For Amarin to immediately pursue an Authorized Generic version of Vascepa
Petition Summary: To advocate for the immediate pursuit of an Authorized Generic (AG) version of Vascepa in order to protect our investment in launching the Icosapent Ethyl market.
Regarding Amarin - the prevailing story is excessively focused on the insurmountable legal challenge of undoing the recent district and appeals court decisions to invalidate the company’s Marine patents. The ‘hail Mary’ en banc appeal appears to be Amarin’s main path to restoring our position as the dominant supplier of Icosapent Ethyl in the US market. Beyond this legal path, Amarin seems to have a ‘call your bluff’ strategy built on a faulty assumption that generics won’t be able to produce Icosapent Ethyl to meet the market need. Crafting a strategy that puts the ability to win or lose in the hands of our opponents isn’t a strategy any reasonable leader would stand behind.
The market analysts leave no doubt what they think about Amarin’s approach as they forecast rapid loss of US revenues along with significant cash burn to launch Europe. The ‘call your bluff’ approach is negligent when there is a viable and superior strategic option available that detract generics from entry, fills the strategy void currently impacting the stock, and establishes Amarin’s rightful dominance in supplying Icosapent Ethyl to the growing market.
It’s our contention that the decision to bring an Authorized Generic (AG) to market is no longer optional. It should NOT be a reactive decision in response to generics taking our market share. Launching an AG should be in advance of generics establishing early supply contracts with pharmacies and before they’re able to bring product to market. Doing so will secure our dominant place in the market while discouraging generics from aggressive entry.
As you’re aware, the process to launch an AG requires no additional regulatory hurdles other than informing the FDA of your intent. The ease of following this path is why it’s such a widely applied strategy among other brand drug makers. According to the FDA, there are 1232 authorized generics currently in the market. (https://www.fda.gov/media/77725/download)
Market share vs Margin
We acknowledge that most drugs on the Authorized Generic list had strong market penetration before they converted to AG. The brand drug makers were in a solid position to cut their price as further sales and marketing weren’t required to improve drug awareness and adoption. Although Vascepa is nowhere near reaching full market penetration, priority #1 should be protect our position on the pharmacy shelves. Again, before generics contract with pharmacies as future suppliers, we should offer an authorized generic at a modestly reduced cost to our brand version in order to rapidly establish a dominant generic position. Reduced margin may be offset by increased volume as we continue sales and marketing while reducing prescriptions lost to generic Lovaza.
The best defense is a strong offense
If we go on the early offensive by flooding the pharmacy shelves with our Authorized Generic we’ll be in a better position to defend that territory if/when Generics arrive with their inferior product. We should inform all pharmacies that we’re willing to price match our generic competitors. At some point in the future, this could mean we completely stop sales and marketing to reduce our costs-- but it’s worth repeating that priority #1 should be protect our dominant position on the pharmacy shelves. Doing so puts us in the driver’s seat, leaving generics with less enticing options, such as:
- They can enter a grossly immature market with no pricing leverage over Amarin’s existing authorized generic.
- They can set on the sidelines until Amarin builds solid brand awareness nationally. It will be difficult to penetrate Amarin’s dominance as a generic, but capturing even a small percentage of a massive market could be worth the price of entry. Amarin is the only company that can promote the Reduce-IT results to build a market large enough to make it worth entering.
- They could consider a collaborative agreement with Amarin to share cost of promoting Vascepa on a pro-rated basis. In such an agreement, generics would abide within defined market share boundaries set to expire at defined thresholds/timetables. To make this worth our while, they would share the cost of sales and marketing commensurate to their percentage of market share defined in the collaborative agreement. There could be several layers and phases to such an agreement.
By acting decisively with an Authorized Generic launch, we put ourselves in a position of strength. It’s a logical business strategy that serves share holders who want to see leadership defend our investment. We shouldn’t have to wait to see if generics take our market share, and we shouldn’t have to watch our investment devalue as the market spins stories of rapid generic dominance. We expect a strategy that puts the odds of winning or losing in our hands, rather than the hands of our competitors.
In the absence of Amarin sharing a logical and substantive US business strategy following the loss of the Marine patents, we respectfully submit this petition requesting that Amarin leadership consider the following:
Rapid launch of an Authorized Generic version of Vascepa prior to generics establishing early supply contracts with pharmacies and before generics establish an Icosapent Ethyl supply chain.
Establish price match agreements with pharmacies to fend off any future efforts by generics to capture our market share.
Attempt to establish collaborative agreements with generics that will enable the full maturity of the Reduce-it market while ensuring we’re in the driver’s seat to hold a majority stake in the market.
We ask John Thero to provide a formal response to this petition at the next available company update.