Frequency of first generic drugs approved through “skinny labeling,” 2021 to 2023

Abstract

BACKGROUND:

Brand-name drug manufacturers receive a market exclusivity period following US Food and Drug Administration (FDA) approval, which can be extended through obtaining additional patents such as method-of-use patents. The skinny labeling pathway, in which the FDA approves generic prescriptions that carve out patent-protected indications from their labeling, has helped promote competition and timely market entry of low-cost generic prescriptions for many decades.

OBJECTIVE:

To determine how the use of the skinny labeling pathway by generic prescription drug manufacturers has changed in recent years.

METHODS:

Based on FDA-curated lists, we assessed the proportion of FDA-approved first generic prescriptions using the skinny labeling pathway from 2021 to 2023. We also examined whether the use of the pathway changed after a 2021 federal court decision (GlaxoSmithKline v. Teva) increased the risk of legal liability for generic manufacturers marketing skinny label generic prescriptions.

RESULTS:

From 2021 to 2023, 42.9% of 21 susceptible brand-name drugs required a skinny labeled generic prescription, including 5 (56%) in 2021, 3 (43%) in 2022, and 1 (20%) in 2023.

CONCLUSIONS:

Previous literature found 43% of brand-name drugs experienced skinny labeling generic prescription competition in a 2015-2019 sample, which is consistent with the rate of skinny labeled generic prescription entry early in our sample. Then, the proportion of first generic prescriptions approved with a skinny label decreased annually from 2021 to 2023. Applying this 2021 GlaxoSmithKline v. Teva methodology in subsequent years can help determine whether the judicial decision has had a sustained chilling effect on generic prescription manufacturers’ use of skinny labeling, resulting in delayed generic prescription competition as a result of fewer generic prescriptions entering the market.

Plain language summary

Brand-name prescription drugs are expensive, and generic prescriptions can lower spending for patients. Brand-name drugs often obtain patents on each of their many approved uses, which prevents generic prescriptions from entering the market. A skinny labeled generic prescription includes only nonpatent-protected approved indications and enters the market before remaining patents expire. Among the 21 first generic prescription entrants from 2021 to 2023 that were susceptible to skinny labeling, 9 were skinny labeled, providing timely generic competition that can help improve patient access.

Implications for managed care pharmacy

Recent federal judicial decisions may make it riskier for generic prescription manufacturers to enter the US market with a skinny label. A decline in the frequency of skinny labeled generic prescriptions will extend brand-name monopoly periods and lead to prolonged periods of higher priced drugs. Policymakers and regulators should take steps to ensure that the pathway remains a valid option to promote timely competition in the US drug market.

Timely availability of generic drugs is critical to the US prescription drug market. Generic competition has a substantial downward effect on US consumer spending for prescription drugs, with prices falling 80% or more following generic drug market entry.¹ In addition to lowering costs for patients, substitution of brand-name drugs with generic prescriptions has saved the health care system an estimated $1.67 trillion over a recent decade.² These reduced costs translate into lower patient out-of-pocket costs and have been associated with improved medication adherence and better health outcomes.^3–6

Given this market dynamic, brand-name drug manufacturers frequently seek to delay generic competition to continue selling their products at monopolistic prices.^7–9 Although individual patents typically last 20 years, patents can be extended through patent term adjustment or patent term extension. Manufacturers generally obtain numerous patents throughout the development process, leading to a patent portfolio of multiple overlapping patents that can extend market exclusivity far past the 20-year period of the patent on the underlying active ingredient. Method-of-use patents, which cover how a drug is used in clinical practice, are one of the most commonly obtained type of patents for brand-name drugs and these patents use codes associated with patents listed in the Orange Book have increased 6-fold between 2001 and 2019.^7,10,11 After initial drug approval by the US Food and Drug Administration (FDA), manufacturers often seek approval for new indications or new populations for conditions that their drug is FDA-approved.¹² Brand-name manufacturers can obtain method-of-use patents on the administration of the drug for such diseases or additional populations.¹³

Later-acquired use patents could delay generic entry past the expiration of the patents on the active ingredient or initially FDA-approved indication if generic prescriptions were forced to wait until all the active patents on a drug expired before they could enter the market. To prevent such delays, in the Hatch-Waxman Act of 1984, Congress allowed generic prescriptions to receive FDA approval for nonpatented uses as long as references to patent-protected indications, including supplemental approvals for new indications, are removed from the labeled indication.⁸ The generic manufacturer excludes, or carves out, indications in the brand-name drug’s labeling with remaining patent protection, leaving the generic prescription with a skinnier label than its corresponding brand-name product. Skinny labeling allows generic prescription manufacturers to gain market entry for unpatented indications without waiting for all existing and potential future patents to expire, which could lead to significant delays.¹⁴ From 2015 to 2019, about half of new generic prescriptions for brand-name drugs with use patents and multiple indications entered the market with a skinny label.¹⁵ The number was even higher for biologic drugs, with more than two-thirds facing competition from a biosimilar with a skinny label.¹⁶ Once available, skinny label generic prescriptions are often widely used in the market, including for off-label indications, and can generate substantial savings.^17,18 Although a skinny labeled generic prescription enters the market for a specific indication, these generic prescriptions may be used off-label uses, as generic prescriptions are automatically substituted for brand-name drugs in most states.

However, a 2021 federal court decision found Teva liable for inducing infringement on GlaxoSmithKline’s patents for the brand-name beta-blocker carvedilol (Coreg) based partly on routine labeling and advertising practices.¹⁹ By increasing the risk of liability for induced infringement, this decision may discourage generic prescription manufacturers from pursuing skinny labeling. Previous literature has assessed skinny label trends from 2015 to 2019, which occurred prior to the GlaxoSmithKline v. Teva ruling in 2021.¹⁵ To evaluate the initial effect of the court decision, we evaluated generic drugs entering the market for approved indications using the skinny label pathway from 2021 to 2023.

Methods

To create a cohort of drugs, we used FDA-curated annual lists of drugs that experienced new generic prescription competition from 2021 to 2023.^20–22 We extracted the manufacturer, approval letter, marketing status, brand-name reference drug, brand-name label, and brand-name submission classification.

We located the generic drug’s Abbreviated New Drug Application (ANDA) approval letter from the FDA. A drug was deemed a potential “skinny label” generic prescription if the FDA in the letter highlighted still-in-force patents that the generic prescription manufacturer needed to avoid infringing. Patent expiration dates were extracted from the details of the ANDA letter. For any generic prescriptions for which we could not locate an ANDA approval letter, we used the FDA Orange Book to obtain information on available patents, verify patent expiration dates, and extract generic market status.²³ We excluded over-the-counter drugs, along with generic prescriptions that received tentative approval, as tentative approval does not allow a manufacturer to market the generic drug.²⁴ To avoid double counting, we included only 1 generic prescription entry per brand-name drug in cases of multiple approved ANDAs. We also excluded generic prescriptions that had not yet entered the market using prescribing records from the quarterly Medicaid State Drug Utilization data during the year of first generic prescription approval.²⁵

To determine susceptibility to skinny labeling for brand-name counterparts, we reviewed the indications listed in the most current brand-name label prior to generic prescription approval, as well as their patents and exclusivities. Brand-name drugs that had 1 indication listed and/or did not have existing patents or exclusivities were considered not susceptible to skinny labeling. Brand-name drugs with 2 or more indications and with remaining patents or exclusivities at the time of generic prescription approval were deemed susceptible. To determine whether a first generic prescription had a skinny label, we compared indications listed in the original first generic label on DailyMed to the brand-name counterpart, assessing whether the first generic label contained carveouts.²⁶

We calculated the time between brand-name and generic prescription approvals. Brand-name prescription approval dates were obtained from New Drug Application approval letters or FDA-curated lists for the most recent brand-name prescription approval date (ie, for new dosage or formulation). Generic prescription approval dates were obtained through the FDA-curated lists. Duration between brand-name and generic prescription approval were calculated to the exact day using the difference between the brand approval date and the first generic approval date and then converted to years.

In addition to patents for additional indications and the 6-month pediatric exclusivity, another source of market exclusivity is the 7-year statutory exclusivity offered to drugs approved for rare diseases under the Orphan Drug Act of 1983. These may need to be carved out if a brand-name drug was approved for a supplemental indication for a rare disease and the generic drug was intending to come to the market for other indications on the labeling within the 7-year period. To determine Orphan Drug Act exclusivities, we reviewed the FDA’s Orphan Drug Designations and Approvals database for designated/approved statuses.²⁷

To determine if certain types of drugs receive skinny labeling approval more frequently, we used UpToDate Lexidrug (formerly Lexicomp) to determine drug classifications according to the World Health Organization’s Anatomic Therapeutic Classification.²⁸ The Veterans Affairs Formulary database, DrugBank Online, and PubChem were used for verification of this information.^29–31

We used the Centers for Medicare and Medicaid Services Medicare Part B and Part D databases to determine total Medicare spending for each drug in the year prior to first generic approval.³² We then examined the relationship between a drug’s Medicare sales and the proportion of generic prescriptions approved through skinny labeling.

Results

Between 2021 and 2023, there were 290 first-time generic prescriptions, of which 269 were excluded because they were tentatively approved, duplicates, or versions of brand-name drugs that were not susceptible to skinny labeling (Figure 1). Among the remaining 21 brand-name drugs susceptible to skinny labeling, 9 (43%) were approved through the skinny label pathway, including 5 of 9 in 2021 (56%), 3 of 7 in 2022 (43%), and 1 of 5 in 2023 (20%). Neurological drugs were most commonly susceptible to skinny labeling, of which 1 of 4 had a skinny label generic prescription marketed (Table 1).

FIGURE 1.

Determination of Study Cohort of Brand-Name Drugs Susceptible to “Skinny Labeling” From 2021 to 2023

TABLE 1.

Generic Drug Approvals Through the Skinny Labeling Pathway, 2021-2023

	Brand-name drugs susceptible to skinny labeling	Full label generic prescriptions (%)	Skinny label generic prescriptions (%)
2021	9	4 (44)	5 (56)
2022	7	4 (57)	3 (43)
2023	5	4 (80)	1 (20)
Total number of brand-name drugs	21	12 (57)	9 (43)
Drug classifications
Blood and blood forming organs	2	1 (50)	1 (50)
Systemic hormonal preparations	1	1 (100)	0
Antineoplastic and immunomodulating agents	3	2 (67)	1 (33)
Cardiovascular system	3	1 (33)	2 (67)
Musculoskeletal system	1	1 (100)	0
Nervous system	4	3 (75)	1 (25)
Anti-infective for systemic use	2	1 (50)	1 (50)
Genitourinary system and sex hormones	1	0	1 (100)
Respiratory system	1	1 (100)	0
Alimentary tract and metabolism	2	0	2 (100)
Dermatologics	1	1 (100)	0
Submission classification
Type 1- New molecular entity	9	2 (22)	7 (78)
Type 2- New active ingredient	1	1 (100)	0
Type 3- New dosage form	6	5 (83)	1 (17)
Type 4- New combination	1	1 (100)	0
Type 5- New formulation or new manufacturer	4	3 (75)	1 (25)
Medicare total spending in 1 year prior to first generic prescription approval, in millions, US $
0-<50a	12	8 (67)	4 (33)
50-<250	4	2 (50)	2 (50)
250-<1,000	2	1 (50)	1 (50)
≥1,000	3	1 (33)	2 (67)

^a The following 4 drugs had spending less than $1 million: spironolactone oral suspension, baclofen oral suspension, enalapril maleate oral solution, and imiquimod cream 3.75%. Of these 4 drugs, enalapril maleate was the only skinny labeled generic prescription.

Nine (43%) of the first generic drugs susceptible to skinny labeling were classified as new molecular entities when they were first approved, indicating a novel active ingredient. These were dabigatran, tasimelteon, bendamustine, mirabegron extended-release, bortezomib, ivabradine, lubiprostone, carglumic acid, and lenalidomide. Among these, 7 (78%) attracted generic prescription competitors with a skinny label. Ten (48%) of the first generic prescriptions susceptible to skinny labeling were for less innovative drugs initially approved as new dosage forms or new formulations/manufacturers, of which 2 (20%) faced generic prescription competition from a skinny label generic prescription. The remaining 2 (10%) first generic prescriptions susceptible to skinny labeling were classified as new active ingredient or new combination. Neither of these attracted a generic competitor with a skinny label.

BRAND-NAME TO FIRST GENERIC PRESCRIPTION APPROVAL PERIODS AND SKINNY LABEL CARVEOUTS

For brand-name drugs with a skinny label generic prescription, the median period from brand-name prescription approval to first generic prescription approval was 10.26 years (interquartile range [IQR] = 8.20-13.16 years), whereas for full label generic prescriptions, the median period was 10.17 years (IQR = 5.77-14.96 years).

Five brand-name drugs susceptible to skinny labeling had an Orphan Drug Exclusivity protection. All 5 drugs had a first-to-market generic prescription with a skinny label. For example, carglumic acid (Carbaglu) did not have any remaining patents, but received an Orphan Drug Act exclusivity for the treatment of acute hyperammonemia because of propionic acidemia or methylmalonic in pediatric and adult patients from 2021 to 2028. Its first generic prescription was approved in 2021 with a skinny label carveout of that rare disease indication. A skinny label can also enter the market with carveouts for both method-of-use patented indications and Orphan Drug Act exclusivities as in the case of lenalidomide (Revlimid), which had remaining patents and multiple Orphan Drug Act-related protections.

SKINNY LABELING AND MEDICARE SALES

Among the 12 brand-name drugs with a total Medicare gross expenditure less than $50 million in the year before first generic approval, 4 (33%) had a first-to-market skinny label generic; 2 of 4 (50%) with spending between $50 and $250 million had a first-to-market skinny label generic; 1 of 2 (50%) with spending between $250 and $1 billion (50%); and 2 of 3 with spending greater than $1 billion (67%) (Table 1). For brand-name drugs with full label generic prescriptions, median annual Medicare spending was $7.8 million in the year prior to generic competition, compared with $89.4 million for brand-name drugs with skinny labeled generic prescriptions.

Discussion

Among brand-name drugs susceptible to skinny labeling, approximately half had a generic launch with a skinny label in 2021 and 2022. This is consistent with a previous study that found 43% of susceptible brand-name drugs had skinny labeled generic prescriptions from 2015 to 2019.¹⁵ However, in 2023, only one-fifth (20%) of susceptible brand-name drugs had a skinny label generic prescriptions, which may be a signal of a diminished use of the pathway. Higher selling brand-name drugs more commonly faced competition from skinny label generic prescriptions, highlighting the pathway’s importance to promoting cost-reducing generic competition for patients and payors.

A federal appeals court decision in 2021 has threatened the viability of the skinny label pathway. In GlaxoSmithKline v. Teva, the court ruled that Teva improperly promoted its skinny labeled product, leading to infringement of GlaxoSmithKline’s patent on a use of the drug, even though the statements made by Teva—such as press releases describing the generic drug being “AB-rated” and hence bioequivalent with the brand-name version—were consistent with its skinny labeled approval.³³ Teva was required to pay more than $235 million in damages. The case may have increased the financial risk for generic manufacturers engaged in skinny labeling, because normal statements a company might make in selling its product could be interpreted as patent infringement and lead to large damage awards.^34,35 The FDA expressed sufficient concern about the chilling effects of the GlaxoSmithKline v. Teva case that it requested Congress to pass legislation clarifying the exception from patent infringement for generic manufacturers with a skinny label.³⁶ In addition, Congress could amend the Hatch-Waxman Act to further clarify that generic prescriptions with skinny labels are legally protected from patent infringement.¹⁹ In our data, the rates of skinny label declined annually, with a dip in 2023 serving as a potential signal that fewer generic prescriptions may be willing to use the pathway. To confirm these initial findings, future studies should monitor the rate of use of the skinny label pathway among first generic entrants to the US market. Monitoring of generic marketing and advertisements should occur as advertising that can be deemed a violation of existing patents can give rise to lawsuits, as in the case of GlaxoSmithKline v. Teva. Clarifying the boundaries of the existing safe harbor for skinny labeled generic prescriptions would ensure that generic manufacturers remain confident in using this pathway without being subject to the risk of infringement.

Brand-name drugs classified by the FDA as new molecular entities were most likely to have a skinny labeled generic prescription. As these drugs contain active ingredients that have not been previously approved by the FDA, they are likely to have the least competition and may generate greater revenue than reformulated drugs. Thus, these drugs may experience the greatest skinny label generic prescription competition as generic prescription manufacturers may aim to enter the market quickly, with a skinny label being the most effective method to enter in a timely manner.

Skinny labels have been associated with Medicare savings for both small molecule and biosimilars.^16,18 In our study, median Medicare expenditures for drugs subject to skinny labels in the year before generic entry ($89.4 million) far exceeded median Medicare expenditures for drugs that first attracted competition from full label generic prescriptions ($7.8 million), suggesting that the timely entry of skinny labeled generic prescriptions still has the potential to contribute to important cost savings for health care systems and patients.

The median period between brand-name prescription approval and generic prescription approval was similar for skinny label and nonskinny label first generic prescriptions. However, this time length does not necessarily map to the full market exclusivity period for these products, because we used the most recent approval date for the brand-name prescription manufacturer rather than the initial approval date for the active ingredient. For example, some of the products were new formulations of older drugs like spironolactone, baclofen, and topiramate; repurposing drugs with new formulations in this way can be a less expensive and less risky form of drug development. Providing for timely entry of generic competition via skinny labels in these cases can help ensure that the manufacturers of these reformulated products face competition in a reasonable time frame.

LIMITATIONS

This study assessed brand-generic pairs for generic small molecule drugs that receive FDA approval through an ANDA. We did not assess brand-name new chemical entities that could have experienced generic competition but did not receive FDA approval as a result of skinny label issues. Thus, generic drugs for which manufacturers unsuccessfully tried to enter the market or received tentative approval were not included in the sample size. This is a limitation of our study, because the full scope of creating a riskier skinny label pathway includes the possibility of an overall decline in the number of generic prescriptions approved. Future research could try to assess the number of generic prescriptions that failed to enter the market because of perceived manufacturer liability risk to provide greater insight on the overall impact of GlaxoSmithKline v. Teva on skinny labels and generic market entry.

This study was restricted to publicly available data, and the small number of drugs in our sample precluded statistical trend testing. Another limitation is that the drugs in our sample from 2021 to 2023 may obtain further indications, regulatory exclusivities, and patents in the future. As data sources are continuously updated, we may not have identified all expired and/or current patents protecting carved-out indications. Our analysis was limited to Medicare Part B and Part D expenditures, which represent only a portion of each drug’s total US sales. Therefore, we could not fully assess the link between total US spending and the proportion of generic prescriptions approved through the skinny labeling pathway. Another limitation is we assessed the period between the most recent brand-name approval to first generic approval date rather than generic market entry date. Some first generic prescriptions in our cohort approved between 2021 and 2023 may not have entered the market immediately, and in some cases like Revlimid, even when generic prescriptions entered the market, there still may not have been competition to lower drug prices. A final limitation is the size of our sample as there were only 21 generic drugs susceptible to skinny labeling within this time frame.

Conclusions

Despite these limitations, our study showed the substantial importance to the US health care system of future research to investigate the frequency of the skinny label pathway, because from 2021 to 2023, there has been a signal that fewer first generic entrants may be relying on skinny labels in the wake of the GlaxoSmithKline v. Teva case. Such future research should extend as well to biosimilar drugs, a group of drugs in which skinny labeling is even more common.¹⁶ Future research could also investigate the associated Medicare savings for both the small molecule drugs and biosimilars approved in this time frame. To help ensure timely generic competition, policymakers should reinforce the ability of generic manufacturers to bring their products to market with skinny labels.