How Long Do Drug Patents Last: Everything You Need to Know
Drug patents will be valid for approximately 20 years. There are variables that can influence patent life, either to extend it or, sometimes, to shorten it.12 min read
How Long Do Drug Patents Last?
In general, a drug patent will be valid for approximately 20 years. However, there are variables that can influence patent life, either to extend it or, sometimes, to shorten it.
Why Is Drug Patent Life Important?
Intellectual property laws protect drug manufacture and sales through patents. However, a large portion of a drug's patent life can expire due to research, development, and approval time before it ever hits the market.
Once they are marketed, however, drugs make a lot of money. They are depended upon by thousands or millions of people. If a patent for a best-selling drug runs out, other companies can begin engineering it. People will stop buying the original company product, costing that company a great deal of money.
When a company owns a patent to a drug, it is sold under a brand name. Doctors usually prescribe it using that name, which is a patented term for the ingredients in that drug. The company has a monopoly on it until its patent period ends (unless it attempts to extend or to renew it). The longer that drugs have their original patents, the longer before the companies making generic versions can manufacture those drugs to help make them more affordable.
What Factors Affect Reduced Drug Patent Life?
The first factor that makes drug patent timelines vary is that the 20-year time period begins at the time of the drug's creation. In other words, a pharmaceutical company might be developing and getting Federal Drug Administration (FDA) approval for a drug without selling it for eight or more years into its patent life. This means that when the drug shows up on the market, the patent could be good for only a few more years.
Some have considered whether it would be sensible to allow a solid 15 years of patent life after the drug has been cleared by the FDA. However, this is a complicated solution. Presently, drug companies already try to extend the patent life of their drugs as much as they can. Therefore, at this point, it may not solve anything to add more definite years of patent life to the equation.
When Can Other Companies Copy The Previously Patented Drug?
Once a patent has ended, other drug makers can manufacture and sell the drug as they wish. In addition to the patent's expiration, the following conditions must be met.
- It's no longer sold under the company's name, but it is known generically.
- In the U.S. and most countries, the generic form has to be exactly the same as the original, in terms of how effective it is, how safe it is, its use, type of dosing, its chemical ingredients, how it moves through and affects the body, and how it works in the body.
- The generic drug company must confirm that the patents are fully unenforceable or invalid, and there is no risk of infringement.
- The generic company is located in a country where there is no other patent on the drug.
Then, the generic drug can be produced. The monopoly on the product no longer exists. Companies can produce it cheaply, and it can be sold at lower cost.
The original company may re-work the drug in a number of ways and then attempt to renew the patent. Usually, the re-worked medicine will then compete in the market against the generic ones. Sometimes, however, there are faults in either the generic brand or in the original, and it must be removed from the market.
How Do Original Companies Extend The Life Of A Patent?
There are some ways to extend patent life. These generally tend to slow medical advancements, as the company's aim is to keep profits coming in rather than to make new cures. In time, it's possible that the FDA will be tougher on those companies that use these strategies.
The Hatch-Waxman Act
This act was passed in 1984. Its chief purpose was to help balance out the many years a company can lose in patent life while it waits for the drug to be tested and certified. Extensions can be permitted in order to make up for this lost time, but there are a few exceptions. Firstly, the extension cannot go beyond five years, regardless of how many years the company lost while waiting. Secondly, the actual maximum amount of years for a company to own a patent once it's been approved is 14. Between these two numbers, there is not much flexibility.
By seeking to test out a drug on children, a patent can be extended for six months. This arrangement can occur two times with the same drug.
One trick companies use is to combine the medical components in a somewhat new way by coming up with a newer concoction of what is essentially the same medicine. They might make a drug more tolerable via numerous new methods. For example, they might change a particular intake to a slow-release, or they might change from one daily dose to two, or transition from an oral medicine to an injection.
Transcept's Intermezzo is an example of alternative delivery. The pill form of the drug, Ambien, had been in use for several years. Intermezzo, which dissolves under the tongue, has a lower dosage of its active chemical as well as faster activation and a slightly different effect on the user. Therefore, it qualified for a five-year exclusivity period, which offset the expiration of the patent on Ambien.
New Things It Can Do
The FDA has a rule called the "three year new use" stipulation. It means that when it's discovered that the drug can achieve another remedy, you can increase the patent for three years on the basis of its new purpose.
Companies can make adjustments to the amount of isomers in a medicine. When companies do so, the drug is essentially different, even though it's achieving the same purpose. If one isomer doesn't add anything to the purpose, it can be deleted, and then it's a new drug, ready for an extended patent. Another term for this is "purification," meaning that when an unnecessary chemical is taken out of the combination, it leaves behind what really matters. Regardless, it's considered a new drug.
An example of purification is Lundbeck's Lexapro. It took only three-and-a-half years to develop because its predecessor, Celexa, used two forms of the molecule citalopram. Lexapro was considered a purified form because it utilized only the one of these forms that caused the anti-depressant effect. Because Lexapro didn't use the second form of the molecule, it was seen as a new drug, and the FDA granted the company a five-year exclusive period. This period corresponded to the expiration of Celexa's patent. Sometimes, as in this case, purifications offer fewer side effects.
Sometimes, it isn't dangerous to combine two drugs into one. In some cases, it may even to be found to be more effective. At least, it can have a neutral effect. Therefore, companies have been known to fuse two medications together, thereby coming up with a new drug for patenting. Likewise, two mechanisms can be considered for one medicine, and this may also extend patent life.
For example, Pfizer patented Caduet, a heart disease drug that included two of its other patented drugs, Norvasc and Lipitor. The patents for the underlying molecules of the earlier drugs expired, but because Pfizer had a patent on the combination, no other company could produce it.
Combination drugs sometimes increase consumers' co-pays or require full retail payment because they are new. In these cases, patients can request the separate drugs from their doctors.
Drugs for Rare Diseases
A rare disease is defined as one that fewer than 200,000 people in the U.S. have in any given year. In order to encourage drug companies to develop treatments for such diseases and to keep these medicines available, a seven-year patent extension is possible for these drugs.
30-Month FDA Stays
If a generic company applies for approval of a spoken-for patent in order to claim a right to it, then the FDA gets involved, and a conflict and potential court case can ensue. When this happens, the original company could receive as much as another 30 months of patent life, unless the case is settled sooner.
Patent Extension and Drug Costs
Since drug patents are relatively short compared to other inventions, some may think that this lessened time accounts for their inflated costs.
Drugs are so expensive that many U.S. citizens simply cannot afford them. There are stories of drugs that are so expensive that even the doctors and researchers who study them cannot afford their purchase.
It may be believed that high costs are a result of a great deal of research and time the companies expend bringing new drugs to market. However, pharmaceutical analyst Richard Evans claims that the increased cost of drugs accounted for almost 50 percent of pharmaceutical sales growth ever since 1980, and 145 percent of U.S. sales growth over the last five years.
In other words, Evans says, the price increase is related to the price only — not to a specific medicine or research method. The fact that companies get away with this increase further shows the power of having ownership of the drug patents.
Given the amount of money pharmaceutical companies bring in, it's not necessarily the case that extending drug patents will lower the cost of drugs. It's possible that drug prices would simply stay the same. There are many reasons a company might argue that it must keep its prices the same in spite of such extensions.
One recent situation involved Bristol-Myers Squibb. Through court cases, the company managed to put off generic versions of Taxol and BuSpar. Taxol in particular did not come out in generic form for an extremely long time. While generic companies didn't benefit from this, Bristol-Myers did, quite significantly.
However, Bristol-Myers spent $2 billion on ImClone, a drug that took a long time to get on the market. Meanwhile, its competitors got ahead of the game with hypertension drugs. Therefore, even though the company made headway with the court cases, it lost half of its potential 2002 income.
This isn't a far-fetched situation; it could happen with other drug patents too. For example, AstraZeneca is in conflict with generic drug makers over Prilosec, a medication for acid reflux. Even if it wins that case, the money spent there could have gone to research.
Further, drug patent loss creates major loss of income for companies. When Pfizer lost its patent on Lipitor (used to reduce cholesterol), the company lost 19 percent of profits in the first few months after. Lilly lost 9 percent of income in the time after Prozac went generic. Lilly also hit hard times when Zyprexa went generic, losing 73 percent of its sales. And Merck, when losing its patent for Pepcid, its earnings went from $755 million to $110 million.
Another interesting case is that of Amgen's 2002 acquisition of Enbrel, which generates an annual income of $4.2 billion. The patent expired in 2013. Amgen received the patent when it bought the company Immunex and then shared profits with Wyeth. In 2011, Amgen received a patent on Etanercept, an alternative to Enbrel, which extended its monopoly on the drug until 2028. Many major drug makers argued against the patent and attempted to make other generic forms (despite the costs of clinical trials for such apparently new drugs).
These cases illustrate why some think that the implementation of a solid 15-year rule is a good idea. For instance, if Prilosec had been given a 15-year patent, there wouldn't be a long and expensive trial and delay for the generic companies (and the public) to access it. Such a rule might change the focus of drug development from its current uncertain financial status toward the science of helping the greatest number of people.
In Australia, drug patent life was increased from 14 to 20 years. Unfortunately, this had a major negative effect on their economy. At the time, it was done to try to boost pharmaceutical developments. Instead, the generic drug companies suffered to the extent of about $2 billion over eight years, and the cost to the government was $200 million per year because lower-cost generic drugs took longer to become available in its health-care system.
Patent Holding vs. Market Exclusivity
Whether or not a company holds a patent to a drug, there is still a question of its market exclusivity. This is when a company owns the exclusive right to market a drug. It was designed to balance new drug innovation with competition from generic drugs, and it can prevent generic companies from having a hand in drug sales. The market exclusivity and patent may be concurrent but are not necessarily. The period of exclusivity depends on the type of drug.
What Is a Compulsory License?
In some international markets, there is a "compulsory license," which permits generic brands to produce patented drugs before they are legally allowed to do so, therefore bypassing the patent. This is typically permitted in the case of a drug or illness crisis when drugs are not affordable for the public on a mass scale, such as in a developing country.
Drug Patents in Developing Countries
Drug companies who already own patents in developed countries often seek to gain patents abroad. However, this has caused conflict between the wealthy drug companies and the local companies and governments, who would prefer that their own companies own the patent. There have been great debates over the pricing and ownership of such patents in the developing world.
India is one country where Big Pharma is trying to claim patents. With such a large population, there is an expectation that drug sales will grow tremendously. And since drugs are expensive, most of the providers there are generic brands.
There are two issues for drug companies in India. First, will patent law in India be the same as in the more developed world? Secondly, will high prices be permitted and maintained? It is presently unclear, but the answer so far has seemed to be "no" to both questions. India's Supreme Court supported the country's right to deny patents, so generic drug makers have been selling drugs which have patents elsewhere. So far, the people of India refuse to pay the prices Big Pharma wants them to.
Novartis created Glivec, an important drug for chronic myeloid leukemia. India rejected the patent after years of Novartis fighting for it there. It was a closely-watched case that symbolized Big Pharma's attempted outreach to patents in the developing world, where there is significant demand for medicine. Many developing countries, however, want to help their own drug makers, and therefore often don't approve patent applications from foreign makers.
India is a particularly important place for this battle, one that's further complicated by poverty there. It is likely that drug sales will increase a great deal in the country, but nearly 75 percent of sales are from generic brands.
The Reality of Patent Life
The reality is that drug patent life is not particularly long, unless one continues to make adjustments and apply for new patents. Drug patents — just like other kinds of patents — are bound by the 20-year limit. And, as with other patents, that amount of time can be reduced due to other occurrences. For example, a total of three maintenance fee payments must be made every few years to keep the patent in force. Each payment is larger than the last, and if they are not made, the patent expires.
Patent Maintenance Fees
Maintenance fees must be paid to keep utility patents in force. There are no maintenance fees for plant or design patents or for a reissue patent if it didn't need maintenance fees before. The three maintenance fees needed are as follows:
- Three-and-a-half years post issuance (or up to six months after that with an added surcharge)
- Seven-and-a-half years post issuance (or 8 years after with surcharge)
- Eleven-and-a-half years post issuance (or 12 years after with surcharge)
You can't pay maintenance fees more than six months early, and if you are more than six months late, the patent can go into the public domain. In case of an unavoidable delay, you may be able to revive the patent.
Payment amounts are as follows:
- First payment is $980
- Second payment is $2,480
- Third payment is $4,110
There may be a 50 percent decrease for small entities (making the fees $490, $1240, and $2055). They also get reductions on late fee surcharges.
Many patents become public domain because the the patent holders don't consider the maintenance fees worth paying. The USPTO publishes such patents in the Official Gazette. There could be an average of 20 pages of such patents in a given week.
Exceptions to Patent Life
Generally, patent terms are 20 years. There are a few exceptions:
- Utility and plant patents from before June 8, 1995 or filed before that date: Their patent life is either 20 years or 17 years from the patent grant.
- A patent from international application filed before June 8, 1995 that went national: The term is either 17 years from the grant or 20 years from filing or earlier filing date that was used — whichever is longer.
- If there's a delay from the patent office: This delay will be added as a patent term extension or a patent term adjustments.
- Design patents: These last 14 years from patent grant.
- Continuing, divisional, or continuation in part applications on or before June 8, 1995: These will close twenty years from filing the earliest application (from either a U.S. or international application).
- International Patent Application: If filed on or after June 8, 1995, it will end 20 years from the filing date of international application.
- Foreign Priority: The patent will end on the date of U.S. patent filing.
- Provisional Applications: The 20-year term runs from the filing date of a non-provisional application, only when it's accepted over the earlier provisional one.
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