Reimagining Pharmaceutical Market Exclusivities: Should the Duration of Guaranteed Monopoly Periods Be Value Based?

Value-Based Pricing for Patent-Protected Medicines Over the Product Life Cycle: Pricing Anomalies in the "Age of Cures" and Their Implications for Dynamic Efficiency

OBJECTIVES

Conventional cost-effectiveness analysis (CEA) for the value-based pricing of new medicines largely ignores the implications of limited market exclusivity (ie, patent-protection periods plus any exclusivity granted by regulators). This paper explores the implications of this methodological shortcoming, which produces several pricing anomalies with potentially unintended effects on research and development (R&D) incentives.

METHODS

We illustrate these implications by comparing 4 stylized examples of increasing complexity, from short-term cures for acute conditions to long-term cures for rare, health-catastrophic conditions.

RESULTS

(1) Conventional-CEA will project a different result than an adjusted CEA that considers generic or biosimilar entry; (2) free and flexible pricing of long-term treatments (eg, statins for hypercholesterolemia) or repeated-dose cures (eg, insulin for type 1 diabetes) for chronic conditions will likely result in predictable price increases at the end of the exclusivity period that may be perceived as unjustified or unsupported; and (3) one-time administration "cures" (eg, gene therapy for spinal muscular atrophy) have the potential to allocate a large share of the social surplus to the manufacturer over the product lifetime, which may or may not be dynamically efficient per se, but may also inadvertently disadvantage the development of valuable long-term treatments or repeated-dose cures for chronic conditions.

CONCLUSIONS

We highlight the need for additional research on long-term solutions to these issues that would aim to promote dynamically efficient global R&D. More work is needed on the following: (1) relationships between social surplus allocation and the amount and composition of global R&D, as we may be as likely to be encouraging excessive R&D in some areas as to be undersupplying it in others; and (2) relating the size of the surplus reward to R&D cost and, thus, the return on investment.

Approvals and Timing of New Formulations of Novel Drugs Approved by the US Food and Drug Administration Between 1995 and 2010 and Followed Through 2021

Questions

Are sales or therapeutic value associated with approval of new formulations of brand-name novel drugs, and does timing coincide with generic competition?

Findings

In this cross-sectional study of 206 brand-name drugs approved in tablet or capsule form by the US Food and Drug Administration between 1995 and 2010, approval of new formulations was 4 times more likely among blockbuster drugs and 5.5 times more likely among drugs granted accelerated approval. First new formulation approval was statistically significantly lower after approval of generic competition.

Meaning

Manufacturers pursue new formulations of best-selling brand-name drugs and those granted accelerated approval but less frequently once generic competition begins.

Importance

New formulations of prescription drugs can improve convenience and tolerability for patients, but they also constitute manufacturer strategies to extend brand-name drug market exclusivity periods.

Objective

To examine whether new formulations of brand-name novel drugs were associated with novel drugs’ sales and/or therapeutic value, as well as characterize first new formulations’ approval timing relative to the novel drug’s generic approval.

Design, Setting, and Participants

This cross-sectional study used the Drugs@FDA database to identify all novel tablet and capsule drugs approved by the US Food and Drug Administration (FDA) between 1995 and 2010 and followed through December 31, 2021.

Exposures

Novel drugs’ blockbuster status, defined as annual sales of $1 billion or greater, and therapeutic value, measured by (1) accelerated approval status, (2) World Health Organization Model Lists of Essential Medicines inclusion, (3) innovativeness, and (4) clinical usefulness.

Main Outcomes and Measures

Approval of a new formulation and timing relative to a novel drug’s first generic’s approval.

Results

Among the 206 novel drugs in tablet or capsule form approved by the FDA from 1995 to 2010, 81 (39.3%) were followed by an FDA-approved new formulation, and 167 (81.1%) had a generic version as of December 31, 2021. In multivariable analyses, new formulations were statistically significantly more likely among blockbuster drugs vs not (58.2% vs 27.6%; adjusted odds ratio [AOR], 4.72; 95% CI, 2.26-9.87; P < .001) and those granted accelerated approval vs not (50.0% vs 37.6%; AOR, 5.48; 95% CI, 1.52-19.67; P = .009), and less likely among orphan products vs not (11.8% vs 44.8%; AOR, 0.13; 95% CI, 0.03-0.52; P = .004). Essential medicine listing vs no listing (47.8% vs 36.9%; AOR, 1.32; 95% CI, 0.52-3.34; P = .56), first-in-class or advance-in-class status vs addition-to-class status (37.8% vs 40.5%; AOR, 0.71; 95% CI, 0.32-1.58; P = .40), and categorization as clinically useful vs not useful (40.9% vs 44.8%; AOR, 0.81; 95% CI, 0.34-1.92; P = .64) were not associated with increased likelihood of a new formulation. First new formulations were statistically significantly less likely to be approved after the novel drug’s first generic approval (84.6% vs 15.4%; P < .001).

Conclusions and Relevance

In this cross-sectional study of novel drugs in tablet or capsule form approved by the FDA between 1995 and 2010, manufacturers pursued new formulations of best-selling brand-name drugs and those granted accelerated approval but did so less frequently once generic competitors entered the market. Other measures of therapeutic value were not associated with new formulations.

Analysis of Patent and Regulatory Exclusivity for Novel Agents in China and the United States: A Cohort Study of Drugs Approved Between 2018 and 2021

Patent and regulatory exclusivity shall constitute incentives for pharmaceutical companies to develop new drugs. This study aims to investigate the differences in the patent term extension (PTE) and regulatory exclusivity between China and the United States, and to evaluate their potential impact on the market exclusivity period of novel drugs. Small-molecule novel drugs with their first indication approved in China and the United States between 2018 and 2021 were evaluated regarding their PTE and regulatory exclusivity. The PTE length of the China-approved drugs was calculated by simulation, whereas that of the US-approved drugs was extracted from the United States Patent and Trademark Office. Thirty-two and 107 novel drugs approved in China and the United States, respectively, were included in the study. The PTE length of the US-approved drugs calculated by the China-PTE method was significantly longer than that calculated by the US-PTE method. Patent extensions should be granted for 91% of new drugs in China and 82% in the United States. The simulated median PTE length of novel drugs approved in China was significantly higher than that of the United States (5.0 vs. 2.9 years, P < 0.05). It can be expected that the implementation of the PTE policy in China would significantly extend the period of market exclusivity for novel drugs similar to that of the United States. China should fully evaluate the potential impact of the PTE policy on the market exclusivity of novel drugs and provide better incentives to the development of novel drugs in addressing unmet clinical needs when developing its regulatory exclusivity policy.

Application of the Fuzzy VIKOR Method to Assess Concentration and Its Effects on Competition in the Energy Sector

Background: Understanding the market competition is one of the most important factors for examining and assessing competition issues, and is of growing interest in business sustainability research. Markets in the energy industry, which are notoriously harder to monitor, are often presented with scenarios in which the strength of various market parties varies, making harmonization a significant problem. This article’s aim is to find the feasibility of measuring the HHI in the implementation of business strategies in order to avoid market distortions in the energy industry. The uniqueness of this article is that it outlines the capabilities of the fuzzy VIKOR approach for assessing the HHI in order to avoid a distorted market by examining the most important economic parameters in the energy market. This paper’s contribution is compiling the HHI evaluation system in the energy sector, with the goal of identifying the market conditions of corporate entity and assisting in the attainment of long-term market competitiveness. The results demonstrate that a comparison of the fuzzy VIKOR (VlseKriterijuska Optimizacija I Komoromisno Resenje) approach with probability theories proved that it is possible to measure the HHI-based performance of the energy sector.

Determining the Level of Market Concentration in the Construction Sector—Case of Application of the HHI Index

Background—competitive conditions are often distorted in the construction sector, therefore this affects the market position of all participants. This paper seeks to find the tools for properly assessment of participants by Herfindahl-Hirschmann index (HHI) and to identify what parameters have the greatest impact in the competitiveness of the construction sector. Methods: in this article the DEMATEL method was used whereas tool for assessing the balance of market concentration as it may help to determine factor with the greatest influence on a firm’s HHI. Results in this work showed how different parameters affect each other and their impact on a value of a firms’s HHI. When the parameters are determined, they can be useful for assesment of mergers their influence on the HHI and alteration of the market’s power balance. Conclusions—The calculation of the HHI by using the DEMATEL method allowed to check the empirical implementation check of the multicriteria assessment method, on the market power of business entities, operating in the distorted market conditions of the construction sector.