Patent Expiry and Pharmaceutical Market Opportunities at the Nexus of Pricing and Innovation Policy - Innovation and Marketing in the Pharmaceutical Industry - page 259

holders that undertake clinical studies examining the effi cacy of their drug in
pediatric populations are granted an additional 6 month marketing exclusivity
beyond the expiration of their patent or the expiration of any other FDA granted
marketing exclusivity grant that may be in place (Li et al. 2007 ; FDA 1999 , 2009 ).
During the exclusivity term, no ANDA application will be approved. Hence the
period of time for premium pricing absent direct price-based competition from bio-
equivalent generics is effectively extended by 6 months.
The Orphan Drug Act (ODA) of 1983 (Haffner et al. 2002 ) promotes research
into markets of underserved patient populations such as orphan diseases. An
orphan disease by defi nition has a small (<200,000) target patient population. This
limited market will not justify the required investment in clinical trials needed to
prove the effi cacy of the drug. Hence independent of patent rights, the FDA grants
up to a 7 years of marketing exclusivity to any fi rm who will fi le an NDA or sup-
plemental new drug application (SNDA) with data that proves an improvement in
the effi cacy of existing treatment of an Orphan Disease. More recently the FDA
has provided expedited reviews of applications for Orphan Drug status (Burton 2011 ).
The success of the US-based ODA has inspired similar legislation elsewhere
(Haffner et al. 2002 ).
Beyond the above options, the SNDA procedure (Glover 2007 ) can be used to
realize 3 years of additional marketing exclusivity for an approved drug that can
be demonstrated to have effi cacy for treating a new disease indication. 3 Three
additional years of exclusivity will be granted to the fi rst SNDA approved for an
over the counter (OTC) nonprescription use of a previously approved prescrip-
tion drug.
Scientifi c advances such as pharmacogenomics coupled with companion
diagnostics lead to opportunities for more market segmentation of an existing
patient population (Lichter and Kurth 1997 ; Lindpaintner 2002 ). To the extent
that the genetically specifi c treatment can be resolved in an existing population
with the effi cacy and novelty required to establish patentability, new patents may
be realized on both the diagnostic and any reformulation that addresses the sub-
type population.
Finally, the incumbent NDA approved drug company can introduce a generic
version of their branded drug at any time before or after patent expiry (Laurent
2008 ). An ANDA is not required since it will be the same molecule and from the
same source as the drug approved in the original NDA. Some scholars suggest that
this leads to a better market for all consumers (Jain 2010 ; Kamien and Zang 1999 ).
While this approach would seem to make sense according to economic models, it is
rarely done in the United States but has some traction in other markets such as
Canada (Hollis 2005 ).
3 Three years or additional marketing exclusivity granted for each new approved indication.