1369-6998
`doi:10.3111/13696998.2013.873723
`
`Journal of Medical Economics
`
`2013, 1–8
`
`Article 0135.R1/873723
`All rights reserved: reproduction in whole or part not permitted
`
`Brief report
`Recent trends in brand-name and generic drug
`competition
`
`Henry Grabowski
`Duke University, Durham, NC, USA
`Genia Long
`Richard Mortimer
`Analysis Group, Inc., Boston, MA, USA
`
`Address for correspondence:
`Dr Henry Grabowski, Duke University, Department of
`Economics, Social Sciences Building, PO Box 90097,
`Durham, NC 27708, USA.
`Tel.: +1 919 660 1839;
`grabow@econ.duke.edu
`
`Keywords:
`Prescription drugs – Generic drugs – Pharmaceutical
`economics – Economic competition
`
`Accepted: 6 December 2013; published online: 23 December 2013
`Citation: J Med Econ 2013; 1–8
`
`Abstract
`
`Objective:
`To provide evidence on recent trends in: (1) market exclusivity periods (MEPs, the time between launch of a
`brand-name drug and its first generic competitor) for new molecular entities (NMEs); (2) the likelihood and
`timing of patent challenges under Paragraph IV of the Hatch-Waxman Act; and (3) generic drug penetration.
`
`Methods:
`IMS Health National Sales Perspectives data were used to calculate MEPs for the 257 NMEs experiencing
`initial generic entry between January 1995 and September 2012 and the number of generic competitors for
`12 months afterwards, by level of annual sales prior to generic entry and time period. The likelihood and
`timing of Paragraph IV challenge were calculated using data from Abbreviated New Drug Approval (ANDA)
`approval letters, the FDA website, and public information searches to identify drugs experiencing Paragraph
`IV filings, and the first filing date.
`
`Results:
`For drugs experiencing initial generic entry in 2011–2012, the MEP was 12.6 years for drugs with sales
`greater than $100 million (in 2008 dollars) in the year prior to generic entry, 12.9 years overall. After generic
`entry, the brand rapidly lost sales, with average brand unit share of 16% at 1 year; 11% for NMEs with pre-
`generic entry sales of at least $250 million (in 2008 dollars). Over 80% of NMEs experiencing 2011–2012
`initial generic entry had faced at least one Paragraph IV challenge from a generic manufacturer. These
`challenges were filed relatively early in the brand-name drug life cycle: within 7 years after brand launch, on
`average.
`
`Limitations:
`Analyses, including Paragraph IV calculations, were restricted to NMEs where generic entry had occurred.
`
`Conclusion:
`Pharmaceutical competition continues to evolve; while the average MEP below 13 years for 2011–2012
`remains consistent with prior research, Paragraph IV challenges are increasingly frequent and occur earlier,
`and generic share erosion has intensified.
`
`Introduction
`
`Pharmaceutical competition has evolved considerably since the passage in 1984
`of the Hatch-Waxman Act amending the Federal Food, Drug, and Cosmetic
`Act, with dramatic increases in rates of both generic penetration and patent
`litigation. Congress’s objective when enacting the legislation was to increase
`generic competition while balancing the resulting cost savings with sufficient
`incentives to encourage continued medical innovation through the develop-
`ment of new drugs. The result has been a system where new brand-name drugs
`generate nearly all of their sales during a market exclusivity period (MEP, the
`Exhibit 1079
`ARGENTUM
`IPR2017-01053
`
`Recent trends in brand-name and generic drug competition Grabowski et al. 1
`
`! 2013 Informa UK Ltd www.informahealthcare.com/jme
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`Journal of Medical Economics Downloaded from informahealthcare.com by Terri Metules on 01/15/14
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`For personal use only.
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`Journal of Medical Economics
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`2013
`
`time period between market launch of a brand-name drug
`and the launch of its first generic), generic manufacturers
`frequently challenge patents protecting brand-name drugs,
`and generic drugs tend to rapidly supplant sales of the
`corresponding brand-name drug following generic entry.
`The Hatch-Waxman Act included a number of provi-
`sions aimed at facilitating approval of generic drugs by the
`Food and Drug Administration (FDA) and encouraging
`generic entry (and other provisions encouraging innov-
`ation described later below). One of the primary provisions
`of
`the Act established an Abbreviated New Drug
`Application (ANDA) process, which greatly reduced the
`cost of completing an FDA application for approval of a
`generic drug. Prior to the Hatch-Waxman Act, generic
`manufacturers were required to submit original safety and
`efficacy data on their products to gain market approval by
`the FDA. To meet this requirement, the generic manufac-
`turer generally had to duplicate many of the brand-name
`manufacturer’s trials1. Under the ANDA process, generic
`manufacturers need only demonstrate that their products
`have the same active ingredients as and are ‘bioequivalent’
`to their brand-name counterparts. Generic manufacturers
`also received a research exemption for bioequivalence stu-
`dies, allowing them to begin research on the innovator’s
`drug prior to patent expiration, without running afoul
`of patent law.
`The Hatch-Waxman Act also created incentives for
`generic manufacturers to challenge brand-name patents
`before they expired. For example, under a so-called
`Paragraph IV challenge, the generic manufacturer files a
`Paragraph IV ANDA, notifying the FDA that it claims its
`generic product does not infringe on a listed patent on the
`brand-name drug, or that a patent held on the brand-name
`drug is not valid. If the brand-name drug manufacturer files
`a patent infringement action against the generic company
`within 45 days of receiving notice of the Paragraph IV
`ANDA being filed, the FDA cannot approve the generic
`company’s ANDA until the company prevails in court or
`through settlement, or until a 30-month stay expires,
`whichever comes first. However, as an incentive for gen-
`eric manufacturers to challenge brand-name patents, the
`first generic manufacturer (or manufacturers) to file a
`Paragraph IV challenge and to receive FDA final approval
`of its application, resulting in entry prior to patent expir-
`ation, is granted a 180-day period of exclusivity. During
`this 180-day period its drug is the only ANDA-approved
`generic version allowed on the market. Paragraph IV chal-
`lenges can be made at the dosage form or strength level.
`The first to file a Paragraph IV challenge is determined by
`the day of filing, and multiple generic manufacturers can
`share first-to-file status if they file on the same day.
`A generic manufacturer’s 180-day exclusivity period
`applies only to the dosage form or strength level for
`which that manufacturer was the first to file a Paragraph
`IV challenge.
`
`The 180-day period of exclusivity generally is very
`profitable to a generic manufacturer because the generic
`manufacturer tends to drop price only modestly below the
`brand price during this period, generic share increases
`rapidly, and generic sales are enjoyed by a single manufac-
`turer (or a few first-filing manufacturers). This provides
`substantial
`incentives
`for being the first
`to file a
`Paragraph IV challenge, or being among the first-filers.
`In an effort to balance these provisions aimed at
`encouraging more generic competition for brand-name
`drugs, the Hatch-Waxman Act also established new
`incentives for innovation for brand-name drug manufac-
`turers. For example, innovators can receive an additional
`period of patent protection through so-called patent term
`restoration. This provision extends the life of a patent on a
`drug by up to 5 years, with the aim of compensating for
`time that the innovator company spent conducting human
`clinical trials on the drug before it applied to the FDA for
`approval of the drug through a New Drug Application
`(NDA) and also for a portion of the time the NDA is
`under FDA review. Under patent
`term restoration,
`the life of the patent cannot be extended by more than
`5 years, and the remaining patent term after FDA approval
`cannot exceed 14 years, including the extension.
`In addition to patent term restoration,
`innovative
`brand-name drugs are also protected from early ANDA
`filings through a data exclusivity provision in the Hatch-
`Waxman Act. Data exclusivity runs concurrently with
`patent protection and restricts the FDA from receiving a
`generic application that relies on a brand-name drug’s
`safety and efficacy data for 5 years following that drug’s
`approval (unless there is a Paragraph IV challenge, in
`which case it is 4 years).
`Under the Hatch-Waxman Act, therefore, the MEP for
`new brand-name drugs reflects, among other factors, the
`combined impact of provisions aimed at facilitating earlier
`generic entry and other provisions aimed at maintaining
`incentives for innovation.
`The use of generics has increased substantially since the
`mid-1990s, in part because of increases in the mechanisms
`available to promote generic use, including incentives in
`commercial insurance plans and public coverage, such as
`tiered formularies with lower patient co-payments for gen-
`eric than for brand-name drugs, and restricting formulary
`coverage to generics in certain therapeutic categories2,3.
`In addition, a number of state laws allow generic forms to
`be substituted automatically by pharmacists for brand-
`name drugs prescribed by physicians, so long as physicians
`have not specified that the prescription must be ‘dispensed
`as written’. As a result, generic products’ share of total
`prescriptions in the US increased from 36% in 1994 to
`84% in 20124.
`The impact of Hatch-Waxman on incentives to innov-
`ate has received somewhat less attention. A 1998 report by
`the Congressional Budget Office estimated that generic
`
`2 Recent trends in brand-name and generic drug competition Grabowski et al.
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`competition reduces by 12% the net present value of the
`total stream of future profits expected from the average
`brand-name drug.
`In particular,
`the Congressional
`Budget Office found that, for brand-name drugs, the nega-
`tive effects on returns from generic competition probably
`outweighed the positive effects of patent term restoration,
`described above5.
`The objective of this study was to provide evidence
`on recent trends in three factors that have a potentially
`substantial influence on the balance of cost savings and
`incentives for continued innovation in the form of new
`drugs: (1) MEPs for new brand-name drugs; (2) the likeli-
`hood and timing of Paragraph IV patent challenges under
`the Hatch-Waxman Act, through which generic manufac-
`turers challenge the validity or applicability of patents
`protecting brand-name drugs; and (3) the rate and
`extent of generic drug penetration following initial generic
`entry.
`The findings presented extend and expand upon
`research originally conducted by Grabowski and Kyle6
`and updated in Grabowski et al.7, which evaluated data
`on MEPs for all new molecular entities (NMEs) experien-
`cing initial generic entry between 1995 and 2008. Here, we
`further extend those prior analyses to include data on all
`NMEs
`experiencing
`initial
`generic
`entry
`through
`September 2012, allowing for evaluation of trends over a
`long period of time for key features of generic competition.
`We collected and analyzed new data from 2007 through
`September 2012, allowing for corroboration of
`the
`2007 and 2008 period considered in prior analyses,
`while also extending the time period covered through
`September 2012.
`
`Patients and methods
`
`Data sources
`
`IMS Health National Sales Perspectives data were used for
`calculating MEPs for drugs experiencing first generic entry
`between January 2007 and September 2012. This is the
`same data source relied on for prior analyses, and the
`data obtained for this study was merged with similar data
`for the time period 1995–2006. The data set used in the
`analysis contained information about all 460 drugs experi-
`encing first generic entry during this period, including 257
`NMEs, and 203 new formulations of older drugs. New for-
`mulations include changes in the form of administration—
`for example, changing from an injection to a topical appli-
`cation—but not new strengths or new indications. We
`excluded several products from the analysis based on the
`following criteria: one product was excluded because gen-
`eric versions of it were subsequently withdrawn as a result
`of litigation following initial entry; and seven products
`were excluded because the original brand FDA approval
`
`Journal of Medical Economics
`
`2013
`
`pre-dated October 1962 and the requirements for safety
`and efficacy data introduced at that time. Our analysis
`focused on NMEs and we present data only on the 257
`NMEs
`experiencing
`initial
`generic
`entry between
`January 1995 and September 2012 because regulations
`for generic entry differ if the brand-name product is a
`new formulation.
`In addition to providing the information necessary to
`calculate MEPs, the data also included information on
`drug characteristics, such as mode of administration and
`number of generic entrants. All sales data are presented
`in 2008 dollars, adjusted using the US Department of
`Labor’s Consumer Price Index for All Urban Consumers
`as the market deflator.
`We supplemented the market exclusivity data with a
`detailed review of information from the FDA’s website on
`Paragraph IV ANDA filings8. We also analyzed ANDA
`approval letters in the study period and searched other
`public information including company press releases,
`court documents, and industry trade reports, to identify
`all of
`the drugs
`in the data set
`that experienced
`Paragraph IV ANDA filings, and the date of the first
`filing for each drug. Our data contained only drugs that
`experienced generic entry (i.e., drugs that have experi-
`enced a Paragraph IV ANDA filing but where generic
`entry has not yet occurred are not included in our analysis).
`For the sub-set of drugs in our sample that experienced
`first generic entry between 1999 and September 2012, we
`reviewed IMS Health National Sales Perspectives monthly
`data on standard units separately for the brand-name drug
`and for generic versions of the drug. Monthly sales data
`were not available for drugs experiencing first generic
`entry prior to 1999. The data were used to calculate the
`monthly erosion of brand-name drugs’ share of standard
`units for the 12 months following first generic entry. The
`extent of brand-name drug share erosion is summarized
`based on the timing of first generic entry, illustrating the
`increasing extent of brand-name drug erosion for drugs
`more recently experiencing first generic entry.
`
`Methods
`
`Consistent with prior research, we defined the MEP as the
`time between the launch of a brand-name drug and the
`launch of its first generic competitor. As noted, this def-
`inition reflects the often complex interaction among many
`technical, regulatory, and competitive factors, including:
`the timing of patent filings, the amount of patent term lost
`during product development, the duration of regulatory
`review before FDA approval, the eligibility for patent
`term restoration under the Hatch-Waxman Act, the like-
`lihood and outcome of generic patent challenges (includ-
`ing the possibility of a stay on generic entry for up to
`30 months pending court decisions on patent infringement
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`Journal of Medical Economics
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`suits), entry decisions by generic manufacturers, and the
`duration of FDA review of generics. Any one or a combin-
`ation of these factors can affect the market exclusivity of a
`particular drug. The average MEP remains a key determin-
`ant of profitability and incentives for innovation.
`The average number of generic entrants within 1 year of
`first generic entry was calculated by level of sales (i.e., less
`than $100 million, greater than or equal to $100 million
`and less than $250 million, greater than or equal to $250
`million and less than $1 billion, $1 billion or larger), based
`on sales in the year prior to generic entry and inflation-
`adjusted to 2008 dollars using the US Department of Labor
`Consumer Price Index for All Urban Consumers, and by
`time period of initial generic entry (i.e., 1995–1998, 1999–
`2003, 2004–2008, 2009–2011).
`Paragraph IV filing frequency was calculated as the per-
`centage of NMEs experiencing at least one Paragraph IV
`filing at any time prior to first generic entry, by year of first
`generic entry. Paragraph IV timing was calculated as the
`average time from NME launch to first Paragraph IV filing.
`The generic penetration rate was defined as the share of
`units of the drug that are filled by a generic version of the
`drug rather than the brand-name drug. Generic penetra-
`tion rates reflect market factors, an increase over time in
`the mechanisms available to commercial insurance and
`public plans to promote generic use, as well as state regu-
`lations and laws.
`
`All figures presented are unweighted averages. Figures
`in parentheses following calculated averages are standard
`deviations. Figures for Paragraph IV filing frequency and
`timing (as presented in Exhibit 3) are 3-year moving
`averages.
`
`Results
`
`Average period of market exclusivity
`
`Figure 1 shows the average length of the market exclusivity
`period for all new drugs, by year of first generic entry, and
`for those with annual sales greater than $100 million in the
`12 months prior to generic entry (in 2008 dollars).
`Between 1995–2012, the average MEPs for all drugs
`experiencing first generic entry ranged between 12.2–
`13.7 years over the period.
`Drugs with annual sales greater than $100 million (in
`2008 dollars) in the year prior to generic entry represent
`54% of all drugs and 97% of sales for all drugs in our
`data set experiencing generic entry. The average MEP
`for these higher-revenue drugs was 12.6 years in the
`most recent period in our study (2011–2012). The aver-
`age length of exclusivity for all NMEs for 2011–12 was
`12.9 years, compared to 13.5 years in the initial period
`(1995–1996). Figures
`for each cohort of NMEs, as
`
`13.5
`
`12.7
`
`13.7
`
`13.5
`
`13.5
`
`13.6
`
`13.5
`
`12.6
`
`11.1
`
`10.5
`
`13.2
`
`12.1
`
`12.2
`
`11.5
`
`13.5
`
`13.4
`
`12.9
`
`12.6
`
`16.0
`
`14.0
`
`12.0
`
`10.0
`
`8.0
`
`6.0
`
`4.0
`
`2.0
`
`0.0
`
`All new molecules
`
`New molecules with sales greater than $100 million
`
`Source:
`IMS Health data on all new drugs with iniƟal generic entry in the period 1995 through September 2012.
`Notes:
`New molecules with sales greater than $100 million based on sales in the year prior to generic entry and inflaƟon adjusted to 2008 dollars
`using the Consumer Price Index for All Urban Consumers.
`
`Figure 1. Average market exclusivity period by year of first generic entry: new molecular entities.
`
`4 Recent trends in brand-name and generic drug competition Grabowski et al.
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`Journal of Medical Economics
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`
`defined by year of first generic entry, are presented in
`Table 1.
`Average MEPs were similar whether we analyzed drugs
`with annual sales greater than $100 million, $250 million,
`or $1 billion (in 2008 dollars, data not shown).
`Figure 2 summarizes the number of generic entrants
`observed for NMEs in the data. The exhibit shows the
`average number of a brand-name drug’s generic competi-
`tors in the market 12 months after the first generic entry,
`segmented by level of
`sales and by time period.
`The number of generic entrants is higher for drugs with
`
`larger sales before the first generic entry and for drugs
`experiencing first generic entry after 1998. For example,
`one drug with over $1 billion in annual sales prior to gen-
`eric entry experienced first generic competition in the
`period 1995–1998 and it faced six generic entrants after
`1 year. The corresponding figures for drugs with over $1
`billion in annual sales (in 2008 dollars) prior to generic
`entry were an average of between eight and nine generic
`entrants for the period 1999–2003, between 11 and 12 for
`2004–2008, and between nine and 10 for 2009–2011.
`Similar trends in the number of generic entrants were
`experienced for drugs with under $1 billion in sales.
`
`Table 1. Average market exclusivity period by year of first generic entry.
`
`Year of first
`generic entry
`
`New molecules with sales
`greater than $100 million
`Mean, in years (SD)
`
`All new
`molecules
`Mean, in years (SD)
`
`1995–1996
`1997–1998
`1999–2000
`2001–2002
`2003–2004
`2005–2006
`2007–2008
`2009–2010
`2011–2012
`
`12.7 (7.5)
`13.5 (7.0)
`10.5 (3.2)
`12.6 (3.6)
`11.1 (3.6)
`12.1 (3.8)
`11.5 (2.9)
`13.4 (2.3)
`12.6 (2.7)
`
`13.5 (6.9)
`13.7 (5.5)
`13.5 (6.4)
`13.6 (4.5)
`13.5 (6.2)
`13.2 (5.3)
`12.2 (3.6)
`13.5 (3.6)
`12.9 (3.2)
`
`Source: IMS Health National Sales Perspectives data on all new drugs with
`initial generic entry in the period 1995 through September 2012.
`Notes: New molecules with sales greater than $100 million based on sales in
`the year prior to generic entry and inflation-adjusted to 2008 dollars using
`the Consumer Price Index for All Urban Consumers.
`
`Paragraph IV challenges
`
`The likelihood of a Paragraph IV challenge being filed has
`increased substantially in recent years (Figure 3). Only 9%
`of drugs experiencing first generic entry in 1995 had
`experienced a Paragraph IV challenge at any point prior
`to first generic launch. That share increased steadily to
`81% by drugs experiencing first generic entry in 2012.
`Drugs with sales greater than $100 million the year
`before first generic entry (in 2008 dollars) faced an even
`higher probability of a Paragraph IV filing, increasing from
`17% in 1995 to 84% in 2012 (data not shown).
`Paragraph IV challenges also occur sooner following the
`launch of a brand-name drug (Figure 3). For drugs experi-
`encing first generic entry in 1995 and also experiencing a
`Paragraph IV challenge, the average time between launch
`
`Sales less than $100M
`
`Sales $100M or larger and less than $250M Sales $250M or larger and less than $1B
`
`Sales $1B or larger
`
`11.3
`
`7.2
`
`9.5
`
`7.5
`
`8.7
`
`6.8
`
`6.0
`
`4.4
`
`2.3
`
`1.8
`
`3.3
`
`1.9
`
`3.6
`
`3.0
`
`3.6
`
`2.2
`
`14
`
`12
`
`10
`
`8
`
`6
`
`4
`
`2
`
`0
`
`Number of Generic Entrants
`
`1995-1998
`
`2004-2008
`1999-2003
`Year of First Generic Entry
`
`2009-2011
`
`Source:
`IMS Health data on all new drugs with iniƟal generic entry in the period 1995 through September 2012.
`Notes:
`New molecules with sales in the year prior to generic entry, inflaƟon-adjusted to 2008 dollars using the Consumer Price Index for All Urban
`Consumers.
`
`Figure 2. Average number of generic entrants within 1 year of first generic entry: new molecular entities.
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`Average Years from Brand Launch to PIV Challenge
`
`20.0
`
`18.0
`
`16.0
`
`14.0
`
`12.0
`
`10.0
`
`8.0
`
`6.0
`
`4.0
`
`2.0
`
`0.0
`
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`100%
`
`18.7
`
`Share of new molecules experiencing Paragraph IV filings
`
`15.6
`
`15.8
`
`Average Ɵme in years from brand launch to first Paragraph IV filing
`
`81%
`
`74%
`
`12.2
`
`10.3
`
`31% 32%
`
`10.8
`
`9.7
`
`38%
`
`38%
`
`67%
`
`67%
`
`64%
`
`60%
`
`47%
`
`44%
`
`47%
`
`41% 42%
`
`8.4
`
`8.4
`
`7.7
`
`8.4
`
`8.5
`
`8.5
`
`7.6
`
`7.9
`
`7.8
`
`7.5
`
`6.9
`
`19%
`19%
`
`14%
`
`9%
`
`75%
`
`50%
`
`25%
`25%
`
`0%
`
`Share of New Molecules EnƟƟes
`
`1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
`Year of First Generic Entry
`
`Source:
`IMS Health data on all new drugs with iniƟal generic entry in the period 1995 through September 2012. Food and Drug AdministraƟon
`data and general public informaƟon sources on Paragraph IV challenges.
`Notes:
`All numbers are three-year moving averages.
`
`Figure 3. Paragraph IV filing frequency and timing (3-year moving average).
`
`and the first Paragraph IV challenge was 18.7 years (6.2).
`That time fell to 6.9 years (3.4) for drugs experiencing first
`generic entry in 2012. For new drugs with sales greater than
`$100 million in the 12 months before first generic entry
`(in 2008 dollars), the time between brand launch and first
`Paragraph IV challenge fell from 14.3 years (one drug) in
`1995 to 5.9 years (2.7) for 16 drugs in 2012 (data not
`shown). Paragraph IV challenge activity is even more
`aggressive for new drugs with sales greater than $250 mil-
`lion (in 2008 dollars). Of these drugs that experienced first
`generic entry in 2012, 92% also experienced a Paragraph
`IV challenge (13 of 14 drugs), and the average time from
`launch to first challenge was 6.3 years (3.0).
`The calculations reflected in Figure 3 reflect averages
`across all new drug introductions associated with first gen-
`eric entry in a given year. They may vary according to
`factors such as the drug’s sales prior to generic entry, the
`nature of the patents protecting the drug, and the ease with
`which generic manufacturers can imitate the drug to satisfy
`FDA regulations. In particular, for higher-revenue drugs,
`generic manufacturers may be less selective when filing
`challenges, as even a low likelihood of success in litigation
`can yield a large expected return on the investment neces-
`sary to challenge a patent. For instance, researchers have
`found that court decisions on Paragraph IV challenges
`filed prior to 2005 involved a disproportionate share of
`
`high-revenue drugs9. Others have calculated that, as
`brand-name drug revenue increases, the probability of suc-
`cess required to justify a patent challenge by a generic
`manufacturer diminishes to below 1%10. For patent cases
`litigated to district court decisions between 2000–2009,
`brand companies prevailed in 52% of them11; for cases
`decided by district courts between 2009–2012, they pre-
`vailed in 54% of them12.
`
`Market share erosion after generic entry
`
`Figure 4 shows the erosion in brand-name drugs’ share for
`the 12 months following first generic entry, with share
`defined as the unit share of brands for a given molecule
`divided by the sum of units for brands and their corres-
`ponding generics (brand-name share of total molecule
`units, which may have increased, decreased or remained
`relatively constant). Generic erosion has increased dra-
`matically over the past decade. For all NMEs facing first
`generic entry in 2011–2012, brands retained an average of
`only 16% (0.13) of units at 1 year. For those NMEs with
`sales greater than $250 million (in 2008 dollars) prior to
`first generic entry, generic erosion was even more pro-
`nounced; the corresponding figure was only 11% (0.09)
`of units at 1 year.
`
`6 Recent trends in brand-name and generic drug competition Grabowski et al.
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`
`Year of First Generic Entry
`1999-2000
`
`2001-2002
`
`2003-2004
`
`2005-2006
`
`2007-2008
`
`2009-2010
`
`2011-2012
`
`1.00
`
`0.90
`
`0.80
`
`0.70
`
`0.60
`
`0.50
`
`0.40
`
`0.30
`
`0.20
`
`0.10
`
`0.00
`
`Brand Share
`
`0
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`Source:
`IMS Health data for all new molecular enƟƟes with first generic entry in the period 1999 through September 2012.
`Note:
`IniƟal generic entry occurs at some point during month "0". Month "1" is the first full month of generic compeƟƟon.
`
`Month Post First-Generic Entry
`
`Figure 4. Average monthly brand share of standard units of the molecule/form following first generic entry.
`
`In comparison, drugs experiencing first generic entry in
`1999–2000 maintained a share of 44% (0.28) of units at 1
`year following first generic entry. Grouping drugs into
`2-year periods by the date of first generic entry illustrates
`the steady increase in the rate and extent of generic pene-
`tration over the past decade.
`
`Discussion
`
`Consistent with prior research, MEPs for drugs experien-
`cing initial generic entry in 2011–2012 was 12.6 years for
`NMEs with sales greater than $100 million (in 2008 dol-
`lars) in the year prior to generic entry, and 12.9 years for all
`NMEs. Further research may reveal variation by type of
`NME, whether defined by molecule type or other
`classification.
`Generic competition has intensified over the past
`10–15 years, and the MEP has become an even more
`important indicator of the economics of brand-name
`drugs. The MEP is critical to manufacturers’ ability to
`earn profits on brand-name drugs to fund future research
`and development activities, and brand-name drug shares
`rapidly drop following initial generic entry. For NMEs
`experiencing initial generic entry in 2011–2012 and with
`pre-generic entry sales of at least $250 million (in 2008
`
`dollars), average brand unit share had fallen to 11% at 1
`year; for all NMEs with initial generic entry in 2011–2012,
`average brand unit share at 1 year had fallen to 16%.
`While the average MEP for brand-name drugs has
`remained relatively constant over the past 10–15 years,
`generic manufacturers are challenging the patents protect-
`ing brand-name drugs more often and earlier, which may
`have a downward impact on future MEPs (we calculate
`MEPs only for those already experiencing generic entry).
`Over 80% of brand-name drugs experiencing initial gen-
`eric entry in 2012 had faced at least one Paragraph IV
`patent challenge from a generic manufacturer, up from
`only 9% for drugs experiencing initial generic entry in
`1995. These challenges are filed relatively early in the
`brand drug life cycle, on average within 7 years of brand
`launch.
`
`Conclusions
`
`Pharmaceutical competition continues to evolve since the
`passage of the Hatch-Waxman Act in 1984. While the
`average MEP for brand-name drugs, currently 12.6 years
`for NMEs with pre-generic entry sales of $100 million (in
`2008 dollars) and 12.9 years for all drugs, has remained
`relatively constant, consistent with prior research, other
`
`! 2013 Informa UK Ltd www.informahealthcare.com/jme
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`Recent trends in brand-name and generic drug competition Grabowski et al. 7
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`Journal of Medical Economics
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`
`factors have changed. Over the past decade, Paragraph IV
`challenges have become increasingly frequent and occur
`earlier, and generic share erosion has intensified.
`
`Transparency
`Declaration of funding
`The authors received financial support from the Pharmaceutical
`Research and Manufacturers of America for this research. The
`analysis presented was designed and executed entirely by the
`authors, and any errors or misstatements are ours alone.
`
`Declaration of financial/other relationships
`Two of the authors (Long and Mortimer) are employees of
`Analysis Group, Inc., a consulting company that has provided
`consulting services to biopharmaceutical manufacturers, both
`brand-name and generic. Henry Grabowski has served as an
`expert witness in pharmaceutical patent-related litigation on
`behalf of both plaintiffs and defendants. JME Peer Reviewers
`on this manuscript have no relevant financial or other relation-
`ships to disclose.
`
`Acknowledgments
`The authors thank Anna Kaltenboeck of Analysis Group, Inc. for
`research and technical assistance in the preparation of this
`article.
`
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