Strategies for Extending the Life of Patents

Pharmaceutical companies today are faced with increased costs for drug discovery and development and aggressive competition from generic drug companies. As research costs skyrocket, generic drug companies sit poised and ready to compete as soon as a patent expires. Maximizing patent term for successful products is an effective strategy for fending off generic competition and extending product lifecycle. This article will explore strategies for keeping a product under the patent umbrella.

RISING COSTS OF DRUG DEVELOPMENT

The costs associated with discovering a compound, turning that discovery into a suitable drug candidate, and getting that candidate to market have risen dramatically. Some estimates indicate that the cost for developing and marketing a single pharmaceutical product has risen from $54 million in the 1970s to greater than $800 million by 2000.1

Patent protection and the market exclusivity that comes with it help to ensure a return on investment. A patent holder has the right to exclude others from making, using, and selling the patented invention for a defined period (Figure 1). Therefore, patented drugs are temporarily safe from the competition of generics, often resulting in substantial revenues. For example, US sales for Prilosec in 2000 were over $4 billion,2 and worldwide sales of on-patent Lipitor and Prevacid totaled over $9.2 billion and $2.5 billion, respectively, in 2003.3,4

Over the next few years, a remarkable number of patented "blockbuster" drugs will lose their protection (Table 1). When Eli Lilly's patents for Prozac (fluoxetine) expired in 2001, the concomitant multi-million dollar losses in revenue demonstrated the devastating impact of patent expiration. Table 2 shows three examples of revenue losses following patent expiration.

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