IPR and medicines 11: When blockbusters' patent expires

Two weeks ago, the President of the Philippine Chamber of Pharmaceutical Industry (PCPI), Mr. Beau Agana, invited me to attend their general assembly at Astoria Plaza, Ortigas. Mr. Agana liked the position paper that I submitted to the House Committee on Trade and Industry regarding Cong. Biron's bill creating another government bureaucracy, the Drug Price Regulations Board. PCPI and many of its members, mostly the local generic pharma companies, also do not like the drug price control policy and the creation of a new price control bureaucracy in government, but they were still drafting their position paper at that time.

In his talk, Beau shared that PCPI is now the head of an ASEAN body on pharma, I don't remember its exact name something like ASEAN Pharmaceutical Confederation. That's a good achievement. ASEAN member countries want a pharma harmonization plan.

Personally, I am not in favor of government-initiated "harmonization" plans. Businesses thrive on competition, consumers benefit from competition. Harmonization generally mellows if not kills competition because wide price differences among competing players for instance, are discouraged if not eliminated. Another example is the EU Tax Harmonization Program. Europe is known for high taxes to sustain their expensive welfare states. Some countries however, initiated low taxes, and it set off a "tax competition" trend, at least among the smaller economies like former Eastern European countries. EU did not like tax competition and thus, it introduced tax harmonization.

Anyway, I digress and I have not read much about the ASEAN pharma harmonization plan. I will write about it in the future.

One of the two guest speakers that evening was Mr. Romeo "Al" Castro, Jr., head of IMS Health Philippines and IMS Thailand. IMS Health has a rich database about the pharma market, global, regional, national. If one wants to know for instance, what are the leading and most saleable drugs, who are the biggest pharma companies (overall and in each product category) and so on, one must get the services of IMS, or officially ask data from them.

Among the points made by Al that evening, was how off-patent drugs have mushroomed after the patent of the innovator drugs have expired. He mentioned the case of three blockbuster drug molecules.

1. Amlodipine, an anti-hypertension drug. In 2007, before the patent of Norvasc (made by Pfizer) expired, there were only two brands. Then it became 12 by 2008, 23 by 2009, 29 by 2010, and this year, there are 35 different brands from different pharma companies, mostly generic. The price differential among those brands, say at the 10mg tablet, can range from P7-8 to around P33. And the 5mg tablet, from as low as P3.50 to around P22 per tablet. Wide consumer choices.

2. Clopidogrel, anti-blood clot. In 2007, there was only one brand, the innovator drug Plavix by Sanofi. After its patent expiry in 2008 or 2009, the number of brands expanded: 2 in 2008, 7 in 2009, 13 in 2010, and this year, there are 21 different brands from different manufacturers, mostly generic. Prices range from P19 to P73 per tablet. Wide consumer choices.

3. Atorvastatin, anti-high blood, anti-cardiovascular diseases. In 2007, there was only one brand, the innovator drug Lipitor made by Pfizer. Patent expired last year I think, this year there are 6 brands already.

The lesson is clear. The patent and IPR system benefits both the innovator and generic pharma companies. The innovators get the temporary product (but not industry) monopoly via patent for their newly-invented drug, make high profit from that limited period to recoup its high R&D costs. Patients buy the newly-invented drug despite its high price compared to existing drugs against the same disease, because the newly invented one has more or better disease-killing capacity than the older drugs.

When the patent expires, generic manufacturers come in to produce their own brand, their own marketing, and the competition for the same drug molecule among many producers benefit the public and the patients. The manufacturer of the now off-patent drug may or may not bring down its price immediately in the presence of more competitors. The point is that patients and the public now have more options of what brands from different pharma manufacturers at different prices -- assuming that all those new brands are of good and safe quality -- choose.

There are a few patented drugs in the market now, but they are not as popular or as blockbuster as the 3 mentioned above. Co-amoxiclav molecule (anti-infection, anti-biotics) is also a famous drug, innovator brand was Augmentin by GSK. Now there are many other branded generics from different generic manufacturers.
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See also Part 9, about declining death from AIDS, and drugs in development in the US, June 08, 2011, and
Part 10, about the WaPo article on physicians' prescription of branded vs. generics, July 13, 2011.