22 October 2014
Patents in the UK and many countries around the world have a life span of 20 years from the earliest priority date, but what happens when this term expires? Patents are common amongst all kinds of new technological developments, but what are the implications when we are talking about not just everyday products but life altering medicines and healthcare?
In this blog post I will explore what happens when pharmaceutical patents expire. The end of patent life or “patent cliff” means that other companies are able to manufacture and produce cheaper generic drug alternatives to the patented product once the patent has expired. The FDA1 describes a generic drug as “a drug product that is comparable to a brand/reference listed drug product in dosage form, strength, route of administration, quality and performance characteristics, and intended use”. Generic drugs are often a lot cheaper than their branded alternatives2 but many consumers develop brand loyalty particularly for OTC products and will stick to the brand they have always used regardless of price.
Pharmaceutical companies lose billions of pounds of revenue to the patent cliff and seek new ways to keep profits coming in, such as changing the route of delivery for the drug and product modifications.
Pfizer’s patent for Viagra expired last year, so this can now be manufactured and sold by other pharmaceutical companies as well as Pfizer for the treatment of erectile dysfunction. The generic versions of Viagra that have become available are a lot cheaper than Viagra.
Despite the patent’s expiry, other pharmaceutical companies will not be able to brand under the name Viagra and will instead have to use another name or use the technical term of the ingredient, Sildenafil Citrate. This is because Pfizer exclusively own the rights to the brand name ‘Viagra’ and may therefore have a slight advantage because of the size and global recognition of their brand although it is recognised that price is the most important factor for the majority of consumers.
Nexium is the brand name for Esomeprazole which is a Proton-Pump Inhibitor (PPI) to treat gastroesophageal reflux disease (GERD) which went off patent in the US in May 2014. A company called Ranbaxys – a generic manufacturer in India, applied to the FDA to launch a generic version of Nexium, but due to issues with their manufacturing plant they are yet to receive the final approval. In an agreement made with the FDA, Ranbaxys was granted 6 months exclusivity for the generic version. Latest reports show that Ranbaxy has still not launched the generic version and may indeed lose the exclusivity given by the FDA.4 Undoubtedly consumers are keen to get a cheaper version of Nexium as studies have shown there is a high percentage of the population that suffer from the ailment.
Ranbaxys and Nexium did a deal in 2008 for the generic launch of the drug following patent ligation proceedings that Astarazenca filed against Ranbaxys. Interestingly, they are working together in a strategic partnership to manufacture and brand the drug when they would traditionally be seen as competitors. It is known that many pharma companies are doing deals with generic firms to try and continue to gain revenue make back some money after patent expiry.
“Product hopping” is a term used to refer to the practice of releasing new and improved versions of pre-existing drugs and therefore hindering the release of generic alternatives as this extends the time period for which branded manufacturers have patent exclusivity. In the US the Drug Price Competition and Patent Term Restoration Act of 1984 is used to strike a balance between innovation by branded drug companies and fostering the development for lower cost generic versions of branded drugs6.
Many generic drug manufacturers have sued branded manufacturers, claiming that these changes do not represent true product innovation but are done simply to block generic product entry. Examples of changes could be things like change from a tablet to a capsule, changing the dose from high to low, or changing the mode of delivery.
If branded drug manufacturers are able to extend patent exclusivity if there is little change or improvement to the product, e.g. if the parent patents are about to expire, the branded drug manufacturer could try to get new patents for small, non-substantive changes to the drug and try to make it unlikely that doctors would prescribe old versions of the drug (that could be filled with generics)7.
In the UK the Office of Fair Trading imposed a £10.2 million fine on Reckitt Benckiser after they admitted they abused its dominant position by stopping doctors on the NHS from prescribing generic alternatives to the heartburn medication, Gaviscon Original liquid.
The NHS prescription channel provides that, where a patent has expired and a generic name has been assigned to it, doctors can use their prescribing software to search for the original branded product and then provide patients with an open prescription that lists its generic name. When the patient presents the prescription to the pharmacist, they can choose whether to dispense the original brand or an equivalent (and usually cheaper) generic medicine. The OFT alleged that Reckitt Benckiser sought to restrict competition for Gaviscon by deliberately withdrawing and de-listing Gaviscon Original Liquid from the NHS prescription channel after the product’s patent had expired but before the publication of its generic name. This meant that when doctors searched for Gaviscon, their prescribing software would identify only Gaviscon Advance Liquid (patent in force), RB’s alternative product. Pharmacies that received prescriptions for Gaviscon Advance had to dispense it, as it was patent-protected and there were no generic equivalent medicines8.
A supplementary protection certificate can extend patent life for a pharmaceutical product after the expiry of the patent, this is to compensate for the time is takes to obtain regulatory approval of the drug to put these products of the market. The maximum term in the UK is 5 years3. Clearly having a longer term of protection means more profit, so where they are able to, most pharma companies will file for this extension.
Overall although pharma companies leave themselves open to the loss of millions of pounds in revenue when patent terms expire, they seem to be trying look at new but not necessarily effective ways to save money.