New methods of administering drugs may mean taking a drug that was previously only available by injection like migraine medication Imitrex used to be and creating a nasal spray version. When a new use is discovered for a drug, it can earn an additional three years of protection under FDA rules.
Suppose a drug designed to treat clinical depression was found to treat another disorder, like ADHD. In such cases, the drug can gain three additional years of patent protection under new use rules. Reformulating a drug so it can be administered in a different form can confer longer patent protection.
The Orphan Drug Act promotes the development of drugs to treat rare diseases those that affect , or fewer people in the US. Under this law, drugs developed for rare diseases gain seven years of additional exclusivity on drug sales, and the FDA is blocked from approving any competing generics during this time.
The purpose of orphan drug legislation is to help drug developers recoup the considerable costs of developing and marketing drugs which are never expected to have wide markets. Hatch-Waxman also provided innovators with meaningful patent protection and an opportunity to recoup their investment, and also provided incentives to generic manufacturers to promote the rapid availability of generic alternatives.
The Act established regulatory exclusivity periods for branded and first generic agents. Exclusivity periods were included in the Act as a lever to promote a balance between new drug innovation and generic drug competition. For example, the first generic manufacturer to challenge a patent for a branded product listed in the Orange Book is awarded a day exclusivity period, beginning at FDA approval. One of the main objectives of the Hatch-Waxman legislation was to promulgate a formal pathway for the introduction of generic drugs, in an effort to bring generics to the market sooner.
To achieve this, the Act introduced the abbreviated new drug application ANDA process, and detailed the studies and data required by the FDA to evaluate a generic drug for approval. Under Hatch-Waxman, upon approval of a new chemical entity, the FDA grants a regulatory exclusivity period of 5 years regardless of patent life remaining.
Importantly, as some agents take a longer time to obtain FDA approval, the Hatch-Waxman Act provides patent-term extensions for those products where a longer time is required by the FDA to review the drug application.
Some patent approvals may indirectly extend market exclusivity of a product. It lists prescription drug products and over-the-counter agents that are approved by the FDA as safe and effective.
Manufacturers of branded products must identify USPTO-approved relevant patents and provide information on them, including patent expiration dates, to the FDA, which then publishes this information in the Orange Book.
The latter usually occurs through the litigation process. The process for challenging a patent listed in the Orange Book generally occurs in the following steps:. A notice letter is sent to the patent holder.
When a generic manufacturer files an ANDA, the patent holder may consider this as an act of infringement, and can file suit for patent infringement. If the patent holder sues the generic manufacturer within 45 days of the receipt of the notice letter, the FDA may not grant final approval of the generic application for 30 months from the time of loss of regulatory exclusivity, unless a district court rules for the generic drug manufacturer before then, allowing time for the patent challenge to be decided in court.
In this case, the appeals process takes an average of roughly 14 months. However, if the patent holder wins the appeal, the patent holder can seek monetary damages for the revenues lost. Therefore, launching at risk can carry significant financial implications, especially in the case of a generic for a blockbuster medication. In practical terms, between the initial hearing process and potential appeal process, the patent holder may achieve up to an additional 30 to 45 months of effective exclusivity, beyond the point of loss of regulatory exclusivity.
Although patents may seem to be an impregnable barrier to early generic competition, this is not necessarily the case.
Certain types of patents are stronger than others. Part of the reason relates to an imperfect system of reviewing and approving patents. In that context, new composition-of-matter patents seem to offer the strongest protection; they are the most difficult for generic drug manufacturers to challenge in court, according to the patent experts on the roundtable.
In contrast, method-of-use and formulation patents, which can include new routes of administration and unique drug delivery devices, may offer less protection. The reason for this vulnerability is that generic manufacturers can often utilize other mechanisms for drug delivery or develop new ways to bind molecules for oral or intravenous use. Likewise, method-of-manufacturing patents may also offer less protection than a composition-of-matter patent.
For example, drug makers may produce a bioequivalent product by manufacturing with different excipients or with other established methods. As indicated earlier, the patent life remaining on a product at time of approval may be only 7 to 10 years. The complexities of market exclusivity and patent litigation frustrate payers, physicians, patient groups, and other stakeholders. As there is no certainty as to the timing of availability of generics, these stakeholders cannot formulate a plan for the introduction of a generic version of a specific product.
Payers are frustrated by the extension of branded product life cycles through the granting of patents on isomers, metabolites, prodrugs, new delivery methods, and fixed-dose combinations; some of these modifications may improve aspects of drug effectiveness, safety, or adherence, while others may not.
Extending the life cycle of a brand is extremely profitable to the manufacturer of a product nearing the end of its patent life. This profit may be used to fund future research and development. Margins of this magnitude not only compel the efforts made to extend the life cycle as long as possible, but also greatly increases the amount a generic manufacturer who launches at risk, before patent litigation is complete, may have to compensate the branded manufacturer.
Manufacturers often conduct additional research in an effort to enhance their marketed agents. The result of the research may be new uses and new indications. Many times, drug companies evaluate new routes of administration for their product injectable, sublingual, intranasal, etc , which may increase absorption or enhance adherence.
Commonly, manufacturers file patents on new drug formulations eg, extended-release versions or formulations that contain different excipients to help stabilize the active ingredient, for instance. Furthermore, manufacturers may patent a new manufacturing process, which helps create greater quantities of medication more efficiently or with fewer inactive ingredients. As previously discussed, these improvements may not effectively shield the product from patent challenges.
The combination of the existing product with a new or other marketed agent is another way to extend the life cycle of a drug. This is the case with several diabetes agents eg, combinations with metformin. Price increases toward the end of patent life are also a mechanism for maintaining revenue. Ms Johnson added that price increases often go beyond the patent expiration to maximize revenue for the branded manufacturer. Every brand name drug in that class feels their market share will be threatened because the class is going to be disrupted.
Health plans, insurers, and PBMs monitor the anticipated patent expiration dates for high-cost agents, but as indicated earlier, their confidence level of exactly when a generic will be introduced is fairly low. We take a long-term approach to this. The near-term entry of a generic drug can also have implications for other medications in the same class. This can open negotiations for expiring contracts on branded agents.
Payers seek to determine which of several products in a therapeutic class may be first to go off-patent. For example, if the category comprises therapeutically equivalent products, these other products may be subject to a step through the new generic. Since the FDA has approved the agent, presumably as bioequivalent to the original brand, the first 2 issues are moot. In most cases, the new generic is offered at a significant discount to the branded product. Ms Johnson remarked that when a generic is approved, generally, the new generic is automatically placed on the formulary tier 1 , and the innovator brand is usually moved to nonpreferred status or excluded from the formulary the latter in the case of a 2-tier or closed formulary.
Later, when more than one generic product becomes available in a class, a tipping point may be reached such that all brand products are relegated to nonpreferred or nonformulary status.
In certain situations, if the generic is not priced at a significant discount, it may be placed in a higher tier, solely based on cost nonpreferred generic tier or a tier developed for brand name products. During the second part of the roundtable, the moderator asked participants to comment on several case studies involving specific products, to gain feedback and perspective from the payers and attorneys regarding the particular circumstances surrounding the introduction of generic versions.
Gleevec imatinib is indicated for the treatment of chronic myelogenous leukemia CML. The introduction of a generic version of imatinib was followed closely by payer pharmacy directors, said Dr Dunn. We are now covering the generic and not covering the brand. It will shape anything that occurs in the future with this class of tyrosine-kinase inhibitors. It is on a specialty tier rather than the traditional generic tier, however. Today, other tyrosine-kinase inhibitor brands are stepped through the generic for the labeled indications via the prior authorization process.
The short-term budget impact of this generic may be less than pharmacy directors anticipated, Dr Dunn pointed out, because the generic is not priced substantially less than the brand.
In most uses, generics are clinically equivalent to the original branded drug. Some drugs are straightforward to imitate and produce at low cost. Others, particularly those requiring sterile manufacturing conditions or similarly complex production processes, are much more costly to copy.
The authors find clear evidence that competitors entered the market and prices fell after patent expiration. Typically, between three and five manufacturers applied to produce generic versions of complex-to-manufacture physician-administered drugs.
There were more applicants, 6. Average drug prices dropped after expiration. The decline was more modest, about 25 percent, for oral drugs. For these drugs after generic entry, high and increasing brand prices partly offset low and decreasing generic prices.
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