The news is surprising since PhRMA has long been at daggers drawn with companies specialising in generic drugs, and Teva is the leader of this sector.
Legal proceedings for patent infringements are still underway, for example, between historic members of PhRMA, such as Eli Lilly, and Teva. In the framework of the international commercial agreements being negotiated by the US authorities with developing countries, the interests of pharmaceutical giants are still diametrically opposed to those of the generics sector. For decades, PhRMA has been defending, before Congress and the world, the importance of protecting patents on its products for as long as possible, at Teva’s expense.
Today, the Israeli firm boasts the position of number one in the generics sector. Its more than 1,000 generic molecules make up 49% of its annual sales of nearly $20 billion. 37% of its profits of $4.7 billion come from this business, and its imminent acquisition of Allergan is set to increase the share of generics in its business. Already, one in seven prescriptions in the United States is for a medicine manufactured by Teva, but originally invented by a traditional pharmaceutical company. “Generic companies cannot afford to carry out long and expensive clinical and toxicological studies; this is why they can offer their products to the public at a considerably lower cost”, Teva reminds those who ask about its advantageous pricing when compared with that of branded drugs.
Prior to this historic decision by PhRMA, some of its members criticised the organisation for considering Teva’s application favourably. “The stress placed on supporting innovation will be diluted if the largest generic drug company joins the ranks of the PhRMA”, argued Carlos Alban for example, Executive Vice-President of AbbVie.
Has the PhRMA given up its defence of the patents that are the basis of profitable innovation? Not at all, is the reply from the head of the powerful Washington lobby: “PhRMA continues to grow its membership at a time when the U.S. health care system is evolving to embrace a strong commercial market and value-driven health care”, according to the press release of the board of directors at PhRMA.
Hidden behind this diplomatic language is an important change reflecting the political context in which the pharmaceutical sector is operating in the United States. PhRMA is seeking to gain credibility in the eyes of Congress by representing the widest possible range of companies.
The lobby is widely criticised for financing the electoral campaigns of candidates ready to block any reform likely to lead to lower drug prices. Last year, PhRMA spent $18 million on “lobbying” campaigns, not counting the sum spent on such campaigns by giants like Amgen ($10.5 million), Pfizer ($9.4 million) or Eli Lilly ($7.2 million). The pharmaceutical industrie expects months of complicated explanations and controversy next year, after November’s presidential and legislative elections. It will involve opposing different possible projects for drug market regulation put forward by Democrats and Republicans, while the press underlines that the price of drugs is increasing faster than the cost of living.
In anticipation of this struggle, the management of PhRMA believes it will be in a better position to act effectively if it represents not only classical pharmaceutical companies, but also the leaders in generics. It will be more capable of approaching members of Congress individually by telling them that: “the current market is playing its role: the generic sector has already lowered prices at the end of a sufficient period of patent protection, it is not necessary to change the rules in place.”
This more nuanced discourse also corresponds to a change in “big Pharma” strategies: Pfizer is in turn developing generics with its subsidiary Greenstone. Its acquisition last year of Hospira, in the domain of injectable generic medicines, confirms this. Novartis, meanwhile, is doing the same through its subsidiary Sandoz.
At the same time, the wall separating the world of generics from the world of traditional labs is also cracking. Companies such as Teva are in turn developing original drugs protected by patents. The company based in the eastern suburb of Tel Aviv has the “deuldopa” molecule, for example, against Parkinson’s, in its pipeline, and also deutetrabenazine, against Tourette’s syndrome, both in phase 1. Last year, its ProAir RespiClick drug for the treatment of asthma received its first green light from the FDA. In this world where traditional lines are shifting, it would be counter-productive if the pharmaceutical lobby were to remain immobile.