1. According to sources, large companies create generic versions of their product (which is identical to the original product) once their patent expires, and sells it at a marginally lower cost. Can you confirm this?
This is true. Pharmaceutical companies create what are known as clones of their own products – sometimes manufactured on the same production line as the original product and then branded and labelled differently, or produced to the same formula by an outsourced manufacturer.
They still hold the patent to these clones, and price them slightly below the original product, in order to compete with the generic products that generic manufacturers can produce once the patent on a product has expired.
Generic producers procure dossiers from Dossier developers around the world for these patented molecules before the patents expire, and establish the feasibility of producing generic versions.
Producers of clone medications and generic medications are still compelled to pay for comparative studies and other supporting research and documentation before the medications can be approved by the Medicines Controls Council.
However, clone producers already hold much of that documentation because they hold the original patent, putting generic producers at a disadvantage because clone products can actually be marketed before the patents expire and therefore get to market more quickly, and are established as an alternative to the originals in the minds of medical professionals often long before generics appear on the market.
To give you an idea of how pricing works, a typical original oncology medication would cost R1 789.00 Its clone would sell for R774.00 Eurolab’s generic version of that product sells for R245.10 – an 86% saving compared to the original product and a 68% saving compared to the clone product.
2. How does this affect competition in the market?
Clones tend to make it to market before generics do, and many doctors prefer to prescribe clones rather than generics, because they already have a relationship with the original pharmaceutical brand.
This established relationship also makes it challenging for generic producers to build relationships with medical professionals, and we typically have to invest significantly more in marketing and brand building than the clone products do.
There are also medical professionals who refuse to prescribe generics, unless instructed to by medical aids – which means generic producers have to invest in substantial communication initiatives with medical aids.
The loser in all of this is the patient, who is compelled to pay unnecessary or excessive amounts for medication that could improve their quality of life, or indeed save their life.
3. Are there any regulations in place to monitor or prevent this?
All clone and generic medications are subject to the same rigorous approvals process put in place by the Medicines Control Council, the Pharma companies who hold the patents are not prevented from launching their own clones before the patent expires. There are also no pricing restrictions when a company launches a product.
4. How does this affect companies who specialise in generic medication?
There are times when generic medication producers simply cannot compete with clones, for various reasons, among them the manufacturing efficiencies of large-scale production facilities that supply whole continents, compared to our operation that only produces for South Africa.
Furthermore, at Eurolab, in order to provide our patients with cost effective, premium quality generic oncology products locally, we have to import all of the molecules, which places us (and the patients who use our products) at the mercy of fluctuating exchange rates.
5. How can consumers distinguish between a pseudo-generic and a true generic?
To be clear – the industry norms are patented products, clones, and generics. Typically, the only way a patient would be able to know or find out the difference would be if their doctor explains that they are prescribing a clone or a generic, or if the pharmacist asks the patient’s permission to dispense a clone or a generic. The pharmacist may still need to obtain the doctor’s permission thereafter, if the doctor had insisted on ‘no substitute’ on the prescription.
6. What are your concluding comments?
There’s no doubt patent-holding pharmaceutical companies are overcharging for their products. For example, Thalidomide was a cheap product in its first iteration in the 1960’s before it was withdrawn, but is now one of the most expensive oncology drugs available – well beyond the means of most South Africans. This is the same drug, used for a different purpose – but with a ridiculously inflated price.
Pharmaceutical companies have valid cause to recover the tremendous costs associated with research and development, trials and testing, but they do engage in dubious practices to extend their exclusivity over a product, such as releasing different formats of a medication to extend the life of a patent – for example releasing a different strength or formulation change, just before the patent on the original product expires.
We always ask how this impacts the patient, and the greater good that could be achieved by a product – rather than focusing on the pure profitability of a product.