April 23, 2024
The question of "when will a drug face competition" is incredibly complex to answer.
There are many factors at play - patents, lawsuits, and the type of drug, among many others.
Legally, drugs have two main forms of protection - exclusivity and patents:
In the US, the period of exclusivity depends largely on the type of drug - drugs containing a new chemical entity (NCE) have 5 years of exclusivity.
Meanwhile, more complex biologic drugs get 12 years, thanks to the BPCIA.
A key difference between exclusivity and patents is that while patents can be granted at any time during the innovation process, exclusivity is granted upon approval of the drug, if requirements are met.
Some drugs are protected by both patents and exclusivity at the same time, and some by just one or the other.
Patents technically last 20 years. However, as with many things in biopharma, the story isn't that simple: by the time a drug is approved by the FDA and launched, several of those years will have expired, leaving roughly 10-12 years left on the patent.
Eli Lilly's GLP-1 blockbuster Zepbound is a good example: it launched late last year, but its US patents expire in 2036 - 13 years away.
But expiration dates of key patents only tell part of the story, as there are a variety of factors that can delay the arrival of competition.
While primary patents may expire, companies often have additional IP, like formulation patents, that extend the timeline.
Regeneron's Eylea is a case in point - composition of matter patents expired in 2023, but formulation patents last until 2027, and the company recently won a lawsuit against a would-be generic challenger, Viatris.
Additionally, companies often strike commercial settlements with generics manufacturers. J&J's Stelara is a good example. Key US patents for Stelara expired in 2023, but J&J struck settlements that delayed likely competition until 2025.
While patent cliffs pose challenges, the complexity reveals a key insight:
Navigating the patent cliff is less about the fall, and more about the parachute - a blend of legal acumen, strategic patents, and timely settlements ensure things aren't as dire as they might seem.
