Generic versions of ribavirin finally received approval from the U.S. Food and Drugs Administration (FDA) this week. Both Three Rivers Pharmaceuticals (in partnership with Par Pharmaceutical, a subsidiary of Pharmaceutical Resources Inc. [PRI]) and Sandoz (formerly Geneva, a subsidiary of Novartis) can now market generic ribavirin—Three Rivers/Par calls their version Ribasphere, while Sandoz does not use a brand name (see PDFs of FDA approval letters for Three Rivers and Sandoz; also press releases from Three Rivers, PRI, Sandoz [PDF], Novartis). This marks the culmination of a three-year battle between generic manufacturers and brand-name companies, but any hopes for reducing the cost of hepatitis C treatment were dashed by the announced prices.
Generic drugs have been much in the news recently as a solution to soaring drug prices in the U.S. and the best hope for expanding HIV treatment in the developing world. Generic drugs are cheaper versions of the original brand-name drug; to receive FDA approval, a generic manufacturer has to demonstrate bioequivalence—their drug works the same way as the original brand-name version—and meet manufacturing standards that guarantee the quality and purity of the drug (see the FDA's Frequently Asked Questions on generic drugs).
When a new drug is introduced to the market, it’s sold as a brand-name drug by its developer—typically a large pharmaceutical company that has put the drug through a range of tests and clinical trials to meet FDA requirements. The company receives an exclusive license to market the drug without competition—in practical terms, the length of this license varies depending on when the drug was patented, and companies have a number of strategies available to extend the length of the license. Without competition, the brand-name drug can be priced at whatever the market will bear.
Ribavirin is an antiviral drug that was originally discovered in 1970 by ICN Pharmaceuticals (renamed Valeant last fall to distance themselves from their turbulent history in recent years). Used on its own, ribavirin shows no significant antiviral effect against hepatitis C. However, it substantially boosts the effectiveness of interferon alpha, and combination therapy with interferon alpha and ribavirin has become the standard of care for hepatitis C treatment.
ICN licensed ribavirin to the two main companies marketing interferon—first Schering-Plough, which markets ribavirin as Rebetol (PDF of product label), and later Roche, which markets ribavirin as Copegus (PDF of product label). Both companies now pay royalties to Valeant on sales of their brand-name versions of ribavirin. But they’ve been able set the price of ribavirin artificially high, due to lack of generic competition. As a result, ribavirin accounts for roughly half of the cost of hepatitis C treatment.
Ribavirin comes in 200 mg capsules; the usual dose for hepatitis C treatment is 1,000 or 1,200 mg per day, depending on body weight—5 or 6 capsules a day.
According to drugstore.com, a 30-day supply of 1,200 mg of Rebetol costs $1,632.98—about $9.07 a capsule, or about $18,300 for a full 48-week course of treatment. Drugstore.com lists a 28-day supply of 1,200 mg of Copegus for $1,026.88—about $6.11 a capsule, or about $12,300 for 48 weeks’ worth. Drugstore.com quotes prices for pegylated interferon from Schering (Peg-Intron) and Roche (Pegasys) at about $1,300 a month (for four once-weekly injections), which adds up to around $15,600 per year.
So how does this compare to the prices for the new generic ribavirin? Below are the average wholesale prices for Three Rivers/Par and Sandoz—average wholesale price (AWP) is a calculation of what pharmacies are charged by wholesale distributors (the “middlemen” in the supply chain). The actual price varies, due to discounts and mark-ups by the pharmacy. The wholesale acquisition cost (WAC) is the price that the drug company charges wholesale distributors (see articles listed under 'further reading' at the end of the post for more detailed explanations of these terms). Prices are for 200 mg capsules.
Three Rivers/Par (Ribasphere): $9.93/capsule (AWP)
Sandoz: $9.93/capsule (AWP; $5.05/capsule WAC)
$9.93/capsule = $1,787.40/month for 1,200 mg = $20,018.88 for 48 weeks
Compare to brand-name versions:
Schering-Plough (Rebetol): $11.03/capsule (AWP) = $22,236.48 for 48 weeks
Roche (Copegus): $6.33/capsule (AWP as of 9/03; $5.58/capsule WAC) = $12,761.28 for 48 weeks
So the average wholesale prices for generic ribavirin come in at 10% less than Schering-Plough’s Rebetol. But Roche’s Copegus is already substantially cheaper than Rebetol—Roche strategically set the price of Copegus at about 40% below Rebetol when they launched their pegylated interferon, as part of an enormously successful attempt to gain market share from Schering.
But ribavirin could be even cheaper—a compounding pharmacy, which produces ribavirin pills in-house from the raw ingredients, can sell a month’s supply of 1,200 mg for about $250. AIDS activists were traveling to Mexico in the early ‘90s to get a month’s supply of ribavirin for about $200. So prices as low as $2,000-$3,000 a year are possible.
So why are the generic forms of ribavirin priced so high? Part of the reason is, again, lack of competition—the first FDA-approved generic receives a 180-day period of market exclusivity. This means that no other generic versions can be introduced for six months, so there’s no price competition. In an unusual move, the FDA granted dual exclusivity to both Three Rivers and Sandoz—an action that’s currently being challenged in court for another generic drug.
But Three Rivers/Par and Sandoz may have outsmarted themselves. According to a Reuters news story, Schering-Plough announced yesterday that it will begin selling its own generic form of ribavirin through its Warrick Pharmaceuticals subsidiary (see press release), likely undercutting the prices of Three Rivers/Par and Sandoz. Meanwhile, the Israel-based generic manufacturer Teva Pharmaceuticals has also filed an application to market generic ribavirin, which would place increased pricing pressure on ribavirin at launch time, possibly in October.
But what are companies really charging for ribavirin now? The AWP gives a rough guide, but actual prices are typically lower. As GMHC's Bob Huff wrote in a recent article for Treatment Issues, "because of an arcane system of discounts, rebates, and charge-backs, almost no one pays the "official" price. The acquisition cost (AC) is the actual amount that a pharmacy pays for its drug inventory. This cost varies depending on the quantity purchased, as well as on the rebates and discounts available to the pharmacist. Large buyers can obtain significant discounts: you can almost be sure that a drugstore chain like Duane Reade is paying less for pharmaceuticals than an independent neighborhood drugstore, although this may not translate into lower prices for consumers." Government entities also constitute large buyers purchasing drugs in bulk; the Department of Veterans Affairs typically gets the lowest available price.
The Reuters article on Schering's generic ribavirin cites the opinion of unnamed analysts who "said they believed Schering-Plough's generic will be sold to wholesalers at up to a 65 percent to 70 percent discount to its branded version [Rebetol].... At that steep a discount, the Schering-Plough generic would deeply undercut prices of the other two generics, said analysts, noting that they were selling for a 35 percent to 40 percent discount to Rebetol."
The actual costs of the various versions of ribavirin are unclear -- as Schering noted in its press release, "the market for generic pharmaceutical products is volatile, particularly at launch" -- but in the best case scenario, further competition will continue to drive down ribavirin prices.
So what does all of this mean for access to hepatitis C treatment? The implications depend on how you access healthcare:
Medicaid and private insurers already cover ribavirin; cheaper ribavirin would save these payers money. If a co-payment is charged for prescriptions, it’s often lower for generic versions of a drug than for the brand-name, making hepatitis C treatment somewhat less expensive. People who pay part or all of the costs of medications out-of-pocket will save some money with cheaper ribavirin, but the overall cost of hepatitis C treatment will remain prohibitive.
People who could most benefit from cheaper ribavirin are those receiving health care/medications through prisons, the Veterans Health Administration, and state AIDS Drug Assistance Programs (ADAPs). These systems have budgets for hepatitis C treatment—when treatment is expensive, less people get the drugs. As it stands now, very few people are treated in prison, in large part because of the expense. Most ADAPs can’t afford to cover hepatitis C treatment at all -- as of last year, only 9 states cover pegylated interferon and ribavirin combination therapy.
Even with cheaper ribavirin, hepatitis C treatment will remain expensive due to the high cost of pegylated interfeon. Don't hold your breath waiting for generic competition here -- interferon is considered a "biologic" and much harder to manufacturer than pills. The FDA still hasn't worked out a process to approve generic biologics or how to define bioequivalence for the field. Hopes for a nascent generic industry in biologics were set back recently when the FDA's European counterpart, the European Agency for the Evaluation of Medical Products [EMEA], rejected Sandoz' application to market a generic version of human growth hormone (see article from The Scientist).
In the meantime, Valeant is wasting no time in making up for the revenues they stand to lose when sales of brand-name ribavirin plummet. Valeant's developing a modified version of ribavirin called Viramidine for hepatitis C treatment. Viramidine looks like it's just as effective as ribavirin in combination with pegylated interferon. But Viramidine won't suffer from ribavirin's major drawback -- anemia. The high rates of anemia seen in people taking ribavirin leave a lot of people on hepatitis C treatment with two options: lower the dose of ribavirin -- reducing your chances of treatment success -- or take expensive doses of erythropoietin, a red blood cell growth factor marketed as Epogen or Procrit (links to manufacturers' websites). Valeant sees a market opportunity in shifting the standard of care from ribavirin to Viramidine, and has started two large phase III clinical trials to prove Viramidine's effectiveness to the FDA (see Valeant press release). They might be right about the superiority of Viramidine, but this new drug is sure to come at a cost.
But right now, it’s time to demand cheaper ribavirin and more affordable hepatitis C treatment for everyone who needs it. Keep watching this website for updates.
Further reading on drug pricing:
A Simple Guide to Understanding the Cost of HCV Medications by Alan Franciscus, for HCV Advocate (from May 2003)