Commentary
Going Over the Patent Cliff
What will it mean for physicians and patients as top-selling prescription drugs lose their patent protection?
By Jon C. Schommer, Ph.D.
Patents on a number of blockbuster drugs will expire in 2011 and 2012, costing the pharmaceutical industry an estimated $250 billion in sales over the next four years.1 This long-anticipated “patent cliff” has haunted pharmaceutical companies for years but has been eagerly anticipated by generic manufacturers, consumers, and health plans. Once a drug loses its patent protection, a lower-priced generic version can quickly capture up to 90 percent of sales. For consumers, health plans, and others who pay for prescription drugs, the savings can be significant.
Some of the drugs set to lose patent protection in 2011 and 2012 are the cholesterol drug Lipitor, the antiplatelet medication Plavix, and the asthma drug Singulair (Table). Manufacturers will be able to sell these popular medications in generic form, making them more affordable. But what will this mean for future innovation in the pharmaceutical industry? Will it hinder the ability of drug companies to develop new and better products?
Industry Out of Control
The book Pharmaplasia by Michael Wokasch offers an interesting perspective on how we got to where we are today and what we might expect in the future. Wokasch asserts that the pharmaceutical industry’s problems can be blamed on “pharmaplasia,” rapid, uncontrolled growth of a pharmaceutical company that exceeds its capacity to be managed effectively, resulting in a series of unintended consequences.2 He describes how advances in science and medicine, combined with dynamic health care markets, created an increasingly complex environment for drug discovery, development, and marketing. That complexity, along with the industry’s pursuit of revenue growth and profits, has driven decisions about which new drug products to develop.2
Having an extensive pipeline of commercially viable new products has been the foundation for long-term success in the pharmaceutical industry. Wokasch describes how a series of missteps in the past several decades has led to a high rate of failure in drug development efforts (for example, over-reliance on computer-assisted drug design and high throughput screening resulting in a hit-or-miss approach, mismanagement, dilution of scientific expertise, application of inferior research tools, inability to correctly interpret findings, unrealistic timelines, and clinical trial fraud). He explains that because of these missteps, many now companies have fewer products in the pipeline.2
Strategies to rebuild product pipelines through company mergers, patent extensions (reformulations and me-too products), or aggressive marketing schemes (illegal off-label promotion) have been, in my opinion, desperate and ineffective attempts to generate revenue and capture market share. As a result, the number of new molecular entities approved by the Food and Drug Administration fell from 53 in 1996 to just 18 in 2006.
Armed with new knowledge about the human genome, pharmaceutical companies recently have turned their attention to developing biologics.3 The complexity of manufacturing these large-molecule proteins not only provides pharmaceutical companies the opportunity to seek intellectual property protection4 but also supports these companies’ arguments for charging very high prices for their biologic drugs (in the tens of thousands of dollars per month for some of these products as compared with hundreds of dollars per month for small-molecule pharmaceuticals).
What’s Next?
It appears that the patent cliff has motivated the pharmaceutical industry to take a new high-risk/high-reward approach. As a result, it is likely that in the future prescribers will have to decide whether to use relatively inexpensive, generically available small-molecule drugs or very expensive, single-source, large-molecule biologics.
Several other factors are likely to influence prescribing decisions as well. They include:
- The extent to which the delivery of health care will be managed;
- Whether pricing pressures will continue to increase;
- Whether traditional pharmaceutical industry marketing tactics will become obsolete;
- Whether new products will have to meet market expectations for superiority over current options; and
- The fact that evidence will have to be provided to support premium pricing.
That certain blockbuster drugs are becoming available as generics is welcome news for payers. However, the pharmaceutical industry already is reacting to the anticipated loss of revenue by changing its strategy. For that reason, health care providers who are able to translate evidence-based, comparative effectiveness information into patient-centered, individualized care are going to be more valuable than ever before. MM
Jon Schommer is a professor in the University of Minnesota College of Pharmacy.
References
1. Alazraki M. The 10 Biggest-Selling Drugs That Are About to Lose Their Patent. Daily Finance, February 27, 2011. Available at: www.dailyfinance.com/2011/02/27/top-selling-drugs-are-about-to-lose-patent-protection-ready/
2. Wokasch MG. Pharmaplasia. Wokasch Consulting, McFarland, WI, 2010.
3. Devine JW, Cline RR, Farley JF. Follow-on biologics: competition in the biopharmaceutical marketplace. J Am Pharm Assoc. 2006;46(2):193-204. 4. Wenzel RG. Current legal, regulatory, and scientific implications of biosimilars. Am J Health System Pharm. 2008; 65 (14Suppl 6):S1.