How Pharma Can Prepare for the Patent Cliff
Extending market exclusivity and responding properly to the volume of recent patent expiries are critical to the sustainability of pharmaceutical corporations. In the midst of the 2012-2019 patent cliff, the period during which market exclusivity for top-selling biologics is jeopardized, pharmaceutical corporations have been prompted to adopt more innovative approaches to cope with loss of exclusivity (LOE).
Regardless of the strategy a company chooses to pursue to combat LOE, planning should commence at least two years prior to the anticipated LOE date. There are numerous tactics used to combat LOE, but there is no single silver bullet. Each brand requires a uniquely tailored approach, dependent on the therapeutic area, patient population, competitive landscape, and drug properties.
One such tactic to decrease sales erosion post-LOE is to release an OTC version of the branded product, perhaps with a different formulation or smaller dose. While this could expose the manufacturer to additional expenses for additional trials and vying for FDA approval, AstraZeneca’s Nexium® proved to be highly successful in the post-LOE phase, raking in $900M in sales in 2015 after losing exclusivity in 2014. AZ also did a great job at leveraging consumer marketing campaigns to brand Nexium as “the purple pill”.
Another option is to assert differentiation by increasing DTC advertising. For example, Pfizer drastically increased advertising for Lipitor® during 2010 and 2011 while facing loss of exclusivity in 2011. They deployed a copay card along with a specialty pharmacy partnership to enable direct mail order fulfillment of Lipitor prescriptions, resulting in a 30% market share 6-months post-LOE.
While the knowledge and experience to combat LOE is important for all pharma manufacturers, one must also remember to “pick your battles.” Not all brands warrant gearing up for the post-LOE battle; sometimes it’s better for all stakeholders alike to sunset the brand. That is, to suspend all marketing / sales investments and adjust inventory levels for the decline in demand. If the portfolio includes improved options for patients, a focus on the new brand and attempts to upgrade the market would be a better strategic play.
As many blockbuster biologics approach the patent cliff, it will be more difficult for them to avoid post-LOE erosion unless they reduce prices.. Pricing is key, as Payers are increasingly financially challenged and cost conscious. In 2017 and beyond, we may see bidding wars over small-cap manufacturers with approved biosimilars in their portfolios. For instance, Pfizer’s 2015 purchase of Hospira for $17 billion underscores the high price tag that big pharma is willing to pay for biosimilars. We can also expect to see more innovation in the litigation methodologies employed by pharma legal teams. For example, Novartis’ generics arm, Sandoz, will not be able to reap the rewards of Enbrel® biosimilar Erelzi until beyond 2018 due to a legal battle with Amgen even though the BLA (biologics license application) was submitted in July 2016. The stakes are higher than ever given the industry’s undeniable trend towards biosimilars, so it will be interesting to see how the key players navigate the twists and turns of the legal system to their advantage.
Maintaining market share during the post-LOE phase of a drug’s lifecycle is challenging. . Pharmaceutical manufacturers have responded with a number of strategies from pricing through switch to alternative products. A robust analysis of options, including evaluation of existing and pending regulations, should drive LOE strategy.