There has been much talk of the ‘patent cliff’ recently, this being the phrase used to describe the sharp decline in revenues following expiry of a number of patents between 2011 and 2016. A patent typically provides a 20-year monopoly. During this time, the patent owner has the right to prevent others from making and selling the patented product, thus providing a period of exclusivity for the patent owner. In cases where a patented medicinal or plant protection product requires regulatory approval before being sold commercially, a supplementary protection certificate (SPC) may extend the protection conferred by the patent on the product for a period of up to five years beyond this 20-year term in order to compensate the patent owner for the delay in obtaining the necessary regulatory approval. Once a patent and any associated SPC has expired, the previously patented product may be replicated freely by competitors without the risk of patent infringement, leading to more competition and driving lower prices. Whilst it is applicable to any industry, in recent years the phrase ‘patent cliff’ has become synonymous with the pharmaceutical industry, as it has been predicted that pharmaceutical firms in particular will incur major losses in revenues following the expiry of patents on so-called ‘blockbuster’ drugs such as the cholesterol-lowing drug, Lipitor®. [login type="readmore"] In the pharmaceutical field, patent expiry of blockbuster drugs is typically followed by lower-price generic versions being made available. It is estimated that drugs with combined annual sales of €117 billion will go off-patent by 2015 and the effect of this is already evident from the falling sales figures for many of the world’s top pharmaceuticals (see Table). Table: Sales figures for top pharmaceuticals
The pharmaceutical industry has been aware of the impending patent cliff for some time and a number of strategies have been implemented in an attempt to at least lessen the loss in revenues. Such strategies obviously include attempts to patent and commercialise new drugs that have the potential to become big sellers and replace those currently coming off patent.Ireland will not be immune to the effects of the patent cliff, given that according to the Industrial Development Authority (IDA), nine of the top ten pharmaceutical blockbuster drugs are produced in Ireland. For example, the IDA indicates that Pfizer manufactures Lipitor, Viagra, Enbrel and Prevenar in Ireland. The patents of many of these drugs have already expired or will do so in the near future. The US Food & Drug Administration (FDA) approved 35 new medicines in 2012. However, the need to develop new, high-quality drugs must be aligned with the fact that budgets are far more constrained than they were in previous years when the current blockbuster drugs were being developed. There is therefore pressure on pharmaceutical companies to find a less expensive and more efficient way to develop and patent new drugs that offer an advantage over cheaper generic drugs. EVERGREENING Whilst attempts are under way to develop and patent new drugs to potentially replace the existing blockbusters, attempts are also being made to prolong patent protection for existing blockbuster drugs, for example, by attempting to patent new delivery systems for existing drugs or new pharmaceutical compositions that include these drugs in combination with other active ingredients, in a practice known in the pharmaceutical industry as ‘evergreening’. Evergreening results in the grant of a new patent for a product or process that incorporates the existing blockbuster drug or a variation thereof, thus in effect extending the period of patent protection beyond the normal twenty-year term. However, in order to be patentable, a product or process must satisfy a number of requirements. In particular, the product or process must be novel (never have been made available to the public) and inventive (non-obvious) at the date of filing a patent application in order to be patentable. Any newly developed delivery system or pharmaceutical composition must generally be associated with a surprising technical advantage in order to be patentable. The practice of evergreening suffered a recent setback in India, when the Indian Supreme Court rejected an attempt by Novartis to patent an amended version of its cancer drug Glivec. Novartis argued that it was entitled to a patent for the amended version of Glivec because the original compound was not suited to be turned into a pill. The Indian court found that the revised Glivec compound lacked both novelty and an inventive step and was therefore not patentable. This finding means that it is likely that other pharmaceutical companies will also encounter difficulties if they seek to prolong patent protection in India by evergreening. Other strategies being adopted in light of the patent cliff include a more focused approach being implemented by pharmaceutical companies. For example, companies are starting to look at developing drugs for previously unmet needs such as Alzheimer’s disease, cancer and Parkinson’s disease and are also focusing more on personalised medicines that will target relatively small patient populations. This is being achieved in part by acquiring small biotech companies, licensing drug candidates from biotech companies and placing an increased emphasis on developing partnerships, as well as expanding in high-growth markets such as China and Latin America. LIPITOR As previously mentioned, one example of a drug that has recently come off patent is Lipitor®, which was once taken by nearly 3.5 million people daily to control cholesterol levels and has earned over $81 billion for its manufacturer Pfizer since its entry to the market in 1997. The effect of the expiry of the patent for Lipitor® in November 2011 on Pfizer’s revenue and the success or otherwise of Pfizer’s attempts to limit that effect was watched with keen interest by the rest of the pharmaceutical industry. Pfizer reported that its fourth-quarter profit fell by half in 2011 largely due to a decline in Lipitor ® sales. With just a month left in the quarter after expiry of the Lipitor® patent, Lipitor® sales still fell by 42% in the US and 24% worldwide. This was in spite of Pfizer’s attempts to retain its market by adopting a number of strategies including offering large discounts to patients and insurers using Lipitor®. Pfizer also jointly marketed an authorised generic version with Watson Pharmaceuticals. In addition, the company implemented a change to its previous practice, which had involved the acquisition of a number of large companies, including Warner-Lambert and Wyeth, by announcing the sale of its infant nutrition business to Nestlé. It also reduced its research budget and implemented a plan to focus on only the most promising areas, like cancer and Alzheimer’s disease, this being in line with strategies being adopted by other pharmaceutical companies, as described above. There are many other examples of well-known blockbuster drugs tha have recently come off patent. The expiry of Lilly’s patent for the schizophrenia treatment Zyprexa® in October 2011 resulted in a 56% hit to first-quarter drug sales, whilst the expiry of AstraZeneca’s patent for its schizophrenia drug Seroquel® IR in March 2012 resulted in a 25% drop in drug sales in the first quarter. With further blockbuster patents set to expire in the next couple of years, including Astra Zeneca’s patent for Crestor®, which will expire in 2016, pharmaceutical companies must continue to search for and implement strategies which will offset the loss of revenues caused by the patent cliff and thus cushion an industry which may otherwise face a hard landing. Anne Marie Carr is a European patent attorney based in Murgitroyd’s Dublin office. Carr has a BSc in Biotechnology from NUI, Galway and a post-graduate diploma in Chemical Engineering from University of Limerick. She specialises in patents in the life sciences and pharmaceuticals areas and is a member of Murgitroyd’s Supplementary Protection Certificate (SPC) team. She joined Murgitroyd, which is a global firm of intellectual property attorneys specialising in the provision of services relating to patents, trade marks and designs, in 2004. The firm has 15 offices worldwide located across Ireland, the UK, the USA, Germany, France, Italy and Finland. Murgitroyd works with a range of clients across a variety of commercial sectors including chemistry, life sciences, pharmaceuticals, engineering, ICT and energy. Contact email@example.com or see www.murgitroyd.com.