The timeline shows major events during the end of market exclusivity for glatiramer from 2011 to 2019. The events in bold mark the first launch of generic competitors to daily and 3-times-weekly versions of the drug. The timeline is divided into 3 periods, with the shaded region (period 2) representing the 2.5-year period when only daily glatiramer faced generic competition.
Each line shows the trend in price for a monthly (28-day) supply of each glatiramer product. Squares indicate daily (20 mg/mL) versions, and circles indicate 3-times-weekly (40 mg/mL) versions. The prices for Mylan’s 3-times-weekly and daily (not shown) products are within 7% of each other in each year. For brand-name Copaxone, the wholesale acquisition costs (ie, list prices) and net prices after manufacturer rebates and other price concessions are both shown. Generic products typically are not rebated; thus, list prices are shown. All prices are in 2019 US dollars.
Each area shows the number of monthly (28-day) supplies of each glatiramer product over time in 3 different insured populations: Optum Clinformatics Data Mart (A), Medicaid (B), and Medicare Part D (C). Vertical axes are different for each population, and Medicare data are available only through 2018.
The diamonds indicate estimated quarterly US spending on all glatiramer products in 2019 US dollars. The solid lines show linear regression models estimating spending in each of the 3 periods. The dashed lines show 2 models estimating spending if the 3-times-weekly version had not been introduced and robust generic competition had begun in 2015 rather than 2017. Model 1 assumes spending levels would remain constant after reaching mid-2019 levels, and model 2 assumes spending would continue to decrease for an additional year before stabilizing.
eTable 1. Six Glatiramer Products Available During Study Period
eTable 2. Data Sources Used to Estimate Quarterly Glatiramer Utilization
eTable 3. Changes in US Glatiramer Spending Trends After Limited and Full Generic Competition
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Rome BN, Tessema FA, Kesselheim AS. US Spending Associated With Transition From Daily to 3-Times-Weekly Glatiramer Acetate. JAMA Intern Med. 2020;180(9):1165–1172. doi:10.1001/jamainternmed.2020.2771
How much excess US spending was associated with the delay in generic competition because of the transition from a daily to a 3-times-weekly version of glatiramer acetate?
In this economic evaluation, prices and spending on glatiramer remained high until generic competition for daily and 3-times-weekly versions began in 2017. The 2.5-year delay in full generic competition from 2015 to 2017 may have been associated with excess spending of $4.3 billion to $6.5 billion.
The findings suggest that policy makers should consider policies that prevent manufacturers from delaying generic competition by introducing a new version of an existing drug and provide incentives to develop incremental innovations to existing drugs that are commensurate to the level of investment and risk involved.
Market exclusivity for daily injections of glatiramer acetate, a disease-modifying therapy for multiple sclerosis, expired in 2015. In 2014, the manufacturer launched an alternate 3-times-weekly version that was widely adopted, sustaining market dominance of brand-name glatiramer until late 2017.
To estimate excess US spending associated with the transition from daily to 3-times-weekly glatiramer.
Design, Setting, and Participants
This economic evaluation estimated total US glatiramer spending from January 1, 2011, to June 30, 2019, using a national cohort from 3 data sources that collectively represent approximately 40% of the US glatiramer market: Medicare Part D, Medicaid, and a claims database of commercially insured and Medicare Advantage patients.
Main Outcomes and Measures
Outcomes were quarterly US glatiramer spending, estimated as price × use. Manufacturer list prices for generic products and estimates of net (postrebate) prices for brand-name products were used. Linear regression and interrupted time series models were used to compare spending trends in 3 periods: before generic competition (2011-2015), during generic competition for daily glatiramer (2015-2017), and during generic competition for daily and 3-times-weekly glatiramer (2017-2019).
From 2011 to 2015, US glatiramer spending increased to $962 million per quarter and did not decrease with generic competition of only daily glatiramer (2015-2017). After generic competition began for 3-times-weekly glatiramer in 2017, prices decreased by 47% to 64%, and spending decreased to $508 million per quarter in 2019 (P < .001 for slope). The delay in decreased spending from 2015 to 2017 was associated with excess spending of $4.3 billion to $6.5 billion.
Conclusions and Relevance
These findings suggest that 2.5 years of delayed generic competition related to introduction of a new version of branded glatiramer acetate was associated with $4.3 billion to $6.5 billion in excess spending. Extended market exclusivity from introducing a new version of an existing brand-name drug can yield manufacturer returns out of proportion to the level of investment or risk involved; more limited incentives could encourage incremental innovations to existing drugs at a lower societal cost.
Glatiramer acetate, a disease-modifying treatment for relapsing-remitting multiple sclerosis (MS), was poised to lose market exclusivity and become susceptible to generic competition in 2015. In 2014, the drug’s manufacturer launched a noninterchangeable version that could be injected 3 times weekly rather than daily and was associated with better patient tolerability and fewer injection-related reactions.1 The 3-times-weekly formulation of the exact same compound at a higher concentration, which was protected by at least 4 additional patents, was heavily promoted and widely adopted.2 As a result, when the first generic daily version of glatiramer entered the market in 2015, uptake was minimal.3 In 2017, a US district court struck down the patents that protected the 3-times-weekly formulation,4 after which 2 generic alternatives to the 3-times-weekly version entered the market, and glatiramer prices decreased substantially.
This 2.5-year delay in robust generic competition by transitioning patients to a new, slightly modified version of glatiramer just before exclusivity for the original product expired exemplifies a strategy commonly used by manufacturers to extend revenue from profitable brand-name drugs. Although this strategy, sometimes referred to as product hopping, has been previously described,5-8 formal assessments of the societal cost are uncommon. Using the case of glatiramer, we estimated the excess spending associated with delayed generic competition owing to the transition from a daily to 3-times-weekly version.
For this economic evaluation, we estimated quarterly US spending on glatiramer from January 1, 2011, through June 30, 2019. Spending was the sum of price × use for the 6 different glatiramer products marketed as of 2019 (eTable 1 in the Supplement): the daily (20 mg/mL) and 3-times-weekly (40 mg/mL) formulations from Teva (Copaxone), Sandoz (Glatopa), and Mylan (glatiramer acetate). We estimated excess spending associated with the transition from daily to 3-times-weekly glatiramer by modeling actual spending trends vs spending assuming full generic competition for daily and 3-times-weekly glatiramer beginning in 2015 rather than 2017. The Partners Institutional Review Board approved this study and waived patient consent for use of deidentified commercial claims data.
For brand-name glatiramer, we used quarterly net price estimates from SSR Health, which uses publicly reported revenue data to approximate mean US prices across all payers, net of confidential manufacturer rebates and other price concessions.9,10 For generic glatiramer, we used wholesale acquisition costs (list prices) from First Databank because generic drugs are not typically rebated. One exception is in Medicaid, in which generic drugs receive a 13% rebate plus additional discounts for price increases over inflation.11 However, because no generic versions of glatiramer had increases in list price and Medicaid represents only 5% of US glatiramer use, we conservatively used undiscounted list prices for generic products.
Unit prices (measured per milliliter) were converted to the price for 28-day drug supplies (28 vials of 1 mL for daily formulations and 12 vials of 1 mL for 3-times-weekly formulations). Prices were converted to 2019 US dollars using the seasonally adjusted Consumer Price Index for All Urban Consumers.12
We estimated overall national use of glatiramer products based on the national sales of brand-name Copaxone from SSR Health. Copaxone sales were stable until a decrease occurred when generics entered the market; thus, we conservatively assumed that total US glatiramer use remained constant during the study period, with use of generics substituting for use of the brand-name products. We validated this assumption against actual patterns of use from the data sources described below.
To estimate relative use of the 6 glatiramer products, we used available data from 3 sources that collectively represented approximately 40% of US glatiramer users (eTable 2 in the Supplement): (1) Optum’s deidentified Clinformatics Data Mart, (2) Medicaid State Drug Utilization data,13 and (3) the Medicare Part D Drug Spending Dashboard.14 We obtained quarterly estimates of units used for each glatiramer product, which we converted into 28-day supplies. We combined the constant estimate of national glatiramer use (from SSR Health) with the relative market share of each product from the 3 sources using each independently and a weighted mean to obtain 4 separate estimates of national glatiramer use trends.
Some glatiramer users may be captured in more than 1 data source, including Medicare Advantage patients in Optum (who are also captured in the Part D Spending Dashboard) and dual-eligible patients enrolled in both Medicare and Medicaid. However, we used both combined and separate data, and we relied on these data only to estimate relative use of different glatiramer products, not national use.
For each quarter from January 1, 2011, through June 30, 2019, we estimated US glatiramer spending as the sum of price for a 28-day supply × number of 28-day supplies (using each of the 4 use estimates) for the 6 glatiramer products.
On the basis of when the first generic daily and 3-times-weekly products were launched, we defined 3 study periods (Figure 1): (1) before any generic competition (quarter 1 in 2011 to quarter 1 in 2015), (2) during generic competition for daily glatiramer only (quarter 2 in 2015 to quarter 3 in 2017), and (3) during generic competition of both daily and 3-times-weekly glatiramer (quarter 4 in 2017 to quarter 2 in 2019). We used mean least-squares linear regression to estimate national spending trends in each period, and we assessed for changes in spending trends between periods using interrupted time series models. All statistical analyses were performed using SAS software, version 9.4 (SAS Institute Inc).
To estimate excess spending associated with the transition from daily to 3-times-weekly versions of glatiramer, we ignored the spending in the second period and shifted forward the spending trend from the third period, assuming any decrease in spending from full generic competition would have started in the middle of 2015 rather than late 2017. We then calculated total estimated US glatiramer spending since 2015 with and without the dosage switch, with the difference representing excess spending associated with the 2.5-year delay in full generic competition.
Because the decrease in spending associated with generic competition will not continue indefinitely, in a more conservative model, we assumed that once spending reached the most recently available level (quarter 2 of 2019), it would remain stable going forward. In a second model, we assumed that spending would continue to decrease linearly through the middle of 2020 and then remain stable.
The list price of brand-name Copaxone increased from $4001 per month in 2011 to $5458 per month in 2014 (Figure 2). Net prices after manufacturer rebates and price concessions were up to 35% lower than list prices. The 3-times-weekly (40 mg/mL) formulation of Copaxone launched in 2014 at a lower price than the daily formulation, and prices for the 3-times-weekly product remained lower through 2019. List prices for brand-name products increased until 2017, whereas net prices peaked in 2016 and decreased by 47% from 2017 to 2019 to less than $3000 per month.
The first generic competitor to daily brand-name Copaxone (named Glatopa and manufactured by Sandoz) was launched in 2015 at a list price of $5220 per month, which was higher than the net price of both versions of brand-name Copaxone. Sandoz did not change the list price through the first half of 2019, resulting in a small decrease in real price over time because of inflation.
Mylan launched generic daily and 3-times-weekly formulations of glatiramer in late 2017 at approximately $5000 per month, similar to the price of Glatopa but above the net price of brand-name Copaxone. In the second half of 2018, Mylan markedly lowered prices for both generic products by 62% to 64%, resulting in prices of less than $2000 per month by 2019.
Before generic competition, total US glatiramer use was approximately 220 000 monthly supplies per quarter, which we assumed to be constant throughout our study period. This assumption was validated by total use of all glatiramer products in each of the 3 data sources, which did not substantially change for most of the study period (Figure 3). After introduction of the 3-times-weekly version, overall glatiramer use increased in Medicaid from approximately 12 000 to 15 000 monthly supplies per quarter, although no similar growth was seen in the other 2 populations. From 2017 to 2019, overall use of glatiramer products decreased in all 3 populations, possibly because of shrinking market share in favor of newer disease-modifying therapies for MS.15-18
When 3-times-weekly brand-name glatiramer launched in 2014, it was rapidly adopted and represented 27% (range in the 3 data sources, 21%-48%) of all glatiramer use by the end of 2014 and 58% (range, 55%-74%) by the end of 2015. The first generic daily glatiramer (manufactured by Sandoz) launched in 2015, but its share of all glatiramer use across the 3 data sources peaked at a range of 3% to 19%. Sandoz launched a 3-times-weekly generic product in 2017, although it represented less than 4% of all glatiramer use in all 3 data sources. Mylan’s generic daily and 3-times-weekly glatiramer products launched in late 2017, and the 2 products combined represented 15% of glatiramer use across all 3 data sources (range, 8%-32%) by the end of 2018 and 52% (range 41%-63%) by the middle of 2019.
Estimated quarterly national glatiramer spending increased from $664 million to $962 million in period 1 (before generic competition) (Figure 4). During period 2, when only the daily formulation faced generic competition, spending remained just below $1 billion per quarter, although the change from period 1 was not significant (P = .08 for slope) (eTable 3 in the Supplement).
In period 3, with generic competition for both daily and 3-times-weekly glatiramer, spending decreased substantially from $978 million in the third quarter of 2017 to $508 million in the middle of 2019, representing a significant change from the prior period (P < .001 for slope).
Assuming spending had decreased beginning in 2015 at the same rate as it did in period 3 and that spending would not decrease any further below the middle 2019 levels (model 1), US glatiramer spending from 2015 to 2019 would have decreased from $15.6 billion to $11.3 billion, resulting in $4.3 billion in excess spending. Assuming spending had continued to decrease for an additional year (model 2), total spending from 2015 to 2020 would have decreased from $17.1 billion to $10.6 billion ($6.5 billion in excess spending). Use of estimates of glatiramer use from each data source led to similar estimated excess spending (Table).
The 2.5-year delay in robust competition owing to the transition from daily to 3-times-weekly glatiramer acetate was associated with $4.3 billion to $6.5 billion in excess national health care spending. Federal court decisions in 2017 struck down patents and thereby ended market exclusivity of the 3-times-weekly version of glatiramer; had the courts ruled differently, excess brand-name spending might have been substantially higher.
Prices and spending on disease-modifying therapies for MS have increased substantially in the past decade, with out-of-pocket costs to patients estimated at $7000 per year in 2019.18-20 Although generic competition typically leads to lower prices, a prior study19 found that the introduction of generic daily glatiramer in 2015 had nominal effects on overall price trajectories for disease-modifying therapies. Our results were similar, finding that spending on glatiramer remained high until late 2017 when full generic competition was associated with substantial decreases in spending as the generic manufacturers set lower prices and the brand-name manufacturer offered larger rebates.
The case of glatiramer is 1 of many similar product hops in recent decades in which the brand-name drug manufacturer introduces a new version of the drug to extend use of a profitable product and delay use of less expensive generic versions.5,7,21 Esomeprazole (Nexium), the purified s-enantiomer form of racemic omeprazole (Prilosec), earned tens of billions of dollars for its manufacturer despite not demonstrating improved efficacy at equivalent dosing levels.22 From 2001 to 2009, several sequential and clinically insignificant changes to the dose and formulation of the lipid-lowering medication fenofibrate allowed the drug to avoid generic competition until 2011, resulting in $700 million excess spending.23 In 2015, the manufacturer of twice-daily memantine (Namenda) introduced a daily extended-release version and tried to remove the older formulation from the market,5,8 a move that would have cost Medicare an estimated $6 billion during 10 years had it not been blocked by a lawsuit filed by the New York Attorney General.24 In 2019, the manufacturer of buprenorphine (Suboxone) agreed to a $1.4 billion settlement for delaying generic competition by transitioning patients from the sublingual tablet to a dissolvable film.25
Of note, not all modifications to existing drugs lead to delayed generic competition, and 80% of modified product launches are not temporally related to the loss of generic exclusivity of the original product.26 Furthermore, many modifications offer benefits over the original product, including decreased dosing frequency, easier administration, or better tolerability. In the case of glatiramer, comparative effectiveness data between the daily and 3-times-weekly versions are lacking, but the 3-times-weekly formulation was associated with increased perceived patient convenience and a 50% reduction in frequency of injection reactions—the most frequent adverse effect of glatiramer treatment.1
Adequate incentives must exist to drive incremental drug innovations that benefit patients. However, in the current US pharmaceutical market, the return that manufacturers can earn for small changes to their products is independent of the value provided, the financial risk involved, or the resources required for development. Furthermore, as occurred with glatiramer, the US Food and Drug Administration allows manufacturers to test modified drugs against a placebo rather than comparing them with the original product, limiting comparative effectiveness data to guide clinical decision-making. In addition, the current system incentivizes manufacturers to delay launching improved formulations of blockbuster products until the original product nears generic competition. Teva first registered a clinical trial to study the 3-times-weekly glatiramer formulation in 2005, although the new product was not launched until 9 years later.27
There are several policy solutions to limit manufacturers' ability to delay generic competition by introducing new versions of existing products. First, manufacturers could be required to notify the Federal Trade Commission when they receive additional patents that could extend exclusivity on their products, allowing an opportunity to track potential anticompetitive practices.8 Second, the US Congress could limit pharmaceutical protections to a single regulatory exclusivity period per drug (eg, 1 patent per drug).8,28 If implemented, such a policy would likely need to be complemented by a strategy to encourage incremental innovations on existing products, although the rewards offered could be capped or more directly tied to the value they provide to patients.
Third, states could adopt broader therapeutic interchange laws to allow direct competition among different formulations of the same active ingredient. Currently, pharmacists may substitute only exact generic copies of a drug, and allowing pharmacies more flexibility to fill prescriptions with cheaper, therapeutically equivalent alternatives could have saved patients and payers $100 billion from 2010 to 2012.29 Fourth, increased price transparency or eliminating confidential manufacturer rebates could simplify the marketplace and allow more direct competition between brand-name and generic products.30,31 In the case of glatiramer, the first generic product was priced higher than the net price for brand-name drug after confidential rebates. This higher pricing may have contributed to the slow initial generic uptake from 2015 to 2017, and generic competition might have been more effective if net prices for the brand-name drug had been available to the generic drug maker.
Our findings must be interpreted in light of several limitations. First, we assumed that the 2.5-year delay in reduced glatiramer spending was entirely attributable to the transition from a daily to a 3-times-weekly version. For example, there has been increasing political pressure to lower drug prices in recent years, which may have contributed to some of the decrease in prices in 2017 to 2019. As a result, not all the $4.3 billion to $6.5 billion in estimated excess spending may be directly associated with the transition to a new version of the drug.
Second, actual glatiramer prices and patterns of use may vary among payers. However, we used estimates of average US prices and estimates of relative use from multiple data sources, which did not change our findings. Third, in our conservative analysis, we assumed spending would not decrease below 2019 levels, but this is likely an underestimate because the current level of generic competition is likely to further decrease prices.
Fourth, we assumed stable use of glatiramer acetate over time, even though the product has been decreasing in use because of competition from newer, more effective disease-modifying therapies to treat MS.15,16,18 Modeling a decrease in overall use of glatiramer from 2017 to 2019 may have led to higher estimates of excess spending associated with delayed generic competition. Fifth, the transition from daily to 3-times-weekly glatiramer was not limited to the US, and our estimates therefore only represent a portion of excess global spending associated with delayed generic competition.4
These findings suggest that 2.5 years of delayed generic competition related to introduction of a new branded version of glatiramer acetate was associated with $4.3 billion to $6.5 billion in excess spending. The 3-times-weekly version appeared to offer better tolerability and fewer adverse effects, but it is unclear whether this benefit could have been achieved with alternative incentives at a lower cost to payers and patients. Drug manufacturers earn billions of dollars in additional revenue by delaying generic competition through introduction of new versions of existing products. Although modified products may offer incremental benefits, the financial reward is not tied to the cost of development of the new product or the value to patients. Our findings suggest that policy makers should consider revisiting application of patent laws or expanding therapeutic interchange at the pharmacy level to prevent modified versions of an existing brand-name drug from delaying generic competition.
Accepted for Publication: May 22, 2020.
Corresponding Author: Benjamin N. Rome, MD, Program on Regulation, Therapeutics, and Law (PORTAL), Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital, 1620 Tremont St, Ste 3030, Boston, MA 02120 (email@example.com).
Published Online: July 20, 2020. doi:10.1001/jamainternmed.2020.2771
Author Contributions: Dr Rome had full access to all the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.
Concept and design: Rome, Kesselheim.
Acquisition, analysis, or interpretation of data: All authors.
Drafting of the manuscript: Rome, Tessema.
Critical revision of the manuscript for important intellectual content: Rome, Kesselheim.
Statistical analysis: Rome.
Obtained funding: Rome, Kesselheim.
Administrative, technical, or material support: Tessema.
Conflict of Interest Disclosures: Dr Rome reported personal fees from Blue Cross Blue Shield of Massachusetts and Alosa Health outside the submitted work. No other disclosures were reported.
Funding/Support: This work was funded by the Anthem Public Policy Institute and Arnold Ventures. Dr Kesselheim’s work is also supported by the Harvard-MIT Center for Regulatory Science.
Role of the Funder/Sponsor: The funding source had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.
Additional Contributions: The following PORTAL colleagues provided uncompensated feedback about the study analysis and figures: Rachel E. Barenie, PharmD, JD, MPH, William B. Feldman, MD, DPhil, Sheng Liu, JD, MSc, Véronique Raimond, PhD, MSc, Leah Rand, PhD, MA, Victor L. van de Wiele, LLB, LLM, Rebecca E. Wolitz, JD, MPhil, and Steven Woloshin, MD, MS.