Transcript and “me too” drugs. 3) Have an understanding of the economics of

Generic Drugs and Drug Economics
M.T. Piascik
OBI 836
September 6, 2006
OBJECTIVES
1) Review generic drug law.
2) Know the difference between “breakthrough”
and “me too” drugs.
3) Have an understanding of the economics
of prescription drugs.
A REVIEW OF GENERIC DRUG LAW
FORMULARY SUBSTITUTION
This is NEW.
A pharmacist is presented a prescription, which is
Rejected upon adjudication to the patient’s
third party insurance
NOW the pharmacist may substitute with another drug
--if the prescription has “Formulary Substitution”
written on it—if the phrase is stamped on it the
prescriber must still make an affirmative
notation that FS is OK
-- in the same class
--the substitution must be OK with the third part
insurance
--the prescriber must be informed in writing within
24 h
A REAL TIME EXAMPLE OF DRUG COST
Determine the price of Lortab 7.5
(7.5 mg Hydrocodone/500 mg Acetominophen)
versus the generic equivalent on
http://www.drugstore.com
FACTS ABOUT THE PHARMACEUTICAL
INDUSTRY
Fig. 1: Framework representing chain of operations of pharmaceutical companies
Mintzberg, H. CMAJ 2006;175:374
Copyright ©2006 CMA Media Inc. or its licensors
WHY ARE PRESCRIPTION DRUGS SO
EXPENSIVE?
OR
“There is gold in them thar pills”
The Cost of Direct to Consumer (DTC) Advertising
A BREAKTHROUGH drug is a unique
therapeutic entity that opens a new
approach to the treatment of
a given pathophysiology. The
discovery of breakthrough drugs
presents the greatest financial risk.
A ME TOO drug is a structural
analogue of an existing therapeutic
entity. Because me too
drugs are derived from established
drugs the risk associated with their
development is not as great as for
breakthrough drugs.
Drug Name
Total Prescriptions (X1000)
1) Hydrocodone/Acetaminophen
101,639
2) Lipitor
63,219
3) Amoxicillin
52,104
4) Lisinopril
47,829
5) Hydrochlorothiazide
42,757
6) Atenolol
42,001
7) Zithromax
38,110
8) Furosemide
34,782
9) Alprazolam
34,230
10) Toprol-XL
33,598
11) Albuterol Aerosol
32,679
12) Norvasc
32,580
13) Levothyroxine
32,465
14) Synthroid
30,695
15)Metformin
25) Zocor
29,202
22,325
Costs of Various Drugs
Lee T. N Engl J Med 2004;350:211-212
•PepsiCo spent $125 million advertising
its premier product, Pepsi – less than
the top promoted drug Vioxx with DTC
ad spending of $160 million.
•Vioxx also beat out Budweiser beer,
with an ad spending of $146 million in
2000,and was close to the most heavily
advertised car – GM’s Saturn – with ad
spending of $169 million in 2000.
•Each of the top seven most heavily
advertised drugs beat out Nike’s ad
budget of $78.2 million for its top shoes.
OBJECTIVES
1) Review generic drug law.
2) Know the difference between “breakthrough”
and “me too” drugs.
3) Have an understanding of the economics
of prescription drugs.