Biomedical Engineering Reference
In-Depth Information
In this chapter I focus on strategies that build on a drug that is already on the
market and do not cover various related topics. These include a discussion of the
general R&D process (e.g., Ganuza et al.
2009
) and the budgets set for R&D (e.g.,
Weiss et al.
2009
). In addition, I refrain from discussing the technical aspect of the
R&D process and an in-depth discussion of legal strategies. However, I will discuss
the R&D and legal strategies at a more general level, as they are important strategies
in themselves and because they are also closely related with the other lifecycle
extension strategies.
Patent expiration has consequences for many different market players: Branded
manufacturers, generic manufacturers, doctors, patients, insurers, pharmacists, and
the government. I focus mainly on the consequences of patent expiry for branded
manufacturers and will not extensively discuss the impact for the other players.
Finally, I limit the main discussion to pharmaceutical drugs and not discuss strat-
egies for biologics. Biologics are still relatively new and regulations concerning
generic biologics (also called biosimilars) are in fl ux (Engelberg et al.
2009
; Frank
2007a
; Kozlowski et al.
2011
). The end of this chapter will briefl y discuss implica-
tions for biologics.
I continue by discussing the regulatory environment for prescription drugs,
which is essential to understand the rest of the chapter. Then, I discuss the determi-
nants and impact of generic entry. Next, I discuss the various lifecycle extension
strategies in more detail and give specifi c recommendations for future research on
them and I end with a conclusion and some more general recommendations for
future research.
8.1
Regulatory Environment
New drugs are often protected by multiple patents. Patents allow fi rms to extract
monopoly rents from their product for a limited period of time, often in return for
high R&D investments. The total time a drug is on the market without facing generic
competition is referred to as the market exclusivity period (e.g., Grabowski and
Kyle
2007
). Upon approval of a drug in the United States, its patents are listed in the
Orange Book of the Food and Drug Administration (FDA).
4
The most important
patent on a drug protects the molecule. Internationally, the norm is that a patent lasts
for 20 years from the date of application. However, after patenting fi rms need to test
and prove the safety and effi cacy of the drug to receive market approval from the
national regulatory bodies. Both patents and drug approval by the regulatory body
are needed to sell drug without liability (Bhat
2005
).
5
The time between patent fi ling
5
The market approval of a drug is regulated by the regulatory body of a country. In the U.S. this is
the Food and Drug Administration (FDA), in Europe the European Medicines Agency (EMA), and
in Japan the Japanese Pharmaceuticals and Medical Devices Agency (PMDA). These agencies
control the three largest pharmaceutical markets.
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