A decade ago, physicians who treat epilepsy got what seemed like a piece of good news: Eight companies had received federal approval to sell a generic version of an injectable lifesaving drug.
Doctors liked the brand-name drug Cerebyx because it was safer and easier to use than a previous medicine that stopped seizures but could cause terrible skin reactions. The only problem was that it was too expensive for many hospital pharmacy budgets. A widely available and cheaper generic version would remove those cost barriers — or so doctors thought.
But the introduction of Cerebyx’s generic form, fosphenytoin sodium, in 2007 — called “fospheny” for short by some doctors — did not over the long term produce the robust marketplace competition that is one of the main arguments for the generic industry.
The trajectory of generic Cerebyx shows the limitations of relying on the market alone to bring down drug prices and ensure supply — particularly for hard-to-make injectables or low-volume drugs, which are critical to the people who need them. It’s the flip side of the low prices in the generic industry: Thin profit margins can turn temporary challenges such as active ingredient shortages or manufacturing delays into decisions to discontinue a drug altogether.
Companies stopped making fosphenytoin for several reasons, including technical challenges, production problems and decisions to concentrate on producing other drugs. And Cerebyx was not an outlier. Recent studies of the generic drug industry show that low levels of competition may be far more normal than the public appreciates.
“More than 50 percent of generic drugs are supplied by one to two manufacturers; that really turns on its head the idea this is a competitive, commodity-like market, like widgets or milk or things that people use every day,” said Rena Conti, a health economist at the University of Chicago. “While there may be robust entry into these markets, over time these markets degenerate into monopoly or duopoly supply.”
Concerns about high drug prices often focus on the lack of generic competition, a problem the Trump administration has decided to tackle head on. The Food and Drug Administration last month hosted a day-long meeting devoted to understanding how companies may be gaming the approval process to delay or prevent competition from emerging.