US brand-name drug market exclusivity periods remain relatively unchanged over the past decade

Generics/Research | Posted 22/10/2021 post-comment0 Post your comment

The passage in 1984 of the Hatch-Waxman Act set into motion sweeping changes to the US brand-name and generic drug competitive environment. It greatly increased generic drug competition for small-molecule drugs, by establishing a new abbreviated new drug application (ANDA) generic drug approval process that substantially reduced the time and cost associated with a generic drug marketing application submitted to the US Food and Drug Administration (FDA). In addition, it created incentives for challenges to brand-name drug patents, while also creating incentives for continued medical innovation and new drug development by drug innovators.

Generic Brand Name V13C01

Since then, US pharmaceutical competition has continued to evolve within this framework. Patent challenges by generic drug manufacturers have become routine under Paragraph IV of the Hatch-Waxman Act, under which a generic manufacturer filing an ANDA notifies FDA it is challenging one or more FDA-listed patents. Brand-name drugs then generally experience rapid declines in US share and sales following initial generic drug market entry. Generic drug penetration has steadily increased over time, with generic drug prescriptions accounting for over 90% of all US prescriptions in 2019 [1].

As a result of these dynamics, new brand-name drugs typically rely on US sales during a market exclusivity period (MEP), defined as the time between the first sale of the brand-name drug and the first sale of a corresponding therapeutically-equivalent generic drug by an independent generic drug manufacturer. The US MEP is key to the drug innovator’s ability to generate profits and fund future investment.

The aim of a study carried out by analysts from the US [2] was to provide updated evidence in a series of analyses of US trends over the past two decades in three critical economic factors that have an important influence on the balance between cost savings from generic drugs and incentives for continued innovation in the form of new brand-name drugs: 1) market exclusivity periods for new molecular entities (NMEs); 2) the probability, timing and number of patent challenges under Paragraph IV of the Hatch-Waxman Act; and 3) the rate of generic drug penetration during the first year following first generic entry.

Using the same data sources as in previous iterations of this study (IQVIA National Sales Perspectives US data), the MEPs were calculated for the 356 NMEs experiencing initial generic drug entry from 1995 through 2019, as well as the number of generics competitors for 12 months afterwards (calculating results for drugs with more than US$250 million in sales in 2008 dollars in the 12 months prior to first generic drug entry and for all drugs) and the rate of generics penetration over the first year following first generic drug entry, as measured by the brand-name drug’s share of units sold. In addition, the probability, timing and number of Paragraph IV challengers using ANDA approval letters, the FDA website, public information searches and, a proprietary source collecting data on patent litigation court filings, were also calculated.

The authors found that for NMEs experiencing generic drug entry for the first time in 2017–2019, the US MEP was 13.0 years for drugs with sales greater than US$250 million the year before generic drug entry (all figures in 2008 are in dollars) and 14.1 years for all drugs. One year later, the average share of units sold for brand-name drugs was 18% for NMEs with sales greater than US$250 million and 23% for all drugs. For drugs with first generic drug entry in 2019, 93% of NMEs with sales greater than US$250 million experiencing initial generic drug entry faced at least one Paragraph IV challenge, facing the first challenge an average of 6.0 years after brand-name launch (for all NMEs the figures were 81% and 6.3 years to the first challenge; figures relating to Paragraph IV challengers are three-year rolling averages). For NMEs experiencing first generic drug entry in 2017–2019, they faced an average of 6.8 and 8.9 Paragraph IV challengers per NME, for all drugs and NMEs with sales greater than US$250 million, respectively.

The average 2017–2019 US MEP of 13.0 years for NMEs with sales greater than US$250 million has changed relatively little over the past decade; and remains lower than the figure for all NMEs (14.1 years). Paragraph IV patent challenges are more frequent and occur earlier for NMEs with sales greater than US$250 million. Over the past two-and-a-half decades since the passage of Hatch-Waxman, brand-name drug manufacturers face Paragraph IV patent challenges increasing frequently and they face them earlier in the brand-name drug’s commercial life cycle. Most NMEs experience multiple Paragraph IV patent challenges. Generic erosion of brand-name drug share remains rapid and deep for all NMEs and for NMEs with sales greater than US$250 million.

Conflict of interest
The authors of the research paper [2] reported conflict of interest, including being employees of Analysis Group at the time of the research. For full details of the authors’ conflict of interest, see the research paper [2].

Abstracted by Henry Grabowski, Genia Long Analysis Group, Boston, USA.

Editor’s comment
Readers interested to learn more about generics in the US are invited to visit to view the following manuscripts published in GaBI Journal:

Thirty years of generics in the US

Generics reach 80% and play a critical role in reducing costs

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1. IQVIA. Medicine Spending and Affordability in the United States: understanding patients’ costs for medicines. []. Connecticut, USA: IMS Institute for Healthcare Informatics; [cited 2021 Oct 22]. Available from:
2. Grabowski H, Long G, Mortimer R, et al. Continuing trends in U.S. brand-name and generic drug competition. J Med Econ. 2021;24(1):908-17.

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