Generic approvals soar again despite new stepped pricing

319 generics approved in February, highest since last May

Hundreds of Atozet and Januvia generics approved

Entering generic market late drops pricing, new off-patent drug to become the generic market target

Despite being seemingly suppressed by the revised drug pricing system, the number of approved generic is soaring again.

 

Hundreds of Atozet and Januvia generics have entered the market and recorded the highest number generic approvals since May last year.

 

In the second half of last year, the pharmaceutical companies had a vacant gap in new approval as they have already had their generics approved before the pricing system revision.

 

However, the companies seem to jump into the generic approval competition, whenever a large generic market opens up, to take the advantageous pricing.

 

According to the Ministry of Food and Drug Safety (MFDS) on Mar.

 

2, 319 prescription generics have been authorized last month.

 

Compared to 102 generics approved in January, the number almost tripled.

 

The number of approved generic is surging compared to 50 items cleared from last June through December.

 

It has been nine months, since last May, the number of newly approved generics surpassed 300 in a month.

 

Monthly generic approval number (Unit: Item) Source: Ministry of Food and Drug Safety

Many of the newly approved generics are following originals like cholesterol-lowering Atozet and anti-diabetic Januvia.

 

Apparently, 89 pharmaceutical companies received the South Korean health authority approval on total 256 items combining atorvastatin and ezetimibe.

 

The original combination drug is Atozet sold by MSD and Chong Kun Dang.

 

A group of generic makers all applied for approval after Jan.

 

11, when the original’s post-marketing surveillance period ended.

 

And 44 of sitagliptin generic versions of MSD’s original anti-diabetic Januvia were approved as well.

 

The number of generic approvals started rising rapidly from early 2019, and it slowed down in the latter half of last year.

 

Total 5,488 generics, or with monthly average of 323 items, were authorized from January through May 2019.

 

In a span of year in 2018, total 1,110 generics were approved with monthly average of 93 items.

 

The approval rate has tripled in just a year.

 

The government’s sign of tightening the generic regulation has eventually instigated the surge in generic approval.

 

Implemented from last July, the drug pricing system was revised to sustain the 53.55 percent of the original pricing before patent expiration for generics that individually conducted a bioequivalence test and use drug master file (DMF) submitted active ingredient.

 

Moreover, MFDS’ approach on regulatory changes in generic approval also encouraged the generic makers to rush for the approval.

 

The ministry warned of strengthening the regulation on joint bioequivalence test regulation by partially revising the Regulation on Pharmaceuticals Approval, Notification and Review in April 2019, which restricts the number of a manufacturer conducting a joint bioequivalence test.

 

Although the joint bioequivalence test regulation restriction never got passed due to the opposition by Regulatory Reform Committee at Government Policy Coordination Office, the application for generic approval soared immediately after the ministry disclosed the plan to restrict the bioequivalence test early last year.

 

However, the soaring number of generic approval application bounced back down after the revised drug pricing system was implemented.

 

The generic approval number, tallied up to be 427 as of last May, plunged to 73 in June.

 

For seven months, from July through December last year, 73, 51, 45, 43, 58 and 69 generics were approved, respectively, with monthly average of 58 shrinking down to 18 percent of the previous 18-month average.

 

The products that applied for the National Health Insurance (NHI) reimbursement before last May would receive the previous pricing benefits.

 

Technically, the generics that applied for the reimbursement from following June would be applied with the new lower pricing.

 

And it explains why the number of new generic approval applications dropped drastically from June.

 

The recent surge in new generic approvals was led by the generic fully manufactured by consignment contract.

 

83 percent, or 84 out of 102 generics approved in last January were manufactured with consignment contract.

 

Also 85 percent, or 319 out of 375 generics approved in last month were the same.

 

From last October through December, only 26 percent, 38 percent and 70 percent of the prescription generics were respectively manufactured by consignment contract.

 

Ratio of generics manufactured by consignment contract among monthly generic approval number (Unit: percent) Source: Ministry of Food and Drug Safety

As for Atozet generic makers, only nine out of 89 companies are directly manufacturing the drug.

 

The majority of the generics would not be able to obtain high drug pricing without the individually conducted bioequivalence test, but they still joined the generic market.

 

In fact, entering the existing generic market late became meaningless with the reformed pricing system.

 

Due to the stepped pricing system, entering the market late would mean significantly low pricing.

 

The industry predicts the temporary exponential surge in generic approval would repeat in the future whenever a large new generic market opens up like Atozet’s.

 

Hundreds of Atozet generics were released due to huge marketability.

 

A pharmaceutical market research firm UBIST reported Atozet’s prescription volume last year reached 74.7 billion won making a year-on-year growth of 13.5 percent.

 

In two years from 2018, the volume rapidly surged by 60.6 percent from 45.4 billion won.

 

A pharmaceutical company associate commented, “Not many generic makers would join the already saturated market with the new stepped pricing system.

 

When a largely profitable original has its patent expire, a lot of generic makers would continue to try to launch their products at once to get the best pricing.”