Patent Expiry and Pharmaceutical Market Opportunities at the Nexus of Pricing and Innovation Policy - Innovation and Marketing in the Pharmaceutical Industry - page 265

more than half of the overall market returns as measured by the present value of net
revenues was captured by the top decile of earning drugs in the sample (Grabowski
et al. 2002 ). Similar patterns of highly skewed earnings distributions are observed
with other groupings of NCE introductions of earlier time cohorts. More than 60 %
of the drugs in the sample failed to earn enough to cover the average cost of devel-
opment. This research further suggests that the search for top decile earning drugs
or blockbusters is what drives the R&D process in the pharmaceutical context.
These blockbusters are also viewed as a target market where the “size of the
prize” for the fi rst ANDA approved is ultimate. With multiple generic drug fi rms
pursuing ANDA's simultaneously and poised to enter these lucrative markets post
patent expiry, there will be substantial price-based competition and hence the sales
decline effect of Fig. 9.1 . Our interest in the later sections of this paper will be
exploring methods used by large pharmaceutical innovators to delay generic entry
and extend the advantages of the original innovation beyond patent expiry.
An emerging area of product-based competition in the prescription drug arena is
in shape and or coloring of the pill or tablet. The shape or color of a medication may
be the central component of an advertising message. An advertising focus on such
attributes through direct to consumer (DTC) advertising become help to grow an
important cognitive touch point of the user experience (Conley et al. 2008 ). Table 9.2
is a collection of pill shape and color-related trade mark registration data as found
in the USPTO online Trademark Data Records. 9 Note that these are all “live” marks
which mean that they are in use in the marketplace as of summer 2011.
The shapes of tablets listed in Table 9.2 are suggestive of their intended use such
as the eye shape of Ocuvite Preservision for ophthalmic indications or the kidney
shape of the Thalitone tablet for kidney-related indications. Similarly, pill color can
be a distinguishing product feature that can secure source identity through regis-
tered marks. In the Paxil example, pill shape, brand name (Paxil) as printed on the
pill and tablet color in combination become product design variables secured
through unique mark registrations. In this context, color marks are used to distin-
guish between pill dosages. In the proton pump inhibitor category, two gold stripes
on the purple pill means a 20 mg dose while three gold stripes corresponds to the
40 mg dose of the Nexium medication.
While the use and ownership of exemplary color or shape marks listed in
Table 9.2 may not slow down generic entry in theory, they can be an important
repetitive dimension of direct to consumer advertising both pre and post expiry.
As expiry approaches, the color or shape used as a mark that may be further secured
as a registered mark is banned for use by other market entrants such as the generic
fi rms. So secured the colors or shapes can be used to migrate a brand loyal popula-
tion from one generation of a patented medication to a second generation drug with
a new patent. Hence the term value transference (Conley and Szobocsan 2001 ).
9 Records of pill shape and color US trademark prosecutions and registrations are searchable
through the Trademark Electronic Search System and Document Retrieval available at http://www.
uspto.gov .