Drug Firm’s Monopoly Threatened by Rival

SACRAMENTO — Two large drug companies are waging a legislative war at the Capitol over whether one gets to keep a 40-year-old brand name monopoly or must share the lucrative California market with the rival maker of a new generic substitute.

At stake are millions of dollars in sales a year and the health of thousands of patients suffering from heart, respiratory, neurological and other serious diseases.

Each side has lined up powerful supporters, ranging from doctors and patient advocates to HMOs and chain drug stores, and has hired some of the most expensive lobbyists in town.

At issue is a commonly prescribed blood-thinning medication for heart patients known as Coumadin. It has been manufactured exclusively for 40 years by DuPont Merck Pharmaceutical Inc. of Wilmington, Del.

But now Barr Laboratories Inc. of New York, maker of a cheaper generic substitute medication newly approved by the federal Food and Drug Administration, wants to break into the Coumadin market.

Barr is among the top 10 independent manufacturers of generic medicines, reporting $232 million in net sales last year. DuPont Merck is larger but is privately held and does not report its sales.

Generic equivalents sell anywhere from 20% to 70% less than brand name medications, depending on market conditions. Some estimates have put national sales of Coumadin at $400 million to $500 million a year, of which California’s share is estimated at $40 million to $50 million.

Last year, Medi-Cal, the taxpayer-financed health care program for the poor, spent $6.1 million for Coumadin, officials said. In March, for example, Medi-Cal paid for 15,000 prescriptions of Coumadin.

DuPont Merck, which claims that patients’ health and welfare would be put at risk if Barr gains entry without additional safeguards, is sponsoring a bill by Sen. Hilda Solis (D-El Monte) that would impose what Barr calls steep barriers to its substitute medication, called warfarin sodium.

Amid conflicting testimony, the Solis bill was heard last month by the Senate Health and Human Services Committee, but was not put to a vote.

A second hearing is scheduled for Wednesday. Solis and DuPont Merck’s chief lobbyist in Sacramento, John R. Valencia, said amendments will be offered in an attempt to reach a compromise.

For state lawmakers the choice is difficult: Vote for DuPont Merck’s bill and virtually assure its continued monopoly or vote against it and face criticism that they have potentially jeopardized the health of thousands of Californians with serious heart problems.

The bill (SB 1181) would prohibit a pharmacist from dispensing any generic or substitute drug for Coumadin and certain other medications unless the prescribing physician and the patient consent to the switch. Druggists now can routinely substitute generic medications unless the physician instructs otherwise.

The bill also would create a screening system for about 24 “narrow therapeutic index” drugs, including Coumadin, and their FDA-approved generic substitutes. The standards would be stricter than, and in addition to, the national standards already applied by the FDA.

The FDA so far has approved generic substitutes for 16 “narrow therapeutic index” medications.

Narrow therapeutic index medicines are used for treating severe problems such as heart attack, depression, epilepsy, stroke and asthma.

Margins of tolerance to them are so narrow, there can be wide differences even when nearly the same dosage is prescribed. A dose that is too small can be useless and one too big can be dangerous, or in extreme cases, fatal.

“It’s all about money,” Barr chief executive officer Bruce Downey said of DuPont Merck’s opposition to his company’s generic substitute. “Their arguments are just manufactured to save the monopoly position of DuPont Merck.”

Not so, contend Solis and other supporters, including the California affiliates of the American Heart Assn., American Lung Assn., American College of Cardiologists and the United Cerebral Palsy Assns.

Solis concedes that her legislation “could be misconstrued that I was carrying some kind of special interest bill.” But she said her chief concern is safeguarding patient safety in the era of cost-cutting by insurance and managed health organizations.

Solis said she fears that patients will be jeopardized by cut-rate generic substitutes dispensed without physician and patient approval.

“If, in fact, you do that, you could be risking the lives of children and the elderly,” Solis said. “Did the patient ultimately have some protection and safety? That is my primary goal here.”

But Charles Mayr, a Barr spokesman, said challenges to generic products are without scientific foundation. “There may be anecdotal evidence, but where’s the clinical evidence that shows these [generic] drugs are not working?” he asked.

Solis counters that various medical studies support her concern for patient safety.

The Wilson administration opposes the bill on several grounds, including the belief that it is unnecessary.

“Current law allows for physicians and pharmacists to make a decision that a generic drug should not be substituted if they believe that another drug is more appropriate and medically necessary,” said Ken August, spokesman for the state Department of Health Services.

Downey, of Barr Laboratories, said the California bill is part of a multi-state legislative campaign by DuPont Merck to deny the generic version a chance to compete with Coumadin.

Downey said the big push is occurring in Sacramento. “California is the key state because of the size of its market,” he said.

Barr is supported by the powerful HMO industry, including Kaiser in California, and chain drugstores.

Economic turf wars are relatively common in the Legislature, but this one involves some extraordinary firepower.

Both sides armed themselves with sophisticated public relations companies and some of the capital’s best-connected lobbyists: Dennis Carpenter, Kathleen Snodgrass and Marjorie Schwartz for Barr; and Valencia, Don Brown and Mark Watts for DuPont Merck.

As part of its multi-state campaign, DuPont Merck in January gave $75,000 as a “seed” grant to finance the newly created “Health Alliance for Narrow Therapeutic Index Patient Safety.” The group describes itself as a national coalition of “medical, consumer and patient advocacy organizations.”

“We philosophically and financially support them,” said Scott Nelson, a DuPont Merck vice president, of the alliance. He said the company also financially backs other nonprofit health interest groups that support legislation such as Solis’ measure.

Nelson insisted that his company’s support of such organizations had no connection to the Solis bill in California or legislative efforts in other states.

“The legislation that we are supporting [is] in the best interests of patient safety,” Nelson said. “With a high degree of certainty, I can say if we made financial contributions in the past [to alliance members], it is unrelated to this issue.”

DuPont Merck has been a modest--about $4,000--contributor to legislative candidates of both parties in California in the past couple of years. Barr officials said they have made no donations to state legislators in California, but have given approximately $5,000 to candidates in other states.

A Capitol staffer involved in the issue said some lawmakers are “uncomfortable” with the conflicting interests in Solis’ bill.

“One of the confusing aspects is that it is presented as a bill which is intended to protect people,” the staffer said. “But the alternative explanation is that what we have here is two pharmaceuticals fighting for market share. The members just are not sure.”