Abstract
Nowadays, there are many generic medications available in the market. Their sale is increasing day by day due to their lower cost and affordability by most of the customers. Generic medications are pharmaceuticals that are therapeutically equivalent to an original off patent drug. Both authorized generics and branded generics are the versions of generic medications. They offer lucrative business and increase competition for ordinary generics. They supply medications having quality of branded drugs at lower prices and this establishes their recognition among the masses who earlier has limited options to buy only brand-name drugs. They are cheaper than brand name drugs but costlier than ordinary generics. Authorized generics are sold only by Innovator Companies but the branded generics can be sold by both innovator companies and generic companies. They both are different from one another and have their own impact on the brand drug companies, generic companies and consumers.
Introduction
Generic drugs are the pharmaceuticals that are similar in active ingredients, dosage form, route of administration, strength, safety, quality to an already approved brand name drug. They can contain different inactive ingredients and look different than their branded counterparts. They can cost up to 95% less than the brand name drugs and can be afforded by almost all the sections of the society.1 They are cheaper because after the expiry of the patent many manufacturers compete with each other for their generic version which results in decrease in prices.
Authorized generics
Authorised generic is a pharmaceutical product that is exactly identical to a brand name drug but marketed as a generic version without the label of brand on it. They are marketed mainly by the brand name company or other subsidiary companies with the permission of Brand Name Company.2 They are sold with different labelling and packaging at lower prices than the brand name drugs. They contain the same active and inactive ingredients like their branded counterparts and are manufactured according to the specifications of innovator companies. They are recognised as therapeutic equivalents of the brand name product, so they are not included in the orange book. They can be marketed under the brand name product’s NDA by notifying the FDA. They are defined in 21CFR 314.3 as is a listed drug that has been approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act and is marketed, sold, or distributed directly or indirectly to the retail class of trade with labeling, packaging (other than repackaging as the listed drug in blister packs, unit doses, or similar packaging for use in institutions), product code, labeler code, trade name, or trademark that differs from that of the listed drug. The applicant of NDA can market both the brand name product and the authorised generic at the same time. No separate NDA is required for Authorised generics. They are different from branded and unbranded generics for which ANDA is submitted. A list of authorised generic has been published by the FDA and is updated regularly.3 Authorized generics reviews are handled by FDA/CDER office of Pharmaceutical Quality. They first came to use in early 1990’s as a part of litigation settlement where the generic company got an opportunity to market authorized generics in exchange of not challenging their patent.
According to USFDA, there are almost 1200 authorised generics in the USA.4 Their market is growing very fast because consumers are getting these authorized generics which have the quality of branded drugs at generic prices. It is expected that the global authorized generics will observe strong growth. There are many factors which are likely to drive the authorized generics in the market: 1) patent expiration of branded drugs 2) rapid increase in the cost of branded drugs 3) health care plans by government.5
Classification of global authorized generics:
1.
On the basis of product type
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Simple generics
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Super generics
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Others
2.
On the basis of application
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On the basis of application
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Cardiovascular
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Anti-infective
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Anti-arthritis
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Central Nervous System
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Respiratory
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Others
3.
On the basis of region
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North America
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Asia Pacific
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Europe
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Latin America
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Middle East and Africa
Hatch-Waxman Act
According to this act, 180 day market exclusivity is given to a first ANDA applicant who challenges the patent of a brand name drug (Paragraph 4 Certification). During this period no other generic company is allowed to launch their product and the applicant can use this period to get incentives to recover litigation expenses. But this act doesn’t apply to authorized generics. If an authorized generic is launched during this 180 day exclusivity period, then it may increase the competition for the independent generic firm and makes it difficult for them to recover litigation expenses.6 The authorized generics allow the big companies to compete with generic company’s drug during this period even without lowering the cost of their brand name-product. So, authorized generics have the potential to reduce the revenue generated by the independent generic firms during this period.
Example: In 2003, FDA had given 180 day market exclusivity to generic manufacturer Apotex for its generic version of anti-depressant drug Paxil. During this period, brand drug company Glaxo Smith Kline also launched its authorised generic for Paxil. Although sales upto $575 million were expected by Apotex during this 180 day exclusivity period but due to introduction of authorized generic, the sales were reported to be between $150 million and $200 million. So, the entry of authorized generics increased the competition for independent generic firm (Apotex) and reduced their right to claim about two-thirds to the tune of approximately $400 million.7
Pay for delay deals
Brand drug manufacturers adopt many life cycle management strategies to extend their market exclusivity and to delay the entry of generic drug. After the entry of generic drugs in the market, the sale of brand drug manufacturers decreases. So sometimes to tackle this problem and to alleviate the influence of generic launches on market share, many innovator companies use ‘pay for delay deals’ in which they make an agreement with generic firms to delay the entry of their generic version in the market. This pay for delay deals cost consumers as they are left with the option of buying branded drugs or authorized generics.8
Pros and cons of authorized generics
Pros
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They are less costly than brand name drugs and have been produced by the same manufacturer of brand name drugs.
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They increase competition by encouraging the sale of low price authorized generics during the 180 day exclusivity period in which generics are often sold at higher prices.
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They also provide benefits to the brand name firms by providing them additional revenues or royalties made on sales done by their contacting partners. This additional revenue can be employed in support of pharmaceutical innovation.
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Authorized generics also helps in smooth settlement of patent infringement suits between brand-name firms and independent genric firms. By settling patent litigation and by allowing an ANDA applicant to produce an authorized generic, the brand-name firms will not only be able to manage risk but can also provide a more stable revenue system. The generic company manufacturing an authorized generic will also be benefitted by acquiring manufacturing experience as well as 180 day exclusivity period. Now they don’t have to spend their capital on litigation with an unclear result.
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Authorized generics launched before the expiry of patent can help the customers to gain access to lower cost versions of brand name drugs.
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Help the innovator companies to better control sales when more generic versions come into the market.
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Authorized generics can be launched into the market more quickly than the other generics.
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There are many consumers who have serious allergic reactions to many drugs which limits their choice to certain branded drugs. In this case, authorized generics can be helpful to them since they have same quality of brand-name drugs but are cheaper than brand-name drugs.
Cons
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During 180 day exclusivity period, the launch of Authorized generic can reduce the profits gained by generic manufacturers.
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To prevent loss of revenue, many generic manufacturers make an agreement with the innovator companies that they will delay the launch of generic in return for the brand drug manufacturer’s agreement to not launch their authorized generics during exclusivity period. The consumers have to face the consequences of this agreement as they are only left with the option of buying costly drugs.
Branded generics
Mainly two types of pharmaceutical products are launched by Indian Pharmaceutical companies for the same molecule: 1.brand-name drug -Their main drug which is developed and patented by them. 2. branded generics - they are not under any patent and are sold by using a brand name instead of a chemical name. Branded generics can be developed either by a generic drug firm or by the original manufacturer and can be marketed after the patent expiry of the original drug. Abbreviated New Drug Application (ANDA) is submitted to the regulatory body for marketing them and they should be therapeutically equivalent to the original drug for which the patent is expired.9 Their launch in the market is very advantageous to the brand name companies because of the following reasons: the innovator companies have production experience which can help them in producing branded generics. ii) no FDA approval is required to enter generic business as long as they are produced on the same production line used for innovator drug and less time is required in filing ANDA iii) the generic can be launched even before the patent expiration without any legal obstacles because it is marketed by the patent holder.
They are also known as value added generics and these can be either novel dosage form of an off patent drug developed by a different manufacturer or a copied molecule of an off patent drug.10 Example: Benitek A (Olmesatran in combination with Amlodipine) sold by GSK, Nifedical (nifedipine), Digitek (digoxin), etc.
Their global market is growing slowly since a large number of pharmaceutical products will experience patent expiry in the near future.
Branded generics market:
On the basis of product type
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Value added generics: Developed by using innovative pharmaceutical technology to make them patient friendly.
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Trade name generics: Generics sold by more than one trade name.
On the basis of application
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Cardiovascular drugs
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Anticancer drugs
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Central nervous system
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Anti-infective drugs
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Others
On the basis of distribution channel
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Hospital pharmacy
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Clinics
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Pharmacy and drug stores
On the basis of region
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North America (US, Canada)
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Latin America (Mexico, Brazil)
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Western Europe (Germany, Italy, England, Spain, France etc)
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Eastern Europe (Russia)
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Asia Pacific (China, India, ASEAN, Australia, New Zealand, Japan)
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Middle East Africa (GCC, South Africa, North Africa)
Unbranded generics are known by their chemical names like Amoxicillin for brand drug Trimox whereas branded generics are given brand names to promote patient recognition. Example: Cryselle (contraceptive pill). Its generic name is Norgestrel and Ethinyl estradiol. Since, it is very difficult for patients to remember long chemical names of combination products and also to increase its sale, it is sold by brand name Cryselle. These branded generics cost less as compared to brand- name drugs but are expensive than unbranded generics.11
Pros and cons of branded generics
Pros
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They are less expensive than brand name drugs and are sold as alternatives to brand name drugs.
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There are many medications which come in combinations and it becomes very difficult to remember their generic names, so they are given a brand name which can be easily remembered.
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They are generic drugs with brand names which attracts many consumers who are dependent on branded drugs only.
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They provide quality assurance from well-known companies like Sandoz by Novartis, torrent etc.
Cons
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There are some branded generics which have to be obtained from alternative suppliers, since they may not be available from key sources.
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If a drug is prescribed by a brand name then it becomes difficult to get that specific brand of the drug since many pharmacies don’t stock all the branded generics.12
Difference between authorized generic and branded generic
Conclusion
Pharmaceutical companies use many life cycle management strategies either to avoid competition or to increase competition for generic manufacturers because after the expiry of patents many drugs become generics and the sale of big pharmaceutical companies decreases. Marketing of both authorized generics and branded generics is a strategy to increase competition for generic firms and to remain in the market. Both of the authorized generics and branded generics are sold at a price lower than brand- name drugs but higher as compared to unbranded generics or ordinary generics. Their market is growing rapidly and is very valuable for innovator companies and destructive for generic firms.
Declaration of conflicting interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.
ORCID iD
Bharti Latwal https://orcid.org/0000-0003-3850-6544
References
1. Beall RF, Darrow JJ, Kesselheim AS. A method for approximating future entry of generic drugs. Value Heal 2018; 21: 1382–1389.
