Generic competition: when one door closes, another opens

With several major drugs set to face generic or biosimilar competition as patent protection expires, LSIPR analyses how well prepared their manufacturers are and how badly their sales may be affected.

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.