How Drug Companies Use “Product Hopping” To Fight Off Affordable Generic Drugs

October 01 01:00 2015 by ushadmin

You’’re probably used to the idea of your doctor prescribing you a brand-name drug and your pharmacist automatically substituting a lower-cost generic equivalent that saves you, the drugstore, and your insurer money. But there’s practice known in the industry as “product hopping” that brand-name drug makers can use to repeatedly delay generic versions from reaching consumers.

Getting a new drug on the market is a costly and time-consuming process, which is why brand-name drugs have exclusivity windows that last for years. The lack of competition lets them determine the price, recoup their expenses, and make a profit.

Creating a generic equivalent used to also require significant time and effort to get FDA approval, but the 1984 Drug Price Competition and Patent Term Restoration Act (aka Hatch-Waxman Act) abbreviated the process so long as the generic was equivalent to the original.

Additionally, for decades states have allowed pharmacists to substitute “AB-rated,” therapeutically equivalent generics for brand-names unless the patient or physician demands otherwise. But for a drug to get that AB rating from the Food and Drug Administration it must, among other factors, not only contain the same active pharmaceutical ingredient as the brand-name drug, but also the same dosage and form.

And this is where “product hopping” comes in.

Imagine you’re the head of a drug company that’s bringing in a pile of cash for your popular brand-name product Morranicillin. You know that the patent on this wonder drug is set to expire in the not so distant future and that GenericCorpUSA is waiting in the wings to introduce a cheaper equivalent that will immediately decimate your market share because most pharmacies will automatically start swapping out the new generic.

But in order for that generic version of Morranicillin to be auto-swapped at the pharmacy, it needs to be virtually identical. So in advance of the generic launch, you tweak the dosage of standard Morranicillin, or switch the standard version from tablets to capsules.

Each time you do this, GenericCorpUSA needs to revise its generic to match. At the same time, the makers of Morranicillin stop selling the older, slightly different version of the drug and flood doctors’ offices with free samples of the version for which there isn’t a ready generic equivalent.
Studies show that doctors often don’t think about the cost of a particular drug they prescribe.

“Doctors’ ignorance of costs, combined with their tendency to underestimate the price of expensive drugs and overestimate the price of inexpensive ones, demonstrate a lack of appreciation of the large difference in cost between inexpensive and expensive drugs,” concluded the authors of one 2007 study.
Additionally, once doctors find something that works, many tend to stick with that brand even when a generic becomes available…