What role do drug patent extensions play in the pharmaceutical industry, and how do we balance the ROI to fuel innovation while ensuring patients have access to the medicine they need?
In a perfect world, all medication would be free, and access to that medication would be globally universal, allowing everyone to access the medicine they need when needed. However, that’s not the world we live in.
In the following article, we’ll look at how pharmaceutical companies utilize their patent protections, how that balances with patient access to healthcare, and how it fuels further innovation in the pharmaceutical industry.
Pharmaceutical Drug Patents – An Overview
Currently, pharmaceutical companies research, test, and develop new medications, and once those drugs are available to the public, they are sold under their brand names. The patent protection on new drugs means that they can only be produced and sold by the pharmaceutical company that holds the patent.
According to the US FDA, in most cases, a drug patent in the United States will last for twenty years. The total lifetime of a patent will vary for different drugs and countries, as well as whether or not the drug patent is eligible for any extensions. However, because pharmaceutical companies apply for patents before development and clinical trials start, most patents only have between seven and ten years left once the drug hits the market. The development, testing, and trials typically take 10-15 years to complete before approval is given.
Once the patent on a drug expires, it can be manufactured and sold by other companies, typically under the label of a generic drug. To learn more about the importance of generic medicines, check out our article, Why Are Generic Pharmaceutical Drugs Important?
According to the US FDA, generic drugs need to be identical to the original branded drug in terms of dosage, efficacy, safety, and route of administration.
What Are Patent Extensions and What Do They Do?
Thanks to the Drug Price Competition and Patent Term Restoration Act, more commonly called the Hatch-Waxman Act, pharmaceutical companies may apply for patent extensions based on the time taken throughout the regulatory approval process.
Under the Hatch-Waxman Act, patent extensions are available for eligible products in the human drug category, veterinary drug category, and medical devices category.
The maximum term of any extension is five years as long as the patent extension doesn’t result in the remaining patent term exceeding fourteen years.
It was as a result of the introduction of the Hatch-Waxman Act that generic drug alternatives became possible.
Balancing Patient Access with Innovation and New Drug Development
There’s a fine line between giving patients access to the medication and drugs they need at affordable prices while motivating pharmaceutical companies to invest money into developing new drugs. Researching, testing, and creating successful drugs is not only expensive but far from a ‘safe bet’ if you’re investing your money.
According to the National Library of Medicine, despite efforts to improve research and development, analysis, testing, and trials, only 10-15% of drugs ever make it to market. That’s a failure rate of almost 85-90%.
On average, pharmaceutical companies invest up to $1 billion in most new drugs, with the average cost of bringing a new drug to market ranging from $800 million to $1 billion. If we look at the development of 100 new drugs, with an average success rate of 10%, that’s approximately $90 billion spent to create 10 new drugs, with 90 never making it to market.
That’s not to say that the money invested in those failed drugs is wasted. An excellent example is the COVID-19 vaccines developed by Moderna and Pfizer-BioNTech. The research and data used to create their COVID-19 vaccines were primarily based on the failed development of an HIV vaccine seven years earlier.
Pharmaceutical companies have two options when it comes to research and development. They can choose to either explore or exploit. They can exploit what they already know, building on current knowledge, for small, essential gains. Or they can explore new novel drugs which, while more challenging and with higher failure rates, offer greater potential rewards not only to pharmaceutical companies but to patients.
In 2022 the global pharmaceutical industry invested over $244 billion into research and development. No other industry in the world invests more in research and development. By 2028, that number is expected to exceed $302 billion.
Regardless of your opinion on ‘big pharma’ and their motives, there’s no denying that they are investing an unprecedented amount of money into drug research and development, and ultimately, that new drug could one day save your life or the life of a loved one.
Laxxon Medical is dedicated to engineering patented 3D pharmaceutical solutions that optimize products and benefit patients. Our goal is to establish SPID®-Technology as a manufacturing process with the individual and the pharmaceutical partner in mind.
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