Singulair latest victim of generics onslaught

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The expiry of Merck's top seller, asthma and allergy mega blockbuster Singulair, will not only impact revenue for the drugmaker. As one of the largest-selling brand drugs losing patent protection this year, it's one of several brands expected to boost savings from generics, a study shows.

On Friday the FDA announced the approval of the first generics of Singulair for adults and children, noting that Apotex, Aurobindo and Glenmark were among a crop of 10 generic drugmakers who received its OK to make montelukast copies. Teva won approval to make the oral-granule form of the drug.

Merck hasn't been quiet about the long-anticipated expiry. The firm reminded Wall Street that Singulair has been heading toward the generics heap during its second-quarter earnings call on July 27. The drug racked up $1.4 billion in sales for the quarter ended June 30, 6% more than it did during the second quarter of 2011. This is in addition to the $5.5 billion it brought in for all of 2011, the $5 billion it swept in in 2010, and the $4.7 billion it earned in 2009.

There's more to the story than just another brand's expiry making the pool of no-name drugs bigger and the realm of major money-making brands one smaller. A recent study by the IMS Institute for Healthcare Informatics, commissioned by the Generic Pharmaceutical Association, showed that generics accounted for about 80% of all US prescriptions last year, and contributed to $192.8 billion in savings across the healthcare system, and more than $1 trillion between 2002 and 2011.

As brands like Singulair, and other large sellers like Takeda's Actos (diabetes) and Pfizer's Aricept (Alzheimer's), go off patent and face generic competition, they're set to push savings from generics even higher. In the next three years, brand drugs with $67 billion in annual sales will lose patent protection, notes the report. As a result, generic utilization will reach nearly 87% by 2015, according to the Generic Pharmaceutical Association's report.

Savings have far outpaced initial expectations. When the 1984 Hatch-Waxman act passed and created the generic drug industry, the report noted that estimates were that the bill would save up to $1 billion over 10 years. However, the 1998 Congressional Budget Office found this estimate to be off -- instead of saving $1 billion over 10 years, the CBO reported that generics saved between $8 billion and $10 billion annually, according to figures cited by IMS.

Last year's major generics break down as follows:
•    Nervous system drugs accounted for 33% of generic prescriptions
•    Cardiovascular drugs accounted for 24% of dispensed generics
•    Metabolics totaled 14% of distributed generics

Cancer treatments accounted for just 5% of last year's generic fills, but the study said oncology provided the greatest one-year savings growth rate, amounting to $10 billion last year, compared to the $3 billion that generic cancer drugs sidelined in 2010.

Despite the falloff in branded sales, the study noted that having patients hop from branded to no-name variations has done little to crimp innovation, and that while generics accounted for the super-majority of prescriptions in 2011, more new drugs were launched last year than at any other time in the past 10 years.
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