Pseudo-generics stealing the market

Large pharmaceutical companies, who produce pseudo-generic products following their patent expiring, are preventing true generic products from entering the market.  

“They create what are known as clones of their own products,” said Lynne du Toit, managing shareholder at Eurolab, a South African producer of generic oncology medication.

“These are sometimes manufactured on the same production line as the original product and then branded and labelled differently, or produced according to the same formula by an outsourced manufacturer,” she added.

Du Toit explained that these companies price their pseudo-generics below the price of their original products in order to compete with the real generic products.

The problem with this is that companies who create true generics have to pay for comparative studies and other supporting research before the medications can be approved.

“However, clone producers already hold much of that documentation because they hold the original patent, putting generic producers at a disadvantage,” said Du Toit.

“Clone products can actually be marketed before the patents expire and therefore get to the market more quickly, and are established as an alternative to the originals in the minds of medical professionals often long before generics appear on the market,” she added.

Du Toit illustrates how a true generic is actually a lot more affordable than a pseudo-generic: 

However, according to Du Toit, clones tend to make it to the market before generics do, and many doctors prefer to prescribe clones rather than generics, because they already have a relationship with the original pharmaceutical brand.

“This established relationship also makes it challenging for generic producers to build relationships with medical professionals, and we typically have to invest significantly more in marketing and brand building than the clone products do,” said Du Toit.

“The loser in all of this is the patient, who is compelled to pay unnecessary or excessive amounts for medication that could improve their quality of life, or indeed save their life,” she added.

Erik Roos, CEO of Pharma Dynamics, explained that the National Department of Health (NDoH) has a rule against one company selling the same medicine at a different price, but that pharmaceutical companies have found a loophole in the system.

“In many cases the brand name company will register a subsidiary with a different trade name to bypass this rule,” said Roos.

He pointed out that there have been several international reports confirming the uncompetitive nature of such practices, which have proven to lead to higher long-term medicine prices.

“The debate over affordable medication is hugely emotive in our country where 12 million people live under the breadline and where the poor often have to forego potential life-saving treatment because of the high price tag on medication,” said Roos.

Lianne Lutz, who’s a qualified pharmacist and wealth coach at Women’s Wealth, noted that pseudo-generics are often also referred to as authorised generics.

When considering the impact these clones may have on the industry, she pointed out that it could be particularly negative if the generic and authorised generic are sold at the same price. 

She believes if consumers are explained the difference between a generic and an authorised generic, they are more likely to choose the latter because it has the exact same substances as the original product.

“Other generic productions of the medicine will have the equivalent composition to the original brand but not the exact composition as generic brands will not have the original formula,” said Lutz.

Du Toit believes that pharmaceutical companies have valid cause to recover the tremendous costs associated with research and development, trials and testing.

“But they do engage in dubious practices to extend their exclusivity over a product, such as releasing different formats of a medication to extend the life of a patent,” she said.

“We always ask how this impacts the patient, and the greater good that could be achieved by a product – rather than focusing on the pure profitability of a product,” she concluded.