PharmaFocus: Facing Patent Cliff, Pharma Clings to Blockbusters
By Mari Serebrov
Big pharma is refusing to go quietly into the night as its biggest blockbusters fall off the patent cliff, endangering more than half of some drugmakers' brand portfolios.
To keep from being dragged over the cliff along with their drugs, pharma companies are digging in their heels. For some, that means clinging to their grasp on the market even after a drug has gone generic.
Under Hatch-Waxman, which changed the landscape in the 1980s for generic competition, companies tended to let their drugs go once generics came on the scene, Pfizer Inc. spokesman MacKay Jimeson told BioWorld Today.
But not anymore. There's too much at stake.
Take Pfizer's Lipitor (atorvastatin), for instance. The No. 1 bestselling drug, Lipitor went off patent November 2011 . Since it was approved in 1997, Lipitor has generated more than $130 billion in sales for Pfizer and comprised 20 percent of the company's total revenue, according to a recent Congressional Research Service (CRS) report on the impact of the pharmaceutical patent cliff.
Annual sales for the cholesterol drug peaked at $13 billion. And in 2010, even in the face of other brand competition, Lipitor produced $7.2 billion in sales.
Facing patent expiration, the New York-based Pfizer authorized a generic version of Lipitor from Watson Pharmaceuticals Inc. and reached a settlement with Ranbaxy Laboratories Ltd. that allowed the Indian company to launch a generic in November. (The Ranbaxy generic didn't hit the market until Dec. 1.) (See BioWorld Today, Dec. 22, 2011.)
Meanwhile, Pfizer will try to keep the brand drug competitive for as long as possible in the generic space, Jimeson said. In reality, that's probably about the first six months, when the price is expected to erode only about 20 percent with limited generic competition.
Pfizer knew that, as the generics came to the market, a segment of Lipitor patients would want to stay on the brand formulation. To facilitate that, the company has launched a "Lipitor for You" program that includes existing initiatives and adds services, assistance, co-pay help and counseling. A co-pay card will be valid through this year, Jimeson said.
In addition to enhanced patient services, Pfizer has developed partnerships with health care plans and pharmacy benefit managers to make Lipitor available at the generic tier. This will make the cost of the brand to payers competitive with that of the generics, Jimeson said.
But such moves will only delay the fall. As more generics enter the market after the 180-day exclusivity period, the price will drop further. While that's good news for payers, it won't help Pfizer's bottom line.
Generally, a year after a top-selling brand loses patent protection, about four or five generics are on the market and the price has dropped to 50 percent, according to the CRS report. Two years out, several more generics usually are competing in the space and the price averages 23 percent of the original brand price.
At the Edge of the Cliff
Pfizer is not the only big pharma company standing at the edge of the patent cliff. More than 80 blockbuster drugs have or will lose patent protection between 2011 and 2015, CRS said. U.S. drug sales affected by those patent expirations could be as high as $133 billion by 2016.
The most severe impact is expected this year, when $33.2 billion in U.S. drug sales will be affected by loss of patent protection. Besides being the first full year with generic Lipitor competition, CRS said 2012 will see the patent expiration for a number of other blockbusters. They include Plavix (clopidogrel, Sanofi SA and Bristol-Myers Squibb Co.), the No. 3 best-selling drug with 2010 U.S. sales of $6.1 billion; Seroquel (quetiapine fumarate, AstraZeneca plc), No. 6 at $4.4 billion; Singulair (montelukast sodium, Merck & Co.), No. 7 at $4.1 billion; Actos (pioglitazone, Takeda Pharmaceutical Co. Ltd.), No. 9 at $3.5 billion; and Lexapro (escitalopram, Forest Laboratories Inc.), No. 19 at $2.8 billion.
Citing an analysis by PriceWaterhouseCoopers, CRS said only four of the 10 major pharmaceutical companies have drugs in clinical trials that are "'sufficiently valuable to offset these losses.'" Consequently, some of the biggest U.S. names in the pharmaceutical industry are expected to lose more than half of their brand drug portfolios in the next three years as a result of patent expirations.
Pfizer stands to lose the most, CRS said, with 68 percent of its portfolio at risk due to looming patent expirations. Besides Lipitor, Pfizer will see patents expire on drugs such as Protonix (pantoprazole sodium) and Geodon (ziprasidone HCI) this year. (See BioWorld Today, Feb. 2, 2009.)
However, the cliff hang may not be quite so dire, as the 68 percent was based on Pfizer also facing generic competition for Viagra (sildenafil) in 2012. While the drug's main ingredient was set to lose patent protection this year, Pfizer succeeded in court with a method-of-use defense for its patent for Viagra. And in February, the FDA granted the company pediatric exclusivity for sildenafil. Together, the court decision and the six-month pediatric exclusivity will delay generic competition for Viagra until April 2020, Jimseon said. (See BioWorld Today, Aug. 24, 2011.)
Three other U.S. drugmakers are expected to lose more than half of their brand drug portfolios to patent expirations – Eli Lilly and Co., of Indianapolis, 66 percent; Bristol-Myers Squibb Co., of New York, 58 percent; and Johnson & Johnson, of New Brunswick, N.J., 52 percent.
The patent cliff is not just a problem for drug companies on this side of the Atlantic. Paris-based Sanofi, for example, is facing revenue losses of up to $9 billion over the next 10 years because of generic competition for Lovenox (enoxaparin) and Plavix, CRS said. Lovenox had $2.9 billion in U.S. sales in 2009, the year before the first generic was approved. (See BioWorld Today, July 26, 2010, and Jan. 26, 2011.)
In addition to trying to keep a brand foothold against the first generics on the market, pharma has developed a number of strategies to cope with the impending patent expirations. But other than launching delayed-release formulations to postpone generic competition, most of the strategies – including price changes and mergers and acquisitions – won't offset the losses from the patent drop-off, CRS predicted. (See BioWorld Today, March 16, 2011.)