Generic competition: when one door closes, another opens
For consumers, the prospect of drugs going off-patent may well be a blessing. But for the pharmaceutical companies behind the branded medication, the onslaught of generic competition is seemingly far from positive.
One study suggested that the overall cost of developing a prescription drug is $2.6 billion, from research to marketing approval (“Innovation in the pharmaceutical industry: new estimates of R&D costs”, Tufts Center for the Study of Drug Development, published in the Journal of Health Economics, 2016).
Sanya Sukduang, partner at Finnegan Henderson Farabow Garrett & Dunner, says that America’s Hatch-Waxman Act recognises the significant investment that pharmaceuticals inject into developing new drugs and provide an incentive, through a range of regulatory and statutory provisions (such as market exclusivity and patent grants), for companies to continue developing novel therapies.
Yet, upon patent expiry, the floodgates are opened and generic manufacturers can produce and sell comparatively inexpensive versions of the branded drug.
As generic competition reduces the pricing/market share of the branded drug by more than 80% in just 12 to 18 months (“Global Generic Pharmaceutical Industry Review”, Bank of Tokyo-Mitsubishi, 2016), it’s particularly important for drug developers to avoid the “patent cliff” of expiries.
Pharmaceutical companies’ revenue may “fall off the patent cliff” if a number of leading products go off-patent at a similar time, resulting in a sharp decline in revenue that businesses may struggle to recover from. On the other hand, the total cost savings for US drug buyers over one full year after generic approval of a branded product is estimated to be $16 billion (US Food and Drug Administration [FDA], “Estimating Cost Savings From Generic Drug Approvals In 2017”, 2016), meaning that off-patent medicine is more accessible and affordable for consumers. LSIPR investigates some of the highest revenue-earning drugs that are expecting generic or biosimilar competition for the first time over the coming months.
Drug: Lyrica (pregabalin)
Brand owner: Pfizer
Use: Treatment of seizures, fibromyalgia, and nerve pain
Off-patent: December 2018
Pfizer’s blockbuster drug Lyrica, which was first approved by the FDA in December 2004, is set to lose patent protection in the US in December.
Lyrica generated annual global sales of $5.1 billion in 2017 (with $3.46 billion coming from US sales), contributing to Pfizer’s remaining the largest pharmaceutical company last year, according to prescription sales data provided by EvaluatePharma in 2018.
Novartis came second globally, but with $41.9 billion in sales, it has some catching up to do to beat Pfizer’s total of $47.6 billion.
Pfizer may well be prepared for the challenge of Lyrica going off-patent in the US, as its patents for Lyrica expired in the EU a few years ago.
Pfizer then did not pay the renewal fees to bring a supplementary protection certificate (SPC) into force in May 2013, leading to the reportedly rare occurrence of a pharmaceutical company allowing an SPC to lapse.
In addition, Pfizer’s data exclusivity on Lyrica’s marketing authorisation expired in 2014, meaning that generic firms could use Pfizer’s trial data in order to obtain a marketing authorisation.
Consilient Health, a UK pharmaceutical manufacturer, launched a generic version of Lyrica in 2015 at a price 25% less than that of Pfizer’s branded drug.
Mylan and Teva’s generic versions of Lyrica are also already available in many European markets. Pfizer’s Financial Report 2017 said that globally, Lyrica revenues decreased by 11% in 2017 year on year as a result of the drug going off-patent in Europe, while US-based sales of Lyrica in 2017 increased by 10% year on year.
One measure Pfizer has taken in the midst of losing US patent protection is to pursue a six-month patent term extension for paediatric exclusivity for Lyrica. If granted, the extension would prevent generic competition until June 2019 at the earliest.
A spokesperson for Pfizer told LSIPR that it will soon be submitting data from its paediatric epilepsy clinical programme to the FDA for a paediatric exclusivity determination, but regardless, “Lyrica continues to be an important treatment option for the conditions for which it is approved”.
