2011 and 2012 were called "patent cliff" era when the original drugs with annual sales of nearly USD 80 billion became off-patent. According to the research report of the data analysis company Dickson Data, once an original drug faces significantly lower-cost alternatives, its sales drop by a staggering average of 90%.
The panic of the patent cliff spreads again today. There will be 22 original drug varieties becoming off-patent in 2017, involving 6 blockbuster brand original drugs, with dominant varieties of Merck, Eli Lilly, BMS and Novartis all included. This fierce off-patent tide has been called "patent cliff 2.0" by the Bernstein analyst Tim Anderson recently.
The protection duration of new drug invention patents is 20 years at present. In fact, patents are generally obtained before drug marketing, and the patent protection duration of most drugs after being formally marketed is generally only 7-12 years. Specific to the long pharmaceutical product approval process, the U.S. and EU have successively introduced the pharmaceutical product patent term extension system, aiming to compensate for the loss of time of the patent holders in the pharmaceutical product clinical trial and marketing approval stages. In accordance with provisions of the U.S. Hatch-Waxman Act, patent holders can apply for a patent extension amount to the sum of half of the new drug trial period as well as the new drug application period, with a maximum of 5 years, and the total patent life for the drug with the patent extension not to exceed 14 years from the drug’s marketing. Anyway, sooner or later, the patent protection duration, an important part of the lifecycle of innovative drugs, will end. And with the continuous technological innovation, the basic patents initially applied for will possibly encounter narrowing of the protection scope.
No matter the expiration of basic patent protection of original drugs or the opportunities arising from the holes of patents themselves will lead to new opportunities for the rise of generic drugs. In the meantime, in the context of growing pressure of medical insurance expense control in the world, the market demand for generic drugs of low price and fine quality continues to grow, and the medical insurance payers look forward to the marketing of the lower-cost alternatives.
Certainly, original drug companies which possess original drug patent, market, brand loyalty and other advantages will not sit back and wait for the devastating impact of patent cliff and the challenge of generic drug competitors. Patent is both shield and spear which the large pharmaceutical companies have been getting better at utilizing to strengthen own market dominating position. At the beginning of basic patent application, original drug companies deliberately raise the imitation technical threshold through appropriate technology secret protection strategy; after they obtain the basic patents, based on the basic patents, they can apply for surrounding patents or conduct a series of patent applications for the improved version of original technology, which plays a similar role in extending the patent protection duration. And also don’t forget the "weapon" of patent litigation. Original companies can defend own marketing exclusivity by delaying the marketing time of generic drugs through filing litigations, or conduct costly tort lawsuit claims against generic drug companies which launch patent challenges. As specified by Hatch-Waxman Act, if an original drug company files a patent infringement lawsuit against a generic drug company, then FDA’s approval of the relevant generic drug will be automatically delayed for 30 months; and if the infringement act of the generic drug company is determined to be established, then the compensation obtained by the original drug company may be as high as 3 times of all its losses.
From this, the patent expiration of original pharmaceutical products in the patent cliff era does not mean the generic drug marketing to be trouble-free, and the panic and anxiety or overjoyed emotional expression shall be interpreted with caution. Generic drug enterprises which intend to take the lead to seize the original drug market shall move cautiously under the global intellectual property "game rules" at pres...
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