Patent expirations

As patents expire, exclusivity of producing a trade-nemed product will pass and competitive-versions of the basic drug will be marketed under generic names (or other new trade nemes) by new manufacturers. It has been estimated that 40% of the drugs on the market in 1990 will be generic drugs. 

The patent expiration date (in the U.S. usuaily 17 years after the patent issuance date cited) offers the opportunity to duplicate and practice the patented process without legal conflict after expiration. 

When a new chemical product is first developed, it can often be protected by a patent in the early years of commercial exploitation. For a product to be eligible to be patented, it must be novel, useful and unobvious. If patent protection can be obtained, this effectively gives the producer a monopoly for commercial exploitation of the product until the patent expires. Patent protection lasts for 20 years from the fifing date of the patent. Once the patent expires, competitors can join in and manufacture the product. If competitors cannot wait until the patent expires, then alternative competing products must be developed. 

First, the pharmaceutical market failures mentioned above may be empirically inconsequential, which may either render their regulation unnecessary or make it advisable to use more flexible price control policies. For example, justifications for regulation that are based on the virtual absence of competition seem weak when one observes markets with products whose patent has expired. When a patent expires barriers to entry should disappear, since the composition of the active ingredient becomes public, and other companies should not have too many problems to reproduce the production process. The reasons brandished for price regulation when any company can manufacture a generic to compete with the brand product find no justification in theory. 

PUBLIC CONTROL OF PHARMACEUTICAL PRICES DOES NOT GUARANTEE LOWER PRICES WHEN THE PATENT EXPIRES... 

Caves, R.E., M.D. Whinston and M.A. Hurwitz (1991), Patent expiration, entry, and competition in the US pharmaceutical industry , Brooking Papers on Economic Activity, 1991, 1-66. 

Monsanto [117] has developed a way to electrosynthesize by reductive carboxylation the optically active precursor to Naproxen, (S)-2-(6 -methoxy-2 -naphthyl)propionic acid, a drug used to treat arthritis. A more economical route was needed since the US patent expires in 1993 while the market is growing. The electrochemical process is said to cut manufacturing costs by over 50%. Since it uses CO 2 instead of the hazardous HCN used in conventional synthesis, it is also safer. 

One aspect in which biopharmaceuticals may differ from small molecule NCEs concerns the ease of generic entry when patents expire. To date, there have only been a few patent... 

Federal Trade Commission (FTC), Generic drug entry prior to patent expiration. An FTC Study, FTC, Washington, DC, July, 2002. 

Phase III completion date = March 2006 Accumulated development costs = 300M Primary indication = Alzheimer s disease Patent expiration = May 2015 Others... 

Bristol-Myers Squibb licensed its AIDS drug, Reyataz, free of charge to two generic manufacturers in South Africa and India. This decision will make available the generic form of the drug to sub-Saharan Africa AIDS victims at affordable prices. Reyztaz was first marketed in the United States in 2003 and its patent expires in 2017. 

Generic Drug Entry Prier to Patent Expiration ... 

GENERIC DRUG ENTRY PRIOR TO PATENT EXPIRATION AN FTC STUDY... 

In spite of this reeord of sueeess, two of the provisions governing generie drug approval prior to patent expiration (the 180-day exelusivity and the 30-month stay provisions) are suseeptible to strategies that, in some cases, may have prevented the availability of more generic drugs. These provisions continue to have the potential for abuse. 

FDA may approve ANDA effective on the date that the patent expires one or more generic applicants may enter at drat time... 

If the applicant makes a certification xmder paragraphs I or n, the FDA may approve the ANDA immediately, provided other requirements are met. If the >plicant m es a paragraph IH certification, the FDA may approve the ANDA effective on the date that the patent expires. ... 

Richard E. Caves, et ah, Patent Expiration, Entry, and Competition in the U.S. Pharmaceutical Industry (Brookings Papers on Economic Activity, Microeconomics, Martin Neil Baily Qifford Winston, eds., Brookings Institution, Washington, DC 1991). 

Filing of the lawsuit stays the FDA s approval of the ANDA until the earliest of (1) the date the patents expire (2) a final determination of non-infringement or patent invalidity by a court in the patent litigation or (3) the expiration of 30 months from the receipt of notice of the paragraph IV certification. This chapter reviews the frequency and outcome of these patent infringement lawsuits. 

For 15 of the 29 drug products where the brand-name company did not sue the first generic applicant, the generic applicant began commercial marketing soon after FDA approval and prior to patent expiration. In 6 cases, the FDA has not approved the generic applicant s ANDA as of June 1, 2002, and the patents have not yet expired. 

For 2 of the 29 drug products in which no suit was filed, the brand-name company s patents would have expired during the first several months of the 30-month stay. Because patent expiration terminates the 30-month stay, it may not have made sense in those cases to initiate patent infringement litigation, which takes, on average, 25 months to resolve. 

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