Why Are There So Few Generic HIV Drugs?

U.S. Pharmaceuticals Uniquely Shielded from Competition

Monty Rakusen/Getty images

Few can argue with the fact that HIV drugs are expensive. In fact, according to the Centers for Disease Control and Prevention (CDC), a person living with HIV who starts treatment early will be faced with lifetime costs of roughly $250,000, and that’s just for their pills alone. The costs can hardly be surprising given that a standard three-in-one option, like Triumeq, has a wholesale price of over $2,600 per month.

Other combinations are well in excess of that.

Despite this, you don’t often hear much in the way of a public outcry against the price of these drugs. And this is because many get their HIV drugs paid for, at least in part, from insurance or various government and private subsidies.

In the same breath, others rightly wonder how antiretroviral drugs can carry such a hefty price tag in the U.S. when we hear that the generic versions are not only available overseas but cost as much as 2000 percent less than what we’re paying here.

The reasons for the virtual absence of generic HIV drugs in U.S. is at once simple and confusing, involving science, politics, and good, old-fashioned profit. By segregating these intertwined issues, we can make better sense of the challenges facing both consumers with HIV and the healthcare industry at large.

When Advancing Sciences Hamper Generic Drug Development

Typically speaking, when a patent of a drug expires (usually 20 years after the patent was first filed), the right to copy that drug will be open to anyone who chooses to create a generic version.

The goal of the generic is to compete with the original product on price, with more players spurring greater competition and, more often than not, lower costs.

So why haven’t we seen this with HIV drugs? After all, the patents for a long list of antiretrovirals have either expired or are soon to expire, including such former "superstar" drugs as Sustiva (efavirenz) and tenofovir (TDF).

But when you check the registry of the Food and Drug Administration (FDA), generic formulations have only been submitted and approved for six drug agents. Of these, a third are infrequently used in the treatment of HIV in the U.S. (stavudine and didanosine), while all but two (abacavir and lamivudine) are falling out of favor.

And therein lies one of the challenges facing generic manufacturers in the HIV space: Fast-changing science can make certain drug agents obsolete.

Waning Demand Diminishes Generic Competition

Take, for example, Rescriptor (delavirdine) and Aptivus (tipranavir), two fine HIV medications whose patents expired in 2013 and 2015, respectively. While both are still used in the treatment of HIV, other, newer-generation drugs (particularly integrase inhibitors) have been granted preferred status. These drugs, meanwhile, have been downgraded to alternate status.

As a result, Rescriptor and Aptivus will more often be used as a "fall-back" when other treatments fail. This alone decreases the incentive for manufacturers to jump into generic production when there is less assurance of volume sales.

Similarly, while a drug like TDF is still among the most widely used in the world, an improved version—called tenofovir alafenamide (TAF)—was introduced in 2016 just as TDF’s patent was set to expire.

A conspiracy perhaps? Not really, given that the newer form offers far fewer side effects and higher, steady-state blood concentration levels (meaning that the drug stays in your system longer). In the end, TAF is a superlative drug that will rightly supplant TDF, particularly in newer combination tablets.

So, does that mean we won’t be seeing generic forms of TDF anytime soon? Most believe that we will. Even in the face of waning demand, a TDF generic still has a place in the current HIV regimen and may be aggressively embraced by insurers and other providers wanting to trim medication costs. And, ultimately, the more generic competitors there are in a market, the lower the prices will go.

That has certainly been the case with the generic version of Epzicom, a two-in-one option containing abacavir and lamivudine. With both drug components still recommended for first-line therapy, four manufacturers have jumped on the generic bandwagon and have managed to offer savings of up to 70 percent off that of the brand name version.

HIV Drug Manufacturers Shielded From Generic Price Pressures

U.S. HIV drug manufacturers are in the unique position of having little competitive pressure from generic companies that might otherwise be nipping at their heels.

Firstly, the consumer demand for one-pill options has made individual tablets far less attractive in anything but later-stage therapy. Not surprisingly, the patents for many of these combination tablets are nowhere near the end of their lifespan, with some like Truvada (TDF plus emtricitabine) only due to expire in 2021.

So even if individual drug components are available to generic manufacturers, the consumer will more often opt for the brand name combination tablet (unless, of course, an insurer forces them to do otherwise).

But, even beyond the issue of consumer demand, the competitive playing field in the U.S. has long been slanted in the direction of the non-generic HIV drug manufacturer. This is due in large part to the fact that the U.S. government is the single largest purchaser of antiretroviral drugs today.

Through the federally mandated AIDS Drug Assistance Program (ADAP), state governments are directed to buy HIV drugs directly from wholesalers. Prices are set through the Federal 340B Drug Pricing Program, which discounts the average wholesale price by anywhere from 60 to 70 percent. After factoring in rebates, the brand name drugs almost always end up being cheaper than their generic counterpart.

Another factor shielding pharmaceuticals is the way in which treatment is dispensed. Unlike private health insurance, ADAP treatment choice is directed solely by guidelines issued by the Department of Health and Human Services, which currently place all-in-one combination tablets—the very drugs protected by patents—as the preferred option in first-line therapy.

In the end, it is not "collusion" driving these directives. Studies have long shown that people on a one-pill therapy are more likely to remain adherent compared to those taking several pills. This, in turn, translates into higher rates of sustained viral suppression, meaning that the virus is unable to replicate and you are far less likely to develop drug resistance.

Fair or not, these policies can’t help but favor the non-generic manufacturer, making it far more difficult for generic companies to compete on anything but a tangential level.

To further protect their market position, almost all brand name manufacturers have agreed to offer financial support to those who cannot afford their drugs, either in the form of co-pay assistance or the subsidization of care for those who don’t qualify for insurance. It’s an offering generic manufacturers are hard-pressed to match.

But, as valuable as these incentives are, they still don’t address the generally high cost of HIV drugs when compared to the same medications available outside of the U.S.

Overseas Pricing Challenges Research and Development Claims

The big pharma supply chain is a global enterprise that extends well beyond the U.S. borders. It not only tactically places these companies in the heart of emerging markets where diseases, like HIV, are prevalent, it presents them the opportunity to retain some control over the intellectual rights of their products.

This is especially true in countries like India, whose laws allow for the production of vital HIV drugs irrespective of patent. As a result, India is today a major supplier of generic antiretrovirals to developing countries, drugs that are not only chemically identical to the original but have been individually granted approval by the FDA.

As such, one can purchase a generic version of Atripla for roughly $50 at a retail counter in South Africa, while being faced with a wholesale price of over $2,500 at your local Walgreens or CVS.

The pharmaceutical industry has long insisted that this disparity is a result of the exorbitant cost of research and development (R&D), which can not only take years but reach well into the billions of dollars. On the surface, it’s a fair claim given the bulk of the initial R&D takes place in the U.S. amid the hub of biopharma and academic research facilities.

By foregoing patent laws, the pharmas argue, countries like India can easily make a profit on low-cost generics since they are not burdened with R&D investment. Pharmaceutical giants, by contrast, don’t have such luxury, and, by default, neither do their customers.

The irony, of course, is that 80 percent of ingredients in U.S.-made drugs and 40 percent of all finished drugs come from countries like India and China, according to the FDA. And, despite claims that India is making a killing by sidestepping patents, the annual turnover for the Indian pharmaceutical industry represents a mere 2 percent of the total global industry revenues.

Moreover, many American pharmaceuticals are well staked in the India generic industry, including Pennsylvania-based Mylan, which in 2007 purchased majority ownership of Matrix Laboratories, a top Indian producer of the active pharmaceutical ingredients (API) used in generic drugs. The purchase helped Mylan become what is today the fourth largest generic drug company in the world.

Similarly, global drugs giant GlaxoSmithKline (GSK) was, until recently, a major stakeholder in Aspen Pharmacare, the South Africa-based pharmaceutical which remains one of the continent’s leading producers of generic HIV drugs. The relationship, formed in 2009, allowed GSK to license its HIV drug basket to Aspen, including the then-powerhouse combination tablet, Combivir. This allowed GSK to share in the profits from the sale of their generic HIV drugs in Africa while maintaining a high-ticket price for the same, non-generic versions in the U.S.

In 2016, GSK sold its 16 percent share in Aspen Pharmacare for a reported profit of $1.9 billion. This coincided with the expiry of Combivir in that very same year.

It was irony not missed by advocates, who argued that such practices are discriminatory. On the one hand, an American company like Mylan can produce cheap, generic HIV drugs for the developing world which they cannot sell in the U.S. On the other, a multinational giant like GSK can essentially "have its cake and eat it, too" by preventing American consumers access to what are essentially their own FDA-approved, generic HIV drugs.

What Can I Do As a Consumer?

The cross-border sales of pharmaceutical drugs from other countries to the U.S. remains a highly contentious issue, but one that a number of American consumers continue to turn to. Canada is a prime example, garnering criticism from those who claim that the country’s popular online pharmacies are profiteering from the illegal import of unapproved drugs into the U.S.

The criticisms are half-right and half-not. In terms of actual revenue, online Canadian pharmacies report sales of little more than $80 million per year, a number that could hardly be considered a threat compared to the $425 billion in sales reported in the U.S. in 2015.

Meanwhile, the law regarding the personal import of drugs is another matter entirely and one that can be just as contradictory.

According to FDA regulations, it is illegal for individuals to import any drug into the U.S. for personal use unless they comply with the following special circumstances:

  1. The drug is for use for a serious condition for which treatment is not available in the U.S.
  2. There has not been the commercial promotion of the drug to U.S. consumers.
  3. The drug does not represent an unreasonable health risk to the user.
  4. The person importing the drug verifies in writing that it is for his or her own use, and provides contact information for the prescribing doctor or proves that the product is for the continuation of treatment started in another country.
  5. The individual does not import more than a three-month supply.

This seriously bars anyone other than newly arrived immigrants or those with serious, untreatable disease to import medications.

The conundrum, of course, is that the rules were based on the conceit that the FDA, in their own words, "cannot ensure the safety and effectiveness of drugs that it has not approved." The fact that the bulk of generic HIV drugs used in developing countries are FDA-approved has not swayed the agency or U.S. lawmakers from altering current laws.

Does this mean that consumers with HIV in the U.S. have some wiggle room when it comes to importing antiretroviral drugs from overseas? Probably not, given that there are numerous mechanisms to improve affordability for those with the disease, including the copay assistance programs (CAPs)and patient assistance programs (PAPs) funded by HIV drug manufacturers.

And that, perhaps, is the greatest irony of all. Even when people are able to access free to low-cost drugs through CAPs and PAPs, the pharmaceuticals still manage to profit enormously.

According to the non-profit AIDS Healthcare Foundation (AHF), these much-lauded programs can hardly be considered charity given that manufacturers can claim tax deductions of up to twice the production cost of donated drugs while maintaining high prices to effectively drain all available ADAP funds. As such, CAPs and PAPs are not only profitable to drug companies but downright lucrative.

This may change as more drugs approach their patent expiry date, incentivizing greater participation in generic drug manufacturing. Until then, most U.S. consumers will have to rely on the current ranges of subsidies—ADAPs, CAPs, PAPs, insurance—to reduce the high burden of their costly HIV drugs.

Sources:

Business Wire. "Patient Assistance Scam - AIDS Drug Company ‘Charity’ Programs Fail Patients, Yet Provide Millions in Tax Breaks to Industry, Says AHF." Published online August 2, 2011.

Farnham, P.;  Gopalappa, C.; Sansom, S.; et al. "Updates of Lifetime Costs of Care and Quality-of-Life Estimates for HIV-Infected Persons in the United States: Late Versus Early Diagnosis and Entry Into Care." Journal of Acquired Immune Deficiency Syndromes. October 2013: 64:183-189.

London Stock Exchange. "GlaxoSmithKline completes sale of remaining Aspen shares." London, England; regulatory documents 1740L; September 29, 2016.

National Institutes of Health (NIH). "Guidelines for the Use of Antiretroviral Agents in HIV-1-Infected Adults and Adolescents - Appendix B: Drug Characteristics Tables (Monthly Suggested Wholesale Price of Antiretroviral Drugs)." Rockville, Maryland; April 2016.

U.S. Food and Drug Administration (FDA). "Approved generic formulations of antiretroviral drugs used in the treatment of HIV infection." Silver Spring, Maryland; February 4, 2014.

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