My previous post “Patent & Regulatory Exclusivity in Pharma R&D” I have indicated that the pharmaceutical company holding the original pharmaceutical product patent may attempt to fight the loss of exclusivity (LOE). The same article already covered the R&D aspects of the patent and regulatory exclusivity protection, leaving the commercial side to further analysis.

It is important to understand that loss of exclusivity is not necessarily equal to the losing the revenue stream. Pharma companies preserve the product value by implementing various strategies and approaches. However, the key is to apply them early, approximately two years before the patent expiry, to allow ample of time for planning and implementation.

The selection of the particular value-extending strategy is dependent on the brand affinity. Brand affinity is defined as the level of customer engagement and comfort with a brand, and it is the key factor dictating the most optimal strategy for LOE management and determines the success of the LOE planning. In a case of the high affinity, below strategy #1 and 2 seem to be appropriate. If the affinity of the brand is low, option #3 and 4 appear to be best. LOE strategy can be executed either in-house or outsourced to the more experienced partner. The pharma companies can choose one or combination of the below options to preserve the off-patent product value by:

1. Securing patient acquisition and retention and keeping patients on the branded therapies in cost efficient manner by the implementation of:

• copay cards than lessen the out-of-pocket expenses for the patients,
• enrollment programs that facilitate more intended interactions with patients (e.g. refill notifications).

This strategy works when there is a limited number of generics on the market. The greater the number of competitors, the more generic-to-brand price ratios drop, reducing further the return on investment. Naturally, with time and growing generic competition, the above strategy may need to be replaced by a different one.

2. Creating OTC formulation

That approach is attractive as it allows acquiring more patients and removes the reimbursement hurdle. Development of OTC formulations comes with certain regulatory and logistical obstacles. Due to safety reasons, OTC option is available only to some drugs and indications. Additionally, OTC marketing and sales require different management approaches and expertise than brand prescription drugs.

3. Launching a generic product

There are few variations to this strategy:

• Creation of brand generic (BG): BG products that are either novel dosage forms of off-patent products produced by a manufacturer that is not the originator of the molecule, or a molecule copy of an off-patent product with a trade name.
• Creation of authorized generic (AG): product is approved as brand-name drug but marketed as generic medicine. The product does not bear the brand name or trademark of the brand-name drug or manufacturer, but the brand-name and AG product is manufactured to the brand’s specifications.
• Creation of licensed generic (LG): achieved by contracting a generic competitor to sell early (before the patent expires). Off-patent competition may be adversely affected if authorized generic entry substantially lowers the attractiveness of subsequent generic entry.

4. Minimizing the marketing and sales costs while maintaining the presence on the market. “Brand sunset” strategy makes the most sense when the number of generic competition is high or rapidly growing.

Summary:

A pharmaceutical company can continue producing income from off-patent products by implementing appropriate LOE strategies, at least two years before the patent expiry date. Even after implementing the selected plan, the efficiency of the strategic option has to be monitored and adjusted with time, due to competitive environment changes.

References:

• Loss of Exclusivity strategies to Maximize Product Value by Faith Glazier, Tom Fezza, Jodi Reynolds, Pharmaceutical Executive Nov 2016
• Authorized Generic Entry prior to Patent Expiry: Reassessing Incentives for Independent Generic Entry, Silvia Appelt, University of Munich
• What Investors Need to Know about Branded and Generic Drugs, By Nicole Sario