How Drug Life-Cycle Management Patent Strategies May Impact Formulary Management

: Drug manufacturers may employ various life-cycle management patent strategies, which may impact managed care decision making regarding formulary planning and management strategies when single-source, branded oral pharmaceutical products move to generic status. Passage of the Hatch-Waxman Act enabled more rapid access to generic medications through the abbreviated new drug application process. Patent expirations of small-molecule medications and approvals of generic versions have led to substantial cost savings for health plans, government programs, insurers, pharmacy benefits managers, and their customers. However, considering that the cost of developing a single medication is estimated at $2.6 billion (2013 dollars), pharmaceutical patent protection enables companies to recoup investments, creating an incentive for innovation. Under current law, patent protection holds for 20 years from time of patent filing, although much of this time is spent in product development and regulatory review, leaving an effective remaining patent life of 7 to 10 years at the time of approval. To extend the product life cycle, drug manufacturers may develop variations of originator products and file for patents on isomers, metabolites, prodrugs, new drug formulations (eg, extended-release versions), and fixed-dose combinations. These additional patents and the complexities surrounding the timing of generic availability create challenges for managed care stakeholders attempting to gauge when generics may enter the market. An understanding of pharmaceutical patents and how intellectual property protection may be extended would benefit managed care stakeholders and help inform decisions regarding benefit management.