The business strategy of patent challenge in American generic drugs (1)

Author: mon Bayi mobile phone number: 13220385722 (WeChat) contact mailbox: bayi.meng@yahoo.com 1 Exclusive rights of drugs and drug price foam 1 drug development Erooms law, new drug development is a high-risk capital game According to IMS statistics, one drug may be screened out for every 5000-10000 compounds, which will take 10-15 years and cost US $1-2.2 billion [1] The development process of new drugs is illustrated as follows: Figure 1 Schematic diagram of drug development data source: who report 2013 Moore's law is a term used in modern science and technology to describe the change range of a certain technology or an indicator in a certain field in a unit time It originated from the computing power of computer integrated circuits: when the price is constant, the number of components that can be accommodated on a unit integrated circuit doubles every 18-24 months, which is called Moore's law However, in the pharmaceutical industry, since the 1950s, the number of new drugs on the market for every $1 billion invested has doubled every decade, which is the so-called "erooms law" The figure is as follows: Figure 2 Data source of anti Moore's law in drug development: eRoom's law by Derek Lowe, March 8, 2012 The industry believes that with the decrease of screened compounds, the increase of knowledge labor cost, and the gradual improvement of regulatory standards, especially the increase of clinical trial costs, the anti Moore's law will go on In other words, it is more and more difficult to find drugs, and the price of drugs is more and more expensive [2] 2 According to "anti Moore" law, the cost of new drug development is increasing geometrically Now the cost of developing a new drug is said to be $1 billion or $2.2 billion No matter how the cost of drug development changes, the way in which pharmaceutical companies and / or investors recover their investment and make profits has not changed This is to recover investment and earn profits through patent monopoly and data monopoly General non drug patents often lose their economic value at the end of the patent period due to the emergence of new technologies and methods Since the drug development and FDA regulatory review usually take up most of the effective patent period, the remaining patent period is not much, or even the patent has expired So drug patents go the other way If we take the R & D, application investment and expected profit of drugs as the measurement scale, the value of the remaining period of drug patents will increase with the increase of drug development investment, which will form the unique patent "tail value" of drug patents Moreover, the commercial expression of the interaction between anti Moore law and patent tail value is patent medicine "price bubble" 3 Patent term extension, PTE) in consideration of the particularity of drug patents, in 1984, when the generic drug legislation was reformed (hatch Waxman act), in order to encourage new drug research, the U.S Congress passed legislation to compensate the patent period of new drugs: the U.S Patent Office USPTO was authorized to extend the patent protection time of new drugs to compensate the patent time occupied by the patentee due to the review of FDA regulations, which was called patent term Extension PTE。 The specific methods are as follows: the time taken up by the FDA official is one day, and the time taken up by the patentee to reply to the official examination, clinical experiment, preparation of documents, etc is one day for half a day, generally no more than 5 years, and the total extension period plus the remaining patent period is no more than 14 years The patent compensation time (EXT 5 years) = 1 / 2 (ind clinical trial time) + (NDA review time) 4 Data exclusivity is also to encourage drug innovation In the drug price competition and patent period compensation act of 1984, FDA is authorized to grant all kinds of data exclusivity to new drugs (unrelated to the aforementioned patents and patent extension) New chemical entity nce 5-year new dosage form / new use 3-year children's drug PDE 6-month orphan drug ode 7-year qidp high quality anti infective drug 5-year biological drug 12-year data exclusive right plays a very important role in the challenge of patent, because it is not affected by orange peel patent, even NDA without patent can obtain data exclusive right Some patent drugs will measure the relationship between patent right and data exclusive right, sometimes they will voluntarily give up patent right and retain data exclusive right, which makes generic drugs unable to challenge patent Due to the special regulations of FDA on children's drug use, patent drugs often apply for children's drug use experiment before the expiration of the patent, so as to extend the patent When generic drugs challenge patents, we must carefully calculate and consider the relationship between data exclusive time and patent period of NDA 5 Prior to the promulgation of the drug price competition and patent period compensation act in 1984, the drug regulations of the United States did not involve patent matters In other words, the FDA and the U.S patent office are in charge of everything FDA specializes in the management of drug safety and effectiveness, and the authorization and dispute of patent belong to the court and USPTO After the reform of the legislation on generic drugs in 1984, the listed drugs approved by FDA should register the important patents related to the approved drugs in the Orange Book of FDA The basis for the listing or patent dispute of generic drugs is the orange book registration patent In principle, FDA does not approve generic drugs with patent disputes This is the so-called FDA and PTO convergence Through this connection, drug exclusive rights (patent exclusive rights and data exclusive rights) are marked on the same platform It makes the commercial competition and legal proceedings around drug patent more open and transparent Figure 3.FDA and USPTO linkage map [3] source: Chad A, Landmon 2016 two Challenge patent is a sharp weapon to pierce the drug price bubble Since the birth of the first modern pharmaceutical code (FDCA) in 1938, generic drugs have been mixed with proprietary drugs, and there has been controversy Real medicine, fake medicine and generic medicine have never been understood Although the drug effect re evaluation (DESI) in 1966 gave the generic "papernda" application channel, but because of the unclear laws and regulations, the tedious application, and the strong suppression of patent drugs, generic drugs can not compete with patent drugs at all The hatch Waxman act of 1984 applied for "slimming" of generic drugs (anda for simple new drugs), removing the extremely expensive clinical trials Therefore, the generic drugs compete with the original drugs in the legal status of "cheap equivalent substitution" Generic drugs accounted for less than 20% of prescription drugs in 1984 and nearly 95% in 2016, which effectively inhibited the per capita drug consumption in the United States, not only ensuring the implementation of the national health insurance system in the United States, but also ensuring the majority of clinical drugs So how do Americans do it? The early challenge of patent - the 1984 reform of generic drug legislation did not focus on the challenge of patent, nor did it realize the great impact of the challenge of patent on the pharmaceutical industry and the medical system of the United States Therefore, the original challenge rules have many flaws and flaws In the next decade, there were few challengers For example, from 1993 to 1998, the FDA approved only three patent challenges At that time, the rules did not restrict the registration of orange peel patent of patent drugs, but required that generic drugs must win all patent lawsuits to obtain 180 days exclusive rights As a result, patent drugs continue to register new patents, continue to sue generic drugs, continue to generate patent litigation, and continue to start a new 30-month automatic deadline, generic drugs will never get 180 days According to the FTC report, there is a patent challenge that has a 10 to 30-month lag! Another drawback of this rule is that if patent drugs are not prosecuted, there will be no litigation, and there will be no 180 days 2 After 1998, in order to promote the entry of generic drugs into the market and reduce the drug price, the U.S Congress and the court revised the rules of patent challenge three times: 1) 1998: the court of Mova rejected the 180 day precondition for FDA to win the challenge of generic drugs (Chapter 10, case study 1) 2) 2003 (medical prescription drug, improvement, And Modernization Act) MMA A multiple first imitations (submitted on the same day) can b e shared for 180 days; B a product can only have one 180 days; C The 180 day abolition system; D after submitting anda, subsequent registration of orange peel patent does not have a 30-month containment effect; e the settlement agreement between generic drugs and patent drugs shall be reported to FTC and the Ministry of justice, which shall not violate the anti unfair competition law 3) 2012 AIA: the introduction of the fast track to solve patent disputes - inter parties review IPR, after three regulatory changes, and Section VIII in 2003, completely changed the ecology of generic drugs challenging patents Since 1998, challenging patents has gradually become a sharp tool for generic drugs and patent drugs to compete for the market More and more patent drugs are challenged by patents, and they have reached a peak around 2010 In the past five years, almost all the giant bomb drugs in the United States have been challenged The following illustration shows the process of changes in the number and duration of patent challenges: figure 4., 1995-2012, patent challenge quantity change schematic map [5] source: Grabowski 20173 challenge patent to pierce the price bubble of proprietary drugs by challenging patents to make generic drugs legal in the patent protection period, breaking the balance between patent drugs and generic drugs under the patent framework The medical insurance system and drug substitution law in the United States make the generic drugs quickly erode most of the market share of the original drugs once the generic drugs enter the market, even if it is 10 cents cheaper (including the drug substitution laws and regulations in the United States, the sales laws and regulations of generic drugs, and the complicated insurance payment system, etc., which will not be detailed in this paper) With the entry of other generic drugs 180 days later, the market monopoly of original drugs immediately disintegrated, the drug price dramatically decreased, and the market share was quickly replaced by generic drugs For example, Lipitor's generic drugs entered the market at the end of 2011, but in three years, the market of the original drugs has eaten up Yijin [6] Figure 5 below shows the impact of Lipitor generic drugs entering the market on the sales of patent drugs: as can be seen from the previous linkage diagram, the so-called challenge patent is actually the patent warping value of patent drugs embezzled by generic drugs through legal means 4 The challenge to patent is more than 30 years after the non 1984 drug price competition and patent period Compensation Act For pharmaceutical manufacturers, the significance and role of this law is second only to the Kefauver Harris amendment (the Bible of modern pharmaceutical) in 1962 It subverts and changes people's understanding, understanding and application of "generic drugs" Looking back at history, you can't imagine what would have happened to drug use in the United States in the past 30 years without the 1984 legislative reform of generic drugs? What about European medicine? It is precisely because of the simplified application and patent challenge system of generic drugs Although under the effect of "anti Moore's law", the cost of drug development has almost reached the sky high, and the "patent tail value" is more steep, but the drug situation in the western developed countries has not deteriorated, and the number of new drugs on the market has not decreased as a result In the past 50 years, the pharmaceutical industry has been a global gold industry In terms of figures, generics have brought the following changes to the pharmaceutical industry in the United States: Figure 6 Schematic diagram of the change in the share of prescription of generics in the United States [4] source: Ann M Thayer 2014 1) the share of prescription of generics in the United States from 19% in 1984 to 92% in 2015; 2) the effective patent time of patent drugs has been reduced by 3 years on average; 3) the average time of entry of generics into the market has been advanced by 3 years; 4) The return on investment of patent drugs has been reduced by 12% [8] References