EY estimates that the top twenty biopharma companies have $180 billion in sales at risk from patent expirations between now and 2028. Why isn’t their widespread panic at big pharma’s patent cliffs?!
What is a patent cliff?
Patent cliffs are when patents expire for one or more leading branded products for a company. This opens the door for competitors to sell copycats of those drugs often at a lower price. There is a significant difference on whether the product with the patent expiring is a small-molecule drug, a drug made from chemicals that have a low molecular weight, or a biologic which is a medicine derived from living sources such as animals or humans.
Generics are cheaper copycats of small-molecule drugs and can have an immediate adverse impact on the original drug’s market share. Biologics copies called biosimilars historically have had trouble gaining market share as they aren’t identical copies of the branded drugs and doctors hesitate on substituting the cheaper product for the original.
What drugs are coming off patent?
Merck’s immunotherapy drug, Keytruda, has key patent expirations in 2028. 2022 sales of $20.9 billion were 36% of Merck’s total sales. BMS’s Eliquis, a blood thinner, has patent expirations in 2026 through 2028. 2022 sales were $11.79 billion which was 25% of BMS’s total sales. BMS also has their immunotherapy drug, Opdivo, coming off patent in 2028. At $8.25 billion in 2022 sales they stand to lose almost 18% of their total sales. Another immunosuppressive medication, Stelara, owned by J&J has patent expirations in 2024 in Europe and 2025 in the U.S. It’s 2022 sales were $10.86 billion or 12% of J&J’s total.
What does big pharma do to combat patent cliffs?
Some strategic decisions made in combating big pharma’s patent cliffs are considered ethical and some have come under ethical scrutiny. New drug development through investing in research to bring new drugs to market either within their own firm or through the acquisition or partnership with other companies has not been ethically questioned.
Controversial methods for extending the exclusivity of a blockbuster drug include evergreening or making minor modifications to existing drugs and obtaining new patents for these variations. Firms have also introduced a new formulation or version of a drug shortly before the patent on the original version expires, and then withdrawn the original product from the market, pushing patients and healthcare providers to the new, patent-protected version. Blocking generic entry through legal battles or pay-for-delay agreements where big pharma pay a generic manufacturer to delay entry of their cheaper versions to market, have also been used.
These questionable practices lead to higher healthcare costs, limit patient access to affordable medications and undermine competition in the pharmaceutical market. The American Liberties Project and the Initiative for Medicines, Access & Knowledge released an analysis that anti-competitive tactics in the pharmaceutical industry cost U.S. consumers “an additional $40.07 billion on pharmaceuticals in 2019.”
Big pharma patent cliffs are a critical challenge for pharmaceutical companies, requiring strategic planning and innovation to navigate successfully. It underscores the importance of a robust pipeline of new drugs and effective management of intellectual property.
