Copyright 1999 Gannett Company, Inc.
USA TODAY
November 26, 1999, Friday, FINAL EDITION
SECTION: MONEY; Pg. 4B
LENGTH: 1289 words
HEADLINE:
Drugmakers fight back as patents near expiration Brand-name companies try to
stall generics
BYLINE: Julie Appleby
BODY:
Ulcer medication Zantac flew off pharmacy
shelves in 1997, racking
up about $ 125 million in sales every month for
maker Glaxo Wellcome.
The best-selling medication's heyday ended in
July that year,
however, when Glaxo's patent on Zantac expired.
Within a year, Glaxo had lost 80% of the market for Zantac as
consumers switched to generic versions that cost far less than
Glaxo's
drug.
Glaxo's experience is typical of what happens when a
brand-name
drug's patent expires and generic companies get competing
products
on pharmacy shelves.
Consumers benefit because of the
lower prices -- many generics
cost 20% to 75% less than brand drugs -- but
the brand manufacturers
lose.
As an increasing number of popular
drugs head for the end of their
patent lives, brand-name companies are
eyeing those potential
losses. And they're fighting back.
The
latest battle is over Claritin, the widely advertised allergy
medicine.
Claritin's maker, Schering-Plough, has run a multimillion-dollar
lobbying
campaign for more than two years trying to persuade Congress
to extend the
drug's patent beyond 2002.
And it won't be the last patent fight.
Patents on dozens of drugs will run out in the next few years,
including such blockbusters as Astra Merck's ulcer drug Prilosec
and Eli
Lilly's antidepressant Prozac.
"Manufacturers of the
billion-dollar-plus products will fight
really hard," PaineWebber analyst
Angela Larson says. "Those
products are very meaningful to the companies."
Expiring patents
Prilosec and Prozac have annual sales
topping $ 5.5 billion. Prozac,
in fact, represents 25% of Lilly's revenue,
Larson says. In all,
analysts estimate that drugs coming off patent in the
next 10
years now bring in $ 50 billion to the brand-name companies.
Although the patents on Claritin, Prozac and Prilosec all expire
during the next three years, don't count on quickly getting generic
versions. Critics say delay tactics by brand companies can preserve
their market share or keep generics off the market for months,
if not
years. Some tactics:
* Lobbying Congress to pass patent extensions,
either through
direct legislation or through last-minute additions to
unrelated
bills.
* Getting multiple patents on a drug, not only
for the
active ingredient but also for such things as the shape of the
pill. The more patents, the more potential hurdles for a generic
version. Litigation over patents can take years to settle, and
generics
cannot enter the market during that time.
* Filing what are called
"citizen's petitions" with the
Food & Drug Administration, questioning
the safety of the
generic version, which can delay generic approvals for
months.
The National Pharmaceutical Alliance, a generic industry lobbying
group, says the FDA has upheld only four petitions out of 51 since
1990.
* Paying generic companies to drop patent challenges. Bayer,
for
example, paid generic maker Barr Labs $ 29.6 million to drop
a patent suit
over an antibiotic called Cipro.
Under the 1977 deal, Bayer can
either provide Barr with Cipro
to sell as a generic or pay the company $ 6
million to $ 8 million
a quarter. So far, it has chosen to make payments.
"Roadblocks are being thrown up by the brand-name companies,"
says Sidney Wolfe of the advocacy group Public Citizen. "Every
day
brings another trick."
Brand-name companies say they do nothing
wrong in trying to protect
the enormous investment they make to research and
develop drugs.
Without strong patent protection, they say, investors would
not
want to take risks on developing new products.
Developing a
drug takes a decade and about $ 500 million, says
Judy Bello of the
Pharmaceutical Research and Manufacturers of
America, the industry trade
group.
On average, only three out of 10 approved drugs have sales
that
exceed development costs, she says.
"The average patent
life for a breakthrough medicine is 11 1/2
years," she says. "That's very
little patent time."
And a patent is not a monopoly, Bello says.
"Look at the number of cholesterol-lowering medicines out there
or allergy medicines," she says. "Increasingly, the brand-name
companies
are racing against each other to provide valuable new
treatments."
The Claritin fight
But the drug companies are also fighting
hard to hang on to their
blockbuster drugs, the ones that helped push the
industry to net
profit margins last year of 20% on average.
In
the Claritin fight, maker Schering-Plough has spent millions
urging Congress
to set up a special patent review board to consider
whether Claritin and
several other drugs were unfairly delayed
during the FDA approval process
and thus deserve more patent time.
Critics say Claritin and other
drugs already won longer patent
lives as a result of world trade talks --
and further extensions
of the allergy drug's patent will cost consumers
millions.
The bills became controversial and stalled in Congress but
are
expected to be picked up again early next year.
Competition
was what Congress had in mind when it made it easier
for generic companies
to get their products on the market, approving
what became known as the
Hatch-Waxman Act in 1984.
Named after its authors,
Sen. Orrin Hatch, R-Utah, and Rep. Henry
Waxman, D-Calif., the law made it easier to get generic
drugs
approved, and it also guaranteed brand-name drug companies 20
years of patent life, minus the time they spend getting FDA approval.
The year the act passed, generic drugs accounted for only 19%
of
all prescriptions. Now, more than 40% of prescriptions are
filled with
generic products, saving purchasers more than $ 10
billion a year, according
to a 1998 Congressional Budget Office
report.
Waxman says the law has been successful in "saving
consumers
millions of dollars, because generic drugs offer a lower price."
But he's concerned about the increasing battles over patent
extensions.
"Unfortunately, many in the pharmaceutical industry have
worked
hard to undermine what we've tried to accomplish and, in some
cases, have succeeded."
Drug prices by prescription
The average price of various brand-name drugs and the price of
their
generic equivalents:
Type of drug Name brand Price Generic drug Price
Ulcer treatment Zantac $96.75 Ranitidine HCI $42.19
Ulcer treatment Tagamet $93.47 Cimetidine $31.36
Anti-anxiety Xanax $58.70 Alprazolam $17.23
Antibiotic Koflex $80.32 Cephalexin $16.38
High blood pressure Inderal $44.07 Propranolol HCI $8.87
High blood pressure Tenormin $46.74 Atenolol $12
Diuretic Lasix Oral $15.13 Furosemide Oral $6.49
Diabetes treatment Glucotrol $55.88 Glipizide $22.43
Sources: Source Prescription Audit (SPA), November 1998-October
1999, Scott-Levin
LOAD-DATE: November 26, 1999
