Passage of the Hatch-Waxman Act enabled more rapid access to generic medications through the abbreviated new drug application process. Patent expirations of small-molecule medications and approvals of generic versions have led to substantial cost savings for health plans, government programs, insurers, pharmacy benefits managers, and their customers.
Under current law, patent protection holds for 20 years from time of patent filing, although much of this time is spent in product development and regulatory review, leaving an effective remaining patent life of 7 to 10 years at the time of approval. To extend the product life cycle, drug manufacturers may develop variations of originator products and file for patents on isomers, metabolites, prodrugs, new drug formulations eg, extended-release versions , and fixed-dose combinations.
These additional patents and the complexities surrounding the timing of generic availability create challenges for managed care stakeholders attempting to gauge when generics may enter the market. An understanding of pharmaceutical patents and how intellectual property protection may be extended would benefit managed care stakeholders and help inform decisions regarding benefit management.
This article is based on discussions from a recent roundtable meeting that focused on how drug life-cycle management patent strategies affect the decision-making process regarding formulary planning and management strategies when single-source, branded oral pharmaceutical products transition from single-source to generic status in the United States. The roundtable participants also explored several strategies manufacturers employ to extend marketing exclusivity.
Speeding access to generic medications is a pillar of pharmacy benefit management, as well as a key systematic way of managing pharmaceutical cost trends. This wave has increased competition and yielded significant cost savings for a number of stakeholders.
Several important small-molecule drugs have US patent expirations slated for , including Benicar olmesartan medoxomil , Benicar HCT olmesartan medoxomil and hydrochlorothiazide , Crestor rosuvastatin calcium , Cubicin daptomycin , Zetia ezetimibe , 1 and perhaps, although unlikely, Zytiga abiraterone acetate , as will be discussed later in this article. Health plans, insurers, and pharmacy benefit managers PBMs add generics to their drug formularies as quickly as possible to benefit from savings versus comparator branded medications.
This investment results in precious intellectual property that can bring in revenue for a drug maker for years to come. Without protection of this intellectual property, the pharmaceutical industry would be reluctant to invest the capital needed to develop innovative new products to improve health for individual patients and populations.
In recent years, an increased amount of attention has been paid to pharmaceutical patents and litigation in the press and with payers. These factors affect pharmaceutical life-cycle management, the transition of products from single-source to multisource status, as well as formulary decision making and pharmacy budget planning.
Pharmaceutical intellectual property is protected primarily through the US patent system. All patents on branded pharmaceutical products are registered and listed in an addendum to the FDA-published Orange Book. According to statute, the granting of a pharmaceutical patent includes protection on that patent for a period of 20 years from time of patent filing.
Patent protection may be extended beyond 20 years, depending on whether the processing and review of the patent application was delayed at the patent office or delays were incurred during product review by the FDA. During the year life of the patent, other drug manufacturers may not sell generic alternatives of the product without the risk of lawsuit and substantial court-approved penalties.
In practice, much of the initial 20 years of exclusivity may be spent in product development and regulatory review. The results of a survey by the Pharmaceutical Research and Manufacturers of America indicated that member companies spent Patents and exclusivity work in a similar fashion, but are different from one another.
Marketing exclusivity interacts to some extent with patent laws. Exclusive marketing rights are granted by the FDA upon approval of a drug, and this period of marketing exclusivity may or may not run concurrently with the period of patent protection.
In its essence, regulatory exclusivity is a congressionally mandated monopoly under the law. It allows a brand name manufacturer a certain guaranteed period of protection, regardless of what patents they may or may not have.
The protection provided by patents, however, is not guaranteed, as discussed later. Marketing exclusivity was granted to the patent holder, but a finite period after which marketing exclusivity would expire was not defined.
Manufacturers who were. For manufacturers of branded drugs, one problem with the system before was that the patents could be found to be invalid or unenforceable. Marketing or regulatory exclusivity may be a stronger shield to protect intellectual property. However, legislative and regulatory efforts have not been used solely to protect intellectual property; generally, the intention of these statutes has been to balance patent protection with beneficial access to high-quality, affordable medicines ie, generics , with the additional result being a period of market exclusivity.
The Hatch-Waxman Act of sought to speed access to generic medications by providing generic manufacturers with incentives and a pathway for approval. Hatch-Waxman also provided innovators with meaningful patent protection and an opportunity to recoup their investment, and also provided incentives to generic manufacturers to promote the rapid availability of generic alternatives.
The Act established regulatory exclusivity periods for branded and first generic agents. Exclusivity periods were included in the Act as a lever to promote a balance between new drug innovation and generic drug competition. For example, the first generic manufacturer to challenge a patent for a branded product listed in the Orange Book is awarded a day exclusivity period, beginning at FDA approval.
One of the main objectives of the Hatch-Waxman legislation was to promulgate a formal pathway for the introduction of generic drugs, in an effort to bring generics to the market sooner. To achieve this, the Act introduced the abbreviated new drug application ANDA process, and detailed the studies and data required by the FDA to evaluate a generic drug for approval. Under Hatch-Waxman, upon approval of a new chemical entity, the FDA grants a regulatory exclusivity period of 5 years regardless of patent life remaining.
Importantly, as some agents take a longer time to obtain FDA approval, the Hatch-Waxman Act provides patent-term extensions for those products where a longer time is required by the FDA to review the drug application. Some patent approvals may indirectly extend market exclusivity of a product. It lists prescription drug products and over-the-counter agents that are approved by the FDA as safe and effective. Manufacturers of branded products must identify USPTO-approved relevant patents and provide information on them, including patent expiration dates, to the FDA, which then publishes this information in the Orange Book.
The latter usually occurs through the litigation process. The process for challenging a patent listed in the Orange Book generally occurs in the following steps:. In , generic drug-maker Apotex briefly marketed generic Plavix, but was ordered to stop until November Sanofi has already lost patent protection in the U. In , the company said generic competition caused the loss of more than e 2 billion U.
Sandoz, the generic pharmaceutical division of Novartis, is already marketing generic enoxaparin, and other generic manufacturers are also looking to launch their own formulations of this drug. Now it will lose patent protection on the widely used antibacterial Levaquin and on Concerta sustained-release formulation of methylphenidate. Levaquin is an antibiotic used to treat pneumonia as well as infections of the sinuses, urinary tract, kidneys and skin.
Hi-Tech Pharmacal Company. Merck has already had to absorb lost revenue from several major products due to patent expiration or product withdrawal, including Vioxx rofecoxib, withdrawn in , Proscar finasteride, , Fosamax alendronate, , and, in the past two years, Cozaar and Zocor simvastatin. Now the patents on two more of its top sellers—Fosamax and Singulair—will expire in the near future.
Its growth has been consistent despite the FDA adding warnings to its label about side effects including depression and increased suicidal thoughts. Now its patent is due to expire in and a generic version could be available as early as August of this year.
In the U. Sandoz, Teva Pharmaceutical Industries, and several others will enter the market days later. A generic form of Combivir is already available in the U. However, it appears that there will be relatively few drugs with the profit potential of Lipitor, Nexium, and Plavix emerging in the immediate future.
The pharmaceutical industry has also invested hundreds of millions of dollars to lobby Congress on a variety of issues ranging from regulating Medicare drug prices to keeping lower-priced foreign drugs from being imported to protecting lucrative drug patents. Other approaches aimed at preserving the future profitability of drug companies have involved structural reorganization and downsizing. Overall, it is estimated that as many as 50, positions in the pharmaceutical industry will be displaced over the next decade.
In return for the innovation, current law provides brand pharmaceutical companies with 12 years of guaranteed market exclusivity monopoly for biologics and 20 years for each patent. There is also extra monopoly time to incentivize pediatric drug development and orphan drugs. During the period of patent and marketing exclusivity, brand drugs are priced and sold free from competition. Generic manufacturers, and the newly developing biosimilars market, are then provided an opportunity to make the same medicine once the exclusivity period expires and the drug is off-patent.
Once competition enters the market, the price of medicine reduces significantly and patients benefit with increased access to more affordable, FDA-approved drugs. Experience shows prescription drug costs decline by more than 60 percent after 12 months of generics entering the market. Some name-brand pharmaceutical companies constantly work to form a new, significantly changed version of the original drug. While this may require another patent application and clinical trials, it effectively blocks the competition from producing a generic equivalent, unless the FDA determines the original is of the same quality as the new drug.
While other patents have a finite length from the approval date, drug patents follow a different set of rules. This act gave patent extensions to name-brand drug companies to compensate for delays in the FDA approval process.
This allows for a patent extension for up to five years, regardless of the length of time it took for the FDA to approve the drug. The act further caps the protected amount of time to 14 years, depending on the approval delay time frame. This ensures the patent holder can assume profitability before generic drug companies move into the picture. Another way to extend a drug patent is through research on children. Any drug intended for use in children is automatically granted a six-month extension.
Known as the pediatric exclusivity extension, this loophole can be used only twice. While the Hatch-Waxman Act provides a standard for drug patent extension, it isn't the only way pharmaceutical companies can extend the patent's life.
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