Generics, Pseudo-Generics and the Race for Consumer Dollars

 

Author: Saaqshi Sharma

The release of pseudo-generics or ‘fake’ generic drugs is common practice in Canada. This allows drug developers to maintain market share over a niche market of drug consumers, but also challenges generic companies’ ability to compete in the industry.

According to Health Canada Regulations, generic drugs have the same active pharmaceutical ingredients (APIs) and therapeutic effects as the corresponding brand name drugs, and differ only in their non-medicinal ingredients (aka excipients). Generic drugs sell at a fraction of the price of brand name drugs because they do not bear the extreme financial burden of extensive research and development phases, clinical trials, and brand marketing.

Generic drugs were first implemented following the Hatch-Waxman Act in 1984 which allowed generic drug manufactures to produce drug products with less fear of litigation from the drug’s innovators. This can only take place after the drug patent for the active ingredients has expired. Since the drug development process can take over 15 years from the original idea to the final drug product, drugs that have been approved by Health Canada and the FDA are awarded a 20 year patent that provides the manufacturer exclusive rights to sell the drug. This gives the innovator time to have sole marketing rights to their product, referred to as market exclusivity, and hopefully make back some of the money they have spent over the phases of research and development before other companies can enter the market with a generic version. When a drug patent expires all other companies are free to produce their own generic versions.

Patents can be extended when new uses for the drug are presented. Drug companies often scramble to find such indications so that they can extend their patent life and as a result be the sole providers of the drug for a longer amount of time. Competing companies similarly move quickly to release generic versions of drugs with closing patents in order capitalize on consumers looking for generic alternatives. In another attempt to maintain their market exclusivity, manufacturers of the brand name drug will release pseudo-generics which are identical to the brand name drug and manufactured on the same production line, but marketed and sold under a different name. Basically it is a ‘generic drug’ that is being produced by the brand name company.

This way, manufacturers can move quickly to infiltrate the generic drug market with little to no competition before the actual generic companies even have time to produce their products. This is beneficial for consumers who can get the same drug for 20-90% of its original cost. On the other hand, it is discouraging for competing generic companies because the market is already saturated with both the brand name drug and the pseudo-generic drugs, both made by the same company.

As a result there is a divide between innovation and competition. Innovator drug companies strive to maintain their market share and recoup costs associated with the development process; and generic companies fight to remain competitive in the industry.

 

Credits: Saaqshi Sharma  Canadian Centre for Clinical Trials