Patent Expiry and Pharmaceutical Market Opportunities at the Nexus of Pricing and Innovation Policy - Innovation and Marketing in the Pharmaceutical Industry - page 277

9.3.5.1 Summary

In this article, the authors have characterized and organized the relevant literature
addressing pharmaceutical marketing models and policy options that can be man-
aged to minimize the impact of patent expiry or patent cliffs. The various FDA regu-
latory regimes and intellectual property exclusivity options that can be tactically
used to build and sustain competitive advantage in the pharmaceutical context are
surveyed. Literature on marketing mix variables such as product, promotion, and
pricing is reviewed. Novel models of dynamic pricing and methods for securing
product identity through pill shape and or color are discussed. Uniquely, this article
integrates related works from the law and economics literature that address compre-
hensive intellectual property regime management for building and sustaining the
market advantages of an innovation. Empirical analysis of pharmaceutical product
life cycles that include revenue, promotional expenditures, intellectual property
maneuvers, and branding can help illustrate the complementarity of options and
how they may interact to sustain the value of pharmaceutical innovations.
Analysis of pharmaceutical product life cycles that include revenue, promotional
expenditures, intellectual property maneuvers, and branding can help illustrate the
complementarity of options and how they may interact to sustain the value of
pharmaceutical innovations. Empirical evidence for how pharmaceutical fi rms
Astrazeneca and Eli Lilly attempt to navigate the patent cliff is presented.

9.3.6 Observations and Guidance for Managers

Based on the above analysis and discussion, just what can be done to manage the effects
of patent cliffs? Some important observations and guidance for managers include:

1. The regulated market environment that is pharmaceuticals in the United States is
complicated. Proactive or Reactive management of patent cliffs benefi ts from
consideration of all the possible regulatory or marketing mix options available to
fi rms. Table 9.1 is a preliminary listing of potential options. Successful travers-
ing of the patent cliff benefi ts from advanced, anticipatory consideration of all
the options listed in the table together with any others that are reasonable in the
given market context.
2. The consideration of all the options listed in Table 9.1 requires a cross functional
team with suffi cient domain knowledge in regulatory exclusivity, intellectual
property management, product development, legal, life cycle engineering, and
marketing functions.
3. Dynamic pricing methods such as the sandwich approach can be useful in the
appropriate context such as AZ's navigation of the Prilosec patent cliff. Economic
analysis of this approach suggests that this leads to improved welfare for both
branded drug manufacturers and their customers. Using this approach benefi ts
from a proactive disposition e.g., the dedicated AZ project team.