Assessing Authorized Generics’ Impact on Drug Costs: Entacapone Market Study

The licensing of multiple authorized generics (AGs) instead of independent generics (IGs) in the case study of the Parkinson disease treatment entacapone suggests increased spending, according to research published in Value in Health.  

The presence of authorized generics (AGs) allows brand-name drug manufacturers to continue selling their products under a generic name while also maintaining revenue streams and competing with independent generics, often through patent litigation settlement negotiations. This practice sidesteps competition and can lead to excessive Medicare spending due to diminished competition from other manufacturers' independent generics (IGs).  

In the case study of entacapone, the brand-name manufacturer introduced 4 AGs before IGs entered the market, leading researchers to examine the impact of AGs on brand-name exclusivity duration and the level of competition from generic alternatives. 

Researchers pulled public data regarding regulatory and legal history for generic entacapone products marketed through 2021 from the Food and Drug Administration and court records. Using Medicare Part D data from 2011 to 2020, researchers analyzed the utilization, pricing, and expenditure patterns of entacapone products, comparing the actual spending to projected spending based on the assumption that generic competition had started after the expiration of the primary patent in October 2013 and prices had dropped like other generic drugs. 

Three potential manufacturers of entacapone IG switched to launching AG versions between 2012 and 2014 due to settlement agreements with the brand-name manufacturer, who also introduced their own AG version.  Four different IG versions became available for use in 2015. Despite the presence of 8 generic versions, average Medicare prices for entacapone only decreased by 62% from 2011 to 2020, resulting in Medicare spending $1.1 billion on entacapone products. Researchers estimated that if typical IG competition were present, Medicare could have saved anywhere between $137 to $449 million during this period. 

“The case of entacapone demonstrates how licensing multiple AGs in place of IG competition can increase spending,” said researchers. “Government regulators should more rigorously monitor AGs to prevent such strategies.” 

Reference  

Rome B N, Egilman A C, Patel N G, et all. Using multiple authorized generics to maintain high prices: the example of entacapone. Value in Health. (2023);26(3):370-377. doi:10.1016/j.jval.2022.08.013.