Patient Access to Affordable Medicines: A Generic Perspective 12th Annual 340B Coalition Conference July 14, 2008 t

1. Patient Access to Affordable Medicines: A Generic Perspective  12th Annual 340B Coalition ConferenceJuly 14, 2008 t Washington, DC Lisa Layman Vice President of Government Affairs Generic Pharmaceutical Association

2. Today�s Agenda Snapshot of the generic industry in the summer of �08 Savings achieved by the utilization of generic drugs Biogenerics would provide even greater patient savings Potential barriers to generic access

3. Current U.S. Generic Industry U.S. generic sales grew 14.3% in 2007 (brand growth 3.9%) Generic sales have more than doubled since 2002, now topping $44 billion for 12 months ending April 2008 Generic growth driven by high level of patent expirations: $17bn in brand sales exposed to generic competition in 2007 Generics account for 66% of total scripts dispensed (2.6bn) and 15% of dollars spent on Rx medicines (12 months thru 1Q08) � Approximately 160 Paragraph IV filings in 2007 $13bn in brand sales (4.5% of total sales) open for generic competition in 2008; $14bn in 2009; $21bn in 2010 and 2011 �Source: IMS Health, National Prescription Audit, Apr 2008

4. Generics Generate Substantial Savings for Medicaid and Medicare Patients CMS 2006 Medicaid prescription drug reimbursement audit: $17.2 billion for 119 million brand Rx = $144 per Rx $3.4 billion for 177 million generic Rx = $19 per Rx Generics accounted for 59% of scripts and 16% of dollars Increase generic use by just 2% = $1.3 billion in added savings OIG November 2007 Medicare Trustees report showed that greater anticipated generic drug use achieved added savings of $12 billion, which lowered annual Medicare costs by 20% to $47 billion, from a projected $59 billion.

5. Generics Provide Significant Savings for 340B Facilities 340B �ceiling� price is approximately equal to the Medicaid �net� price (AMP minus rebate) 340B entities can negotiate prices lower than the �ceiling,� so actual 340B prices could be lower than the Medicaid �net� price Generic companies support 340B, VA, DoD, and similar programs

6. Estimated Prices Paid for Prescription Drugs

7. Biogenerics Promise Additional Savings for Patients and Payors CBO: total savings $200 million over first 5 years; $25 billion over first 10 years savings would increase with appropriate bill language Shapiro (Clinton Under Sec. of Commerce): $67 billion to $108 billion over 10 years; up to $378bn over 20 yrs Pharmaceutical Care Management Association: for top biologics, Medicare savings of $14 billion over 10 years Citizens Against Government Waste: total savings for all payers would be $43 billion over the first 10 years There is NO SAVINGS if we do nothing!!

8. Savings Are Possible Only if Legislation Provides for Timely Access FDA should make approval decisions on a case-by-case basis to ensure safety and efficacy Unprecedented and unwarranted exclusivity periods will extend monopolies and erect barriers to access Legislation must provide for timely resolution of patent disputes Legislation must allow science to guide the process Workable legislation will ensure that biogeneric competition boosts innovation of new products in the biologic sector Amgen R&D budget grew 39% in 2 years after CEO Sharer said Amgen was �going from a monopoly environment to a competitive environment� by entering the oncology area.

9. Generic Savings Are Threatened by Potential Barriers to Access Patent reform legislation Abuse of citizen petition process State carve-out legislation Inadequate funding for FDA�s Office of Generic Drugs

10. Proposed Patent Reform Legislation Would Slow Generic Entry Pending patent reform legislation would make sweeping changes to U.S. patent system: scale back protections under current law pertaining to �best mode� requirements eliminate or greatly limit use of inequitable conduct defense in generic patent cases new definition of �prior art� contains several exceptions that would slow the resolution of patent disputes patent reform bills (S. 1145 and H.R. 1908) may be dead this year, but will be reintroduced in new Congress

11. FDAAA Must Be Fully Implemented to End Abuse of Citizen Petitions Would limit brand company�s ability to use citizen petitions to delay generic entry Prohibits FDA from holding up generic approval due to pending petition (unless FDA says delay would protect public health) Requires FDA to act on a citizen petition within 180 days FDA may deny petition immediately if it determines the petition was submitted for the purpose of delaying generic approval Filer must wait 180 days after filing the petition before going to court to challenge a generic approval.

12. State Carve-Out Legislation Used to Preserve Monopolies Supported largely by brand industry seeking to �carve-out� therapeutic class from generic substitution laws In 2007, more than 60 laws in 33 states � only 2 states enacted Illinois estimates its new anti-seizure drug carve-out law will cost the state $55 million annually Doctors already control process and can write "Dispense as Written" on �Do Not Substitute� on prescriptions Some carve-outs target so-called NTI drugs AMA study concluded evidence supporting exclusion of NTIs from substitution either �does not exist or is extremely weak� Difference between generic and brand is no greater than difference allowed between two lots of same brand

13. Office of Generic Drugs Needs Adequate Funding Generic applications increased 158% from 2002 to 2007 from 307 to 793 [Senate report 110-134] � OGD projects approximately 860 applications will be submitted in 2008 � Current backlog is nearly 1,300 ANDAs, resulting in 19-month median approval time � Modest investment in OGD would save additional billions via more timely access to new generics

14. Additional Generic Suppliers Means Lower Drug Prices

15. Overall Climate for More Affordable Medicines There has been increase in public awareness of generic safety, effectiveness, and �sameness� Both presidential candidates support biogenerics and advocate generic use for greater savings Congress recognizes that generics are the right choice for more-affordable healthcare Generics pipelines remain robust, promising more savings with greater patient access to new generics

16. Thank you. Lisa Laymanwww.gphaonline.org 703-647-2480