The news that the FDA approved the first A-rated (meaning that pharmacists may freely substitute it without physician approval) generic form of Advair Diskus on January 30, 2019 (a product that is to be marketed under the name Wixela Inhub) is welcome, but it doesn’t necessarily mean that costs for either the brand or the generic will immediately plummet. Let’s look at some of the factors that will be in play as Advair Diskus faces its first generic competition since it was approved way back in August 2000.
First is the fact that in the run-up to Wixela Inhub’s impending approval, it has been widely reported that Advair Diskus’ manufacturer, GlaxoSmithKline (GSK), worked to execute “brand-for-generic” contracts with many PBMs, Health Insurance Carriers, and Pharmacy entities. What such contracts aim to do is to make the net cost of the innovator product, in this case Advair Diskus, lower than the net cost of the generic competitor through a combination of purchase discounts, rebates, or both. Such contracts almost always carry a provision that, in exchange for the lower net cost, contracting parties must agree to exclude coverage of the new-to-market generic product. The bottom line here is that although Wixela Inhub’s launch may not directly lead to lower costs, indirectly its launch may lower the net cost of Advair Diskus. We will work with PBMs and Carriers to perform the analytical work necessary to ensure that the low net cost product is identified and given preferential treatment in your formulary.
Second is the fact that Wixela Inhub is likely to be the lone generic competitor to Advair Diskus for an extended period. The second generic competitor is not likely to be approved until some point in 2020, at the earliest. What this means is that, although Advair Diskus’ monopoly has been broken, it hasn’t been broken wide open by virtue of multiple generic products being available. Until at least three generic versions are approved these products will not likely be aggressively discounted to typical generic levels in excess of AWP-70%.
Last is the fact that physicians have grown accustomed to prescribing Advair Diskus for over 18 years. Such an extended period of brand exclusivity often makes it somewhat more difficult for new generic entrants to gain and extend their initial market uptake.
The bottom line is that, in the short run, the introduction of the first A-rated generic form of Advair Diskus may not result in immediate and dramatic cost reductions, and may even result in the generic being excluded from formularies due to “brand-for-generic” contracts, while in the long-run, as more generic versions are approved, costs will decline as competition among multiple generic manufacturers heats up.
If you would like to discuss Wixela Inhub, Advair Diskus, or any other aspect of your Pharmacy Benefit Plan, simply reach out to your Excelsior Solutions account team and we will be happy to quickly set up a call.
Bob has more than 30 years of diverse experience in the pharmacy industry. Over the course of his career, Bob has led clinical and PBM operations teams in successfully managing more than $4 billion in annual drug spend. This was also while limiting per-member-per-year spending growth to levels that have simultaneously drawn industry acclaim and consistently high levels of member and payer satisfaction.