When a Blockbuster Medicine Becomes a Generic

How something old can become something new – the story of generics

Bob McMahon
president, U.S. Market, MSD

A medicine invented by MSD didn’t make big news in 2016, but it did find its way into an estimated 12 million medicine cabinets in the U.S. The drug is a heart medicine called lisinopril, and it was the most-prescribed drug in the country last year.

That’s a little-recognized honor, but it is an important one. While headlines often focus on the excitement – and the cost – of new therapies, low-priced generic medicines are in American homes from Bangor, Maine to Bakersfield, Calif.

That’s because the U.S. only allows patent protection for new medicines for a limited period. During this time of patent protection, most R&D-based pharmaceutical companies base the price of medicines on their value to patients and the health care system, and reinvest a significant part of the revenues into R&D. After that period of patent protection ends, an array of companies can make generic versions of those “branded” medicines, often driving down prices to a fraction of what the branded medicine costs.

The process of patent-protected medicines becoming low-priced generics is one of the greatest aspects of our health care system here in the U.S. It not only helps to fund scientific research needed to bring about the next generation of inventions, but also has important economic benefits.

The fact that nearly 90 percent of prescriptions filled in the U.S. are for generic medicines have helped keep average spending on medicines at a fairly constant level in the U.S. for decades – less than 15 percent of total health expenditures – even as better and better new treatments have been discovered to help patients.

That’s why we’re proud that in 2016, 42 million Americans benefited from lisinopril and other MSD discoveries that are now generic. Our discoveries in cholesterol lowering, heart disease, osteoporosis and asthma treatments – many of them the first of their kind at the time – are now widely available, most for as little as $20 per year. This year alone, three MSD “blockbusters” became generic in the U.S., which means that patients will have access to these medicines at far lower prices. At MSD, we think this system just makes sense.

We support the role of generic drug manufacturers in providing low cost products once intellectual property rights have expired. We don’t support tactics to slow the legitimate entry of generics into the market.

In fact, we advocate for policy changes to speed access to generic drugs and increase generic competition as a way of creating budget offsets to fund innovations entering the system.

This isn’t just about pills – we are also working to bring biosimilars to market as alternatives to existing biologic therapies. Biologics (often infusible medicines), including new treatments for arthritis and cancer, have brought incredible advances to patients, but until recently there haven’t been ways to bring forward lower-cost versions. Now that there is a regulatory pathway, MSD has introduced its first biosimilar in the U.S. for the treatment of rheumatoid arthritis and other approved indications. Upon its launch in July of 2017, we made this medicine available at 35 percent below the list price of its reference product, which will enable significant savings to consumers and the health care system.

All-told, lower spending on generic versions of branded drugs, plus new biosimilars, are expected to drive savings of $140 billion dollars in the U.S. over the next five years. There may be no other industry and no other model that creates such room for innovation.

The only way for Americans to benefit from new, breakthrough inventions that can someday become generic or biosimilar medicines is for companies like MSD to invest in R&D to find the next treatments for cancer, for diabetes, for Alzheimer’s – which is what we do, year after year, with nearly $7 billion invested in R&D in 2016 alone. It’s a difficult business to be sure, but one that we continue to believe is worth it.