"Pay for delay" settlements of disputes over pharmaceutical patents

Promoting Competition in Drug Pricing: A Review of Recent Congressional Legislation

Brand-name prescription drug manufacturers use various strategies to extend their market exclusivity periods by delaying generic or biosimilar competition. Recent Congressional legislation has targeted four such tactics. We analyze these proposals and assess their likely effect on competition in the U.S. drug market.

Market Exclusivity for Drugs with Multiple Orphan Approvals (1983-2017) and Associated Budget Impact in the US

OBJECTIVES

The Orphan Drug Act extends exclusivity of branded drugs by 7 years for each rare disease approval. By extending market exclusivity, manufacturers can forestall generic competition. We determined the prevalence of drugs with multiple orphan approvals, the duration for which manufacturers are able to maintain exclusivity using this mechanism, and the budget impact of these additional exclusivity periods on US spending on orphan drugs.

METHODS

We analyzed a retrospective cohort of US orphan drug approvals filed between 1983 and 2017. Drug costs throughout this time period were measured using IQVIA claims data. We estimated additional years of exclusivity per drug per orphan approval using mixed-effects negative binomial regression. The budget impact analyzed potential cost-savings for exclusivity periods greater than 7 years after the initial orphan approval based on potential price reductions from the introduction of biosimilar/generic competition.

RESULTS

A total of 432 branded drugs were approved for 615 orphan indications, of which 108 had multiple indications. Market exclusivity, beyond the initial 7 years, increased by 4.7 years with two orphan approvals, and there were 3.1-, 2.7-, and 2.9-year extensions for three, four, and five approvals, respectively (p < 0.05). Drugs with five approvals averaged 13.4 additional years of exclusivity. Sixteen drugs had exclusivity periods extending at least 1 decade beyond the original exclusivity period. The potential budget impact of additional exclusivity was estimated at US$591 billion for 7 years following the end of the first approval.

CONCLUSIONS

Multiple blockbuster drugs have received exclusivity of > 10 years through the Orphan Drug Act, thereby delaying rare disease cohorts' access to generic/biosimilar equivalents.

Patent term restoration for top-selling drugs in the United States

Patents temporarily protect brand-name drugs from generic competition, but some of the 20-year patent term is used up before marketing approval. To compensate for patent life lost to clinical testing and regulatory review, current law provides patent term restoration (PTR) of up to 5 years. Examining 170 top-selling drugs with a first generic equivalent approved between 2000 and 2012, we found that 49% (83 drugs) received a PTR extension (median extension: 2.75 years) yielding a median total exclusivity period of 13.75 years, compared with 10.0 years for the 87 nonextended drugs. Because PTR substantially prolongs market exclusivity periods, policies that extend non-patent exclusivity periods (which generally run concurrently with patent exclusivity) for less than the extended patent terms of drugs will have little practical impact.

Rising health care costs and life-cycle management in the pharmaceutical market

Aaron Kesselheim discusses Natalie Vernaz and colleagues' paper on the effects on health care costs of “evergreening” strategies pursued by drug manufacturers. Please see later in the article for the Editors' Summary

Projecting future drug expenditures--2012

PURPOSE

Factors likely to influence drug expenditures, drug expenditure trends in 2010 and 2011, and projected drug expenditures for 2012 are discussed.

SUMMARY

Data were analyzed to provide drug expenditure trends for total drug expenditures and the hospital and clinic sectors. Data were obtained from the IMS Health National Sales Perspectives database. From 2009 to 2010, total U.S. drug expenditures increased by 2.7%, with total spending rising from $299.2 billion to $307.5 billion. Drug expenditures in clinics grew by 6.0% from 2009 to 2010. Hospital drug expenditures increased at the moderate rate of 1.5% from 2009 to 2010; through the first nine months of 2011, hospital drug expenditures increased by only 0.3% compared with the same period in 2010. The dominant trend over the past several years is substantial moderation in expenditure growth for widely used drugs, primarily due to the ongoing introduction and wide use of generic versions of high-cost, frequently used medications. At the end of 2010, generic drugs accounted for 78% of all retail prescriptions dispensed. Another pattern is substantial increases in expenditures for specialized medications, particularly in the outpatient setting as growth in prescription drug expenditures for clinic-administered drugs consistently outpaces growth in total expenditures. Various factors are likely to influence drug expenditures in 2012, including drugs in development, the diffusion of new drugs, generic drugs, drug shortages, and biosimilars.

CONCLUSION

For 2012, we project a 3-5% increase in total drug expenditures across all settings, a 5-7% increase in expenditures for clinic-administered drugs, and a 0-2% increase in hospital drug expenditures.

An empirical review of major legislation affecting drug development: past experiences, effects, and unintended consequences

CONTEXT

With the development of transformative drugs at a low point, numerous commentators have recommended new legislation that uses supplementary market exclusivity as an incentive to promote innovation in the pharmaceutical market.

METHODS

This report provides an historical perspective on proposals for encouraging drug research. Four legislative programs have been primarily designed to offer market exclusivity to promote public health goals in the pharmaceutical or biomedical sciences: the Bayh-Dole Act of 1980, the Orphan Drug Act of 1983, the Hatch-Waxman Act of 1984, and the pediatric exclusivity provisions of the FDA Modernization Act of 1997. I reviewed quantitative and qualitative studies that reported on the outcomes from these programs and evaluated the quality of evidence generated.

FINDINGS

All four legislative programs generally have been regarded as successful, although such conclusions are largely based on straightforward descriptive reports rather than on more rigorous comparative data or analyses that sufficiently account for confounding. Overall, solid data demonstrate that market exclusivity incentives can attract interest from parties involved in drug development. However, using market exclusivity to promote innovation in the pharmaceutical market can be prone to misuse, leading to improper gains. In addition, important collateral effects have emerged with substantial negative public health implications.

CONCLUSIONS

Using market exclusivity to promote pharmaceutical innovation can lead to positive outcomes, but the practice is also characterized by waste and collateral effects. Certain practices, such as mechanisms for reevaluation and closer ties of incentives programs to public health outcomes, can help address these problems.