The Wall Street Journal reports that about every major drug company has a blockbuster drug that will face generic competition within the next few years. In the coming years drugs with annual sales of nearly $500 billion will lose exclusivity as their patents expire. That suggests – at least in theory – that consumers will potentially reap savings of at least $400 billion dollars a year. Congress should take steps to make sure it happens. The following is from WSJ:
The pharma industry is entering its biggest wave of patent expirations in decades. The world’s bestselling drug in 2025, Merck’s cancer immunotherapy Keytruda, loses U.S. patent protection in 2028, and nearly every pharma company has at least one blockbuster drug that will go off patent in the next five years.
Patents are a double-edged sword. Without patents firms could not afford to conduct research & development on new products since they would not reap the benefits of their investments. However, if patents were allowed to exist permanently the same firms would have less incentive to invest in new products. The following is from WSJ:
The scale of the cliff “is what has driven, and will continue to drive, companies to seek out new growth opportunities,” said Greg Graves, a senior partner in the life sciences division of McKinsey.
Drug companies must look for new drugs if they want to keep the money rolling in. Some of the biggest drugs on the market are inching closer to the day when generic alternatives will become available. More from WSJ:
Cancer immunotherapies like Keytruda and rival drug Opdivo are some of the other major blockbusters set to lose patent protection this decade.
The blockbuster Ozempic, which put the idea of GLP-1 weight-loss drugs on the map, is one of the bigger upcoming patent losses.
For New Jersey-based Bristol Myers, one of its biggest drugs, blood-thinner Eliquis, is also losing exclusivity.
WSJ reports drugmakers have various strategies to reduce the shock of patent expiration (besides innovation). Some companies sue and then agree to pay generic drug makers to wait longer to enter the market. Or would-be generic competitors sign an agreement limiting generic market share for a period of years. Bristol Myers’ therapy Revlimid (for blood cancer) faced patent expiration in 2019 but settled lawsuits with agreements limiting unrestricted competition for seven years, beginning in 2026. More from WSJ:
AbbVie protected its blockbuster drug Humira by filing more than 100 patents in the U.S. Rival copies, known as biosimilars, didn’t go on sale until 2023, five years after they launched in Europe.
AbbVie also allegedly informed pharmacy benefit managers (PBMs) it would withhold rebates on all its brand drugs if PBMs did not put Humira on the same formulary tier (i.e., same cost sharing despite lower price) to encourage patients to use the higher-priced drug rather than cheaper generic versions.
Eli Lilly is suing the U.S. Food and Drug Administration (FDA) to force the federal agency to classify its new weight loss drug, Retatrutide, as a biologic drug rather than a standard drug. Retatrutide is an easy-to-produce peptide but classifying it as a biologic would more than double remaining patent exclusivity from about five years to twelve. The disagreement has to do with the number of amino acids in Retatrutide. Lilly argues Retatrutide has 41 and meets the threshold for a biologic, while the FDA says it falls short. This obscure disagreement has huge ramifications for consumers.
Drug innovation is important, as are patents to protect and encourage innovation. However, too much patent protection increases consumers’ costs and reduces drugmakers’ incentives to innovate. Congress should respect patents before they expire, while facilitating a quick transition to generic competition once patents expire. Allowing drugmakers to game the patent system by delaying generic competition, allowing bogus patents (called patent thickets) and allowing drugmakers to buy off competitors reduces competition and harms consumers.
Wall Street Journal: Pharma Industry Stares Down Biggest Patent Cliff in Decades