and when the entire purpose of a pricing scheme is to maximize shareholder value, this may eventually force Mylan to lower the EpiPen list price in an effort to calm investor worries and increase stock price. Capitalism FTW.

What is the Purple Book?

Confusion within pharmacy about biosimilars and interchangeable biologics is understandable. Pharmacists have decades of familiarity with biologic products but first biosimilar was only approved in 2015 and the FDA hasn’t yet written the rules to guide the application process for interchangeable biologics. One potentially confusing element related to these new types of products is the Purple Book. To understand the Purple Book, it is first necessary to understand the difference between biosimilars and interchangeable biologics.


What’s the Difference between Biosimilars and Interchangeable Biologics?

Both biosimilars and interchangeable biologics must be highly similar to an original, reference biologic product with no differences in safety and efficacy. This is analogous to the requirement that a generic small molecule drug must be bioequivalent to a reference small molecule drug.

The only difference between these two regulatory classes of medication is the interchangeability standards described in Section 351(k)(4) of the Public Health Service Act. If a product sponsor wishes to pursue interchangeability, it must submit additional information to the FDA that shows switching back and forth between the interchangeable product and the reference product doesn’t create safety and efficacy concerns. The FDA’s intention is that interchangeable products can be substituted at the pharmacy without the prescriber’s express authorization in the same way that pharmacists currently substitute generic products.


What Does the Purple Book Do?

The Purple Book does not decide which biologic are interchangeable. The FDA, through its authority to decide which drugs can be marketed in the US, rules on interchangeability pursuant to the requirements in Section 351(k)(4). The Purple Book only reports the pathway through which a product was approved and other information associated with the FDA’s approval decision. By reporting that a biosimilar product is not interchangeable, the Purple Book is not suggesting that the product can never be interchanged. Rather, it is simply stating that the product sponsor did not provide sufficient information to meet the FDA’s interchangeability requirements.

The Purple Book in no way impedes a hospital’s ability to create its own biologic product interchangeability list. In the same way that a hospital switches a patient from Novolin to Humulin because that’s the insulin the hospital chooses to keep on its formulary, the hospital can switch a patient from Neupogen to Zarxio because a pharmacy and therapeutics committee has determined that there is no problem switching between these products. Making this choice does not require creating a different Purple Book and the existence of the Purple Book does not impede a hospital’s ability to make this decision.


Why is it Important to Recognize the Purple Book as the Sole Authoritative Reference?

Drug manufacturers have lobbied hard to create confusion and mistrust within the biosimilar and interchangeable biologic classes of medication. They have attempted to insert language into states’ laws limiting a pharmacists’ authority to interchange products to only those that appear on a state list of interchangeable products. Requiring a redundant list would delay pharmacists’ authority to interchange biologic products because the list would need to be updated each time a new interchangeable biologic came to market.

States will ultimately decide on pharmacists’ authority to interchange biologic products. The purpose of the interchangeable biologic class is to allow pharmacists to interchange these products with reference biologics in the same way generics are substituted for brand name drugs. States can expand pharmacists’ authority to interchange products not deemed interchangeable by the FDA, but this would be through a statewide protocol, change to the practice act, or other similar mechanism to expand pharmacists’ authority.


Wrapping it All Up

The FDA, through its authority to decide what drug products can be sold in the US, can rule on product interchangeability. This information is copied over to the Purple Book to make it more accessible to patients, prescribers and pharmacists. If a state creates a redundant interchangeability list, this would only result in the restriction of pharmacists’ closely held product substitution authority. Hospitals disagreeing with the FDA’s determination on interchangeability can create a protocol, standing order, etc. within the confines of their state’s practice laws that would allow pharmacists to use therapeutic substitution to interchange biologic products. In no way does this conflict with the Purple Book.

Pharmacy must have a united voice on the development of the biosimilar and interchangeable biologic classes of medications. Drug manufacturers are pushing hard against the broad use of biosimilars and interchangeable biologics. These new classes hold exciting possibilities for pharmacists to further engage with the healthcare system in maximizing value drugs provide their patients. Pharmacists must recognize that the Purple Book is only a reflection of the FDA’s decisions when approving a product and that redundant lists of interchangeability only serve to limit the use of biosimilars and interchangeable biologics.

OMG, The FDA Draft Guidance on Biosimilar Naming is, Like, So Totally Random

Following the teenager’s trend, the FDA’s proposed policies on naming biologic products are totally random. As the healthcare industry prepares for the biosimilar era, the FDA is writing regulations and issuing draft guidance for industry to help healthcare practitioners differentiate between originator and follow on biologic products. This post explains biologic products, FDA proposed policy on biologic naming and concludes with my thoughts on the draft guidance.

What Are Biologics and Biosimilars?

For a quick refresher, there are three regulatory classes of biologics: originator biologics, biosimilars, and interchangeable biologics. Nearly all biologics are originator biologics. These are the brand names we’re familiar with—Neupogen, Enbrel, Humira, etc. Biosimilars have the same structure as originator biologics and receive approval through an abbreviated pathway specific to biologics which is similar but to the pathway for generic drug approval under Hatch-Waxman.

Biosimilars are “highly similar” to the reference biologic product and there can be no clinically meaningful differences between biosimilar and reference biologic. Interchangeable biologics follow the same pathway as biosimilars but go through additional steps to ensure that they can be substituted for reference, originator biologics without increasing the chance that the immune system reacts to the biologic entity (immunogenicity). Biosimilars will likely require small clinical trials to prove similarity; interchangeable biologics will likely require complicated cross-over clinical studies to prove switching between products doesn’t create immune reactions to the biologic product. For more information check out this informative PowerPoint from the FDA.

Importantly, federal law will provide pharmacists the legal authority to switch between interchangeable and reference biologics, but not between biosimilars and reference biologics. Switching between reference biologic and biosimilars is somewhat similar to situations like switching extended release diltiazem where different AB rated generics exist or switching between albuterol MDIs where multiple non-equivalent brands exist. The pharmacist could call a prescriber and switch the reference biologic to a biosimilar or from one biosimilar to another biosimilar with the same reference biologic, but there wouldn’t be clear authority to switch from biosimilar to biosimilar based on the prescription alone. Confused? The FDA created a Purple Book, analogous to the Orange Book, for the purpose of keeping this all straight.

So far there has only been one product approved through the biosimilar pathway—Zarxio (filgrastim-sndz) marketed by Sandoz. This is a biosimilar for the reference biologic Neupogen (filgrastim). Notice the funny suffix, -sndz, attached the nonproprietary name (AKA generic name) for Zarxio. This is what the FDA’s new guidance is about. Specifically, the new non-proprietary name for Zarxio would be filgrastim-bflm and the new name for Neupogen would be filgrastim-jcwp. The FDA would require manufacturers to market products under these names—the name on the Neupogen packaging would change.

Why is Biologic Naming a Concern and What is the FDA Doing About It?

This first biosimilar was given a suffix that clearly identifies it as 1) not an originator biologic and 2) manufactured by Sandoz. Neither one of these criteria necessarily says anything clinically relevant about the product’s efficacy, but differences could be perceived. Additionally, if an order/prescription was written for filgrastim, technically the pharmacist could not change that to filgrastim-sndz since the products are not interchangeable, even if the prescriber was indifferent to Zarxio vs. Neupogen when he/she wrote the order/prescription.

The FDA’s proposed solution to the problem is requiring all biologics, even those already approved for which a biosimilar is being developed, to be given a random 4-letter suffix that would differentiate between products but wouldn’t clearly indicate an originator product and wouldn’t indicate a manufacturer.

My Thoughts on a Better Naming System

The FDA’s concerns are valid, but I wonder if we’re missing an opportunity to encode more information in the suffix, the same way information is encoded in product names with standardized endings by class (e.g. –statin, -lol, -avir, etc.). An alphanumeric system, for example, with a random 3-letter code unique to each product-manufacturer pair with a single digit denoting originator, interchangeable or biosimilar would be a more effective way of communicating product status. The FDA could even use “4” for the originator, “7” for an interchangeable and “9” for a biosimilar to differentiate between biologic products but not clearly show which biologic the originator is.

Regardless, the use of a random 4-letter suffix seems to be missing out on a significant opportunity. The FDA is limited in the information that can be encoded in an NDC, and using a more purposeful suffix assignment process could allow more information to be encoded into a product name, making it easier for pharmacists, pharmacy technicians and prescribers to differentiate between originator, interchangeable and biosimilar products.

Opportunity to Voice Your Opinion

The FDA, like teenagers, seems to be overly fond of the idea of things being random. If you feel strongly and would like to voice your opinion on how this will impact your practice, the FDA will be accepting comments through October 27th, 2015.