Major brand-name drugs face patent expiration

Key Points

Patents on many small-molecule drugs, which make up some of the most popular prescription medications in the world, are set to expire during the next several years, an occurrence that is expected to cause an unprecedented shift of billions of dollars in sales to generics in the United States and other markets.

In January, Datamonitor, a provider of global business information, released a report looking at patent expiration by country, therapy area, setting, and formulation. In 8 key markets, including the United States, Canada, Japan, and several European nations, small-molecule brands are worth more than $140 billion in sales ($90 billion in the United States alone).

Patents set to expire

According to a separate report by IMS Health, a private firm specializing in healthcare and pharmaceutical market intelligence, this year alone, products with sales of more than $30 billion are expected to face the prospect of generic competition in the major developed markets. Many of the branded prescription medications facing patent expiration are in key therapy areas such as cholesterol and platelet aggregation, said Michael Kleinrock, IMS Health's director of market insights.

In the United States, Lipitor (Pfizer), Plavix (Bristol-Myers Squibb/Sanofi-Aventis), Zyprexa (Lilly USA), and Levaquin (PriCara/Ortho-McNeil-Janssen), which together accounted for more than 93 million prescriptions dispensed and more than $17 billion in total sales in 2010, will lose market exclusivity.

The full impact of the shift to generic alternatives will occur in 2012, because of timing and expected intensity among numerous generic competitors.

According to Maura Musciacco, a healthcare analyst for Datamonitor, Lipitor's patent expiration will trigger what is known as the "patent cliff," meaning that the introduction of generics later this year and through the next several years will cause an almost immediate drop in brand sales. "Once Lipitor goes off patent, it will trigger incredible generic competition," she said. "Most generic manufacturers will fight over getting a piece of this pie."

How the erosion breaks down

Brands are more susceptible to sales and volume erosion in the United States because it is the most mature of all generics markets, said Musciacco. On average, sales and volume decline by 72% and 70%, respectively, after 6 months of generic competition.

After the United States, brand erosion is most severe in the United Kingdom, Germany, and France, with mean sales and volume erosion of 44% and 43%, respectively, after 6 months of generic competition. Brand erosion in Australia, Italy, Russia, Spain, and Japan ranged from 54% (Italy) to 6% (Japan) in terms of value, and 34% (Italy) to 14% (Japan) by volume, respectively, after 2 years of generic competition, said Datamonitor.

When retail and hospital prescription use is compared, brand erosion is greater in speed and severity in hospitals, where drugs lose an average of 40% of their value after 1 year of generic competition, compared with 37% in the retail setting. Similarly, the volume of brand erosion was greater in hospitals, where drugs lost an average of 39% of their value after 1 year of generic competition, compared with 34% in retail pharmacies, Musciacco said. This reflects greater brand loyalty among patients in the retail setting, she added.

By therapy area, brands experienced the greatest level of sales and volume erosion after 1 year of generic competition in infectious diseases (a loss of 65% of sales, largely attributed to the patent expiry of antiretroviral products) and oncology (a loss of 46% of sales, mainly because of erosion of cytotoxic and anti-hormonal therapies), said Musciacco.

By formulation, after 6 months of generic competition, average erosion is similar across oral, oral long-lasting, and parenteral formulations, with parenteral brands experiencing the greatest degree of volume erosion after 2 years, followed by oral and oral long-lasting brands, said Musciacco. Other formulations, comprising mainly ophthalmic therapies, experienced the lowest level of brand erosion.

Ken Krizner is a freelance writer and editor based in Northeast Ohio.