The first patent on OxyContin expires Tuesday, a milestone in the history of one of the most powerful and abused painkillers on the market

Updated April 14, 2013, 8:15 p.m. ET

Generic OxyContin Pains the FDA

Patent Expiration Brings Debate Over Abuse Deterrents

By TIMOTHY W. MARTIN

The first patent on OxyContin expires Tuesday, a milestone in the history of one of the most powerful and abused painkillers on the market.

But it could be quite some time before generic versions of the drug are available.

MK-CC393B_OXYCO_G_20130414195110Generic-drug makers have lined up to make their own versions of the medication, which has become synonymous with painkiller abuse. But first, they must wait for the Food and Drug Administration to decide whether they may produce the original version of OxyContin—the one losing patent protection—or whether they may make only newer versions designed to impede abuse, which won’t come off patent for several more years.

The agency’s decision is likely to have significant implications for the fight against prescription-drug abuse. Overdoses from painkillers caused more deaths in 2010 than heroin and cocaine combined, according to the Centers for Disease Control and Prevention. Yet the agency must weigh that problem against legitimate demand from patients for effective, inexpensive, generic painkillers. OxyContin is prescribed for a broad range of ailments, from chronic back pain to cancer.

The FDA’s ruling also will dictate whether profits in the $9.4 billion annual painkiller industry are shuffled and could influence proposed federal legislation to require that most prescription painkillers be made with so-called abuse-deterrent formulations. OxyContin, with $2.8 billion in annual sales, represented about 30% of the market for painkillers last year, according to research firm IMS Health Inc.

The original version of OxyContin helped spawn addiction because the pill was easy to heat or crush, breaking its extended-release function. Users then could inject, snort or smoke the contents for a heroinlike high.

But OxyContin maker Purdue Pharma LP in 2010 infused the blockbuster drug with a polymer that made the pill more difficult to crush, an innovation that the company spent about $100 million to develop. The patent on that formulation, the only one Purdue now sells, doesn’t expire until 2025.

The FDA for years has been reviewing whether generic OxyContin should be required to have such an abuse deterrent and, if so, what kind.

The FDA has several options, and there is no assurance it will rule by Tuesday. The agency could allow generic drugs to be sold using the original formulation, that would make inexpensive versions available almost as soon as the FDA ruled. It could also allow only versions using Purdue’s abuse deterrent. And the agency could permit generic-drug makers to market versions with their own abuse deterrents. That would make it possible for lower-priced OxyContin to hit the market before Purdue’s abuse-deterrent version loses patent protection in 2025, though probably not until late next year.

Douglas D. Throckmorton, a deputy director in the FDA’s Center for Drug Evaluation and Research, declined to say when a decision would be made. “We are working to take action, as soon as the science and law allow us to do so,” he said.

The agency is under pressure from lawmakers who believe that delays are contributing to painkiller abuse.

“If the FDA doesn’t act this time, there will be consequences,” said Rep. Hal Rogers (R., Ky.), co-chairman of the Congressional Prescription Drug Abuse Caucus, referring to his previous efforts to get the FDA to take action.

Israel-based Teva Pharmaceutical Industries TEVA -0.53% Ltd.; Impax LaboratoriesInc., IPXL -0.24% of Hayward, Calif.; and Covidien COV -1.04% PLC’s Mallinckrodt unit, which is based in St. Louis, are awaiting FDA approval to make generic versions of the original OxyContin. Purdue, meanwhile, is in court trying to fend off old and new generic versions of OxyContin.

The average retail price for all strengths of the drug, is $7.50 a pill, or $450 a prescription, according to Purdue. The generic versions would be 30% to 40% less expensive, said Shibani Malhotra, a pharmaceutical analyst for RBC Capital Markets.

The ultimate question: Is the newer form of OxyContin, which is further from patent expiration, safer than the original?

Purdue says, yes.

OxyContin’s sales have declined more than 10% since the Stamford, Conn., company introduced the abuse-deterrent version in 2010, according to IMS.

“Purdue does not think that the public safety will be served by an influx of opioids from multiple sources that do not employ abuse-deterrent technology,” said Purdue spokesman James Heins.

The answer won’t be so simple for the FDA. Much of the research on the effectiveness of abuse-deterrent formulations was funded and conducted by Purdue and Endo Pharmaceuticals Inc., ENDP -0.03% which makes another powerful painkiller, Opana.

Public-health and addiction experts have said that allowing a generic form of OxyContin with no safeguards would be like throwing gasoline on a fire.

“It’s going to mean more dead kids,” said Jeffrey Reynolds, executive director of the Long Island Council on Alcoholism and Drug Dependence. He said there was a shift to a version of Opana without safeguards after OxyContin was reformulated in 2010.

OxyContin’s sales fell 7% the first year it was reformulated, according to IMS Health, while Opana’s revenue rose 72%, to $640 million. Opana’s sales dropped 25% to $479.5 million last year, after it was reformulated with an abuse deterrent.

The FDA has signaled preliminary support for safety features. In January it issued draft guidance on how companies could demonstrate that their painkillers have abuse deterrents. But the guidance stopped short of requiring safeguards. The FDA is seeking input ahead of a public meeting scheduled for the fall.

Blocking generic drugs could mean “leaving behind the millions of patients who stand to benefit from access to lower-cost versions” of OxyContin, said David Gaugh, a senior vice president at the Generic Pharmaceuticals Association, an industry group.

Endo’s Opana ER is an early example of the situation. That extended-release drug was reformulated last year so that the pill’s contents turned into a jellylike goop when heated, meaning it couldn’t easily be injected to produce a high. A generic version of higher-dosage forms—without abuse-deterrent features—was introduced in early January. The total number of prescriptions written for branded Opana ER has remained steady, yet the market share for the new generic version is growing.

“Branded Opana is not being substituted out; the generic market-share growth means it’s being abused,” said Corey Davis, a specialty-pharmaceuticals analyst with Jefferies & Co.

Endo’s initial analysis of substance-abuse and poison-control centers showed that versions of Opana without abuse-deterrent features were abused about 80% more often than the version with the safeguards, said Blaine Davis, a senior vice president for the Malvern, Penn., company.

Meanwhile, makers of generic drugs are debating whether they should find ways to incorporate abuse-deterrent formulations proactively, rather than wait for the FDA to provide definitive guidance, according to a drug-company executive.

Political pressure is mounting for the FDA to take action. The National Association of Attorneys General last month sent the agency a letter signed by 48 members, urging the FDA to require abuse-deterrent features on generic drugs.

“We want to see, as these drugs are coming off patent, that the same rules apply across the board,” said Alabama Attorney General Luther Strange, who signed the letter.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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